Earnings Deliver Market “Nirvana”

Earnings Announcements Deliver Market “Nirvana”

by Louis Navellier

August 1, 2017

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

Randall Forsyth’s latest essay in Barron’s captured the nation’s pulse: “Market Heaven, Political Hell.”

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I’ll focus on the part about heaven.  With 58% of the S&P 500 companies having announced their second-quarter results, 71% of the companies in the S&P 500 have exceeded analysts’ consensus sales estimates and 73% have beaten analysts’ earnings estimates.  The average annual sales growth is 5.0% and the average annual earnings growth is 10.8%.  As earnings season winds down, I expect that the market will get a bit bumpier in the upcoming weeks, as August has become my “least favorite” month in the market.

In short, last week was largely a “nirvana” week, bolstered by better-than-expected sales and earnings announcements.  Furthermore, the Federal Open Market Committee (FOMC) also clarified that they are taking a “wait and see” approach before raising key interest rates further.  There is no doubt that the Fed is puzzled by the lack of inflation and wants to wait for inflation to re-emerge before raising key interest rates further.  Specifically, the FOMC statement said that inflation measures “have declined and are running below 2%.”  The FOMC also said that it expects to begin shrinking its bond holdings soon.

The main key to success at this late stage of a bull market is superior stock selection.  Year-to-date, our Cavalier Fundamental Growth Fund (Institutional Class, CAFGX) is up 19.51%, while the S&P 500 is up 11.67%.  According to Morningstar, our flagship Fundamental Growth fund is highly ranked among its peer group in the 1 month, 3 month, and 1 year rankings.

In This Issue

This week, Bryan Perry and Jason Bodner examine the stellar earnings season in more detail, while Gary Alexander and Ivan Martchev take a look at the chances for more political chaos (or market hurricanes) striking in August.  Then, I’ll cite the latest economic fundamentals to support a rising stock market.

Income Mail:
Corporate America Flexes Its Superhero Earnings Muscles
by Bryan Perry
Finding Earnings Strength Through Dollar Weakness

Growth Mail:
Today Marks the Start of “Market Hurricane Season”
by Gary Alexander
Some Perspective on Today’s Political Circus in Washington

Global Mail:
More Chaos in Washington
by Ivan Martchev
Signals from the Bond Market

Sector Spotlight:
We’re Halfway There – Will We Ever Arrive?
by Jason Bodner
Do Traders Really Take Long Vacations in August?

A Look Ahead:
GDP “Rises” (Anemically) to 2.6% in the Second Quarter
by Louis Navellier
Third-Quarter Economic News is Picking Up

Income Mail:

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

Corporate America Flexes Its Superhero Earnings Muscles

by Bryan Perry

As we pass the mid-point of second-quarter earnings season, America’s iconic blue-chip companies are tearing off their tank tops and putting their top and bottom-line muscles on display for all the investing world to gawk at. One institutional darling after another is throwing up the kind of numbers that can stoke an investor’s animal spirits like no other catalyst can. Forget politics for a moment; let’s look at earnings.

This is the seminal moment for the bulls. Cries of an “overbought” market have been coming from every corner of the investment world, but not a lot of people are selling – unless some algorithmic computer program triggers a sell signal that is quickly pounced on as yet another rare opportunity to average up.

When a blue-chip like Boeing (BA) rallies 30 points, or McDonald’s (MCD) gaps higher by 5%, or Caterpillar (CAT) climbs 6% in a flash, it’s quite an impressive feat, especially because these are not your glamorous “FANG” stocks. Far from it. Instead, these bulwarks represent how a soft dollar can complement organic growth in a meaningful way. (Please note: Bryan Perry does not currently hold a position in BA, MCD, and CAT. Navellier & Associates does currently own a position in BA, MCD, and CAT for client portfolios).

The U.S. Dollar Index (DXY) has declined over 11% since peaking in early January at 103.82. It now trades at 92.30, which is a boon to the foreign exchange component of multinational corporate profits. 

