by Louis Navellier

June 30, 2020

The Federal Reserve Building Image

The Fed freaked out the financial markets late last week when they ordered banks to preserve their capital by not raising their dividends while suspending stock buy-backs. Specifically, the Fed told banks that they cannot pay out any dividends that exceed their average quarterly profits in the four most recent quarters.

Even though many big banks had already agreed to suspend stock buy-backs in the second quarter, the Fed barred all banks from any stock buy-backs in the third quarter. The Fed said that limiting shareholder payouts would help keep banks healthy during what could be a prolonged recession.

The bottom line that many investors are now asking is: “What does the Fed know that the stock market does not know?” Is there now risk of a prolonged recession?  Clearly, the prolonged coronavirus risk could possibly delay a full economic recovery, which remains on the minds of all investors.

CNBC reported on Friday that 4.68 million homeowners, representing 8.8% of all active mortgage holders, are now in “forbearance” plans, which allow them to delay their mortgage payments for at least three months. The number of active forbearance plans rose by 79,000 in the latest week, so the growing number of delinquent mortgages is making the Fed worry, which may be why the Fed wants banks to preserve capital. All I can tell you is that I am glad I do not recommend any bank stocks!

The Latest Economic Statistics are Still Mostly Improving

The Labor Department reported last Thursday that new unemployment claims declined to 1.48 million in the latest week, down from 1.54 million in the previous week. Although this was the twelfth straight week of declining unemployment claims, economists were forecasting only 1.38 million new claims, so this latest report was disappointing. With active coronavirus cases now hitting a record high, there is tremendous anxiety about more service sector layoffs, especially in hospitality and travel sectors.

Energy prices are now falling, despite what used to be the peak of the “summer driving season” as the 4th of July approaches. Last Wednesday, the Energy Information Administration (EIA) announced that crude oil inventories rose by 1.4 million barrels in the latest week, which is the third consecutive weekly increase. Crude oil inventories typically decline about now due to rising seasonal demand, but clearly, consumers will likely stay closer to home this summer due to increasing coronavirus restrictions.

The other economic news last week was mixed. The National Association of Realtors reported that existing home sales declined 9.7% in May to an annual pace of 3.91 million – the third straight monthly decline for existing home sales, which are now running at their slowest pace since October 2010. Economists were expecting only a 3% decline, since applications for mortgages are running at the highest level in 11 years. In the past 12 months, existing home sales have declined 26.6%. Sales should improve rapidly whenever the coronavirus restrictions are lifted, especially if today’s low mortgage rates continue.

By contrast, the Commerce Department reported on Tuesday that new single-family home sales surged 16.6% in May to an annual rate of 676,000, up from a revised annual rate of 580,000 in April. This was a pleasant surprise, since economists were expecting an annual rate of only 650,000 in May. Single-family home sales surged 45.5% in the Northeast, +29.0% in the West, and +15.2% in the South but they declined 6.4% in the Midwest in May. The supply of new homes for sale is 5.6 months at the current sales pace.

The Commerce Department reported on Thursday that the trade deficit rose 5.1% in May to $74.3 billion, up from a revised $70.7 billion in April. Exports declined 6.1% in May to $90.1 billion, while imports fell by 1.2% to $164.4 billion. A wider trade deficit tends to make economists cut their second-quarter GDP estimate. Currently, the Atlanta Fed is forecasting a gigantic annualized GDP decline of 46.6% for the second quarter, but most private economists are forecasting a somewhat softer 35% annual decline.

The best news last week was that the Commerce Department reported that durable goods orders surged 15.8% in May, well above the analysts’ consensus estimate of a 10.3% increase. Automotive orders surged 28% in May and Boeing had no order cancellations, so transportation equipment orders soared 80.7%!  Excluding transportation, durable goods orders still rose by a healthy 4% in May. Even if you exclude defense orders, new durable goods orders rose by an impressive 15.5% in May. Overall, there is new hope for a continued strong rebound in durable goods orders in the upcoming months!

Another bit of good news was that the Commerce Department reported on Friday that consumer spending rose a record 8.2% in May, which was more than double the previous monthly record surge in consumer spending since records began in 1959. There is no doubt that the federal stimulus checks helped to boost consumer spending in May, so it will be interesting to see whether consumer spending will continue to grow in June. Household incomes in May were 3.8% higher than they were back in February before the coronavirus outbreak, so most households are holding up better than many economists had expected!

Navellier & Associates does not own Boeing in managed accounts.  Louis Navellier and his family do not own Boeing in a personal account.

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
My Real-Time COVID Indicator is Flashing Red

Sector Spotlight by Jason Bodner
Go with the Flow (Newton’s 3rd Law of Motion)

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 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 performances should be considered mere “paper” or proforma performance results. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier & Associates’ Investment Products and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters and advertising materials authored by Louis Navellier typically contain performance claims that do not include transaction costs, advisory fees, or other fees a client may incur. As a result, newsletter performance should not be used to evaluate Navellier Investment Products. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or performance claims, 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.