Bond Yields Rise

Bond Yields Rise, Threatening Some High-Dividend Stocks

by Louis Navellier

June 16, 2015

The big news last week was that bond yields continue to rise around the world. Just how much of this is short covering and how much is an overreaction to Greece is uncertain.  I believe that if short-term interest rates rise and follow long-term interest rates higher, the Fed and other central banks may be forced to raise key interest rates later this year.  The German 10-year bund yield, for instance, rose above 1% this week after bottoming out below 0.05% several weeks ago.  This is truly a shocking development and appears to be impacting some high-dividend stocks, since they often move in tandem with the bond market.

Utility Meters ImageAs a result, high-dividend stocks are no longer the oasis they have been for the past 18 months. The best example is the carnage in the utility sector, which was strong in 2014. Frankly, I take this as a new buying opportunity. Many of my favorite high-dividend stocks, especially those with growing dividends, are now great near-term buys in my opinion, since I expect that bond yields will settle down a bit after the latest Greek tragedy is resolved with more debt restructuring and austerity reforms – which the Greek leaders are still fighting.

In the meantime, a steeper yield curve is indicative of more robust economic growth, which gives us another good reason for being bullish on the overall market while we seek out the best bargains. Due to persistently low inflation, the Fed is under virtually no immediate pressure to raise key interest rates, so on CNBC last Wednesday, I modified my prediction about interest rates, saying that the Fed may raise key rates just once (“one and done”) in December and then not raise them again during the election year.

Printing Plate ImageIn other news, President Obama was in Bavaria (Germany) on June 7-8 for a G-7 meeting and reportedly complained about a strong U.S. dollar hindering U.S. economic growth.  According to one unnamed source, the President said that the strong dollar posed “a problem.”  However, the White House quickly contradicted this media report and pointed out that President Obama also said, “I make a practice of not commenting on the daily fluctuations of the dollar or any other currency.”  Perhaps, but what he allegedly said is valid – a strong U.S. dollar has been posing a problem to big multinational U.S.-based companies.

In This Issue

Income Mail:
Even Homer Would Have Been Proud
by Ivan Martchev
Here Comes a Retest of Russia’s Lows

Growth Mail:
U.S. Household Wealth Grew by $1.63 Trillion (+2%) Last Quarter
by Gary Alexander
Most of America is Getting Richer Every Year
Corporate Profits Generally Reflect Nominal GDP Growth

Stat of the Week:
Retail Sales Rose 1.2% in May
by Louis Navellier
Germany Recovers while Greece Stagnates

Income Mail:

Even Homer Would Have Been Proud

by Ivan Martchev

Even if the Greeks pull off this latest bailout tranche by the end of June – a deadline which by now has been called into question again – the drama will not be over. This is because, by best-case estimates, the Greeks need 25 billion euros ($28 billion) in “troika” financing by the end of 2016. If it was that hard to agree on the terms of one bailout tranche then what would it take to resolve the other bailout tranches?

Greece Gross Domestic Product Chart

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

Syriza, the ruling party in Greece, has maintained that cuts to pensions and benefits have put the economy in a death spiral, resulting in a five-year recession (see chart, above). But just as things had begun to stabilize, Syriza’s own policies since January 2015 have resulted in a gigantic bank run, which has crippled the financial system and caused Greece’s economic statistics to begin to deteriorate again.

In my opinion, the only reason why the Greek financial system has not collapsed already is the ECB, which is keeping Greek banks on life support with close to 100 billion euros via its Emergency Lending Assistance program. If that latest tranche is not released and Greece defaults to multiple lenders, that ECB lifeline may disappear. The bank run has resulted in declining tax revenues, but a default will result in financial chaos and most likely a fall of the Syriza government. So the economic devastation that Syriza promised to fight – a promise that brought it into power – could actually get much worse. The epic drama of this self-inflicted devastation would have made even Homer proud, had he been with us today.

