by Louis Navellier

May 2, 2023

Last Thursday, the Commerce Department announced its initial first-quarter GDP estimate of a 1.1% annual growth rate. Slowing consumer spending was cited as the primary reason for decelerating GDP growth in the first quarter, but the most depressing component was that gross private domestic investment fell 12.5%, driven by declines in business equipment (down 7.3%) and residential housing (down 4.2%).

Mirroring this official number, the Atlanta Fed on Wednesday lowered its estimate for first-quarter GDP growth to 1.1%, down from 2.5%. The lower trade deficit added 0.3%, but Atlanta’s estimate fell sharply due to lower personal consumption expenditure growth as well as lower gross private domestic investment.

Earlier in the week, on Tuesday, the Conference Board announced that its consumer confidence index declined to 101.3 in April, down from 104 in March. This big drop was primarily attributable to the expectations component, which plunged to 68.1 in April, down sharply from 74 in March; but the good news is that the present situation component rose to 151.1 in April, up from 148.9 in March. It is refreshing that consumers can feel better currently, even though they are negative on the future outlook.

The S&P CoreLogic Case-Shiller National Home Price Index was also announced on Tuesday, and it showed home prices rose 0.2% in February – the first monthly price increase in the past seven months, as the tight inventory of homes has apparently helped to firm up home prices. The 12-month annual change slowed to a 2% annual pace through February, down from a 3.7% annual pace in January. Also, the 10-year Treasury bond yield is down to 3.4%, so lower mortgage rates should help boost future home sales.

On Wednesday, the Commerce Department reported that durable goods orders surged 3.2% in March, due largely to a 78% surge in aircraft orders. Excluding the 9.1% increase in transportation orders, the rise was just 0.3%. Unfortunately, business investment based on core durable goods orders declined 0.4%. This is the fourth time in the last five months that business investment has declined. In the past 12 months, durable goods orders have risen 2%, down appreciably from an 11% annual pace a year ago.

The Commerce Department also reported on Wednesday that the trade deficit declined 8.1% in March. Exports increased by $4.9 billion (+2.9%) to $172.7 billion, while imports declined 1% ($2.5 billion) to $257.3 billion, even though consumer imports rose by 2.4%. The trade deficit is now at a four-month low.

On Thursday, the Labor Department reported that weekly unemployment claims declined to 230,000 in the latest week, down from a revised 246,000 the previous week. Continuing unemployment claims declined to 1.858 million in the latest week, down from a revised 1.861 million the previous week. The four-week moving average of continuing unemployment claims is now at the highest level since late 2021, which likely has the Fed’s attention – which may cause them to pause raising key interest rates.

Overseas, the European Union’s (EU) statistics agency reported on Friday that their GDP expanded at an annual 0.3% rate in the first quarter for the 20 eurozone nations. What was notable was that the EU’s factory output remained strong despite higher energy costs. So, China, the EU, and the U.S. all showed positive economic growth in the winter, and growth will likely pick up in the spring and summer months.

ChatGPT Update

Microsoft announced better-than-expected sales (a 3.5% surprise) and operating earnings (9.9% surprise) last week. A weaker U.S. dollar is helping sales. The highlight of Microsoft’s first-quarter results was its cloud business growth, but in upcoming quarters, ChatGPT’s impact will be closely scrutinized as well as AI’s overall impact on boosting efficiency and sales throughout Microsoft. The company’s investment in ChatGPT is raising excitement about upgrades to all of its software, especially its search engine, Bing.

The rumblings are that Samsung is planning to replace Google with Bing as its preferred search engine, and that is also fueling speculation that ChatGPT will improve Bing’s search ability and help Microsoft become an AI leader. Since the Bing ChatGPT alliance did not begin until February, not a lot of business divisions were able to benefit immediately from Microsoft’s AI push in the first-quarter report.

Microsoft’s capital expenditures rose to $7.8 billion in the first quarter, which was substantially more than the $6.57 billion that analysts expected. Nvidia is an immediate winner from this ChatGPT cap-ex push, since Microsoft’s Chief Financial Officer, Amy Hood, said, “We will continue to invest in our cloud infrastructure, particularly AI-related spending, as we scale to the growing demand driven by customer transformation.” CFO Hood added, “Capital expenditures have a material sequential impact on a dollar basis driven by investments in Azure AI infrastructure.” Since Nvidia’s chips are used in Microsoft’s Azure AI platform, Nvidia’s stock surged in the wake of Microsoft’s first-quarter results.

The Biden Team Continues to Bungle its “Green Dream” Agenda

The Biden Administration is aggressively trying to transform the electricity grid. The latest example is the Environmental Protection Agency trying to get natural gas power plants to capture their carbon dioxide emissions. EPA spokesperson Maria Mochalos said that the EPA is “moving urgently to advance standards that protect people and the planet, building on the momentum of President Biden’s Investing in America economic agenda, including proposals to address carbon emissions from new and existing power plants.”

The EPA is not expected to mandate the use of carbon capture equipment – an unproven and expensive technology. Instead, the EPA is expected to set caps on pollution rates for electric utilities, chemical plants, and refineries. These proposed regulations are designed to encourage natural gas power plants to switch to hydrogen, which does not emit carbon dioxide. However, since hydrogen is hard to transport and is a very small molecule that often ‘leaks,’ the proposed regulations could require more carbon capture technology.

Since the U.S. is essentially “the Saudi Arabia of natural gas,” it is very odd for the EPA to try to put the natural gas industry out of business, so the pushback from lobbyists and the Republican-led House of Representatives is expected to be massive. Since green hydrogen is cost prohibitive, most hydrogen these days is being made from natural gas, so the EPA’s proposed carbon dioxide emission limits are nonsense.

