by Louis Navellier

March 7, 2023

After wild winter weather enveloped much of America, boosting natural gas prices, we now approach spring, when crude oil prices typically rise, so I remain convinced that our “Big Energy Bet” will continue to pay off in the upcoming months. Due to America’s record natural gas production as well as steadily rising crude oil production, the U.S. is reasserting its energy clout and is helping the world break away from Russian crude oil. The U.S. exported 1.53 million barrels of crude oil a day in January, with no releases from the Strategic Petroleum Reserve (SPR). Interestingly, the Energy Department has received approval to release another 26 million barrels from the SPR, but it may be holding back until the prices at the pump annoy consumers enough to cause political problems for the Biden Administration.

Crude oil inventories in the U.S. are currently 9.7% higher than the 5-year average, so West Texas Intermediate (WTI) prices will likely remain relatively stable until this excess inventory is depleted. However, Europe and much of the rest of the world runs on Brent light sweet crude oil, where prices remain significantly higher than those for WTI crude. The investment angle in this price gap is that the wider the spread between WTI and Brent, the more money our refiners tend to make.

Global crude oil prices rose late last week in the wake of positive economic news as well as new reports that Russia’s crude oil shipments to India were being disrupted by insurance complications from Western sanctions. Russia’s war with Ukraine remains the big international wild card. The newest development is that China is suddenly calling for a cease-fire with peace talks between Russia and Ukraine. Specifically, China’s Foreign Ministry outlined a 12-point plan it called “China’s Position on the Political Settlement of the Ukraine Crisis.” China remains very critical of Western sanctions, which have recently expanded to include Chinese companies that do business with Russia. To protect its economic interests, China has emerged as a peace broker and President Xi is planning to meet with Ukrainian President Zelensky.

China has accused the U.S. of prolonging the Ukrainian conflict with an eye toward profiting from energy prices and by letting some arms shipments to Ukraine flow into neighboring third world countries. Jin Canrong, a professor at Renmin University of China in Beijing, said, “American military enterprises have made a lot of money from the war in Ukraine.” Now that Vice President Harris has accused Russia of both war crimes and crimes against humanity, the Biden Administration has signaled that it does not intend to negotiate with Russia, so China has ironically emerged as the only global “peace broker.”

As expected, Russia’s Kremlin spokesman, Dmitry Peskov, threw cold water on China’s proposed peace plan, saying, “We don’t see any of the conditions that are needed to bring this whole story towards peace.”

If Russia launches its anticipated spring offensive, that could have long-lasting consequences on Russia and oil prices. Russian crude oil output is now down 1.5 million barrels per day and is expected to steadily decline as crude oil backs up in pipelines and forces Russia to cap its wellheads. Restarting any capped wellheads in the Arctic is problematic, so it will be difficult for Russia to revive its oil production.

As a result, the spring surge in crude oil prices is virtually guaranteed unless China can miraculously get Russia to come to peace talks or postpone its spring offensive. Worldwide crude oil demand is now at a record level and will rise steadily in the upcoming months as the Northern Hemisphere warms and seasonal demand picks up. Other than a nuclear war or other shocking event that stops world commerce, I remain confident that crude oil prices will rise steadily in the upcoming months as demand picks up.

U.S. Growth is Anemic but Positive

With the first quarter ending last week, the Atlanta Fed now estimates that first-quarter GDP growth reached a 2.3% annual pace. There will be a new estimate coming out this morning, Tuesday, March 7.

Last week’s other economic news began negative, but with a silver lining. On Monday, the Commerce Department announced that durable goods orders plunged 4.5% in January, but that was due largely to a 13.3% decline in transportation orders attributable to Boeing’s 54.6% drop in commercial aircraft orders. Excluding transportation, durable goods orders declined just 0.7% in January, and the “green shoot” in the durable goods report was that core capital goods shipments, indicative of business investment, surged 1.1%. If core capital goods continue to improve, there is hope for a manufacturing sector recovery.

Speaking of manufacturing, ISM announced on Wednesday that its manufacturing index rose to 47.7 in February, up from 47.4 in January. Since any reading below 50 signals a contraction, the manufacturing sector is still in a recession, for the fourth straight month. The “new orders” component rose to 47 in February (up from 42.5 in January), while the production component declined to 47.2 (down from 48 in January). Order backlogs rose to 45.1 in February (up from 43.4 in January), but since all of these major components remain below 50, the U.S. manufacturing sector is still sputtering and in a contraction.