That said, it has been amazing to see how both sides have been highly resourceful in pushing the final deadline further down the road. The Greeks began to use tactics last used by Zambia in the 1980s to bundle IMF payments for a given month and then promise to deliver them by month’s end – in this case, on June 30 instead of in morsels starting on June 5. While the IMF suggested that strategy to give Greece more time to reach a deal, they walked out of a meeting with Greek representatives last week, saying there was nothing more to negotiate. This suggests they have made their final offer. Yet, the IMF also did some legal research indicating that if Greece misses its bundled payments at the end of June it still may not be in default technically as there is a mechanism to deliver missed payments a couple of months later.

Go figure.

Greece Government Ten Year Bonds Chart

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

In the middle of this impasse the German public has decided to let Greece leave the euro. In polls taken last week by German broadcaster ZDF about 51% of Germans favor the Greeks leaving the euro, with 41% opposing the move, the rest being undecided. But I don't think the German public understands the full repercussions of such a move.

While the size of Greece’s GDP may be a rounding error to euro-zone GDP, a precedent is a precedent. The euro was set up without a withdrawal mechanism and this may result in financial market chaos. In a similar situation, the UK left the euro’s electronic counterpart back in 1992, helped by the legendary George Soros. The resulting sharp depreciation in the British pound revitalized the British economy, which already had a functioning banking system. Greece leaving the euro won't revitalize anything in the short-term and could result in an economic depression and financial system collapse in Greece.

With this standoff, it is difficult to see how German bunds will keep selling off, so this may be a reason for the bond rout to stop. A deal that provides temporary relief to Greece may cause some further selling of bunds and Treasuries, while a Greek default is likely to cause a serious safe haven bid in those governmental bond markets.

Euro United States Dollar - Monthly OHLC Chart

Source: Barchart.com

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

A Greek default is a big negative for the EURUSD exchange rate which is consolidating recent losses by moving sideways in the $1.045 to $1.145 range. Our delayed Fed rate hike may have helped the euro stop falling, but it seems it is only a matter of time before we revisit parity on the (not so) common euro currency.

The intermediate and longer-term dynamics of currency markets suggest the euro may not stop at parity. If the tapering of QE caused the U.S. Dollar Index to move from 80 to 100, what would some actual quantitative tightening do? There is a massive synthetic short position against the dollar where rate hikes in the U.S. will help push the dollar and cause more of a short squeeze than we already have.

As recently reported by Bloomberg News, data from the Bank of International Settlements shows that sovereign and corporate borrowers outside of the U.S. – many of them in developing nations – owe a record $9 trillion in U.S. currency, up from $6 trillion at the end of 2008, much of which will need to be repaid or rolled over right about the time of the now-delayed Fed tightening cycle. A major reason for the 50% surge in dollar borrowings is the Federal Reserve policies related to the financial crisis that kept both long-term and short-term interest rates suppressed and made it advantageous to borrow in U.S. dollars. When a corporate or a sovereign entity borrows dollars, it later sells them to spend the borrowings in its local currency. When those borrowings have to be repaid the dollars need to be bought back resulting in the covering of a gargantuan synthetic short position by multiple borrowers at the same time.

A rate hiking cycle by the Fed – no matter how long it will be drawn out by the 2016 U.S. Presidential elections (as well as by a weak global economy) – will put a burden on those borrowers as they will need much more of their local currencies to buy an appreciating U.S. currency, in effect adding fuel to the fire, in order to repay those borrowings. Furthermore, the dollar’s share of global foreign reserves is rising again and is at present, at 63%, above the record low of 60% of U.S. dollars in central bank forex reserves in 2011. Since that percentage was at 73% a decade ago, further increases in the dollar/forex reserve ratio will add to dollar appreciation. Five years ago the euro was still hailed as an alternative to the dollar, but developments in the old “PIIGS” euro-zone crisis, as well as the increased likelihood that Greece will leave the common currency, have caused forex reserve holders to question the viability of the euro.

