Despite a Late-June Correction

Despite a Late-June Correction, Stocks Rise 8+% in the First Half

by Louis Navellier

July 5, 2017

*All content in this Introduction to Marketmail represents the opinion of Louis Navellier of Navellier & Associates, Inc.*

Most market measures fell in the last week of June, but they were up surprisingly well in the first half of 2017.  For instance, the NASDAQ Composite was down 2% last week but up over 14% year-to-date.  The more volatile NASDAQ 100 was down 2.7% last week, but is still up 16.1% YTD.  The broader blue-chip S&P 500 was up 8.24% (or 9.34%, including dividends) in the first half – a near-20% annual rate.

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Technical analysts do not like the fact that the NASDAQ 100 made a new near-term low last Thursday, but market retests are common.  One key metric is trading volume.  I like to see volume being exhausted on each subsequent retest.  Other retests of this new low are possible, but it is also possible that this was the final capitulation day!  I must stress that when technology stocks correct, the money is not leaving the stock market – it is just being reshuffled to other industry groups, like the embattled energy or financial sectors.  To me, these rotational corrections are the best kind of corrections, so there is no need to panic.

June is historically a weak stock market month, but July is historically the best summer month, by far. According to Bespoke Investment Group’s “July Seasonality” report (published June 28), the Dow Jones Industrials have risen an average 1.44%, 0.79%, and 1.08% in the past 100, 50, and 20 years, respectively.  In the same report, they show that the performance of the S&P 500 tends to surge in mid-July as earnings announcement season heats up.  Earnings help to fuel a lot of market excitement in the second half of July.

In This Issue

All our panelists took a good share of the July 4th weekend calculating market report cards for the first half.  Bryan Perry gives the market an A+, while Gary Alexander gives global markets a similar A grade, but Ivan Martchev examines last week’s counter-trends and currency trends to knock that grade down a bit.  Then, Jason Bodner grades the S&P sectors while I examine corporate buy-backs and dividend data.

Income Mail:
Stock Market Scores “A+” On First Half 2017 Report Card
by Bryan Perry
The “Payout Ratio” is a Market “Tell”

Growth Mail:
Global Markets Score an “A” in First-Half
by Gary Alexander
July Should Continue the Winning Streak

Global Mail:
Counter-trend Quarter-End Games
by Ivan Martchev
How ‘Bout that Euro?

Sector Spotlight:
How Can We “Insure” Against Portfolio Losses?
by Jason Bodner
The Winners and Losers Last Week, Last Quarter, and in the First Half of 2017

A Look Ahead:
Corporate America is Still “Shareholder Friendly”
by Louis Navellier
The Dollar’s Decline Also Helps Multinational Stocks

Income Mail:

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

Stock Market Scores “A+” On First Half 2017 Report Card

by Bryan Perry

The S&P 500 closed the second quarter of 2017 on a mixed note with some fierce sector rotation bringing about a dose of volatility that rattled investors’ nerves. But as of June 30, the S&P 500 is up +9.34% year-to-date (dividends included). Growth stocks were the primary target of sellers in last week’s correction in technology stocks. But I found it interesting that of those high-profile tech stocks that have already reported Q2 earnings, the results have come in above forecast, coupled with strong forward guidance.

While there is clearly some short-term rotation, most notably into financials, it’s my view that the tech sector should firm up as more technology stocks announce better-than-expected sales and earnings in the weeks ahead. Sparking last week’s tech sell-off was news that the European Union (EU) announced that it imposed a $2.7 billion fine on Google. This triggered algorithmic trading and high-frequency trading (HFT) sell programs, which account for about 70% of total trading volume in the U.S. equity markets. (Please note: Bryan Perry does not currently hold a position in Google. Navellier & Associates does currently own a position in Google for any client portfolios).

These rotational corrections are actually quite constructive, since the money coming out of technology is going into other industry groups, with the biotech, financial, and industrial sectors benefitting the most.

Aside from rapid-fire trading among the hot potatoes in the growth stock sectors, the underpinnings of the bullish trend for dividend-paying stocks remain strong and actually improved last quarter. Record stock buy-backs fueled by record amounts of super-cheap debt are now supported by rising organic earnings.

