April 23, 2019

The ongoing debate about the U.S./Sino trade war has been quickly losing its thunder following the latest economic data out of China that showed a rebound in the world’s second largest economy, catalyzed by strong stimulus measures implemented by the Chinese government. Last week’s higher-than-expected 6.4% reading on first-quarter GDP for China quelled fears about how the trade war was so effectively bringing China to its knees and raised new concerns about how the chess board for a deal was shaping up.

No less than three banks raised their 2019 forecasts for China’s economic growth outlook following the surprise GDP surge. Citi, Barclays, and ING all jumped in the pool of investment banks clamoring to call a bottom in the emerging market slump. (Let it be noted that this column was making a case for such an assumption before the analyst community had the luxury of seeing the hard data.)

In making this call before the rest of the crowd, I was simply highlighting the bullish price action in oil and copper, while respecting the charts that were all turning higher – with a few significant “golden crosses” materializing in some leading foreign developed and emerging market ETFs. After three decades of following markets intensely, I’ve learned not to tie myself emotionally, politically, or theoretically to any position – because money will always go where it is best served and where opportunity beckons.

So we have what looks like a recovering global stock market. Despite all the worries of currency crises, geopolitical fallout, recessionary data from global economic ivory tower watchdogs, negative interest rates in Japan, and socialist cries for an end to capitalism, stocks around the world are in rally mode.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary

The chart above is a picture that is truly worth 1,000 words. This global stock market index – the “All Country World Index,” composed of 2,771 constituents that fall within 11 sectors – is the industry’s gauge of global stock market activity. Plain and simple, it’s rising. Not a sermon, just a look at reality in 2019.

Global Blue Chips Sport Fat Yields

One would be hard pressed to find any market pundits touting any notion of prosperity outside the U.S. I’m not sure why this is so, because, quite frankly, several global non-U.S. blue chip stocks are, for lack of better words, on fire. At the top of the list is Nestle SA (NSRGY), the world’s largest food company. The stock has rallied from $75 to $95 in less than a year, sports a 2.6% dividend yield, and leads a group of mostly European blue-chip stocks that are pressing higher because of their global footprint.

(Navellier & Associates does not own Nestle in managed accounts and our sub-advised mutual fund.  Bryan Perry does not personally own Nestle.)

In fact, shares of the iShares MSCI ETF (EFA), noted above, pay a dividend yield of 1.91%, which is higher than the 1.81% of the SPDR S&P 500 ETF (SPY). So, while capital dedicated to fixed income has rushed into U.S. Treasuries, for good reason, I would argue that capital dedicated to blue-chip dividend income stocks has been flowing into U.S. equities for sure, but it is now also finding its way into global large-cap stocks that pay heftier dividends than their American counterparts.

For investors trying to sort out how to play this global stock market recovery outside the blue chips, shares of the Emerging Markets iShares MSCI ETF (EEM) are also making a powerful statement of late, trading to fresh highs this past week, with six of the top 10 holdings in Chinese companies.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary

Trying to determine the wisdom and timing of whether to venture back into foreign markets when the U.S. market has been so reliable deserves serious scrutiny. The current forward P/E ratio for the S&P 500 is 16.8, which is above its 5-year and 10-year averages. Conversely, the forward P/E of the MSCI All World Index is two points lower, at 14.77, and the MSCI Emerging Markets forward P/E is just 11.84.

Yes, there is a premium to be paid for the safety of the dollar, NYSE and NASDAQ accounting, our listing standards, and the pro-business agenda of the Trump administration. But I’m beginning to think that, as unpopular as it is with the majority of investors to allocate capital to markets outside the U.S., it is just this kind of unfavorable tone that defines a great buying opportunity.

What should investors get into if they want some overseas exposure? In general, I’d say this is no time for individual stock picking. Instead, you have the two overseas ETFs noted above to run with. I own both.

Truly definitive forward-looking information is scarce. Right now, this is a purely technical call, but by the time it becomes a fundamental call, it’s my view that all the easy money will have been made.

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. *All content of “Income Mail” represents the opinion of Bryan Perry*


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 intended as an offer or 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.

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 of any offer 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 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 you. 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. Results presented include the reinvestment of all dividends and other earnings.

Past performance is no indication of future results.

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 intended or 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. Request here a list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months, please contact Tim Hope at (775) 785-9416.

Marketmail Archives