A Strong Start

A Strong Start Usually Leads to a Strong Year

by Louis Navellier

March 5, 2019

Our friends at the Bespoke Investment Group issued a report last Tuesday that showed that the S&P 500 is off to a great start this year, with 27 up days (73%) in the first 37 trading days. Since 1961, only eight other years have begun this strongly. In those eight cases, the S&P 500 rose by an additional average of 10.35% for the remainder of the year, with the smallest increase (2012) being 4.43% and the largest gain (1995) being 26.5%, so let’s hope history repeats itself with an additional 10% or greater rise this year.

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It is important to remember that the U.S. remains an oasis of safety. China’s GDP growth has slowed, while Britain and the European Union (EU) are teetering on a recession. This is one reason why the U.S. dollar remains strong. Big multinational companies are being paid in eroding foreign currencies, so their earnings are being impacted by a massive currency headwind. However, domestic companies, especially many small-to-mid-capitalization stocks, are largely immune to any significant currency headwind. 

In This Issue

Bryan Perry profiles the new realities in the energy sector with some specific high-yield recommendations in the LNG field. Gary Alexander wishes a happy 10th birthday to this bull market, along with a profile of the terrible gloom that accompanied its birth. Ivan Martchev profiles the U.S. Treasury market as the most attractive in the developed world with yields likely to rise even higher. Jason Bodner covers the growth-oriented sectors that take turns (Healthcare last week) leading the market surge in 2019. Then I return to review Tesla and other trendy stocks vs. the more mundane business of picking long-term winners.

Income Mail:
Liquified Natural Gas is a Mega Theme for 2019
by Bryan Perry
U.S. Exports of LNG Set to Surge

Growth Mail:
Happy 10th Birthday to the “Most Unloved Bull Market in History”
by Gary Alexander
The Power of “Reversion to the Mean”

Global Mail:
Why the 10-year Treasury is Likely Headed to 3%
by Ivan Martchev
U.S. Rates are the Highest in the Developed World

Sector Spotlight:
Sometimes a “No Brainer” Can Backfire
by Jason Bodner
Healthcare Was King Last Week

A Look Ahead:
High-Flying “Fad” Stocks do not Reflect the Real Market
by Louis Navellier
The U.S. Remains the Oasis of the Investing World

Income Mail:

*All content of "Income Mail" represents the opinion of Bryan Perry*

Liquified Natural Gas is a Mega Theme for 2019

by Bryan Perry

As the stock market continues to impress (and defy) the critics, clawing its way to higher ground, investors are scrambling to find value in areas of the market that have lagged, so as to capture cheap entry points. Chasing popular cloud computing stocks that are technically extended for “fear of missing out” (FOMO) is a good way to end up in a bull trap – i.e., owning the right stock at the wrong price.

So, the hunt for value is hot and heavy, and there is a rising chorus of those touting the energy sector as the next batter up for a move higher. Why? As far as I can tell, the rationale is because…it hasn’t moved yet, and people are desperate for getting in at or near a bottom in any market sector that appears cheap.

Currently, WTI crude is trading at $55.80 per barrel and natural gas is changing hands at $2.86 per million British thermal units (MMBtu). From a price standpoint, oil & gas can’t get out of their own way.

When it comes to oil and gas prices, charts do very little to target near-term direction for prices. Headline risk is what drives prices higher (or lower) the majority of the time. If it’s not some geopolitical crisis, like what’s occurring in Venezuela or a Category 5 hurricane that is heading for the Gulf of Mexico, it’s rare these days to see news of a weekly drawdown in inventories move prices much.

There’s just too much oil and gas that can flood the global market quickly when WTI crude approaches $60 or “natty gas” trades anywhere near $3.50MMBtu. Simply put, the world is awash in available crude from producing countries eager to bring whatever amounts of oil and gas the market will bear, while the world is becoming rapidly more fuel efficient, while pursuing lower carbon dioxide emissions.

