Economic Outlook Remains “Highly Uncertain”

Yellen Says the Economic Outlook Remains “Highly Uncertain”

by Louis Navellier

May 25, 2015

Container Ship ImageThe big news last week was Wednesday’s release of the latest Federal Open Market Committee (FOMC) minutes, which revealed that Fed officials were worried about a strong U.S. dollar hindering economic growth by making U.S. exports more expensive.  Although a minority of Fed officials cited a harsh winter and the West Coast port strike impeding first-quarter growth, most listed a strong U.S. dollar as the main culprit.  Furthermore, the strong dollar also suppressed commodity prices and lowered inflation risks, so some FOMC officials are now questioning whether or not inflation will perk up in the upcoming months.

After the Fed minutes came out, we learned on Friday that the Consumer Price Index (CPI) declined 0.2% over the last year, so there is virtually no evidence of inflation to cause the Fed to raise key interest rates.  Furthermore, according to the Labor Department, wages were flat at just $10.54 per hour in April, despite the minimum wage being raised in some key regions around the U.S. The bottom line is that the Fed is a bit perplexed and uncertain of the direction of economic growth, inflation, and interest rates; so I expect they will not raise interest rates in the upcoming months – unless wage growth and inflation materialize.

Also on Friday, Fed Chair Janet Yellen implied in a speech to the Providence (RI) Chamber of Commerce that weak productivity may be partly to blame for the lack of wage growth. Specifically, she said that, “I have mentioned the tepid pace of wage gains in recent years, and while I do take this as evidence of slack in the labor market, it also may be a reflection of relatively weak productivity growth.”  Overall, she said, the economic outlook remains “highly uncertain.” Ms. Yellen also said the economy is struggling due to persistently slow business investment growth and weak investment in the energy sector.

In This Issue

From mid-April to mid-May the euro recovered a bit, but it suffered a huge (4%) setback last week, due in part to more ECB easing, as Ivan Martchev will explain in Income Mail.  Then, Gary Alexander will analyze the upcoming (Friday) GDP revision with a cautionary note on how that statistic is generated.  In the end, I’ll return with a review of U.S. inflation, along with the latest growth trends in Asia and Europe.

Income Mail:
A Decisive Euro Reversal
by Ivan Martchev
U.S. Bond Buyers Show up on Schedule

Growth Mail:
The Economy May be Growing Faster than GDP Figures Imply
by Gary Alexander
The Creative Destruction of the Smartphone
Convenience and Satisfaction are Not Easily Measured

Stat of the Week:
Consumer Prices Down 0.2% in Last 12 Months
by Louis Navellier
Japan Surges while China Slows and Europe Struggles

Income Mail:

A Decisive Euro Reversal

by Ivan Martchev

The linear extrapolation of trends in the currency markets so prevalent in the financial media came to a halt last week. Its nemesis was the euro, which had one of the largest weekly declines in the euro bear market which commenced last summer. Last week the EURUSD cross rate ended at $1.1012 while the week before it closed at $1.1445.

Euro Dollar Exchange Rate - Weekly OHLC Chart

Source: Barchart.com

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

I had thought this rebound in the EURUSD cross rate was likely to stall in the $1.15 to $1.20 range but in reality we never even touched $1.15. The culprit for the unwinding in this dead-cat bounce in the euro was the announcement by the ECB that they were going to “slightly frontload” their QE operation in May and June ahead of the slower July and August period where many Europeans simply head for the beaches.

European financial markets turn illiquid in the summer – even more so than they do in the U.S. – so the ECB conveniently decided to step in and take advantage of a German 10-year bund yield that had gone from 6 basis points (0.06%) in April (on a closing basis) to 70 bps (0.70%) earlier in May. Buying bonds with positive yields is a heckuva better deal than buying bonds with negative or barely positive yields.

In the end, this seems to be a cleverly designed jaw-boning maneuver by the ECB, which had been enjoying the benefits of a rapidly depreciating euro and its effect on regional economies via the stimulation of trade as well as its impact on deflation. The ECB wants the euro to be down as they believe that a sharply depreciating euro will reverse the stagnation that has gripped Europe. This stagnation is not only the result of European political rigidity but also the effect of the belated actions of the ECB itself. The ECB tried to embark on a rate hiking cycle in 2011, only to reverse course and start experimenting with negative deposit rates in 2014. We believe that this was a major mistake, as the lack of measures to reverse stagnant and later shrinking bank lending has crippled the euro-zone for over two years.

European Central Bank Quantitative Easing Chart

Source: Tradingeconomics.com

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

The ECB’s QE is slated to carry until September of next year. This means any rallies in the euro until then are to be highly suspect and treated as countertrend moves amid a broad and overdue decline that is likely to carry at least to parity to the dollar. Whether it carries past parity will be decided by later ECB and Fed actions. The ECB may be doing too little QE too late and it is entirely possible that, after they realize it, they will introduce a “QE2” next year. Such a move, if it comes, is likely to have profound negative implications for the euro, which will then be in a position to challenge its all-time low of $0.83.