While the S&P 500 dividend yield is currently 1.91%, it is only about 30 basis points below that of the yield for the 10-yr Treasury and therefore supports a continuation of the bullish bias for the current rally.

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

Dividend growth stocks have performed well due to the fact that the S&P 500 dividend yield remains very close to the 10-year Treasury yield. Historically, anytime the yield on the S&P 500 gets near the 10-year Treasury yield, it represents a strong buy signal. With first-quarter S&P 500 growth of 12.2% combined with forecasted second-quarter earnings growth of around 7%, the pace of earnings is growing faster than the stock market’s year-to-date gains with little if any expansion of the P/E ratio for the S&P.

Five out of six stocks (83.4%) in the S&P 500 pay a dividend—417 of them—but only 34 of those 417 stocks qualify as “high dividend” stocks (with yields over 4%). Only 2% of S&P 500 companies currently have a dividend yield over 5%, although the specific number recently rose from 10 to 11.

The “Payout Ratio” is a Market “Tell”

As investors, we want dividends, we want profit growth, and we want our stocks to go up. To find such stocks, we look at the “payout ratio,” or percentage of earnings paid out in dividends, from two different viewpoints: 1) Companies that plow cash back into the business have higher growth potential. Supporters of this theory often refer to the “sustainable growth rate,” which provides a rough estimate of profit-growth potential. 2) High-payout companies tend to make better use of their money. A 2003 study by Robert Arnott and Clifford Asness (in “Surprise! Higher Dividends = Higher Earnings Growth,” January 2, 2003) of the market from 1946 to 2001 found that when the S&P 500 Index had a low payout ratio, it tended to deliver weaker 10-year profit growth than it did after periods with high payouts.

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

Arnott and Asness cited two possible reasons for this trend. First, companies hate to cut dividends, and a high-payout ratio may suggest that executives willing to pay generous dividends are more confident in their earnings outlook. Second, companies with high payouts have less left to invest, which could make them spend their money more cautiously. Such companies presumably focus only on their most profitable projects, while companies with lots of cash may deploy that money on acquisitions or dubious projects.

While the arguments in favor of high-payout companies have merit, the market’s payout ratio tends to hit its highest level during earnings troughs, as it makes sense that profits would rise quickly in a recovery. Dow Theory Forecasts’ research suggests that S&P 500 Index stocks with modest payout ratios have delivered superior returns since 1994. The current payout ratio for the S&P 500 is around 50%, at the high end of the historical range. That number will likely come down in the next several quarters as earnings accelerate out of what has been a multi-year earnings trough. Plus, few catalysts could be more bullish for dividend-paying stocks than the notion of the Fed tapping on the brakes with further rate hikes in 2017. The payout ratio has gradually declined from 90% of operating earnings in the 1940s to about 30%-50% since 1970.

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Building a case for a lower payout ratio in the next few years, this past week the Fed cleared 34 major banks through various “stress” tests. These banks account for 75% of the financial assets in the U.S. The Fed’s clearance means that these big banks could begin to return capital back to their shareholders, since they all have proven that they have sufficient capital to do so. The financial sector carries the second-highest S&P sector weighting of 14.81%. This is naturally good news and many major banks may choose to boost their dividends and/or redeem their preferred stock to return capital back to their shareholders.

To cap off the second quarter, the Commerce Department revised first-quarter GDP growth to an annual rate of 1.4%, thanks to better-than-forecast exports and consumer spending. The optimism for second-quarter GDP growth remains high and most economists expect that 2Q GDP growth will at least double to a 2.8% annual pace, setting the stage for a strong second half for the economy and the stock market.

When inflation is running at an annual rate of less than 2.0%, the 10-year Treasury trading in the low 2% range, S&P earnings forecast to average 9.5% for the first six months of 2017, and the financial sector coming to life in a big way, there is good reason for investors to cheer for higher stock prices ahead. 

Growth Mail:

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

Global Markets Score in “A” in First-Half

by Gary Alexander

The Wall Street Journal did it again – patting investors on the back while kicking them in the rump.

Their July 1-2 weekend Page 1 headline was “Global Stocks Post Strongest First Half in Years, Worrying Investors.”  Why must good news always be coupled with a warning that worse times must lie just ahead?