Even better, the DXY has fallen further since the end of June, which marked the end of the second quarter for earnings accounting. As we enter August, we’re already one month into the third quarter. These same multinational companies that conduct more than 50% of their business overseas are going to see third-quarter profits boosted more than they did during the second quarter. This catalyst caught most experts by total surprise because one would think that the logical move for the dollar in a strengthening economy would be higher, much higher in fact. Here’s the data, according to the Lipper Alpha Insight Dashboard:

S&P 500 Aggregate Estimates and Revisions (as of July 27, 2017)

  • Second-quarter earnings are expected to increase 10.8% from Q2 2016.
  • Of the 289 companies in the S&P 500 that have reported earnings to date for Q2 2017, 73% reported earnings above analyst expectations. This is above the long-term average of 64%.
  • The Q2 2017 blended revenue growth estimate is 5.0%. Excluding the energy sector, the revenue growth estimate declines to 4.1%.
  • 70.9% of companies have reported Q2 2017 revenue above analyst expectations. This is above the long-term average of 59% and above the prior four quarters’ average of 56%.

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Finding Earnings Strength Through Dollar Weakness

The powerful rally in the euro is one reason there is a huge currency counter-intuitive trade occurring. In the chart below, the Dollar Index (DXY) is laid over the Currency Shares Euro Trust ETF (FXE), demonstrating the inverse relationship of the dollar and the euro. Whether this spread widens further is anyone’s guess, but it has Corporate America in full profit mode, waiting with bated breath for a tax reform bill and an infrastructure spending bill to make their way through the House of Representatives.

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

The mighty sell-off in the dollar is not getting nearly as much play from the talking heads as the dollar did when it was rallying to new multi-year highs. In the charts, there is a rising trend line denoting something in the realm of a 200-300 week moving average, depending on the technical indicators being plugged in.

That line comes into play just under where the DXY currently trades. Call it the Dollar’s Red Line. If broken to the downside, we could see a further sell-off to the 85 mark. My personal view is that the support line around 92 will hold, as central banks will intervene to prevent a further rise in the euro that would curtail exports and hurt profits in what is still a nascent recovery for that euro region. However, that doesn’t mean the dollar can’t camp out under the 95-point line for many weeks, if not months.

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

The current conventional line of thinking on most currency trading desks is that European Central Bank (ECB) Chairman Mario Draghi and most other EU central bankers are sold on the idea that a fractured EU would be a devastating scenario that would have a global systemic effect on financial markets. Under that hypothesis, the most recent policy statements by Draghi to continue QE at 60 billion euros per month through the end of 2017 has investors scratching their heads about the recent strength in the euro.

A year from now, this angst might seem like “much ado about nothing,” but in any case, professional fund managers have taken notice of the stimulus effect that the weak dollar is having on Q2 profits, along with its future effect on Q3 earnings. All this comes with momentum building for tax reform and big spending bills. If not, then the same dynamics should continue to work for the bulls – a 2.5% to 3.0% rate of gross domestic product (GDP) growth and a Fed that maintains a dovish stance. When S&P earnings are rising as fast or faster than the overall market is advancing, this rally could go well into extra innings.

Growth Mail:

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

Today Marks the Start of “Market Hurricane Season”

by Gary Alexander

The official Atlantic Ocean hurricane season runs for six months, from June 1 to November 30, but 80% of all historic (between 1851 and 2015) Atlantic hurricanes happened between August 1 and October 31, according to data compiled by the National Oceanic & Atmospheric Administration (NOAA).  There is a long-term (165-year) bell curve of Atlantic hurricanes, peaking around September 10 (see chart, below).

HurricaneSeason.jpg

The same goes for market storms.  August is the worst market month over the last 20 years, according to Bespoke Investment Group, while September is the worst month over the last 50 years and 100 years.

Last week, I talked about two severe “flash crashes” in recent Augusts – 2011 and 2015.  But going back 20 years, August has been hurricane-ridden, starting in 1997 and 1998 during the Asian currency crisis.

  • In August of 1997, the DJIA fell by a then-record 600 points (-7.3%), from 8222 to 7622, and then:
  • In August of 1998, the DJIA fell by a much bigger record 1,344 points (-15.1%) from 8883 to 7539.

