by Louis Navellier
June 17, 2025
Last Wednesday, the Labor Department announced that the Consumer Price Index rose only 0.1% in May, which was lower than the economists’ consensus expectation of 0.2%. and the fourth month in a row in which the CPI came in below economists’ consensus expectations. The CPI rose 2.4% in the 12-months through May 31. The core CPI also rose 0.1% in May, well below the economists’ expectation of a 0.3% increase. The primary catalyst keeping core inflation rates above zero was the average shelter cost (called “owners’ equivalent rent”), which rose by 0.3% in May and +3.9% in the past 12-months.
On Thursday, the Labor Department announced the Producer Price Index (PPI) rose 0.1% in May and 2.6% in the past 12-months. The core PPI, excluding food, energy and trade margins, rose 0.1% in May and 2.7% in the past 12-months. Both numbers were below economists’ consensus expectation of 0.2%.
The Federal Open Market Committee (FOMC) meets this week and will announce their interest rate decision tomorrow. Most pundits expect they will leave rates untouched, but I expect Chairman Powell to at least announce their intention to cut rates in their next (late July) meeting, especially since market rates and global rates are declining. Treasury yields declined in the wake of the CPI and PPI reports last week, which helped the Treasury bond auctions. The 10-year Treasury bond auction was well received, with a bid-to-cover ratio of 2.52. The 30-year Treasury auction was also well-received. I should add that President Trump is turning up the pressure on the Fed to cut key interest rates by a full 1%. In frustration, Trump said, “We can’t get this guy to do it,” even calling Chairman Jerome Powell a “numbskull.”
The tariff and trade talks continue. There were direct trade talks between China and the U.S. in London last week. Rare earth minerals and other key trade items were discussed. Commerce Secretary Howard Lutnick said that China and the U.S. now have a “framework” for continued negotiations. President Trump said, “The trade deal with China is done” and implied that rare earth exports from China will soon resume. The Wall Street Journal reported that the U.S. collected $22.2-billion in tariffs in May, up from $15.6-billion in April. In May, tariffs represented 6% of all funds the U.S. Treasury collected, and tariffs are anticipated to represent even more of the U.S. Treasury’s collections in the upcoming months.
According to Automotive News, sea-based vehicle shipments to the U.S. plunged 72% in May. Most auto companies are playing “wait and see,” hoping some tariffs will be reversed. The inventory of vehicles on dealer lots stands at 66-days, according to Kelly Blue Book, so as these inventories drop, shipments will have to resume, and higher prices are likely. For example, I custom ordered a special Porsche years ago, and I was bumped twice due to part shortages in Germany after flooding, but my Porsche finally arrived at the Port of Houston last week. Porsche is not marking up custom ordered vehicles yet for the 25% tariffs and it is also playing “wait and see,” in hopes that the EU will negotiate lower tariffs with the U.S. (Unlike Audi, Porsche is not planning to open a U.S. manufacturing plant due to its low volumes).
General Motors remains the largest importer of vehicles into the U.S., but GM announced that some of its models made in Mexico will soon be made in the U.S. in a $4-billion expansion plan for its plants in Kansas, Michigan and Tennessee. In other automotive news, Tesla’s Robo-taxi service is set to commence in Austin, Texas on June 22nd. As for Musk’s recent split with the President, Tesla CEO, Elon Musk, said on X: “I regret some of my posts about President @realDonaldTrump last week. They went too far.”
Canadian Prime Minister Mark Carney is a “Net Zero” carbon guy, but Canada is expected to have the highest global emissions this year due to an early start to the annual Boreal fires, when lighting ignites the peat on the forest floors. These “Zombie fires” are now smoldering under the snow-pack in Canada. As the summer days get longer, Canadian forests will continue to burn, since the fires in the peat on forest floors are very difficult to extinguish. Already this year, Canadian fires are breaking all records, so the Canadian smoke will continue to invade many U.S. cities. This is a good time to recall that I recommend Perimeter Solutions (PRM), which makes the fire retardant that firefighters use, and planes drop to suppress fires.