Similar sentiments in other news stories might be reflected in headlines like these:

  •  “Asteroid Misses Earth, Causing Scientists to Fear ‘The Next One Might Hit Us.’”
  • “Terrorism Attack Thwarted, Making the Next Attack More Likely to Succeed”
  • “Summer Weather Delightful on July 4th, Raising Fears of a Frigid Winter”

In the text of their article, the Journal reported that global stock markets collectively matched their strong start in 2009 – the first year of this bull market.  We haven’t seen a better opening six months (globally) since 2007.  In 2017, all but four of the 30 biggest markets rose in the first half, according to the Journal.

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

What “worries investors” in this scenario is that the four best opening six months for global markets in the last 20 years came at the start of bull markets (2003 and 2009) or the end of bull markets (1999 and 2007), implying that we could be nearing the end of the current bull market.  Furthermore, the cycle peak for 1997-99 (left of chart, above) looks very similar to the last three years (2015-17, above right).

Any comparison to 1999 is flawed, however, since that fin de siècle year marked the fifth straight year of 20% or greater S&P 500 growth.  In those five years, the S&P rose 220% and NASDAQ doubled that, up 441%.  The current bull market hasn’t delivered anything like this consistency or amplitude of growth in the last five years.  In addition, the market’s rise from 2000 to 2017 is still sub-par for long-term market averages.  The S&P 500 peak in March 2000 was 1527.  Its latest peak is 2432, up less than 3% per year.

We are nowhere near the kind of “bubble” territory that we were clearly (in hindsight) entering in Y2K, when forward earnings on the S&P exceeded 25 (vs. 18 today).  Neither are we near a U.S. or worldwide recession.  According to the Wall Street Journal (“Revised GDP Signals 1.4% Growth Rate, June 30, 2017), “Forecasters surveyed in early June by the Wall Street Journal saw just a 16% likelihood, on average, of a new recession starting in the next year.”  The same Journal article quoted Macroeconomic Advisors projecting a 3.3% GDP growth rate for the second quarter and the Federal Reserve Bank of Atlanta’s GDPNow model predicting 2.9% growth.  Globally, we have also seen “a synchronized global recovery,” according to Graeme Bencke, global portfolio manager at London’s Pinebridge Investments.

Even though the Trump Administration has not passed any of its major economic reforms in the first half of 2017, we do have some unexpected good news coming from abroad, where moderates won the elections in France and the Netherlands, in sharp contrast to the Brexit vote a year ago (June 23, 2016). As a result, the European economy is finally reviving, along with their common currency, the euro.

The ECB and Bank of Japan have remained accommodative, while the Fed’s rate increases have yet to register even a “speed bump” level of disruption to the U.S. stock market (or gold, for that matter).  Even though U.S. GDP growth was anemic in the first quarter, it has doubled its first estimate (0.7%) and is now estimated at 1.4%.  The market is up 8%+ because earnings are growing much faster than GDP. First-quarter S&P 500 earnings were up over 12% from a year earlier, the best growth rate since 2011, according to FactSet.  Earnings in Asia-Pacific (ex-Japan) and Europe are also up by double-digits.

The five most rapidly-growing national markets in the first half were all in Asia, namely South Korea, India, the Philippines, Taiwan, and Singapore, while Russia came in a distant last (see chart, below).  I don’t count NASDAQ as a ‘national’ market, since it is one of three U.S. indexes in the table below.

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

July Should Continue the Winning Streak

Turning to the U.S., NASDAQ is the winner among domestic indexes in the first half, despite a sharp correction last week.  In the commodity world, gold is a winner, while energy costs are way down.  In the currency market, the euro is up strongly while the dollar has fallen over 5%.

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As Louis said, above, July is the second-best month of the last century, up 1.44% on average (behind only December, at +1.55%).  Over the last 20 years, July is up an average 1.08% per year.  July is also the only positive month in the usually-dismal May-to-September span (which spawned the “sell in May” strategy.)

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More importantly, Bespoke Investment Group showed how the S&P 500 has risen a composite 410% in the second half if the first half was positive.  However, when the first half was down, the second half fell:

“Starting 50 years ago, if you only owned the S&P in the 2nd half of years where the index was down in the first half, you’d be down 16.9%!  You’d be up 410% if you only owned in the 2nd half of years where the index was up in the first half.  That’s quite a difference.”