Within the broad oil, gas, and coal energy sector – which includes upstream, downstream, exploration and development, deep-water drilling, fracking, transportation, and storage – one thing that we can ascertain from the way the sector trades is that there is no trend to speak of. Rather than trying to figure out the oil market, which is transportation dependent and highly volatile, a better theme in my view is to invest in the global power grid for electricity and watch how natural gas and coal usage are being affected.

While renewable energy has made great strides and now accounts for supplying 25% of global power (as of 2017, according to the International Energy Agency), coal still makes up almost 40% of fuel consumption to power the global grid.

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

Coal emissions are part of why we see such horrific pollution conditions in China and India, home to 12 of the 15 most polluted cities in the world. While advances in renewable energy are noble, they fall well short of satisfying the current need to move away from coal in favor of cleaner energy sources for a global market for power that will grow by 18% by 2035 (see chart, below picture).

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

To harness this dilemma of rapidly rising demand for power-starved emerging markets and to provide a safe, clean, plentiful, cheap, and abundant alternative, Liquified Natural Gas, or LNG, has become the de facto energy choice of high-use countries seeking to wean their way off of coal and nuclear power.

As of the end of 2018, China, Japan, South Korea, and India accounted for half of the growth of total global LNG imports, which were up 8.5% over 2017, reaching 308 million tonnes per annum (MMtpa) according to Shell. By 2043, 450MMtpa of LNG will be needed to supply the market, with Asia accounting for over 85% of the growth.

U.S. Exports of LNG Set to Surge

How to play the investment proposition for the LNG wave is what makes this investment theme compelling. The U.S. will challenge Qatar and Australia as the leading exporter of LNG in years to come, but presently there are very few domestic LNG operators [GA1] shipping overseas. They include Cheniere Energy (LNG), owner of Sabine Pass 1-5 and Corpus Christi 1-3; Dominion Energy (D), owner of Cove Point; Sempra Energy (SRE), owner of Cameron 1-3; Kinder Morgan (KMI), owner of Elba Island 1-10; and privately-held Freeport LNG Development, owner of Freeport 1-3.

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

From the chart above, it’s clear Cheniere Energy is way out in front of the competition – by three years and first to the export market – locking in huge 20-year contracts with Brazil, South Korea, and India. Dominion activated Cove Point in early 2018 and the rest will come online over the next two years.

For income investors that want exposure to this clean fossil fuel energy wave, Cheniere Energy Partners L.P. (CQP) is the purest play in the sector for income, sporting a distribution yield of 5.47%. It owns 100% of the Sabine Pass terminals and is majority-owned by the parent and general partner Cheniere Energy (LNG). Following the first LNG shipments from Sabine Pass back in early 2016, CQP has raised its quarterly distribution for six straight quarters.

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

One would be hard pressed to find a stock in the energy patch with as pretty a chart as that of CQP (above) – which shows a very powerful up and to the right formation.

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

As income investors try to call heads or tails as to the future trend for the vast majority of energy stocks, these final two charts stick out for me as they highlight the rising trend line for global LNG imports and the rising trend line for U.S. LNG capacity. Cheniere Energy Partners L.P. (CQP) pays 5.47%, Dominion Energy (D) pays 4.91%, Kinder Morgan (KMI) pays 4.05%, and Sempra Energy (SRE) pays 3.19%.

That’s a 4.40% blended yield for getting aboard the U.S. domestic LNG theme train. And by the way, it’s my own personal view that this train is just leaving the station.

Navellier & Associates does own Cheniere Energy (LNG), and Dominion Energy (D), in some managed accounts but does not own Sempra Energy (SRE), Kinder Morgan (KMI) or Cheniere Energy Partners L.P. (CQP) in managed accounts and a sub-advised mutual fund.  Bryan Perry does not own Cheniere Energy (LNG), Dominion Energy (D), Sempra Energy (SRE), Kinder Morgan (KMI) or Cheniere Energy Partners L.P. (CQP) in his personal accounts.