Here Comes a Retest of Russia’s Lows

While the geopolitical situation certainly does not help at the moment, based on the dynamics in energy and metals markets we appear to have started another leg lower in the Russian RTS Index. This latest downturn is possibly en route to a retest of the infamous December 2014 low resulting from the crash of the Russian ruble and the extreme action in oil futures.

The Russians are between a rock and a hard place. The Chinese economy seems to be deteriorating further, which is a result of record leverage in the financial system and a busted real estate market. Metals and energy prices are deflating – representing the bulk of Russian exports.

Dr. Copper – the metal with a PhD in Economics – has been slowly deflating for three years as Chinese demand has progressively weakened. Copper’s advanced degree comes from its superior electrical connectivity, which causes it to be in high demand in construction and industry, but other metals prices, most of which are also economically sensitive, show similar weakening trends.

It is the general nature of commodity declines to get moving slowly at first and then to exhibit sharp increases in volatility. We saw that with oil in late 2014 and I am wondering if we are not about to see the same thing happen with metals like copper that have active futures markets.

High Grade Copper - Weekly Nearest Line Chart

Source: Barchart.com

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

Oil (the green line, above), whose seasonal rebound seems to be fizzling out, is also driven in a major way by what goes on in China as the mainland is the #1 consumer of that commodity.  Oil futures rallied in the spring as record supplies in storage went down, but U.S. oil production in particular has also kept rising consistently over the past year, making the U.S. the #1 producer of oil. I think further rises in U.S. production, coupled with the weakening of demand from China as well as the end of the strong seasonal demand for oil in the summer, will result in another leg down in the commodity that would be in a position to take out the spring low. If that happens, I expect the Russian ruble to weaken notably and the RTS Index to retest the nebulous lows from December 2014 as well as December 2008, which are in the 500-600 area of support for the index. (The RTS closed last week at 950.)

Russian RTS Index - Weekly OHLC Chart

Source: Barchart.com

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

The ruble is a commodity currency mired in a geopolitical mess. I believe it would have declined anyway, due to the decline in oil and metals prices, but now the situation is much more complicated because of economic sanctions. I think a retest of the all-time low in the ruble may also be coming should commodity prices deflate later in 2015 and should the present geopolitical standoff not be resolved by peaceful means.

United States Dollar Russian Ruble - Weekly OHLC Chart

Source: Barchart.com

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

The Russians  also seem to be preparing for something big. They are working on an alternative to the SWIFT payments system and they are already running it domestically. I am not sure how they can have it up and running internationally, but they sure seem hell-bent on trying. If they are methodically circling the wagons, it pays to ask: What do they think is coming next?

Growth Mail:

U.S. Household Wealth Grew by $1.63 Trillion (+2%) Last Quarter

by Gary Alexander

“Wealth is the ability to fully experience life.” – Henry David Thoreau

Over 30 years ago, I was honored to edit a new magazine called “Wealth.”  (Wealth is like “Money,” only more so; get it?) Well, Money Magazine is still flourishing while Wealth Magazine is dead – in part due to the elitist tone of its title. In fact, I admitted this defect in my opening editorial in Wealth’s first edition.

Wealth has become a dirty word. The guilt manipulators in the media have subtly promulgated the redistributionist myth of socialist economics – that we should all be equally poor – but there is nothing wrong with wealth, only the misuse of it, or the all-consuming drive toward more wealth as an end in itself…. Dictionaries define wealth in terms of value, capital, time, space, health, money, happiness and abundance. What’s wrong with that?”

– From the first issue of Wealth Magazine (1983), by Gary Alexander, managing editor

To enlist some powerful people on my side, I asked economist Henry Hazlitt to write an editorial on how “Wealth is not a dirty word.”  He graciously agreed and also wrote me a cover letter bemoaning the fact that something so obvious should have to be explained in print.  I was also enamored with Milton and Rose Friedman’s 1979 PBS TV series called “Free to Choose,” so I asked them to contribute articles. They graciously demurred but countered with an even better offer – a full hour interview with each of them.  I was impressed with both of these intellectual giants, especially with their sharp debating skills.