-- Bespoke Investment Group, “July Seasonality,” June 28, 2017

August is a different animal.  That’s a good month to take a vacation and ignore the market, but history tells us the fourth quarter’s rally is usually worth enduring the summer doldrums that often precede it.

Global Mail:

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

Counter-trend Quarter-End Games

by Ivan Martchev

When I sat down to write this column and went through major developments last week in stocks, bonds, commodities, and currencies, a peculiarity jumped out at me – last week’s moves were predominantly counter-trend (or against the prevailing trend in the second quarter). Stocks, which had been appreciating in 2Q, were down last week. Ditto for bonds. Oil and commodities in general had been weak in 2Q but then had a rebound last week. Only the dollar kept on sliding last week – as had been the case all year.

One explanation for the counter-trend moves in many financial markets is that last week was not only the last week in June but the last week of the second quarter. It is not inconceivable that many managers simply were involved in more quarter-end window-dressing than usual. For example, mutual funds are obligated to disclose the top 10 positions at the end of the quarter to their investors. Other funds have similar policies, even though they may not be a requirement. The need to reposition portfolios in the last week of the quarter may be much bigger. Still, window dressing, by definition, is not a phenomenon that is long-term in nature. Unless fundamentals drive those moves, markets usually revert to the mean.

The oil market was up five days in a row last week, which may have been just a necessary rebound after a $10 per barrel slide from the May highs to the June lows ($42) in the August WTI futures contract. The crude oil market has been hard to read in the sense that it has not delivered any seasonal strength. This is also true for other commodities, which translates into a poor performance for the CRB Commodity Index.

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

In the past, I have often heard that such gyrations are more likely to happen as high-speed computerized trading systems have dominated the futures market for commodities, so the machines are just pushing the market around and leading traders by the nose. While this is not an implausible explanation, what does one say about iron ore – which has no futures market but is priced in forward over-the-counter markets? China is the #1 producer and consumer of steel, but iron ore careened down from $90/ton to $55/ton in the second quarter (see chart, below), indicating a sharp slowdown in industrial demand last quarter.

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

I have my doubts about China, but rather than go on another “China rant,” I will say that the economic situation there seems more like the eye of the storm, rather than any meaningful economic stabilization. I am watching with great interest to see if this peculiar weakness in commodity prices is indeed China-related. We should see evidence in secondary indicators like third-quarter foreign exchange outflows.

Meanwhile, the U.S. bond market was down for the week, sending the 10-year note yield to 2.30%. We may have more Fed rate hikes in store– this is what the Fed has telegraphed – so seeing some back-up in long-term interest rates is to be expected. Still, the bond market is telegraphing a mature economic expansion in the sense that the difference between the 2-year note yield and the 10-year Treasury note yield (dubbed the yield curve slope) had been shrinking all quarter, even though it rebounded last week.

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

Last summer, after Brexit (June 23, 2016), the 2-10 spread was as low at 76 basis points and then went as high as 136 bps after the U.S. election in November. A steeper yield curve forecasts a stronger economy and vice versa. Since we have been down to 78 bps on the 2-10 spread in June, the bond market is no longer forecasting the acceleration of the U.S. economy that was initially forecasted after the November election. I expect that by the time President Trump’s first full term in office ends in January 2021, the 10-year Treasury yield will have declined below 1%, as I have mentioned previously, as the likelihood that we will have a recession by then is high, based on the statistical distribution of recessions over 240 years.

How ‘Bout that Euro?

I have repeatedly pointed out that the dollar is not as weak as the U.S. Dollar Index would have you believe, since the euro comprises 57.6% of the U.S. Dollar Index. As the eurozone breakup risk is being priced out with pro-EU election victories in The Netherlands and France, the euro has strengthened more at a time when the Fed is accelerating its rate hikes, which is typically supportive of the dollar.

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

Not to diminish the importance of the rebound of the eurozone economy, the strength in the euro is somewhat political, too. We know that because the action is confirmed by the German bond market, which had been acting as the ultimate safe haven. The yield on the “bundesschatzanweisungen,” dubbed the 2-year “schatz notes” to avoid tongue injuries, closed on Friday at -0.56%, a great improvement, since the schatz notes were yielding -0.96% earlier in 2017 before the pro-EU election victories.