Before that, August in 1966 and 1981 fell 7%, while August in 1974 and 1990 collapsed by 10% or more.

Market historian and strategist Jeff Hirsch says that “August is the worst DJIA and S&P 500 month since 1987 with average declines of 1.3% and 1.0% respectively. August is also the worst month for NASDAQ (-0.3%) and Russell 2000 (-0.7%) over the same time period,” making August the worst market month:

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

The last few Augusts in the S&P 500 and Dow Industrials have fallen 2+% (average) in a bull market!

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But let us pause to praise Augusts of long ago.  August was up in 80% of the years prior to 1950.  It was the #1 month in the first half of the 20th Century.  The archaic reason for that anomaly is that America was primarily a farming nation before 1940, so the money flows from harvesting made August a great market month.  Now that fewer than 2% of Americans farm, August has become a fear-of-October selling month.

The best August was in 1932 (+34.8%).  The next August (1933) was up 12.8%.  In modern times, the birth of the biggest bull market of the 20th Century began in August 1982, rising 11.5%, with a booster shot in August 1984, up another 10%.  Two major market bottoms happened exactly 50 years apart in August.  The net result was a pair of double-digit August gains in both 1932-33, and August of 1982-84:

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August 1982 was great by the end of the month, but it started out with a major hurricane: Eight straight down days, August 3-12, as Fed Chairman Paul Volcker’s tight money policies threatened to fuel a new deflation: 1982 was our worst postwar recession, with 11% unemployment and a GDP going down 1.8%.  But markets tend to look forward and most traders realized that we were near a major market low in 1982.

Now, let’s turn to the entertaining arena of the political “storms” emanating lately from the DC swamp.

Some Perspective on Today’s Political Circus in Washington

Sometimes we get so focused on the passing parade of nonsense in the daily news – exacerbated by over-stated headlines, embarrassing tweets, and photo-shopped outrages – that we forget the world was in much worse shape in previous decades and centuries, when there was no real-time news of that era’s outrages.

Here are just a few snapshots from this week (August 1-4) in history, as it touches on today’s madness:

  • 525 years ago, Spain erected a “border wall” against immigrants, Muslims, and minorities, while at the same time launching an imperialistic surge westward, run by a renegade Italian consultant.  In January of 1492, the Spanish army defeated Muslim forces in Granada and then proceeded to expel all Jews on July 30.  On August 3, 1492, King Ferdinand and Queen Isabella sent Christopher Columbus sailing into the unknown with three ships and a crew of 90 in search of new trade routes.
  • The war between the press and politicians raged in pre-Revolutionary America, resulting in the First Amendment.  That freedom was solidified on August 4, 1735, when John Peter Zenger, publisher of the New York Weekly Journal, was cleared of libel charges brought by Royal Governor William Crosby, who had tried to censor Zenger’s attacks on the policies of the faraway British crown.
  • Speaking of the British, August 2, 1776 marked the formal signing date (let’s call it “John Hancock Day”) for the Declaration of Independence, passed exactly a month earlier and proclaimed on July 4.  For a month, that document was unsigned.  By signing it, 56 early patriots risked death for treason. 
  • On August 3, 1914, no stock markets in Europe or America were open.  It wasn’t a holiday.  It was the day Germany declared war on France and invaded Belgium.  That day, Britain’s foreign secretary Sir Edward Grey said, “The lamps are going out all over Europe; we shall not see them lit again in our lifetime.”  He was right – darkness continued through a Great Depression, World War II, then a long Soviet threat.  On the brighter side, the first ship went through the Panama Canal the same day.
  • On August 2, 1923, a controversial Republican President, Warren G. Harding, died of an embolism at age 58, in the Palace Hotel in San Francisco, six days after he had suffered a heat stroke in Fairbanks, Alaska (it was 94 degrees that day), complicated by ptomaine poisoning and pneumonia.  (Who said we don’t need poison tasters at the White House?)  Late that night (11:43 pm, or 2:43 a.m. on August 3 in the East), Calvin Coolidge was sworn in by his father, a notary public, in Plymouth, Vermont.

