Fed Leaves Well Enough Alone

The Fed Leaves Well Enough Alone…For Now

by Louis Navellier

September 26, 2017

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

Despite robust GDP growth, central bankers are puzzled by the lack of inflation. The Fed’s favorite inflation indicator, the Personal Consumption Expenditure (PCE) index, is now running at a 1.4% annual pace, down from 2.2% in February. After the Federal Open Market Committee (FOMC) meeting on Wednesday, Fed Chair Janet Yellen said that the recent slowdown in U.S. inflation is “a mystery,” but as long as the PCE remains well below the Fed’s 2% target, there will be no hurry to raise key interest rates.

The Federal Reserve Building Image

Also at the FOMC meeting, the Fed confirmed the widespread expectation that they will start shrinking their $4.5 trillion balance sheet in October by selling $10 billion in Treasury and mortgage-backed securities. Frankly, I think the credit markets can handle this selling pressure and I commend the Fed for starting to shrink its massive balance sheet that had grown over five-fold since the 2008 financial crisis.

In This Issue

In Income Mail, Bryan Perry opens this week’s edition with one sparkling tech stock and a handful of dogs that have outlived their usefulness. Then, Gary Alexander writes about the latest end-of-world scares (cosmic and financial) and dives deep into one specific statistical indicator: household income. In Global Mail, Ivan Martchev examines the impact of the Fed’s new “unwinding” policy, especially as Japan and Europe continue their QE policies. In Sector Spotlight, Jason Bodner shows why the daily news and the stock market often seem at odds with each other (hint: follow the earnings). Then, in the end, I will give you another reason for the market’s September surge, and a closer look at China’s latest debt downgrade.

Income Mail:
Winds of Change in the Tech Sector
by Bryan Perry
Not All Tech Stocks are Created Equal

Growth Mail:
The End of the World Was Postponed…Again
by Gary Alexander
Putting “Household Income” Under the Microscope

Global Mail:
A Dive into the Monetary Unknown
by Ivan Martchev
Multi-Speed Central Banks

Sector Spotlight:
What We See Depends on Where We Stand
by Jason Bodner
Earnings (not News) Fuel This Market

A Look Ahead:
Traders May Be Front Running Earnings Expectations
by Louis Navellier
Chinese Bank Credit Downgraded

Income Mail:

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

Winds of Change in the Tech Sector

by Bryan Perry

As the bull market enters the fourth quarter – and the ninth year of an extended bull market – portfolio managers are eager to own the crème de la crème blue chip stocks that offer superior total returns (including dividend income and capital appreciation). The higher the market trades, the more investors expect an elevation of volatility. Fewer stocks will lead the market as it trades higher. It is my view that the most coveted holdings will be blue-chip stocks capable of doubling their dividends every 5-8 years.

Take, for instance, the semiconductor and semiconductor equipment sectors that have been leaders within NASDAQ for most of 2017. Some of these stocks have had torrid runs and trade at lofty levels that invite longer periods of consolidation to digest those big moves. Investors looking to stay within the chip space but who want to find deeper value should look at some chip makers and chip equipment makers trading at lower P/E ratios and at the same time hiking their dividends and increasing their stock repurchase plans.

One stock that fits this profile is Texas Instruments (TXN; I currently have no position in TXN). The company designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide and its products are found in hundreds of commercial and consumer-oriented products.

TXN is breaking out of a multi-month trading base, primarily on news that the chip maker's board raised the quarterly dividend 24% (from $0.50 to $0.62) and added a hefty ($6 billion) authorization for share buy-backs, in addition to the $44.6 billion in purchasing authority that remained at the end of June 2017.

This is mouth-watering news to institutional investors seeking stocks that offer yields at or near 3%, with the company itself ready to make a bid for shares. Since buying back shares reduces the size of the float, which has a net positive impact on earnings per share. TXN’s dividend and buy-back news put a fresh fire under the share price this month, but this stock can still trade 10% to 15% higher by year’s end. That kind of fresh breakout is hard to find in the broader tech sector, where the easy money has already been made.