As Thoreau said, above, wealth is not an end in itself, but a means to enjoy life fully. Most people just want to be well off enough to provide for themselves and their families – not to get “filthy rich” – so we should quit thinking of profits and wealth as dirty words. About the time Wealth magazine was born, China’s leader Deng Xiaoping allegedly said, “Poverty is not socialism. Getting rich is glorious.” Those in the know say his word for “rich” is better translated “wealth,” so Deng was actually saying, “wealth is glorious.” He didn’t begrudge the rich; he wanted more people making more money, and so should we.

Most of America is Getting Richer Every Year

Last Thursday, the Federal Reserve released its quarterly census of U.S. household wealth in America. Even though the stock market was flat last quarter (+0.44% for the S&P 500 and -0.26% for the Dow), the net worth of Americans grew by almost 2% ($1.63 trillion) to $84.9 trillion. The fed’s “wealth” report (previously known by a more prosaic term, the “flow of funds” report), said that about two-thirds of the gains ($1.07 trillion) came from financial assets, including stocks and pension funds.  Most of the rest came from gains in real estate values, which rose by $472.5 billion, according to Federal Reserve data.  (The average owner’s equity in their home rose to 55.6% last quarter, up from 54.6% at the end of 2014.)

Net household wealth is up 50% since 2008, due mostly to a recovery in financial markets and real estate:

 *In trillions of US$; Source: Federal Reserve Z.1 data, June 11, 2015 
  End of Year     Household Net Worth*     Annual Gain  
2008 56.492 N/A
2009 58.270 +3.15%
2010 62.458 +7.19%
2011 63.879 +2.28%
2012 69.864 +9.37%
2013 79.262 13.45%
2014 83.296 +5.09%
 2015 (March 31)  84.925  +1.96% (quarterly gain) 

 

This trend will likely continue in the second quarter, since stocks have risen a bit more this quarter – the S&P 500 is up 1.27% so far this quarter, vs. 0.44% last quarter – and the housing market is also picking up: New-home sales in April rose at the third-strongest pace in more than seven years, and purchases of existing homes in April reached a 5.04 million annual rate, vs. a 4.97 million rate in the first quarter.

SUVs ImageThe “wealth effect” tends to give households more breathing room to make bigger purchases or increase their volume of consumer spending. Retail sales finally rose a decent amount (+1.2%) in May, according to the monthly Commerce Department data, released last Thursday. May auto sales rose to 17.8 million (annual rate), the highest since July 2005. All this upbeat data could encourage the Federal Open Market Committee (FOMC), meeting now, to make some kind of announcement about raising rates later in 2015.

The jobs picture could also point toward more robust consumer spending in the summer months, since the latest jobs report showed a healthy 280,000 new jobs in May, the most this year, along with an upward revision to March jobs data, and a revised 221,000 jobs in April.  Wage growth is also recovering, with the average pay for all civilian workers rising 4.2% in the first quarter vs. the same quarter in 2014.

According to a June 11, 2015 Bloomberg article, Dana Saporta, an economist at Credit Suisse Securities LLC in New York, said, “The recovery in general is getting deeper and broader, and that’s a good sign.”  That statement goes a long way toward refuting the political mantra being offered by left-leaning economists and some of the richest Presidential candidates (i.e., Hillary Clinton) that the great divide between haves and have-nots is America’s biggest challenge.

As for this alleged “wealth gap,” four Fed economists released a paper in April titled, “Measuring Income and Wealth at the Top Using Administrative and Survey Data.”  Their basic conclusion is that we are constantly fixing this problem through established safety nets – or, in the words of the Fed economists:

“The failure to properly measure the effects of government policies and market practices that disproportionately benefit families in the middle and bottom of the resource distribution leads directly to overstatement of top income and wealth shares. Policies and practices such as social insurance, government investment in human capital, workplace regulation, and collective bargaining overcome real market failures, meaning economic surplus is being generated by those policies, and the debate is thus properly focused on the distribution of that economic surplus. If we measure only the costs of such policies and practices, without measuring the benefits, it becomes more difficult to make the case for addressing market failures in future policy debates.”