Learning of the President’s death on August 3, the Dow fell a single point – on the death of a President!

Instead of focusing on the drama coming out of today’s political swamp, I recommend reading history…

Global Mail:

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

More Chaos in Washington

by Ivan Martchev

Last week was another week of record ratings for the new reality runaway hit, The Presidential Apprentice. As I have stated privately for months, and now publicly, I fear that we may not be able to afford to renew the contracts for the main characters of this runaway reality TV hit for another season as the cost to re-sign them may turn out to be too high. The plot over the past week culminated with a new White House communications director, Anthony Scaramucci, “communicating” in the most eloquent fashion how he felt about the White House Chief Strategist Steve Bannon and former White House Chief of Staff Reince Priebus a day before Priebus was fired (source: July 27, 2017 The New Yorker, “Anthony Scaramucci Called Me to Unload About White House Leakers, Reince Priebus, and Steve Bannon”).

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While The New Yorker’s masterful piece compares only to the infamous Access Hollywood tape released just before the election, it does show that putting outsiders in key White House posts may not necessarily be that great of an idea. To work Washington effectively you have to know how Washington works. To have an effective White House communications director, you have to know how the media works.

All this drama is relevant to investors since nothing else is getting done in Washington, despite a Republican majority in the House and the Senate and a rather unusual Republican (in-name-only, or RINO) in the White House. That Reince Priebus would be replaced by a decorated Marine Corps General as a White House Chief of Staff is understandable as one might think that the chain of command that is so well taught in military organizations might help organize the present state of chaos, but I don't think so.  Politics is about compromise and bringing people together. In many respects, politics is as challenging as herding cats. As an independent who considers himself right of center, Donald Trump is probably the most divisive politician in modern U.S. history – and no decorated Marine Corps general can fix that!

Signals from the Bond Market

In late 2016, the bond market originally reflected investors euphoria about tax reform and infrastructure spending after the November election by seeing massive yield curve steepening that went from 76 basis points (bps) on the 2-10 spread after Brexit all the way up to 134 bps in the middle of December 2016.

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

In 2017, however, the 2-10 spread – one of the more popular measures of the U.S. Treasury yield curve – has been as low 78 basis points. The recent marginal “re-steepening” of the yield curve, to coin a word, is not as much due to improving economic prospects as it is to the Fed balance sheet unwinding, which has a tentative starting date of September, 2017.

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

The unwinding of the Federal Reserve’s balance sheet has to be one of the bigger unknowns in the history of modern day central banking and the fact it is commencing sometime next month is both highly intriguing and scary at the same time. In the present century, the Fed’s balance sheet has been as low as $672.44 billion in February of 2003, rising to $4.4431 trillion at last count. We were a little above $800 billion just before the Great Financial Crisis in 2008. For all intents and purposes, the Federal Reserve has added $3.6 trillion (to round by a few tens of billions of dollars for the sake of practicality) to its balance sheet to fight the Great Recession. How the Fed’s balance sheet will get “normalized” boggles the mind.

I think that the vast majority of market observers did not understand well the practice of quantitative easing when it was rolled out in early 2009 and many do not understand it now. Quantitative easing is not printing. It is a carry trade where the Federal Reserve buys Treasury and mortgage bonds from financial institutions and credits their accounts at the Fed with electronic dollars called “excess reserves.”

The Federal Reserve impregnated its balance sheet in order to suppress long-term interest rates to help the economy. Excess reserves did not create inflation because the Federal Reserve killed the credit multiplier in the financial system (intentionally) by paying interest on excess reserves that have always been higher than the fed funds rate. When excess reserve interest rises above the fed funds rate, excess reserves do not enter the fed funds market and don't result in the ballooning of broad credit, previously known as M3 (no longer reported by the Fed, even though it can be reconstituted using its individual components).