But those are considerations for 2016. Right now, we believe that parity is a high-likelihood outcome later on in 2015.

U.S. Bond Buyers Show up on Schedule

It appears that the culprit for the mysterious backup in U.S. Treasury yields in April and May is not the U.S. economy, the inflation outlook, or the Federal Reserve, but the ECB. You thought the ECB affects only the dramatic action in bunds? In this case, it appears that the drama has spilled over on the other side of the Atlantic.

Ten Year Treasury Note - Weekly OHLC Chart

Source: Barchart.com

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

There had been numerous spread trades placed on the likelihood of the bund/Treasury yield differential contracting. When the bund market had too many institutional traders leaning on the wrong side of the market, the unwinding of those spread trades moved the Treasury market, the bunds, and the euro itself.

Bond gurus Jeff Gundlach and Bill Gross have referred to single-basis-point bunds as the short of the century. It worked for a couple of weeks and I am watching with great interest to see if this sell-off in German bunds that has been dragging the Treasury market with it will continue. I bet it won’t, due in part to this front-loading of ECB QE.

Buyers of Treasuries appeared right where one would expect them to show up if indeed we still are in a deflationary environment. So far 10-year Treasuries have not closed above 2.29% in May. I still think the likelihood is that we make a fresh 52-week low, if not an all-time low, in 10-year Treasury note yields by the end of 2015. It is worth pointing out that 30-year Treasuries already made an all-time low in yields last January.

Bank of America Merrill Lynch Bonds Chart

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

U.S. economic data does not explain the backup in U.S. yields. The economic numbers have been on the weak side as has been the case over the past three years, partially explained by the winter weather. But we may be developing some 21st century seasonality where the first half is slower and the second half picks up.

It is worth pointing out that the February and April-May 2015 sell-offs in Treasuries were accompanied by a very peculiar resilience in junk bonds. This resilience is peculiar because it happened amid weak economic data. Junk bonds are highly economically sensitive, so if they are shrugging off the weak data, bond traders must think the weakness is seasonal. At last count the B-rated high-yield bonds were near the lows in spreads registered in 2015 of 4.61% in mid-May; in mid-December they were at 6.02%.

I would look for junk bond spreads to expand somewhat, particularly if we are close to a high in oil prices. Last year the high in oil came in June and this year we may be looking at a similar situation. The junk bond sell-off in 2014 was led by the energy sector as much of the surging new U.S. capacity had been financed with high-yield debt. If we make a fresh low in oil below $40 in 2015, the junk-rated debt of U.S. shale producers could come under significant pressure again and may spill over into the broader junk bond market.

Thirty Day Fed Funds - Daily Line Chart

Source: Barchart.com

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

Last week we also had a mild sell-off in fed fund futures as the Federal Reserve Chair indicated she expects to begin raising interest rates later this year if the job market improves and the Fed is confident that inflation will climb closer toward its target rate. Those are two very big “ifs.” The ECB frontloading QE and the Fed hiking for the sake of hiking are only going to push the euro lower and the dollar higher.

Hiking rates for the sake of hiking rates may be more of a political maneuver by the Fed than anything else. It is a sign that they have won the great fight against deflation that former Chairman Ben Bernanke embarked upon. I cannot help but think that this potential rate hike is similar to President George W. Bush landing on that aircraft carrier like Peter Pan with his sign “Mission Accomplished.” If the Iraqi events have shown us anything of late, it is that the mission was never over. What would be most embarrassing is if the Fed hikes the fed funds rate (as they have been telegraphing all year) and then reverses, just like the ECB did in 2011, as deflation remains a persistent problem.

Growth Mail:

The Economy May be Growing Faster than GDP Figures Imply

by Gary Alexander

“The great achievements of Western Capitalism have redounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.”

– Milton and Rose Friedman, in “Free to Choose”

Right now, the big concern among investors, economists, and analysts is the threat of recession.  If the first quarter of 2015 turns negative in this Friday’s GDP revision (or in the third estimate, due on June 24), then we’ll be on pins and needles to see if the second-quarter GDP remains below zero, since two consecutive quarters of negative GDP growth comprise the classic definition of what it means to be “in a recession.”

But what if our primary tool for measuring economic growth – GDP – is a seriously flawed statistic?