Texas Instruments Stock Statistics Chart

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

Not so for TXN. Companies the size and quality of TXN that raise their dividends by 24% will get global attention in the financial community. Managers of long-term pension money are always looking for growth at a reasonable price (GARP) coupled with a robust dividend and stock repurchase plan.

Money managers understand that not all legacy technology stocks are of equal significance. They must continue to reinvent themselves and adapt to new areas of next-era growth, like artificial intelligence and autonomous driving. Texas Instruments will be a big player in these fledging technologies.

Not All Tech Stocks are Created Equal

On the other hand, other big legacy technology companies are being hampered by having to service vast customer bases embedded in systems that demonstrate little or no growth. That is why the stocks of those companies struggle mightily. Eventually, dividend growth stalls out – and then is eliminated altogether.

The world of technology is evolving at a faster pace than at any time in history and the market shows no mercy for companies saddled with a ball-and-chain business model that results in the elimination of a dividend and/or the evisceration of their share prices. Unisys (UIS), for example, went from a split-adjusted price of almost $2,000 per share in 2001 to a current price of just $8.25 as of last Friday’s close. This is an ‘OMG’ moment for investors that continue to hold the stock under the belief that it would eventually recover, simply because its largest customer is our spendthrift federal government.

Unisys Stock Statistics Chart

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

Remember those ultra-cocky salesmen from Xerox? The stock traded at a split-adjusted price of $185 in January 1999 and today it trades at $33 after conducting a reverse 1-for-4 stock split this past June. That makes its 1999 price the equivalent of $740. And how about Digital Equipment Corporation, also known as DEC, a major American company in the computer industry from the 1990s. Their PDP and successor VAX products were the most successful of all minicomputers in terms of sales. DEC was acquired in June 1998 by Compaq, in what was at that time the largest merger in the history of the computer industry. Today, their name can’t be found on any hardware products anywhere.

Compaq had little idea what to do with its acquisitions, and soon found itself in financial difficulty of its own. The company subsequently merged with Hewlett-Packard in May 2002. The Compaq name was discontinued in 2013 and HP subsequently split up into two companies back in 2015 bringing only more pain. Remember when HP was a king amongst kings in the tech world? For many of us, our first laptop was an HP Pavilion. HP helped to pave the way for many of the devices we carry around today.

HP wasn't just a beacon for nerds. They made technology cool. Who can forget the intriguing collaboration between the computer manufacturer and rap icon Jay-Z in 2006? Oh, how times and technology changes. Last Thursday, Hewlett Packard Enterprises (HPE) announced a 10% cut in its global workforce (source: WSJ Sep. 21, 2017, “Hewlett Packard Enterprise to Cut 10% of Workforce”).

The lesson of all this is that investing in the tech sector requires quick reaction time. The market has been dominated by the FANG stocks and, true to form, they have provided great year-to-date results. However, these market darlings are all trading off their highs, with a couple of them showing increased technical deterioration. Shares of FANG stocks have been showing strong signs of distribution of late while shares of Texas Instruments have been breaking out to the upside under strong institutional money flow.

I’m not saying that the FANG stocks won’t reassert themselves and lead a Santa Claus rally. They very well might, but for now, they look crowded and tired and the smart money is moving into big-name tech stocks with hefty and rising dividend payouts that are staying on top of innovation within their markets and posting strong earnings as a result. Successful students of sector and stock rotation always like to follow the money. Heading into the fourth quarter, there are some emerging new leaders that deserve our full attention – and one of them is headquartered in the Lone Star State.

(Please note Bryan Perry does not currently hold a position in the above mentioned securities. Navellier & Associates does not own a position in the above mentioned securities for client portfolios.)

Growth Mail:

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

The End of the World Was Postponed…Again

by Gary Alexander

It’s the end of the world as we know it, and I feel fine….

--A hit song by R.E.M. (1987)

I am writing this column on the day the world ended. If you Google “September 23, 2017,” you will see what I mean. Multiple millions of viewers have done so. As it turns out, Saturday’s date involved a confluence of the constellation Virgo with the sun, moon, three planets, and nine stars from within Leo.