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

It is a rookie mistake to point to surging M1 and M2 money supply measures and look for hyperinflation. Hyperinflation may come someday – because the Federal Reserve may make a big mistake in their monetary machinations – but so far they have not made it. Understanding that excess reserve interest kills the money multiplier in the U.S. financial system is the key to understanding quantitative easing.

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

In effect, the practice of quantitative easing is the largest carry trade in the world, where for most of the operation excess reserve interest was held at 25 basis points, while Treasury and mortgages bonds that the Fed bought using such electronic excess reserve credit carried significantly higher interest rates to the tune of 10X. This interest rate differential was very profitable and was remitted to the U.S. Treasury by the Fed. This is how the Federal Reserve became the most profitable financial institution in the world.

Remittances.jpg

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

It does not take a genius to figure out that if this financial monstrosity called QE helped suppress long-term interest rates, the unwinding of it may push them higher. This is why I wouldn't read too much into a renewed yield curve re-steepening as a signal that the economy is about to shift into high gear. It might be just the Federal Reserve elephant in the room (the U.S. financial system) trying to shrink its balance sheet.

Sector Spotlight:

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

We’re Halfway There – Will We Ever Arrive?

by Jason Bodner

A lively discussion between two opposing viewpoints can be exhilarating and fun. It gets the juices flowing, stimulates creative thinking, and gets to the heart of human communication. As you know from my many columns here, I love to use analogies in order to illustrate my view on a topic. Sometimes these illustrations can be technically correct but practically irrelevant, yet the introduction of the underlying argument in this sideways manner requires the opposing view to concede at least a part of my argument.

One of the masters of this line of thinking was Zeno of Elia, a Greek philosopher born in 490 BCE. He authored a few famous paradoxes. Perhaps his most widely known is the “dichotomy.” The premise holds that in order to get from point A to B, you must reach a halfway point. Then from the halfway point to point B you must reach another halfway point. This mathematical certainty continues infinitely, meaning you will never reach point B, constantly arriving at a halfway point in smaller intervals. Simply put (by Aristotle): That which is in locomotion must arrive at the half-way stage before it arrives at the goal.

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In reality, we all know that even though we traverse halfway every time we go from point “A” to point “B,” most of the time we actually get there! Well, here we are just past the middle of earnings season. We already crossed the halfway mark as 58% of the S&P 500 companies have reported earnings as of last Friday, according to FactSet Earnings Insight. The good news is that 73% of the reporting companies have beaten the analysts’ mean sales and earnings estimates. Should this number hold for the rest of earnings season, it would be a record – at least since FactSet began collecting this data in 2008.

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Positive second-quarter earnings surprises are being led by Info-Tech (84%) and Health Care (83%).

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As we digest these charts it is clear that earnings are behaving very well this quarter. Telecom reported 100% of companies beat revenue estimates. Again, it’s the smallest sector by constituents, but this week it surged nearly 7%! Telecom was the standout performer of the week as other sectors saw performance distributed more evenly. After blowing away revenue estimates, energy surged by nearly 2% last week.

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Before we get too excited, let’s remember that we are only halfway through earnings season and halfway through the summer. As more and more companies report earnings, we will see if the 73% winning rate lasts, but as we approach the August “dead zone,” we may see some disappointing earnings emerge.

Do Traders Really Take Long Vacations in August?

Whether or not we ever “arrive” at our destination, we can leave that debate for the philosophers, but the past few Augusts saw the market hitting some pockets of severe turbulence. As some traders take a hot August vacation, one school of thought says that “while the cat’s away the mice will play,” but with the advent of mobile technology, that argument is obsolete, since no one ever actually ignores the market.

While it is surely true that traders can trade stocks from anywhere these days, many managers treasure their final weeks of August as a time to unplug. In the Hamptons, just outside New York City, I don’t envision managers trading all day from poolside. This is traditionally a time to relax and recharge for the fall season. If they are truly “working,” it is more likely they are working on relationship management or mental health. As a result, August has recently delivered an overdose of volatility. One headline from North Korea or some outbreak of a deadly virus can be enough to slap the market off its all-time highs.