Growth Mail:

*All content of "Growth Mail" represents the opinion of Gary Alexander*

Happy 10th Birthday to the “Most Unloved Bull Market in History”

by Gary Alexander

A decade ago, on Thursday, March 5, 2009, bearish sentiment on the stock market hit an all-time high.

The weekly poll of the American Association of Individual Investors (AAII) is widely considered to be a contrarian indicator, since investors tend to be super-bearish at market bottoms and super-bullish near the top. In the AAII survey, investors are asked if they are bullish, bearish, or neutral on the market over the next six months. Historically, the lowest-ever percentage of bears was just 6%, set on August 21, 1987, the week the market peaked before the catastrophic 1987 crash. The highest percentage of bears was 70.3% in the poll released March 5, 2009, the day before the major stock market indexes bottomed out.

Over the life of this survey, the average bearish sentiment has been 30.6% (with about 35% each as bulls or neutral.)  The standard deviation is 10.1 points, which means that approximately two-thirds (68%) of all poll results fall between 20.5% and 40.7% bearish, but on March 5, 2009, the bears peaked at an incredible four standard deviations above the norm. (Four standard deviations include 99.9% of all cases, meaning there is about one chance in 2,000 of reaching four sigma on the upside: One week in 40 years!)

The day after the AAII poll reached a record bearish level, the S&P 500 bottomed out on an intra-day level at an ominous 666.79. It went on to rise 39.5% over the next six months and 56.9% in 12 months.

The AAII poll was not an outlier. Professionals were equally bearish at the market lows. On Monday, March 9, 2009, a Wall Street Journal headline asked: “Dow 5000? There’s a Case for It… Earnings Point to 1995 Levels for Stocks.” The article began, “As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 looks a little less far-fetched.” On that day, the S&P 500 closed at 676.53 and the Dow closed at 6547.05, their lowest close of the 21st century. Both indexes have more than quadrupled from those levels in 10 years.

Investor sentiment was slow to recover. On the one-year anniversary of the market low (March 9, 2010), The Wall Street Journal quoted a worried Robert Shiller in an interview titled, “Stocks Still Expensive.”  The market was overvalued, Shiller said, because his CAPE ratio had gotten above 20, which “signaled that the stock market was expensive and sooner or later would hit a stretch of subpar returns.”

Investors have been super-slow to get back into this market. The results of a May 2018 Gallup poll showed that the percentage of American households owning stocks fell from 65% in 2007 to 55% in 2018, implying that at least 10% of Americans owned stock in 2007 but were so scarred by the 2008-09 crash that they stayed out of stocks – permanently. The paranoia profile for Americans under 35 is even worse. During the mostly-bullish years of 2001-2007, 52% of young Americans owned stocks vs. just 38% from 2008 to 2018. Jason Thomas, chief economist with the Carlyle Group, a private equity firm, said, “Psychological scars from the crisis make this one of the most unloved bull markets in history.”

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

Perhaps this new reticence to invest comes from the volatility of this bull market. We’ve seen eight corrections of 9.8% or more. During the past 10 years, there were two corrections of 19% or more – the traditional definition of a bear market. The first was in 2011, seemingly confirming the bears’ worst fears.

The Power of “Reversion to the Mean”

Soon after the market bottomed in March 2009, I gave a talk about “reversion to the mean” at the Atlanta Investment conference in April. One of my first columns for Navellier & Associates covered the essence of that talk – basically that a historically large market decline implies an equally strong recovery phase.

My May 2009 Navellier blog entry was titled, “The Worst Crash Since 1929 Implies…the Best Recovery since 1932?” It received unexpected press coverage, since my idea seemed against the grain. Matt Krantz of USA Today called me the next week to ask for some more details and he wrote a review of that article.