In contrast to this downbeat report, China’s manufacturing sector has rebounded impressively. China’s National Bureau of Statistics announced on Tuesday that its purchasing managers index (PMI) rose to 52.6 in January, up from 50.1 in December. Economists were expecting the Chinese PMI to rise to 50.5 in January, so this was a big surprise.  I should add that private economists are expecting 5.5% annual GDP growth for China in 2023, which is below the 6% GDP goal of the Chinese government, but still robust.

U.S. growth is concentrated in the service sector. ISM reported on Friday that its non-manufacturing (service) index remained at 55.1 in February, about level with its 55.2 reading in January. Since any reading above 50 signals an expansion, the service economy is still very healthy. The ISM service index has now expanded for 32 of the past 33 months, and fully 13 of the 17 industries surveyed reported an expansion. The new orders component expanded to a robust 62.6 in February from 60.4 in January. Also encouraging is that service PMIs are now largely above 50 in Europe, so a broad-based economic recovery is apparently underway, despite the fact that some manufacturing surveys are still contracting.

In the labor market, the Labor Department announced that weekly unemployment claims declined to 190,000 in the latest week, down from 192,000 in the previous week. Continuing unemployment claims declined to 1.655 million in the latest week compared to a revised 1.660 million in the previous week.

Turning to real estate, the National Association of Realtors announced last Monday that pending home sales surged 8.1% in January, which was a big surprise, since economists only expected a 1% increase. Falling mortgage rates in December apparently stimulated home sales, since pending home sales increased in every region. However, now that bond yields have headed higher in the wake of the latest inflation fears, mortgage rates have headed significantly higher, and that may stall recent home sales.

The Wall Street Journal reported on Tuesday that apartment rents fell in every major metropolitan area through January as the largest inventory of new apartments in nearly four decades became available. January median rents were 3.5% lower than the equivalent rents paid in August. The share of apartment dwellers that renewed leases declined in January to only 52%, the lowest level for January since 2018. Suddenly, many apartment dwellers have more choices due to new inventory hitting the rental market.

If these median rental costs finally start to decline, it will provide major inflation relief in a key category.

The owners’ equivalent rent component in the CPI has been stubbornly high in recent months, so if it “cracks” and starts to decelerate in the upcoming months, inflation should decelerate. I remain on the outlook for “green shoots” that will signal lower inflation, but right now falling apartment rental costs, plus lower median home prices are the most promising indicators that inflation may be cooling off!

The S&P CoreLogic Case-Shiller National Home Price Index was updated on Tuesday and revealed that home prices declined 0.8% in December, but they rose 5.8% in the past 12 months. This represented the sixth straight drop in monthly home prices after home prices peaked in June 2022. Home prices in Phoenix declined 1.9% in December, in a city which was once the hottest housing market in the U.S.

Currently, Miami and Tampa are the hottest housing markets in the country with 15.9% and 13.9% home price appreciation, respectively, in the past 12 months, due to the national exodus to Florida. The weakest housing market is San Francisco, where home prices have fallen 4.2% in the past 12 months. As home prices moderate, hopefully that will show up in owners’ equivalent rent in the Consumer Price Index.

Some Investment Implications of the Current Economic Outlook

Despite some new “green shoots” that are indicative of positive economic growth, we remain in a 15% market, where only the top 15% of stocks are leading the overall market. The FAANG stocks have stumbled, so, in my opinion Nvidia is now the new stock market leader, due to its AI expertise. Specifically, Nvidia is helping Mercedes to emerge as the autonomous driving leader due to its Level 3 system via Nvidia chips. The Mercedes system also uses Lidar, so companies that make Lidar sensors have also firmed up.

Tesla abandoned expensive Lidar systems in favor of cameras only, but right now Mercedes and Nvidia are leading the race to develop the safest autonomous driving system. Other auto manufacturers are also using Nvidia’s AI chips and systems, so its automotive business remains very promising.

Speaking of semiconductor chips, the $39 billion Chips Act passed by Congress last year, prohibits U.S. companies from expanding in China for a decade. Commerce Secretary Gina Raimondo said, “Recipients will be required to enter into an agreement restricting their ability to expand semiconductor manufacturing capacity in foreign countries of concern for a period of 10 year after taking the money.”