With that said, the fundamentals still matter. Energy is surging on better-than-expected revenue and crude oil is screaming towards $50 again. But looking at a chart of oil, I still see us at the upper boundary range of a down-trend channel. In the coming month, we may find pressure as oil enters a seasonally weak time of year. If this happens and liquidity dries up as earnings season ends, it portends choppy waters ahead.

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We are halfway through earnings season. The Zeno school of thought says that technically we’ll never get to the end of anything, but even when we do (practically), the cycle never ends. Q3 earnings will soon be around the corner. Then Q4 and so on… Whether or not we see some chop in late summer, the picture is clear that companies are reporting better and healthier numbers. This is obviously good news for the long-term bulls out there. Either way, “To be prepared is half the victory,” (Miguel de Cervantes).

A Look Ahead:

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

GDP “Rises” (Anemically) to 2.6% in the Second Quarter

by Louis Navellier

Last Friday, the Commerce Department announced that its preliminary estimate for second-quarter GDP growth was an annual pace of 2.6%, slightly below economists’ consensus estimate of 2.7%, but up from 1.2% in the first quarter.  Neither number exceeds the dismal trend of the last eight years under Obama.

Meanwhile, the International Monetary Fund (IMF) is not very bullish on America’s future growth rate, since its “World Economic Outlook” last week cut its U.S. GDP forecast for both 2017 and 2018 to only 2.1%, down from its prior forecasts of 2.3% for 2017 and 2.5% for 2018.  The IMF cited an “assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of U.S. fiscal policy changes.”  In other words, the IMF is paying more attention to politics than corporate earnings or actual economic data.  I’d ignore the IMF GDP forecasts, since the economic data tells us that the U.S. is on track for at least 2.5% annual GDP growth for the foreseeable future, especially in light of a weaker U.S. dollar that is boosting exports as Boeing is now demonstrating. (Please note: Louis Navellier does not currently hold a position in Boeing. Navellier & Associates does currently own a position in Boeing for client portfolios).

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Due to a weaker U.S. dollar, which hit a 1-year low relative to major currencies this week, commodity inflation is expected to materialize in the upcoming months.  Crude oil prices are firm, since a big supply drawdown is still underway after the American Petroleum Institute and Energy Information Administration reported that domestic inventories declined by 10.2 million barrels and 7.2 million barrels, respectively, in the latest week.  This is the fourth consecutive weekly decline in crude oil inventories, each one larger than analysts forecasted.  Furthermore, due to the fact that the Baker Hughes domestic rig count finally declined slightly in the latest week, the shale boom may be moderating.  Furthermore, Saudi Arabia is talking once again about curtailing production, so crude oil prices have firmed up in late July. 

Third-Quarter Economic News is Picking Up

When I look at the economic data – rather than politics – we have some solid ground to believe that the GDP figure will remain above 2% and perhaps climb to 3% later this year.  First, the Markit purchasing managers index (PMI) rose to 53.2 in July, up from 52 in June.  A weaker U.S. dollar, improving crude oil, and natural gas production were cited as the primary reasons that industrial production has risen for five straight months.  Markit’s service sector PMI remained at 54.2 in July, tying its highest level this year.

On Tuesday, the Conference Board announced that consumer confidence rose to 121.1 in July, up from a revised 117.3 in June.  This is the second highest reading for consumer confidence since 2000.  Their “current conditions” sub-index is now at a 16-year high, due to a strong stock market, falling gasoline prices, and strength in the job market.  Conference Board director of economic indicators Lynn Franco said consumers see the current economic expansion “continuing well into the second half of this year.”

On Thursday, the Commerce Department announced that durable goods orders soared 6.5% in June, due largely to a 19% surge in transportation orders thanks to Boeing.  Excluding transportation orders, durable goods orders rose 0.2% in June.  Interestingly, business investment declined in June for the first time this year, so hopefully this is just a temporary aberration.  Excluding defense orders, new orders surged 6.7% in June and is especially promising.  Overall, it appears that a weaker U.S. dollar may now be helping to boost exports, led by Boeing, which is great news for GDP growth in the coming two quarters of 2017.


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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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