In that article, I wrote, “A historical bottom like 1932, 1974, 1982 or 2009 implies a greater return. A reversion to the mean implies a market recovery on the order of 75% to 100% in two years.” Matt Krantz of USA Today summarized my view: “In the 12 to 21 months following the market bottoms after the previous five recessions, the Dow on average rocketed 55%, says Navellier & Associates.” In my column and in USA Today, I compared the then-recent (2007-09) decline and recovery to five previous analogues:

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As it turns out, one year after that column was published (and 14 months after the market bottom), the Dow was up 79%, the greatest 14-month gain since 1933. That’s the power of “reversion to the mean.”

The last 20 years represent a massive reversion to the mean. First, tech stocks shot to the moon in 1999 and collapsed in 2000-02. Then there was a doubling of the major stock indexes from 2002 to 2007, lasting almost exactly five years. Then came a 55% decline in 17 months – October 2007 to March 2009.

The 10-year bull market we’re celebrating this week represents a “catching up” to the losses of 2000-09.

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As you can see, the last 10 years have been one huge reversion to the mean. NASDAQ, though more volatile than most indexes, is only up a net 2.2% per year for the last 19 years. By comparison, the Dow Industrials have been “hot,” averaging 5.2% per year, while the golden mean S&P 500 is up 3.7% a year.

This is not a bubble by any means.

Global Mail:

*All content of "Global Mail" represents the opinion of Ivan Martchev*

Why the 10-year Treasury is Likely Headed to 3%

by Ivan Martchev

Even with Little Kim pulling off a switcheroo on President Trump in Hanoi last week, the stock market had very little negative reaction. A failed nuclear summit that had a lot of potential to ratchet down tensions on the Korean peninsula is disappointing, but the stock market took it like a champ.

Still, I would characterize the friction with Little Kim as a secondary concern for the moment, when it comes to investors in risk assets, while the Chinese trade deal and the Federal Reserve would be the top two concerns. The stock market is doing well as the friction between the White House and the Federal Reserve has been dramatically toned down since Christmas Eve.

Also, preparations are taking place for a summit between President Trump and President Xi Jinping to sign a trade deal at Mar-a-Lago, where President Xi will be treated with respect, which is very important for the Chinese public. Saving face is more important to the Chinese than tweeting with impunity is for President Trump. It takes an unconventional Twitter connoisseur to get a hardline Sun Tzu disciple to do a trade deal in the present interesting times. Never take negotiations as a foregone conclusion, as per Little Kim’s maneuvers, but it looks like the trade deal will get done.

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

The nearly-negotiated trade deal leaves a lot of the cards on the economy in the hands of the Federal Reserve. The implications for the historic Federal Reserve dovish pivot in late December and early January is that the yield curve may re-steepen, and the 10 year Treasury Yield is headed toward 3%.

Treasury 2-year notes should be a bit more anchored for the moment as they are more sensitive to Federal Reserve policy, namely the fed funds rate. As per the Fed Chairman’s admission that the FOMC is “patiently awaiting further clarity” when it comes to the Fed funds rate, the case for yield curve re-steepening is clear. A steepening of the yield curve should be good news for junk bonds, and stocks for that matter – or risk assets in general, which got killed in the 4th quarter.

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

It has to be noted that quantitative tightening continues as the Federal Reserve balance sheet keeps shrinking on schedule, so the fact that the Fed is not hiking the Fed funds rate does not mean that the Fed has stopped tightening. The lift of the cap on the balance sheet runoff rate from $20 billion to $50 billion in 2018 caused epic volatility in the stock market and, in that regard, it has to be closely monitored.

By the U.S. Treasury’s own admission, borrowing estimates for 1Q 2019 will be $385 billion. Borrowing estimates for the whole fiscal year is over $1.3 trillion. (1Q 2019 is a weak quarter for the Treasury as there are tax refunds issued, hence the borrowing needs are a little higher). By any yardstick, that's a lot of Treasury bonds coming soon, hence going up to 3% in yield is likely with a $50 billion cap on the Fed balance sheet. (A $50 billion balance sheet run off rate cap means that about $50 billion in demand for bonds – ⅔ Treasuries and ⅓ mortgages-- is removed from the market on a monthly basis). 