Martin Feldstein, who was President Reagan’s chairman of the Council of Economic Advisors and is currently an economics professor at Harvard, wrote an opinion piece in The Wall Street Journal last Tuesday entitled, “The U.S. Underestimates Growth.”  Here is how he began his GDP analysis:

“Today’s pessimists about the economy’s rate of growth are wrong because the official statistics understate the growth of real GDP, of productivity, and of real household incomes…. Government statisticians are supposed to measure price inflation and real growth. Which means that, with millions of new and rapidly changing products and services, they are supposed to assess whether $1,000 spent on the goods and services available today provides more ‘value’ or ‘satisfaction’…than $1,000 spent a year ago.”

Then, he provided us with a specific example: “What about valuing all the improved electronic forms of communication and entertainment that fill the daily lives of most people?” How can we measure speed, ease, convenience, and quality?  What are the metrics?  Millions own an iPad or smartphone that is more powerful than the Cray supercomputer of 1985, which cost $17.5 million in 1985 (about $40 million in today’s dollars) and weighed 5,500 pounds.  How do you measure those improvements in GDP terms?

The Creative Destruction of the Smartphone

Think about everything your smart phone does and then try to price those services in historical terms.

According to Peter Diamandis and Stephen Kotler, the authors of “Abundance,” you would pay nearly $1 million in today’s dollars for those services in past times.  Your video teleconferencing package would cost $250,000; a GPS positioning via NAVSTAR would cost $120,000.  Add in a Canon video camera at $3,000, a medical library, a Toshiba video player, the Encyclopedia Britannica, a Nikon camera, a Seiko digital watch, an Atari video console, a Sony music player, a VHS video library…and dozens more “aps.”

Smart Phone ImageDiamandis and Kotler call this “dematerialization,” like “when a phone dematerializes a camera.  It just disappears.” You don’t see armies of tourists with heavy cameras around their necks and a shoulder pack of film rolls to send off for development. You see a multi-purpose phone that uploads those pictures to friends around the world in a second.  The average smart phone is a camera, radio, TV, recording studio, office suite, movie theater, navigator, spreadsheet, stereo, flashlight, board game, card game, (and phone).

This isn’t a toy for the rich.  Billions of people have smart phones, and billions more will buy them in the next five years.  Capitalism brings these tools to the middle class and poor because some rich people first invested in the idea and paid outrageous sums for the first edition.  The first cell phones in the 1980s were monstrous and costly. The first Apple MacIntosh cost $3,000 for 8k memory.  Those of us who paid those outrageous prices (I was one of them, editing newsletters on a MacIntosh in 1984) paid back the original investors so that they could improve the product and make subsequent versions for everyone else, for less.

These innovations now belong to the whole world, including billions in the middle class and millions of the previously poor. According to a recent cover story in The Economist (“Planet of the Phones,” Feb. 28-March 6, 2015), “Today about half the adult population owns a smart phone; by 2020, 80% will.”  A poor rice farmer in China now has access to more data than the richest American enjoyed just 25 years ago.

Global Smartphone Shipments Image

Source: The Economist

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

Global sales of smartphones topped 1.2 billion in 2014, up 28% from 2013. Sales this year are estimated to be 1.45 billion, up another 20%.  That amounts to 1,000 new smartphones shipped every 21.8 seconds.

This is “clean” growth. When I tell friends I write a weekly column called, “Growth Mail,” I often hear a snort about America’s “obsession with growth.” Some even say that growth is “like a form of cancer”!

I respond as best I can, but attention spans for economic concepts seldom exceed bumper-sticker length, or the 140 characters you can compress into a Tweet or Instagram. My usual quick answer is that “growth may look dirty in the early, industrial phases – such as China today or the U.S. a century ago – but growth in an advanced economy is clean.” We grow by cleaning up the environment with smarter technology and by creating non-polluting new products and services, like the billions of new smartphones sold recently.

Convenience and Satisfaction are Not Easily Measured

Martin Feldstein wrote profoundly about the nature of true economic growth in the Journal last Tuesday:

“There is no way to know how much of each measured price increase reflects quality improvements and how much is a pure price increase. Yet the answers that come out of this process are reflected in the CPI and in the government’s measures of real growth. This is why we shouldn’t place much weight on the official measures of real GDP growth . . .

“Consider a new drug that improves the quality of life, reducing pain or curing a previously incurable disease. The ability to buy that new product means that a dollar is worth more than it used to be, and that the properly measured level of real GDP is higher….The main effect of raising well-being when the drug is introduced is completely ignored.…The result is that the rise in real incomes is underestimated, and the common concern about what appears to be the slow growth of average household incomes is therefore misplaced. Official statistics portray a 10% decline in the real median household income since 2000, fueling economic pessimism. But these low growth estimates fail to reflect the remarkable innovations in everything from health care to Internet services to video entertainment that have made life better during these years.”

In short, perhaps GDP is no longer the best way to measure the growth in our quality of life. GDP can’t measure the levels of increased convenience and satisfaction due to a wide array of better products.