– Federal Reserve economists Jesse Bricker, Alice Henriques, Jake Krimmel, and John Sabelhaus

Translated: Tax benefits, new conveniences, food stamps, and other social welfare programs aren’t usually counted as income or wealth. If they were, the wealth gap would not be nearly so wide as commonly cited.

Corporate Profits Generally Reflect Nominal GDP Growth

One of the most commonly-heard indictments of capitalism is that corporate profits outpace economic growth, so that financial investors get rich at the expense of working families. That’s the gist of Thomas Piketty’s best-selling “Capitalism” book and numerous political speeches.  The facts state otherwise:

Over the long-term (since 1960), nominal (i.e., not adjusted for inflation) corporate profits and nominal U.S. GDP have grown roughly in tandem, by about 7% per year, according to economist Ed Yardeni’s June 5 Weekly Briefing, but corporate profits are usually reported in nominal terms while GDP is reported in “real” (after-inflation) terms, creating the illusion that profits are growing faster than the economy. Long-term, they aren’t.

The National Income and Product Accounts (NIPA) track nominal corporate profits as a percent of GDP.  NIPA data is released along with the initial GDP revision, which came out at the end of May.  (A final GDP and NIPA revision will come out next week, on June 24.) According to economist Ed Yardeni:

“The growth trend of corporate profits is determined by the growth trend of nominal GDP, which is equivalent to national income. Our analysis shows that the trend of these variables has been 7% since 1960. Profits growth is much weaker during recessions and much faster during recoveries, but 7% has been the magic number for the trend. That seems to be the best we can expect in the coming years until the next recession. Given that valuation multiples are at their historical highs, 7% may also be the best we can expect in terms of annual capital gains in the stock market for the duration of the current bull market. That’s quite good compared to the bond yield and the inflation rate, which are both historically low.”

These facts tell me that equities still provide a more promising profit opportunity than debt or cash, even though the stock market is obviously far more volatile and sometimes far riskier than cash:

Standard and Poor's 500 Price Earnings Ratio Chart

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

By this chart, stocks seem fairly valued in 2015 vs. severely undervalued from 1974 to 1986 and again from 2008 to 2013.  Stocks were severely overvalued from 1999 to early 2002, but they have not been severely overvalued (by this chart’s reckoning) at any other time since the early 1970s.

We’ve all wrung our hands over the widely-reported fact that “real” GDP fell 0.7% last quarter, but how many realize that number is a quarter-over-quarter seasonally adjusted annual rate (saar)?  If you figure the first quarter on a year-over-year basis, GDP was up a “real” 2.7% and a nominal 3.6% over Q12014.

Last quarter included severe winter weather (just like 2014) and a West Coast port strike (a new wrinkle in 2015).  We also had an oil price decline and dollar surge last quarter, but oil prices are now back to $60 and the dollar is see-sawing back and forth since its March peak, so second-quarter GDP may recover.  If so, we’re liable to see household net worth rise another $2 trillion or so this quarter, potentially fueling more growth.

Stat of the Week:

Retail Sales Rose 1.2% in May

by Louis Navellier

Last Thursday, the Commerce Department reported that retail sales rose 1.2% in May.  Auto sales rose at a very healthy 2% annual pace and gas station sales rose 3.7%. Excluding autos and gas stations, retail sales still rose at an encouraging 0.7% rate.  Sales at home improvement stores rose 2.1% in May.

In addition, business inventories rose 0.4% in April.  Since inventories were severely depleted in the first quarter, this inventory rebuilding is expected to help boost overall GDP growth in the second quarter.

In other news, on Tuesday, the National Federation of Independent Business small-business sentiment index rose to 98.3 in May, up from 96.9 in April, reaching its highest level in five months.  Six of the ten components of the small-business sentiment index rose in May, which is encouraging.