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

The 10-year bund yields closed at 0.47% Friday, as Europe still has a deflationary problem despite the smaller chance of a eurozone breakup (for the time being). Ironically, faster rising 2-year schatz yields mean a shrinking schatz/bund differential – which is like the U.S. 2-10 spread for Germany. In this bizarro world of negative interest rates, less political risk in Europe means a flatter yield curve in Germany, which in this case is a good thing as a eurozone breakup would have been a disaster for the EU economy.

Sector Spotlight:

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

How Can We “Insure” Against Portfolio Losses?

by Jason Bodner

We all need insurance – well, we all tend to buy insurance anyway. There's insurance for everything – life insurance (really death insurance), health insurance, long-term care insurance, home insurance, car insurance, luxury goods insurance, appliance protection plans, and of course the now-ubiquitous mobile phone insurance. The saying should really be: “The only sure things are death, taxes, and insurance.”

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Insurance is built on probabilities, or odds making. Consider this: an average golfer’s odds of a hole in one are 12,500 to 1. A golf pro has better odds, about 2,500 to 1. How do we know this? Insurance actuaries have calculated the odds to insure against contest payouts. In Japan, golfers buy insurance to protect themselves on the golf course because if they do get a hole in one, they have to shell out for a series of expensive gifts and drinks for their friends: $3,000 in coverage costs $65 a year.

Insurance is perhaps the best business on the planet. Warren Buffet made a fortune from GEICO, which is a major cash generator to fund his other investment opportunities. It may surprise you to learn that Sony electronics lost money for more than a decade, but they made losses up in insurance. From 2004 to 2013, they lost $8.5 billion in 10 years but made $9.07 billion on their financial operations, primarily insurance.

The point here is that insurance companies make money by exploiting odds in their favor. This applies to “portfolio insurance” too. The interesting thing about the stock market is that the odds appear to be completely in favor of the bullish investor. Just look at these lifetime charts of the major equity indices:

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Here's the catch: Last week I mentioned a study by Hendrick Bessembinder (“Do Stocks Outperform Treasury Bills? SSRN, May 22, 2017) which found that 4% of stocks accounted for 100% of market gains since 1926. The odds that the average investor will pick such a big winner are about 25-to-1.

That 4% of super-stocks is where expertise in stock picking pays off. So how do people like Louis Navellier succeed year after year? Identifying stocks with characteristics like growing earnings and revenues is tremendously important. Investors should want to own companies with a good chance of being around in years to come. Typically, that doesn't come from shrinking sales and profits! But paying attention to which sectors are leading and lagging will help reveal opportunities within the broader trends.

The Winners and Losers Last Week, Last Quarter, and in the First Half of 2017

Infotech took it on the chin this past week (-2.88%) but has been the leading sector (+16.38%) for the first half of 2017. A highly-respected friend pointed out that tech seems to exhibit seasonal weakness in the summer, especially in June. The sector’s froth is definitely being taken out a bit as perhaps some investors feel valuations are getting bubbly and profits can be taken – along with summer vacations.

The second-quarter winner is Healthcare, which also finished narrowly behind tech in the first half (+15.06%), but the sector lost 1.55% last week. Should trends continue, Healthcare may unseat Infotech as our #1 six-month sector soon, even though tech has gone virtually unchallenged at #1 for a long time.

Financials was the sleeper story this past week with 3.25% gains. With a +3.80% 3-month performance, it is in third place for the second quarter, behind Healthcare and Industrials. This past week was one in which reliable strength (tech) was weak, and reliable weakness (Energy) recovered. This indicates some “summer’s coming” close-out of popular longs and shorts – taking some risk (and profits) off the table.

The fundamental picture, however, has hardly changed. Tech sector earnings have been showing growth, with some notable exceptions. Energy has been dragged down by the physical price of crude oil, which puts pressure and doubt on the future sales and earnings of crude-related companies.

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Only 4% of stocks have accounted for 100% of the market gains since 1926. With odds like those, one would think we can't buy insurance against losing, but insurance is readily available in the form of purchasing puts. But any kind of insurance on the overall market is expensive! Based on SPY’s Friday close of 241.8, August 4th expiry SPY 242 Puts costs 2.32, which annualizes at around 12%. That makes selling (not buying) stock market insurance pretty compelling! Maybe that’s why insurance companies do it…

Investing in the stock market is fun, especially when you can beat the odds; but just remember what humorist Frank McKinney said: “Fun is like life insurance; the older you get, the more it costs.”