Raimondo added that companies receiving U.S. government funding must also not “knowingly engage in any joint research or technology licensing effort with a foreign entity of concern that involves sensitive technologies or products.” In conclusion, Raimondo said, “Our goal is to make sure that the United States … is the only country in the world where every company capable of producing leading-edge chips will be doing that in the United States at scale.” In addition to the $39 billion in the Chips Act, another $75 billion in federal funding could be available to the U.S. semiconductor industry, according to Raimondo.

Elon Musk hosted a “Tesla Investor Day” on Wednesday and laid out a mission statement called “Master Plan, Part 3” to become the largest car manufacturer in the world with an output of 20 million vehicles a year by 2030, up from 1.3 million now. Tesla would have to spend up to $175 billion to achieve its 2030 production goal, and that spooked some investors. No matter how ambitious Musk may be, the media and investors seem more interested in when the Cybertruck will be launched, since some prototypes are being spotted around Tesla’s Palo Alto headquarters and, outside of Cybertruck, Tesla’s model lineup is getting stale and investors crave exciting new models. Meanwhile, electric vehicle (EV) makers are fighting high lithium, nickel, and cobalt prices and Tesla needs to seriously address this acute shortage, since even though Tesla is investing in lithium mining, the high price of batteries is constraining EV sales globally.

Speaking of EVs, Ford will resume production of its F-150 Lightning on March 13th. The culprit behind the production shutdown is apparently attributable to SK On, which is building lithium-ion battery packs for Ford. Specifically, a Ford spokesman said that it will “apply all our learnings and work with SK On’s team to ensure we continue delivering high-quality battery packs…down to the battery cells.”

In the meantime, the recently made F-150 Lightning vehicles remain in limbo, pending updates to “parts and engineering processes.”  What stopped the F-150 Lightning production was that one vehicle awaiting a pre-delivery inspection in a holding lot caught on fire while charging. Ford and VW Group are pushing fast AC/DC charging and their battery packs typically weigh more due to extra cooling to dissipate the heat that fast charging can generate; so, the source of the problem remains elusive, whether it lies with the electronics, or with the cooling associated with the SK On battery packs for the F-150 Lightning.

Finally, I must sadly report that Rivian fell sharply last Wednesday. It was an ESG darling when it went public, since it was briefly worth more than Ford. Rivian announced on Tuesday that it lost $1.72 billion in the fourth quarter, down from a $2.42 billion loss in the same quarter a year ago. The company depleted $2.2 billion in cash in the fourth quarter and had $11.6 billion in cash at the end of the quarter.

At this “burn rate,” Rivian may be on the verge of bankruptcy later this year. The biggest problem facing Rivian is that one of its former investors, namely Ford, is selling its F-150 Lighting significantly cheaper than Rivian’s R1T pickup. Furthermore, the Tesla Cybertruck is coming, and it will also be cheaper than Rivian’s R1T pickup, so I do not foresee any scenario where Rivian can survive. It looks like Rivian is another ESG disaster, and its IPO underwriters – Goldman Sachs, J.P. Morgan, and Morgan Stanley – should be ashamed of themselves for pushing this “pump and dump” IPO to naïve ESG investors!

Navellier & Associates  owns Nvidia  Corp (NVDA) in managed accounts, a few accounts own Tesla (TSLA), per client request in managed accounts. We do not own, Ford Motors (F), Boeing Co (BA), or Rivian Automotive (RIVN). Louis Navellier and his family own Nvidia Corp (NVDA), via a Navellier managed account. He does not own Tesla (TSLA), Boeing Co (BA), Ford Motors (F), or Rivian Automotive (RIVN) personally.

All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
M2 Money Supply Shrinkage Accelerates

Sector Spotlight by Jason Bodner
A Short Course in Market Timing and Sector Selection

View Full Archive
Read Past Issues Here

About The Author

Louis Navellier

Louis Navellier is Founder, Chairman of the Board, Chief Investment Officer and Chief Compliance Officer of Navellier & Associates, Inc., located in Reno, Nevada. With decades of experience translating what had been purely academic techniques into real market applications, he believes that disciplined, quantitative analysis can select stocks that will significantly outperform the overall market. All content in this “A Look Ahead” section of Market Mail represents the opinion of Louis Navellier of Navellier & Associates, Inc.

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.