Revelation Chapter Twelve Prophecy Image

I spent the weekend celebrating some more interesting calendar confluences in my radio programs: In my Classical Hour, I played “The Planets Suite” in honor of the fall equinox. It was written by Gustav Holst, born September 21! In my jazz program, I played “Equinox” by John Coltrane, who was born September 23! Coincidence! Yes, but these musical coincidences harmonize better with me than any heavenly signs.

Before you laugh at any of this silliness, please consider that some very smart men in pin-stripe suits also like to predict the end of the world as we know it. For instance, the September issue of Money magazine profiles five pundits in an article titled, “It’s Going to Collapse, and Other Dire Warnings About Stocks.”

Money Magazine summarizes these five super-bears with a single short headline of what each said:

  1. “It’s Going to Be Agonizing” – Thomas Forester, CIO, Forester Capital Management
  2. “It’s Going to Collapse” – Jimmy Rogers, hedge fund manager
  3. “Asset Holders Will Lose 50%” – Marc Faber, author of “The Gloom, Boom & Doom Report”
  4. “There is Not Enough Fear” – Rob Arnott, chairman and founder of Research Affiliates
  5. “All Markets are Increasingly at Risk” – Bill Gross, manager, Janus Henderson Global Bond Fund

I know two of these analysts fairly well, having introduced them many times at investment conferences, and I have heard these two authors issue the same warnings for a long time. Another author I know well has been predicting “The Greater Depression” for almost 40 years at dozens of investment conferences.

After the September issue of Money went to press, other big-name economists joined the parade of bears. On September 15, 2017, Robert Schiller warned of a coming crash (“A Nobel Prize Winner’s Dire Market Warning,” NASDAQ.com). He is famous for developing a cyclically-adjusted price/earnings (CAPE) ratio, which now stands at 30.2, or “more than 85% above its long-term average of 16.1.” But economist Jeremy Siegel says that the CAPE ratio “may be over-pessimistic because of changes in the computation of GAAP earnings (e.g., ‘mark-to-market’ accounting) that are used in the Shiller CAPE model. When consistent earnings data, such as NIPA (national income and product account) after-tax corporate profits are substituted for GAAP earnings, the forecasting of the CAPE model improves and forecasts of U.S. equity returns increase significantly” (source: Ed Yardeni, “Stocks Not Too Hot,” September 18, 2017).

Putting “Household Income” Under the Microscope

Super-bears tend to get the headlines, for the same reason that earthquakes, hurricanes, terrorist attacks, and stupid tweets garner more headlines than sunny skies, peaceful times, good deeds, and sensible ideas.

Another form of negativism is exemplified by Bernie Sanders’ insistent claim that “99% of all new income today (is) going to the top 1%.” That attitude resurfaced a week ago after the Census Bureau announced that median U.S. real household income rose 3.2% during 2016, reaching an all-time high.

Household and Family Income Chart

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

This good news on median household income was reported in the New York Times under this headline:

“Bump in U.S. Incomes Doesn’t Erase 50 Years of Pain”

--New York Times headline, September 16, 2017

Those “50 years of pain” included some flat-lines and downdrafts in the 1970s, early 1990s, and 2008-9, but the general trend was up. (For reference purposes, a median is the mid-point of all samples, which is a fairer measure of wealth distribution than the mean, which can be distorted by a few multi-billionaires.)

The whole concept of mean (or median) household incomes is also flawed due to the rapidly changing nature of households: The number of people per household has been constantly shrinking over the last few decades, meaning that slightly more real income per household means far more income per capita.

In addition, traditional families accounted for about 75% of households in 1982 but only 65% in 2016:

Percentage of Traditional Families Bar Chart

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

Also, a lot of government benefits are not counted as income, making “real income” statistics incomplete. Comparing apples to apples (before taxes), economist Ed Yardeni calculates that “real average personal income per household (pre-tax) is up 26% from 2000 through 2016.” That’s not stagnation, is it? Even more compelling is that real personal consumption per household is up 28% from 2000 through 2016.

Real Personal Consumption Expenditures per Household Chart

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

This steadily rising chart contradicts what the New York Times dourly labels as “50 Years of Pain.”