Speaking of sentiment, on Friday, the University of Michigan/Reuters survey announced that the preliminary reading for its consumer sentiment index rose to 94.6 in June, up from a final reading of 90.7 in May.  This is very good news, since University of Michigan/Reuters consumer sentiment index peaked several months ago, its big rebound in June is very encouraging for consumer spending.

Part Time Job ImageDespite all this upbeat economic news last week, the San Francisco Fed published a paper on June 8 entitled, “Involuntary Part-Time Work: Here to Stay?” that concluded the number of those forced to work part-time jobs “may remain significantly above” levels seen before 2008 for some time to come.  The San Francisco Fed also pointed out that the high level of part-time workers distorts the unemployment rate and makes it look better than it actually is.  Furthermore, the paper pointed out that only 20% of temporary workers do so by choice. They really want full-time work, but they are often forced to have two temporary jobs.  Translated from Fedspeak, the unemployment rate is artificially low due to double accounting of temporary jobs (when one person has two temporary jobs).

Furthermore, slow wage growth can also be indicative of excessive temporary jobs.  Since Fed Chairman Janet Yellen is the former San Francisco Fed President and is primarily a labor economist, this paper is likely to be very influential and may provide the Yellen-led Fed with another excuse to not raise key interest rates.

On Friday, the Labor Department reported that the Producer Price Index (PPI) rose 0.5% in May, the largest monthly increase since September, 2012.  Excluding surging food (up 0.8%) and energy prices (wholesale gasoline surged 17%), the core PPI actually declined 0.1% in May; so inflation appears to remain in check.  In fact, in the past 12 months, the PPI has declined -1.1%, while the core PPI has risen just 0.6%.

Oil Pumps ImageIn my opinion, the recent surge in energy prices is seasonal in nature. Crude oil prices are expected to peak in July and then decline in the fall as seasonal demand declines. On Tuesday, the Energy Information Administration (EIA) reported that crude oil production rose to 9.6 million barrels per day in May, the highest monthly level in 43 years.  In the meantime, U.S. crude oil production is expected to slow in the upcoming months due to the highest inventories in 80 years, but the May data tells us that wells are not being capped, simply because once a well is completed, it typically costs no more than $15 per barrel to continue extracting oil.  Furthermore, since the land is leased for most crude oil wells, there is no incentive to cap a well, so crude oil production may remain surprisingly high in upcoming months.

Germany Recovers while Greece Stagnates

Around the world, the news is largely upbeat, except for the ongoing Greece conundrum.  On Thursday, the International Monetary Fund (IMF) halted its bailout talks in exasperation that Greece may not implement the pension and other reforms that its creditors are demanding. In CNBC’s article “Here we go again: Greek talks ‘well away from an agreement’”, IMF spokesman Gerry Rice, in an unusually grim public statement, said, “There are major differences between us in most key areas.”  Rice added that “there has been no progress in narrowing these differences recently.” He concluded by saying, “Thus, we are well away from an agreement.”  Clearly, the IMF is trying to put pressure on Greece to implement pension and wage reforms, since that accounts for 80% of the country’s overall budget.

Greek Pottery ImageInterestingly, the IMF is not forcing Greece to raise taxes, since Rice said, “the policy of increasing already-high rates on a low tax base, again, is not sustainable.”  Since the IMF is ready to provide debt relief to Greece by restructuring much of its remaining debt, it is really up to Greece to come crawling back to the IMF when it is ready.  The euro-zone and the IMF are ready to provide sufficient funding to Greece to keep them solvent through March 2016, but they are waiting for Greece to meet their demands.

In the meantime, mighty Germany’s Bundesbank reported that new orders rose 1.4% in April, well above economists’ consensus expectation of a 0.5% rise.  Especially encouraging were that foreign orders grew by a robust 5.5%, with those from the euro-zone rising 6.8%.  German industrial production rose 0.9% in April and there is no doubt that a weaker euro is helping Germany to be more competitive in world trade.


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.

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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.

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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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