Competition resulting from a wider array of selections makes life more enjoyable, safe, and convenient. In my youth, we had three TV networks, then PBS.  Now, we have 500 channels to choose from.  We had three news magazines.  Now, “blogs” are unlimited. We had a few catalogs from major department stores, like Sears. Now, we can make instant online purchases from thousands of specialty firms.  We can find almost anything on Amazon, eBay, Craigslist, or other sources. According to Mark Perry of AEI, the old Sears catalogs offered very few choices, but Sears on-line now offers over 400 different ranges, 500 types of refrigerators, over 200 dryers, and 80 different Sears’ models of gas grills, ranging from $39 to $5,000.

The convenience of buying from home (with no gasoline or time spent driving to multiple stores) looks like a GDP slowdown. In fact, GDP growth suffers when you save money and time by ordering at home.  When I “commute” 20 steps from my bedroom to a comfy home office, I don’t contribute to annual auto sales, gasoline sales, business suit and tie sales, nor am I subjected to radio and billboard advertising; but life is better for me, my employer, and my customers.  When you see a movie for free, read a book for 60% off, see your grandchildren on Skype, or attend a business meeting by teleconference, the GDP may suffer; but we become far more productive. GDP can’t measure such intangibles, but each of us can.  Is your life more satisfying and convenient now than ever? Then real per capita GDP is rising, for you.

Stat of the Week:

Consumer Prices Down 0.2% in Last 12 Months

by Louis Navellier

On Friday the Labor Department announced that the Consumer Price Index (CPI) only rose 0.1% in April.  Energy prices declined 1.3% and put downward pressure on the overall CPI, but higher healthcare and housing costs caused the core CPI to rise 0.3%.  In the past 12 months, however, the overall CPI has fallen by 0.2%, so there is virtually no evidence of inflation that will push the Fed into raising key rates.

The most positive economic news last week was released on Tuesday, when the Commerce Department announced that new home construction surged 20.2% in April to an annual pace of 1.14 million homes, the fastest pace since late 2007.  Single-family home construction rose 16.7%, while multi-unit home construction rose at a 31.9% annual pace.  More favorable weather in April was somewhat responsible for the surge in new home construction, but the fact that new household formation is also on the rise is also aiding the housing industry.  So despite rising home prices, it appears that the home building industry is striving to meet growing demand, which may imply a revival in GDP growth over the upcoming months.

Japan Surges while China Slows and Europe Struggles

Japanese Buddha ImageLast Wednesday, Japan announced that its GDP grew at a 2.4% annual rate due to solid growth in both corporate and domestic sectors.  This came as a big surprise, since economists were only expecting 1.5% annual GDP growth.  A dramatic rise in inventories accounted for most of Japan’s 2.4% growth. This is indicative of a manufacturing sector revving up.  A weak yen is boosting exports and Japanese consumers have begun spending again, after a slump following the sales tax hike launched in April of 2014.  Since the average Japanese citizen is older than the average American, their spending tends to be much more cautious, but hopefully the first quarter was a good sign that domestic consumption is on the rise in Japan.

While long-dormant Japan is rising again, long-dominant China seems to be slowing down. On Thursday, HSBC announced that its preliminary Purchasing Managers Index (PMI) for China improved to 49.1 in May, up from a final reading of 48.9 in April.  Even though HSBC’s China PMI improved in May, any reading below 50 still signals a contraction.  Since China’s central bank recently cut key interest rates and announced more stimulus plans, China’s economy may perk up later this year; but so far there is no evidence of that recovery. I should add that China’s cycles tend to be shorter and turnaround times are much faster than the U.S., so the world is anxiously waiting for China’s imminent turnaround to begin.

Turning to Europe, Markit announced on Wednesday that its preliminary euro-zone PMI slowed to 53.4 in May, down from 53.9 in April and 54 in March.  Even though the euro-zone manufacturing sector has slowed slightly, at least the readings are over 50, which signals an expansion.  Mighty Germany’s GDP grew at an anemic 1.2% annual pace in the first quarter, down sharply from 2.8% in the fourth quarter.  Perhaps the precarious Greek situation is causing a slowdown in German economic output and sentiment.

Also on Tuesday, Eurostat announced that the euro-zone’s trade surplus rose $26.2 billion in the first quarter as exports rose 11% and imports rose 7%.  There is no doubt that a weaker euro has boosted the competiveness of Germany, Italy, Spain, and other major economies in the euro-zone.  Overall, euro-zone GDP grew at a 1.6% annual pace in the first quarter, up from a 1.2% annual pace in the fourth quarter.

It appears that the ECB’s aggressive quantitative easing and stimulus is finally working; but so far there is virtually no sign of inflation, so the ECB is expected to continue with its quantitative easing until inflation is finally “sparked.”  This is a dangerous game, but so far the ECB’s financial engineering is working!


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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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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