Protests at Home and Air Strikes Overseas
The ICE raids in Los Angeles have resulted in expanded protests and fires, so the Trump Administration called in 2,000 nationalized National Guard troops as well as 700-Marines after California Governor Gavin Newsom insisted that the National Guard was not needed. Los Angeles Mayor Karon Bass said that people could exercise their First Amendment rights and protest peacefully. However, burning Waymo Robo-taxis is not exactly peaceful, and Waymo has discontinued service in the protest areas.
ICE director Tom Homan said that California officials, including the Los Angeles Mayor and California Governor Newsom, could face arrest if they impede ICE operations. Obviously, these riots are great political theater for both the Trump Administration and California leaders, so these riots may persist, but they do not provide good optics for the city that is slated to host the next Summer Olympics. After several stores were looted, Los Angeles Mayor Karen Bass finally imposed a sunset curfew in the city.
There is also a growing debate about whether the “Big Beautiful” tax bill will boost economic growth. Tax cuts, deregulation and fossil-fuel production should boost economic growth, but the Congressional Budget Office (CBO) is forecasting that the federal budget deficit will rise $2.4-trillion in a decade. The CBO is forecasting slow (1.8%) annual GDP growth, while the Trump Administration forecasts growth at three to four times that pace (5.4% to 7.2%). Both are unrealistic, I’d say, but 3% to 4% is possible. Growth of over 5% is usually inflationary, so the tax bill will be an interesting economic experiment!
Last Tuesday, Prime Minister Benjamin Netanyahu warned that Israel may be just days away from launching a military operation. Then, the U.K. Maritime Trade Operations (UKMTO), a British maritime security agency, issued a warning on Wednesday, citing “increasing regional tension” that could escalate military activity and pose direct threats to seafarers in the Persian Gulf and surrounding waters. The U.S. Embassy in Baghdad, Iraq was evacuated after Iran’s Defense Minister Aziz Nasirzadeh said that Tehran could strike U.S. bases in the region. U.S. Embassy staff in Bahrain and Kuwait were also evacuated.
Then, on Thursday evening, Israeli air strikes on Iran commenced and more than 100-targets were hit. Senior Iranian military commanders, as well as multiple nuclear scientists, were killed. Iran initially responded with over 100-drones, which Israel’s IDF shot down. Unfortunately, Iran also sent over 100-missiles, and a few got through Israel’s Iron Dome, killing three and injuring at least 44 in Tel Aviv. Israel’s operations are expected to last up to 14-days and at the end, IDF said: “There will be no nuclear threat.”
President Trump had advance knowledge of the Israeli attack. Back in April, Trump encouraged Iran’s leadership to make a deal “before there is nothing left,” saying that Israel had access to lethal military equipment manufactured by the U.S. and that “they know how to use it.” In the wake of Israel’s attack, crude oil prices and gold are soaring. The stock market initially sold off in the wake of Israel’s assault on Iranian leaders and nuclear facilities. The primary fear is that the fighting may spread to other countries and U.S. military bases in the region. In the meantime, gold and energy-related stocks remain strong.
Navellier & Associates; own Alphabet Inc. Class A & C (GOOG), and Perimeter Solutions Inc (PRM), in managed accounts. A few accounts own Tesla (TSLA), and General Motors (GM), per client request only in managed accounts. We do not own Volkswagen (VWAGY), in managed accounts. Louis Navellier and his family own Perimeter Solutions Inc (PRM), via a Navellier managed account. He does not personally own Tesla (TSLA), Alphabet Inc. Class A & C (GOOG), General Motors (GM), or Volkswagen (VWAGY).
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
The Fed’s Search for Phantom Inflation Continues
Income Mail by Bryan Perry
War Assets Rally as Israel Aims to De-Nuke Iran and Liberate Its People
Growth Mail by Gary Alexander
“We Don’t Believe Your Low Inflation Numbers”
Global Mail by Ivan Martchev
No New Highs Until the Middle East Calms Down
Sector Spotlight by Jason Bodner
How Has the Market Reacted to Recent Middle Eastern Wars?
View Full Archive
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Louis Navellier
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