by Louis Navellier
January 7, 2025
Due to forecasts of a cold January, natural gas futures soared to over $4 per million BTU. Natural gas futures briefly hit $4.073/MBTU, its highest price in two years. The weather has always had a big impact on natural gas prices, so cold winters and hot, miserable summers (requiring air conditioning demand from natural gas peak-power plants) are the usual prerequisites for keeping natural gas prices high.
The Russian natural gas pipelines that go through Ukraine to supply Austria, the Czech Republic, Hungary and Slovakia were cut off on New Year’s Day by Ukraine, based on their refusal to renew their transit fee deal with Russia. Obviously, it is ironic that two countries at war with each other were also doing business with each other, but believe it or not, both countries were honoring a five-year contract that expired on New Year’s Day. Most of the Russian gas to Europe is now shipped via LNG. Europe also gets LNG from Norway, Qatar and the U.S. It will be interesting to see if Ukraine eventually caves in and agrees to re-allow Russian natural gas, since it needs the money from these natural gas transit fees.
As I wrote here last week, Qatar is threatening to cut off LNG shipments to the euro-zone over legislation that will penalize companies that fail to meet the EU’s strict criteria on carbon emissions, plus human and labor rights. This a great opportunity for the U.S. to fill this void, if Qatar cuts off LNG shipments.
The other reason that natural gas prices are rising is that wind and solar in Europe have been severely impeded by something called “Dunkelflaute,’ the German word for “dark doldrums,” a time when little or no energy can be generated by either wind or sunlight. A Dunkelflaute is characterized by dense cloud covers and near-windless skies. Northern Europe can have up to 10 Dunkelflautes every winter, so, as green energy output plunges, only coal and natural gas can usually make up the difference for Germany and other European countries. The bottom line is natural gas demand soars during each Dunkelflaute!
In Germany, electricity costs 30 cents per kilowatt-hour, or more than twice the average cost in the U.S., and over three times the price for electricity in predominantly coal-fired China. Germany has installed so much solar and wind power that, on sunny and windy days, renewable energy can provide close to 70% of Germany’s electricity needs, but during a Dunkelflaute, solar and wind deliver less than 4% of the daily electricity Germany needs. As a result, Germany clearly cannot replace its base load of electricity demand with renewable electricity, so its gas and coal-fired electricity plants must provide its base load.
The Wall Street Journal published an excellent article discussing how the U.S. is expected to become increasingly dominant in LNG exports under Trump 2.0. The U.S. is already the largest LNG exporter, but it should now be able to increase its dominance by replacing the Russian LNG exports to Europe. Trump 2.0 will replace the Biden Administration’s Energy Department limited exports, based on claims that “unfettered exports” of natural gas would boost global emissions, but no one is listening, as natural gas continues to replace coal all around the world as a better and cleaner source of electricity generation.
Speaking of energy, Puerto Rico suffered a massive blackout on New Year’s Eve that lasted over 30 hours. Generators at Puerto Rico’s airport kept it operational. Blackouts have also become increasingly common in Cuba due to a lack of maintenance, as well as fuel oil shortages. Unfortunately, due to this maintenance neglect, generators and power-walls may be the best alternative to both Cuba and Puerto Rico.
In EV news, market leader Tesla announced that its EV sales declined to 1.79 million in 2024, about level with its 1.8 million sales in 2023. For the fourth quarter, Tesla delivered a record 495,570 new EVs, up 2.2% from the same quarter a year ago. However, the analyst community was expecting EV sales of between 495,000 and 525,000 in the fourth quarter, and the consensus analyst estimate was 512,277.
Fortunately, Tesla’s energy storage business is booming, and its full self-driving (FSD) vehicle is getting great reviews. Tesla has always been a visionary company, so the sooner it gets its “robo-taxis” out and about on road testing in and around Austin, Texas and other cities, the better the company will be able to change its reputation from being “just another EV car maker” to being a visionary technology company.
Tesla CEO Elon Musk is now more involved in politics, as we all know – and not just cost-cutting in The DC Swamp. He is also backing the Alternative for Germany (AfD) party that is pushing for Germany to have stricter immigration policies, restart its closed nuclear plants and cut oppressive taxes. Although the AfD party is often called a “right-wing” party, its leader, Alice Weidel, prefers that AfD be referred to as a Libertarian party that is trying to reverse the poor energy and immigration decisions that were made under former chancellor Angela Merkel. AdD’s Weidel likes to point out that Merkel’s green energy solutions are impractical in Germany and are systematically destroying its industrial base, which are causing German auto manufacturers to continue to expand outside of Germany, where energy prices are lower.
It is possible that Weidel’s AfD party might win the largest vote count in the February elections, even though the Christian Democratic Union (CDC) party typically gets the most votes. Regardless, it appears that the AfD and CDC will form Germany’s ruling coalition and name a new chancellor in February.
The U.S. Manufacturing and Housing Markets Start to Recover
The Institute of Supply Management (ISM) reported that its manufacturing index improved to 49.3 in December, up from 48.4 in November. This was a big surprise, since economists were expecting the index to slip to 48.2. Especially encouraging was the fact that the new orders component rose to 52.5 (from 50.4 in November), reaching the highest level in over two years. Also encouraging is the fact that the production component rose to 50.3 in December, up sharply from 46.8 in November. Seven of the 14 manufacturing industries that ISM surveyed reported expansion. The ISM manufacturing index has now been under 50 (marking a contraction) for 26 of the last 25 months, but these several “green shoots” in the December survey indicate that America’s manufacturing recession may end in the upcoming months.
In the housing market, the National Association of Realtors announced that pending U.S. home sales rose 2.2% for the latest month, and were 5.6% higher than a year ago, reaching their highest level in nearly two years, since February 2023. The South led the way with a 5.2% increase. Still, home prices remain soft in many other regions, outside the South, due to the recent rise in long-term mortgage rates.
S&P CoreLogic reported that median home prices rose at an annual pace of 3.6% through October, down from a 3.9% annual pace through September. New York was the strongest market with a 7.27% annual gain, while Tampa had the slowest gain, at only 0.39%. On a monthly basis, median home prices rose only 0.18% in October. As prices continue to soften, housing should become more of a buyer’s market.
With long-term rates rising and inflation stubbornly high, credit card debt remains a stubborn problem. The Financial Times reported that defaults on U.S. credit card debt reached $46 billion for the first nine months of 2024, up 50% compared to the first nine months in 2023. Even worse, credit card defaults are now running at their highest level in 14 years. Mark Zandi, the head of Moody’s Analytics said, “High-income households are doing fine, but the bottom third of consumers are tapped out.” He added that, “Their savings rate right now is zero.” J.P. Morgan Chase and Citigroup recently said that their annualized credit card write-off rates through November were 6.1%, up from 5.2% in the same period a year ago.
Navellier & Associates, a few accounts own Tesla (TSLA) per client request only in Navellier managed accounts. Louis Navellier does not personally own Tesla (TSLA).
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
A Cold January (and Europe’s “Dark Doldrums”) Should Supercharge Natural Gas
Income Mail by Bryan Perry
U.S. Utility Infrastructure Stocks Are a Strong Bet For 2025
Growth Mail by Gary Alexander
Recalling January 6th and All That Jazz
Global Mail by Ivan Martchev
More Dollar Strength Coming
Sector Spotlight by Jason Bodner
Dividing 2025 from 2024 – Meaningless, but Habitual
View Full Archive
Read Past Issues Here
Louis Navellier
CHIEF INVESTMENT OFFICER
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 www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. 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.