I expect many in Congress to vigorously fight the EPA’s proposed limit on carbon dioxide emissions.

Tesla announced that it is building a new factory in Shanghai, China, to build a large-scale battery for electricity storage, called the Megapack. California is another big market for Tesla’s Megapacks, which are made with cheaper iron phosphate (LFP) batteries sourced from CATL. It will be interesting just how fast electricity storage facilities expand across the U.S., since it typically causes electricity rates to rise.

Down under, Australia has been shutting down all its coal plants and expanding its electricity storage.

In Chile, Sociedad Quimica y Minera de Chile S.A. is the second largest lithium mining company in the world and it should benefit from the new EPA rules, plus the rise in energy storage facilities with LFP batteries as well as electric vehicles (EVs). However, the chronic shortages of lithium, nickel, and cobalt have made EVs more expensive than equivalent vehicles with internal combustion engines. This is preventing new EV manufacturers, like Lucid and Rivian, from reaching profitability.

General Motors announced better-than-expected first-quarter operating earnings last week. What is not being talked about very openly is that the key to GM’s profitability is that they are slower to build EVs than rival Ford. Although GM sells a lot of Bolt EVs and has announced a lot of new EVs, GM trails Ford in EV sales, so it is more profitable! GM is trying to cater to everyone, but its new EVs, like the Cadillac Lyriq and Hummer, are very costly. LG Energy Solutions is currently GM’s primary lithium-ion battery supplier. LG has been slow in supplying GM with new batteries, so GM’s EV production is constrained.

Interestingly, GM has decided to stop manufacturing its Bolt EVs at its Orion assembly plant by the end of this year to make room for the Chevrolet Silverado EV and GMC Sierra EV at its Detroit-area plant. GM also announced a $3 billion battery plant with Samsung, so both Samsung and LG will be GM lithium-ion battery suppliers. Now that GM is shifting away from the Bolt EV, all of GM’s EVs (moving forward) will be built on the Ultium platform, which should help GM cut costs and be more competitive. Long-term, however, GM needs an iron-phosphate (LFP) battery supplier if it wants to sell more EVs and compete with Ford, since lithium-ion batteries cost more, due to the fact that they utilize nickel and cobalt.

ExxonMobil reported record first-quarter earnings on Friday that were more than double the same quarter a year ago and above analyst expectations. Specifically, the company’s earnings rose 118% to $11.43 billion or $2.79 per share compared to $5.48 billion or $1.28 per share. Excluding extraordinary items, Exxon-Mobil’s operating earnings were $2.83 per share. The analyst community was expecting operating earnings of $2.60 per share, so the company posted an 8.8% earnings surprise. Exxon-Mobil’s production rose 300,000 barrels per day thanks to an impressive 40% increase from Guyana and the Permian Basin.

In other energy news, the Energy Information Administration (EIA) reported on Wednesday that crude oil inventories in the latest week declined by 5.1 million barrels to 460.9 million barrels, which was well below analysts’ consensus expectation of a 1.5-million-barrel decline. Gasoline and distillate inventories also declined by 2.4 million barrels and 600,000 barrels, respectively. Despite these declining inventories, crude oil prices declined sharply on Wednesday due to fears of slower economic growth.

A warmer-than-normal winter in the Northeast cut the demand for heating oil. As a result, refineries could make more diesel than heating oil (both are distillates), so the price of diesel has finally fallen below that of gasoline in many states. Additionally, lower demand from the trucking industry and businesses is also putting downward pressure on diesel prices. Many stores remain overstocked, so until demand picks up, diesel prices should remain low, since demand from the trucking industry is the key price determinant.

Interestingly, crude oil inventories have been falling in recent weeks, so I still anticipate significantly higher prices at the pump by Memorial Day. Multiple energy experts are now raising their price targets to $100 per barrel. The Biden Administration can release more crude oil from the Strategic Petroleum Reserve (SPR) to try to curb soaring crude oil prices, but the SPR has been drained to over a 40-year low and the U.S. is now in the midst of soaring seasonal demand that will be much stronger in the summer.

Russia’s crude oil exports are going predominantly to India, China, Turkey, Italy, Saudi Arabia, and UAE. The U.S. and its allies imposed a $60 price cap on Russia’s crude oil, which is a heavy, sour crude that typically trades at a discount, since it requires more energy to refine. The Wall Street Journal reported last week that the price of Russia’s crude oil is now getting dangerously close to the $60 price cap, up from about $55 per barrel according to Argus Media, so European and U.S. officials say they are stepping up enforcement efforts to make sure the $60 price cap is enforced. The primary reason the price for Russia’s crude oil is rising is due to seasonal demand as well as more refinery capacity for heavy, sour crude oil.

Navellier & Associates Inc. owns Sociedad Quimica Y Minera De Chile S.A. (SQM), Nvidia Corp (NVDA), Exxon Mobil Corp. (XOM), Microsoft Corp (MSFT), and in managed accounts and a few accounts own Tesla (TSLA), per client request in managed accounts. We do not own Ford Motors (F), Rivian Automotive (RIVN), General Motors Corp (GM), Alphabet Inc. (GOOG), or Lucid Group (LCID). Louis Navellier and his family own Sociedad Quimica Y Minera De Chile S.A. (SQM), Nvidia Corp (NVDA), Exxon Mobil Corp. (XOM), via a Navellier managed account. He does not own Tesla (TSLA), Microsoft Corp (MSFT), Ford Motors (F), Rivian Automotive (RIVN), General Motors Corp (GM), Alphabet Inc. (GOOG), or Lucid Group (LCID) 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
Market Advances on Poor Breadth

Sector Spotlight by Jason Bodner
Tech is Back in Fashion – Will That Continue?

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.