U.S. Rates are the Highest in the Developed World

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

That said, the epic Brexit disaster has put the EU on the ropes again, with German 10-year bunds closing the week at 0.19%. My favorite 2-year bunds, technically called bundesschatzanweisungen, but dubbed schatze notes to avoid tongue injuries, closed the week at -0.53%, starting their fifth year in negative territory. The point is that interest rates in Europe are really low, and demand for Treasuries should be strong, despite the record issuance, so 3% is a likely target without necessarily overshooting too much.

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

European financials have trouble making money with such interest-rate differentials and the stock of the biggest bank in Germany and one of the biggest banks in the world – namely, Deutsche Bank – looks worse than Lehman Brothers before it filed for bankruptcy in 2008. DB shares are 50% below their 2008 lows, when most financials saw share prices not seen in decades. The inability of many European financials to straighten out their business in this very low interest rate environment was recently called the “Japanification of European financials” by a famous investment strategist. This Japanification phenomenon should help Treasury yields behave in a year of record issuance like 2019.

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

Taking a look at the latest trends from the largest junk bond ETF, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), StockCharts.com (above) makes adjustments for distributions, which are sizeable given the yield, so this is like a “total return” chart. Many other chart services do not include distributions, so the charts look very different. Be that as it may, investing is about total returns, and HYG is at a 52-week high. That tells me that the stock market is also likely headed to new highs.

Navellier & Associates does not own Deutsche Bank in managed accounts and a sub-advised mutual fund.  Ivan Martchev and his family do not own Deutsche Bank in personal accounts.

Sector Spotlight:

*All content of "Sector Spotlight" represents the opinion of Jason Bodner*

Sometimes a “No Brainer” Can Backfire

by Jason Bodner

Some things seem like “no-brainers,” where an event’s outcome looks like a forgone conclusion. But even a “sure thing” can deliver a completely unexpected conclusion. Amazing sports upsets come to mind, like in Superbowl XLII, when the then-undefeated New England Patriots fell to the mediocre (10-6) New York Giants. Or when the near-unknown underdog Buster Douglas knocked out Mike Tyson.

Or how about that time that Australia declared war on a bunch of birds?  I mean; what could go wrong?

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In Depression-ravaged 1932, Australian farmers were against the ropes. Their crops were delicate enough as it was, but a bunch of large flightless birds pushed them over the edge. The Emu, a smaller cousin to the Ostrich, went to town on the farmer’s crops. Facing enough of a hardship already, they pleaded with the government for help. What did the government do in response? Just what any rational entity would do: They declared war on a bunch of birds. They armed soldiers with machine guns mounted on trucks to cull the birds in an effort to reduce the destruction. The soldiers tried and tried, but the emus were just too good at scattering and evading certain death. After a week and thousands of rounds of ammunition, only a few birds were killed. George Pearce, then Defense Minister, withdrew and the great Emu War ended in failure. It was a stunning upset by the emus: A continent declared war on some birds and lost.

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I’ve lamented the “no brainer” bear market assumptions that took the market down late last year. And here we are – back at last summer’s market levels. Markets rallied immensely since the Christmas Eve lows, led by small caps and growth – the previously toxic untouchables that took down the market.

When was the last time you saw an S&P 500 rally of +20% in under 10 weeks? Growth sectors like the Industrials, Tech, Energy, Discretionary, and Financials have been leading the surge. The Russell 2000 Growth index is up nearly 30 % since its lows. The PHLX Semi index is up 27.5%.

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

Logic dictates that we have gone up too far too fast. We should correct soon, but we have been hearing some iteration of this prognosis for several weeks now. We are definitely overbought, but we can stay overbought for a while, as long as buyers keep buying, so let’s look where the buying has been focused.

Healthcare Was King Last Week

In the past week, Health Care was king. Biotech accounted for half of the buy signals, while lesser concentrations were seen in Health Care Equipment and Pharmaceuticals. This is interesting because the Health Care Sector Index is up only slightly (+0.34%) for the week.