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A Look Ahead:

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

Corporate America is Still “Shareholder Friendly”

by Louis Navellier

Last Tuesday, my favorite economist, Ed Yardeni, reported that the S&P 500 dividend payout ratio in the first quarter remained at about 50%.  Dividends totaled $400 billion, while stock buy-backs added another $508.1 billion.  The S&P 500’s operating earnings were $958.1 billion in the first quarter, so 94.8% of these operating earnings were returned to shareholders via either dividends or stock buy-backs.

These totals are down from the record-setting first quarter of 2016, but reports that stock buy-back activity is faltering is “fake news,” since Corporate America is still obsessed with maintaining high dividend payouts and strong stock buy-back activity.  Furthermore, one of the reasons that the stock market seems to rebound quickly after any technology sell-offs is that dividend bargain hunters quickly appear and Corporate America likes to buy back more stock in the wake of any mechanical algorithmic sell-off.

In other words, the foundation under the market remains strong thanks to (1) the best operating earnings in over five years, (2) a 50% dividend payout ratio, and (3) continued strong stock buy-back activity.

Specifically, many dividend growth stocks have firmed up lately due the fact that the S&P 500 dividend yield remains very close to the 10-year Treasury yield.  As I have repeatedly said, anytime the S&P 500 gets near the 10-year Treasury yield, it marks a screaming buy signal, just like happened last November.  Since the 10-year Treasury yield declined in the second quarter, stocks are still bargains relative to bonds.

Banks may now be willing to become more share-friendly, too.  Last Tuesday Fed Chairman Jane Yellen said in London that U.S. banks are “very much stronger.”  She also said that another financial crisis is not likely “in our lifetime,” since the U.S. banking system has stabilized.  Yellen stressed that the Fed learned lessons from the financial crisis: “I think the public can see the capital positions of the major banks are much stronger this year” since “all [major banks] passed the quantitative parts of the stress tests.”

The next day, as if on cue, the Fed cleared 34 major banks, which account for 75% of the financial assets in the U.S.  Those banks can now begin to return capital back to their shareholders, since they all passed the stress test and have sufficient capital.  This is naturally good news and many major banks may choose to boost their dividends and/or redeem their preferred stock to return capital back to their shareholders.

The Dollar’s Decline Also Helps Multinational Stocks

The other big development in the second quarter was that the U.S. dollar posted its biggest quarterly decline against rival currencies in nearly seven years.  Hints that tighter monetary conditions might be forthcoming from some central banks around the world helped to cause the U.S dollar to decline 4.6% against a basket of major currencies in the second quarter.  The euro was especially strong in the second quarter, surging 7% against the U.S. dollar, despite ultralow interest rates in the Eurozone.

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Speaking of central banks, on Wednesday Bank of England Governor Mark Carney said that interest rates in Britain may have to rise to combat inflation caused largely by a weak British pound, which tends to raise the cost of imported goods.  On Tuesday, the Bank of England tightened bank capital requirements, which is often a first step before the bank’s Monetary Policy Committee (MPC) raises key interest rates.

Meanwhile, multiple Fed officials have recently questioned if the Fed should raise key interest rates any more, since Treasury bond yields are falling and the yield curve is flattening.  These Fed officials are also talking about the lack of inflation in the U.S., implying that the Federal Market Open Market (FOMC) should be in no hurry to raise interest rates further, as the Fed has already “normalized” key interest rates.

A weak dollar helps multinational corporations, especially exporters, and helps boost GDP in the process.  On Thursday, the Commerce Department revised first-quarter GDP growth up to a 1.4% annual pace, up from previous estimates of 0.7% and 1.2%.  The primary reason for the upward GDP revision was that exports rose at a 7% annual pace (up from 5.8% previously estimated) and consumer spending rose at a 1.1% annual pace (up from 0.6% previously estimated).  The optimism for second-quarter GDP growth remains high and most economists expect that GDP growth will at least double to a 2.8% annual pace.


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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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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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