As for Bernie Sanders’ negative mantra about the 1% grabbing 99% of all new income, the Wall Street Journal’s analysis of the Census data (in “New Record for Household Incomes,” September 13, 2017) concludes that “Incomes rose last year across all racial and age categories, inside cities and outside metropolitan areas, for native-born Americans and immigrants. Poverty rates also fell for most groups.”

Martin Feldstein, chairman of the Council of Economic Advisers under President Reagan, also points out (in “We’re Richer Than We Realize,” Wall Street Journal, September 8, 2017) that “the government statistics grossly understate the value of improvements in the existing goods and services.” Free online information is a simple example, but the best way to frame this question is to ask: “Given all the products and services available at the time, when would you prefer to live – in the 1950s, 1970s, 1990s, or now?”

If the world had indeed ended last Saturday, I’m sure the New York Times headline in the next world would be something like this: “World Ends on Trump’s Watch. Poor and Middle Class Suffer Most.”

Global Mail:

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

A Dive into the Monetary Unknown

by Ivan Martchev

Last week brought some clarity as to the beginning of the end of the greatest monetarist experiment in history, otherwise known as the Federal Reserve’s multi-legged quantitative easing (QE) program.

In addition to maintaining the fed funds rate at 1.25%, the Fed directed the managers of the System Open Market Account to reinvest all maturities of Treasury securities above $6 billion and all maturities of mortgage-backed securities above $4 billion. In plain English that’s $10 billion worth (0.2%) of securities from the Fed’s $4.5 trillion balance sheet that will be allowed to mature and won't get reinvested.

United States Government Debt versus Central Bank Balance Sheet Chart

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

This $10 billion monthly amount of securities allowed to run off is forecasted to slowly grow every month. It could theoretically grow to $50 billion or more per month, even though one could imagine this process being closely monitored so that there are no unintended consequences – like a spike in long-term interest rates. The Fed has been extra careful this time due to the “Taper Tantrum” experience when then-Fed Chairman Ben Bernanke created quite a spike in Treasury yields in May 2013.

In less than a decade, the national debt grew from $10 trillion to $20 trillion and the Fed’s balance sheet grew from a tad over $800 billion to $4.5 trillion. As they say in the central banking business these days: a trillion here, a trillion there and pretty soon we are talking about real money, right?

Federal Surplus or Deficit and Current Tax Receipts Chart

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

On a related note, the U.S. government is estimated to collect $3.21 trillion in tax revenues and spend a total of $3.65 trillion in its 2017 budget, resulting in a deficit of $443 billion in the first year of the new Trump administration. So even though tax receipts are at an all-time high and we are in the third longest economic expansion in the past 240 years, we are still running huge deficits. The only conclusion one can make is that spending is out of control. The Obama administration felt it needed to keep deficit spending high in order to help the economy after the worst recession since the 1930s, but what about Mr. Trump?

The level of the federal deficit is relevant to investors, since the first details of the Trump tax plan were unveiled last week to coincide with the start of the Fed’s balance sheet unwinding. Since a tax overhaul is likely to affect the level of federal tax receipts, one could safely conclude that the likelihood of the Trump tax plan affecting the level of federal deficit is high. The first details reported in the press indicate $1.5 trillion worth of tax cuts over 10 years to be offset by $1 trillion in new government revenue due to increased economic growth. The corporate tax rate is also expected to be reduced to around 20%.

Personally, I think nobody really knows how much federal tax receipts will go up because of this coming tax cut. Second, we are eight years and 3 months into the present economic expansion. There have been only two longer economic expansions – one was nine years long in the 1960s and the longest is 10 years, from March 1991 till March 2001. If this tax plan is passed, there may be a boost to the economy, which may give Mr. Trump a chance to beat the all-time record of economic expansions. I would not put it past Republican leaders to make the political calculation to pass the tax overhaul in the February-March 2018 period so that the desired economic effect could give them a helping hand in the 2018 elections.

United States Ten Year Government Bond Chart

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

Still, with the Federal Reserve letting bonds retire in ever higher numbers, possibly reaching a $50 billion monthly rate in 2018, we will have what is in effect Federal Reserve tightening in an election year plus an initially-expanding federal deficit in the early days of the tax cut (if it passes). This combination of rising deficits coupled with Fed tightening could backfire in 2018 as it could produce an interest rate spike.