Information Technology is up 98 basis points. As of Friday, we have seen 118 signals of buying in Infotech. These signals were spread evenly across Semiconductors, Software, and Communications Equipment companies. This high level of tech buying was only slightly overshadowed by Health Care. Financials saw 69 buy signals spread evenly across industries with the highest concentration in Insurance companies. Consumer Discretionary saw 67 buy signals, evenly distributed with only a slight bump in Media and Specialty Retail companies. Finally, Industrials saw 61 buys spread evenly across industries.

Selling was once again scarce, at best. The only selling coming close to worthy of mention were the 14 sells in Consumer Staples companies. There is simply no selling to speak of.

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

So what does all this mean? Everyone can pretty much conclude that the market is due for a retreat, but the data suggests that buying is alive and well under the surface. So, in spite of what we see in a ho-hum week for the broader indexes, there is continued strength under the surface.

I especially like this show of quiet strength in the face of a negative news week. The North Korea summit collapse and the Michael Cohen testimony had more than a few people focused on the juicy news stories. When negative headlines can’t bring a market down, that means there is a ballast of buying underneath.

Let me hammer the point home. After tallying the first four trading days of data last week (February 25-28), I saw 395 unusual institutional buy signals and only 35 sell signals. Buying is still going full force. This means we can stay overbought for a while to come. Our ratio, which measures a moving average of buying to selling, will start falling only when we see buying abate and selling pick up. That hasn’t yet happened, and this overwhelming buying remains strongest in small and midcap growth-oriented names.

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

The markets came screaming back and have to let off some steam – or do they? The trend says buying is alive and thriving. We need to pay attention to when buying slows and selling begins to properly call a turn in the market. We may be there tomorrow, or next week, or next month, but for now, enjoy the tide.

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The market is a lot like surfing. The trends of the market are like waves, and the surfer’s main goal is to read the ocean, adapt, and adjust. I think the markets are the same. There’s a wave at our backs now. As surfer Laird Hamilton said, “Surfing's one of the few sports that you look ahead to see what’s behind.”

A Look Ahead

*All content in this "A Look Ahead" section of Market Mail represents the opinion of Louis Navellier of Navellier & Associates, Inc.*

High-Flying “Fad” Stocks do not Reflect the Real Market

by Louis Navellier

If you just focus on FAANG stocks, or other stocks that have been “hyped” by financial media, the stock market can look scary. Fortunately, the silver lining and critical path to follow in an “overbought” market (like this) is stock selection, focusing on domestic stocks, especially small-to-mid-capitalization stocks.

As an example of an over-hyped stock that is the now-struggling, Tesla was definitely impacted by the SEC request in federal court to hold Elon Musk in contempt over recent tweets that were supposed to be pre-approved. Specifically, Musk’s February 19th tweet that “Tesla made 0 cars in 2011 but will make around 500k in 2019” conflicted with the official guidance the company provided in a January 30th shareholder letter, which said up to 400,000 vehicles would be delivered in 2019.

Hours later, Musk clarified his tweet by saying that he “meant to say annualized production rate at end of 2019 probably around 500k, i.e., 10k cars/week” and then added that “deliveries for year still estimated to be around 400k.”  In response, the SEC said that Mr. Musk “did not seek or receive preapproval prior to publishing this tweet, which was inaccurate and disseminated to over 24 million people.” 

Musk subsequently tweeted that “SEC forgot to read Tesla earnings transcript, which clearly states 350k to 500k” and then added, “How embarrassing ...”  This will be an interesting case in federal court, since a defendant is normally not supposed to publicly mock a regulator, especially on Twitter! 

As a result, Tesla’s stock remains volatile, due to the probability of an unfavorable federal court ruling.

I do not want any investors to chase high-flyers or “fad” stocks, since my Quantitative grading algorithm looks at each stock’s unique fundamentals. As the market rises and becomes riskier, this is a good time to remind all investors that our Dividend Grader and Stock Grader are more valuable as risk increases.