One of my finance professors in graduate school used to say that the Fed Chair holds the most powerful unelected position in the U.S. Government. It is even possible that the Fed Chair holds more power than the President for the ability to push around the economy and influence elections and global markets.

Multi-Speed Central Banks

With the Fed letting bonds run off its balance sheet, the Bank of Japan is pressing full speed ahead with their QE program and so is the European Central Bank (although they are likely to taper in 2018). This puts us into an interesting situation where major global central banks are moving in opposite directions.

Japan Central Bank Balance Sheet versus European Union Central Bank Balance Sheet Chart

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

Out of this collision of central bank policies we are likely to get a stronger dollar and we very well may get a stronger yen too, particularly of the Fed’s balance sheet unwind helps create turbulence in global markets. Coupled with the North Korean standoff that has escalated with increasingly-hostile rhetoric, the likelihood is that volatility in financial markets will rise and perhaps even rise exponentially.

I guess we'll find out in 2018.

Sector Spotlight:

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

What We See Depends on Where We Stand

by Jason Bodner

It should come as no surprise that I am fascinated by space, stars, and galaxies. I consider myself an amateur cosmologist – not to be confused with a cosmetologist. One cool fact is that all of our time-honored constellations would look totally different and have different shapes if we were able to travel significant distances outside our solar system. For instance, a constellation like Cassiopeia wouldn't look the same way if we could travel a few light years from home – alas, an impossibility, for the time being.

Cassiopeia Constellation Appearance Image

Creating a story out of the shape of constellations is like a connect-the-dots game, but we view space in only two dimensions, like a diagram on a page. Instead, imagine a three-dimensional view of space, with two dots right next to each other but having vastly different distances from the observer. They appear to be very close together, but one is much further away. This is the beauty of constellations. Now for the truly fun part, due to the vast distances and the limit of our sight being set at the speed of light, some of the stars in the most familiar constellations may not even be there anymore. Betelgeuse, a star in Orion, has light arriving to our eyes emitted over 525 years ago. What if it exploded sometime after 1492?

The skyscape of the constellations is common to us all, but shifting our gaze back to terra firma, we only see a daily barrage of anxiety-causing headlines. Recently, we’ve seen catastrophic hurricanes, devastating earthquakes, escalating saber rattling from North Korea, stern antagonistic rebuffs from U.S. political leaders, unsettling discoveries in the Russia/election scandal, a monstrous Equifax hack which looks worse each day, and the cherry to top it off – President Trump taking a jab at the NFL.

Trump Football Hat Image

The daily news reads like an ad for Tums. The market, however, is like the little engine that could. It just keeps going up. So, if the world is steeped in terror, what gives? If the news looks 100% negative, what does the market see? With third-quarter earnings season weeks away, what is powering this market surge?

Earnings (not News) Fuel This Market

A quick recap of the latest (Q2) earnings shows the following facts, according to FactSet:

  • Energy was the top growth sector with 330% earnings growth and 15.5% sales growth.
  • 70% of S&P 500 companies beat sales estimates.
  • Q2 was the first time since Q3/Q4 2011 that the S&P 500 reported 2 consecutive quarters of double-digit earnings growth.
  • 39 companies issued positive EPS guidance for Q2 – the highest since Q4 2010.

As we approach third-quarter earnings season, this is a good time to check in with sector performance. This past week saw money come out of Utilities, Health Care, and Consumer Staples. That money flowed into Energy, Industrials, Financials, and Telecom. We are seeing a little rotation in recent weeks which may be indicative of early autumn positioning and movement ahead of autumn earnings season.

Standard and Poor's 500 Weekly and Quarterly Sector Indices Changes Tables

However, weekly moves have a higher likelihood of looking like noise when we extend our timeline. At this point, with the summer behind us, and the market seemingly not placing high value in the negative news that washes over us every day, perhaps we should look more through the longer-timeline lens.

For nine months, virtually year-to-date, Information Technology and Health Care are the undisputed leaders. This is where I have been placing a lot of my attention, since earnings and sales continue to shower in positively in these sectors. While Energy is indeed worthy of a close look, we need to be mindful of the seasonality of Crude Oil, which has been strengthening since June.

Standard and Poor's 500 Semiannual and Nine Month Sector Indices Changes Tables

The reality is that heavenly constellations are a construct of the collective minds of human beings over thousands of years. Our beloved shapes would look completely different if our solar system happened to be on the other side of the Milky Way. Likewise, the daily news reflects the views of those trying to capture our attention, while the market reflects another view. When minding your investments, it’s prudent to look at hard data while factoring in the broader stories. This seems to be the general consensus of investors as markets push higher – despite the mud of bad news – trading just off all-time highs.

In some other bad news, Steely Dan lost half of its brain and soul when Walter Becker died recently. One of their songs, “Time Out of Mind,” seemed to play daily when I was seven years old. I recall this line:

“Keep your eye on the sky, put a dollar in the kitty, Don't the moon look pretty...”

Steely Dan's Walter Becker and Donald Fagen Image

A Look Ahead:

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

Traders May Be Front Running Earnings Expectations

by Louis Navellier

Earnings reporting season doesn’t kick off until mid-October, but Bloomberg had an excellent article last week entitled, U.S. Stocks Are Front Running Third Earnings Beats, in which they quote Morgan Stanley analysts, who think the S&P 500 Index could rise to 2,550 to 2,575 ahead of the reporting season, after which there could be a consolidation phase before the S&P 500 reaches their year-end target of 2,700.

The reasoning behind this forecast is that Morgan Stanley basically believes that the S&P 500 this year has gotten “in front” of previous quarterly earnings beats, and that this third-quarter reporting season is already showing signs of rises in stocks expected to beat the analysts’ consensus third-quarter estimates.

Stocks Got in Front of the First and Second Quarter Earnings Beat Chart

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

The last week of September is also what many analysts call “third-quarter window dressing season,” when it is normal for funds to buy recent winners in order to show off these positions in their quarterly reports.

Some of the bears have been warning that buy-back activity plunged 25% in the second quarter, but a closer look at the facts shows that the drop seems to be mostly due to the fact that Apple only bought back $7.1 billion in the second quarter, down from $10.2 billion in the same quarter a year earlier. Some other big multinational companies have also curtailed their stock buy-back activity but part of this cutback is due to a strong U.S. dollar curtailing stock buy-back activity for some large multinational companies.

Speaking of Apple, many semiconductor stocks were hit with profit-taking on Wednesday due to a poor review of the Apple Watch Series 3 in The Wall Street Journal. Essentially, when the new iWatch switches from a wi-fi network to a cellular network, it often disconnects. Ironically, that happens on the iPhone as well, causing many “dropped calls,” since many major cellular providers, like AT&T, prefer to use wi-fi networks in addition to LTE and 4G cellular networks. This was a gross overreaction, in my opinion, making many Apple suppliers and semiconductor stocks great buys. I should add that if the new iWatch has any problem, it is the same as the old iWatch – a short battery life, since the iWatch has to be charged almost every day and a half. For instance, I wear a FitBit Blaze watch and its battery lasts for well over five days, so the iWatch has to fix its battery problem to become more acceptable to more users.

Chinese Bank Credit Downgraded

Since I recommended many “hot” Chinese ADR stocks that are expected to be added to the MSCI indices in 2018, I thought that I should mention the potential impact of S&P downgrading the Chinese government’s credit rating last week to A+, down from AA-. The real impact of this credit downgrade is limited to three major Chinese banks, which also had their credit ratings downgraded. Specifically, S&P said, “China’s prolonged period of strong credit growth has increased its economic and financial risks,” and then added that “Although this credit growth had contributed to strong real gross domestic product growth and higher asset prices, we believe it has also diminished financial stability to some extent.”

The bottom line is that since we are not recommending Chinese banks, we should not worry about the Chinese credit downgrade. I should also add that the Organization for Economic Cooperation & Development (OECD) forecasted that Global GDP growth is now estimated at a 3.5% annual pace in 2017, the fastest growth since 2011, due partially to continued strong GDP growth throughout Asia.

(Please note Louis Navellier does currently hold a position in Apple. Navellier & Associates does currently own a position in Apple for client portfolios.)


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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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