(Navellier & Associates does not own Tesla or Honda in managed accounts and a sub-advised mutual fund.  Louis Navellier and his family do not own Tesla or Honda in personal accounts.)

The U.S. Remains the Oasis of the Investing World

Federal Reserve Chairman Jerome Powell appeared before Congress last week to explain how the Fed is striving to promote steady economic growth. I find it especially interesting that Powell is watching global events, as he said, “Growth has slowed in some major foreign economies, particularly China and Europe.”

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Brexit is expected to be a major event, since many companies, like Honda, are fleeing Britain due to uncertainty over tariffs and the underlying business environment. Despite this uncertainty, both Britain and the European Union (EU) are now seeking to delay the March 29th Brexit deadline. Specifically, Prime Minister Theresa May has said Parliament can vote to extend the Brexit deadline on March 12th.

However, Prime Minister May does not want to delay Brexit beyond March 29th. This vote seems to be more about appeasing rebellious lawmakers and ministers who believe a “no deal” exit would be a disaster. The EU is hoping for a Brexit extension, but remains divided on the timing. Overall, it is apparent that politicians are doing what they do best – they “kick the can down the road,” which could be a disaster for both Britain and the EU. The business community cannot plan amidst all this uncertainty, so both the British pound and euro remain weak, with recessions for Britain and the EU looking inevitable.

In the meantime, Venezuela remains a humanitarian disaster. The fact that the Venezuelan military has violently blocked trucks with food and medical aid on both the Brazilian and Colombian borders is expected to cause more army desertions. Colombia reported on Tuesday that 320 soldiers deserted in a span of four days. Since there are an estimated 200,000 troops in the Venezuelan military, this is a mere trickle. However, many soldiers are hungry due to acute food shortages, so it may be just a matter of time before the military sides with the Venezuelan people, defying the generals – who got rich under Maduro.

Last week, Vice President Mike Pence and Venezuelan opposition leader Juan Guaido agreed on a strategy to tighten the noose around President Maduro and his generals. Specifically, Pence announced more sanctions against Venezuela and $56 million in aid for neighboring countries with Venezuelan refugees. The detention of Univision’s Jorge Ramos and the seizure of his camera crews after Ramos asked Maduro about “young people eating out of a garbage truck,” has helped increase international pressure to oust Maduro. Ramos and his Univision crew were subsequently deported from Venezuela. Overall, Pence said that “we hope for a peaceful transition to democracy, but President Trump has made it clear: All options are on the table,” adding that Trump is “100%” in support of Juan Guaido.

Brexit and Venezuela are just two examples of why the U.S. remains an oasis in a troubled world.

The most exciting economic news last week came out on Tuesday, when the Conference Board announced that its consumer confidence index surged to 131.4 in February, up from a revised 121.7 in January. This was a huge surprise, since economists were expecting the index to come in at 124.7. The “expectations” component soared to 103.4 in February, up sharply from 89.4 in January.

There is no doubt that the end of the federal government shutdown boosted consumer confidence. After this week’s late winter storms, improving weather in the spring should also boost consumer confidence, so I expect that the consumer confidence index will hit an 18-year high in the upcoming months.

On Thursday, the Commerce Department announced that GDP rose at a 2.6% annual pace in the fourth quarter, substantially above analyst consensus estimates of a 2.2% annual pace. For all of 2018, U.S. GDP rose an impressive 3.1%. Overall, we remain in a “Goldilocks” environment characterized by a lack of inflation, moderate interest rates, a dovish Fed, and a strong U.S. dollar. There is no doubt that the U.S. remains an oasis amidst the impending Brexit chaos and concerns about global GDP growth.

The biggest challenge that investors have is identifying stocks that will sustain strong sales and earnings momentum in a decelerating environment. Fortunately, thanks to our Dividend Grader and Stock Grader, we have the computing power to analyze thousands of stocks, identifying the crème de la crème.


It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Click here to see the preceding 12 month trade report.

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

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