"Good News" Disrupts

“Good News” Disrupts the U.S. Bond and Stock Markets

by Louis Navellier

June 9, 2015

The economic news was better-than-usual last week, which ironically may have caused the market to drop a bit, as we believe investors fear that too much good news might cause the Fed to raise rates sooner than expected.  The Dow lost 161 points (0.9%) last week, its third straight weekly decline, while the S&P 500 fell 0.7% and NASDAQ was essentially flat, but the yield on 10-year Treasury bonds rose 30 basis points to 2.4%.

I’ll get to the economic news later in my Stat of the Week column, but I have to say up front that the bond market is telling me that if long-term market rates continue to rise so rapidly, the Fed may be forced to raise key short-term interest rates in the upcoming months; but I think they will definitely wait until after the Greek tragedy plays out.  The Fed wouldn’t want to engender another mad dash out of the euro and into dollars.  That could happen if the Fed raises rates while the Greek situation remains unresolved.

American Flag and Microphones ImageInterestingly, on Thursday, the IMF’s annual review of the U.S. economy said inflation remains too low and the Fed should wait until the first half of 2016 to raise key interest rates, since there are “significant uncertainties as to the future resilience of economic growth.”  However, we believe that the Fed does not like to raise key interest rates in Presidential election years, especially when the economy is one of the primary topics that the candidates will be debating.  Overall, the Fed and the IMF do not really want key short-term interest rates to rise, but the decision may depend on how market rates react after the situation in Greece is resolved.

As for the Greek situation, a deal is clearly in the works for Greece to make another payment to the International Monetary Fund (IMF) in exchange for more debt restructuring and economic reforms.  So Greece is likely going to have its debt restructured again, which is essentially a managed default that will be politically acceptable to both sides.  In the meantime, the Greek situation is essentially messing with the bond market, since the German 10-year bund has risen from under 0.05% several weeks ago to 0.85% last week.  These rising rates in the euro-zone are helping to push U.S. Treasury yields up as well.

In This Issue

Ivan Martchev will delve deeper into the mechanics of the German bond market and the Greek situation, while Gary Alexander will take a look at innovation in the American economy as a long-term engine of growth. Then, I’ll cover the jobs report and other positive economic indicators in my closing column.

Income Mail:
A “Bundsplosion”
by Ivan Martchev
IMF Tells the Fed Not to Hike

Growth Mail:
Inventions Transform Lives and Lift Markets
by Gary Alexander
A Nation of Tinkerers – Great and Small

Stat of the Week:
280,000 New Jobs Added in May – Plus Positive Revisions for March
by Louis Navellier
The U.S. Economy seemed to start “Thawing Out” in May

Income Mail:

A “Bundsplosion”

by Ivan Martchev

When Germany’s 10-year bund yield dipped below 4 basis points (0.04%) in April, most traders were probably thinking it was going to go negative. After all, the two-year bund had already gone to -0.20% and all intermediate-term maturities had slowly-disappearing positive yields. Quantitative easing coupled with deflationary pressures was boosting the German bund market. The Greek situation, which is yet to be resolved, was another driver of falling yields where German bunds were used as a safe haven to those fleeing peripheral euro-zone bond markets as a Greek exit (Grexit) clearly had unknowable consequences.

Yet bund yields have been surging since mid-April and almost touched 1% last Friday.

German Ten Year Bond Yield Chart

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

I think this is a case of too many institutional investors using too much leverage leaning on the same side of the bund market. When the market moved against them, it turned into a decline in bund prices and a surge in yields that is feeding on itself. While the sell-off in bunds has been sharp, the surge in yields is still within the confines of a long-term decline and there is absolutely no indication this decline is over.

This sell-off in bunds reminds me of a similar sell-off in Japanese government bonds (JGBs) in 2003, where again we had highly respected strategists proclaiming “the short of the century.” Yet in 2015 – 12 years later – we made fresh lows in JGB yields.

Ten Year Treasury Constant Maturity Rate Chart

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

While I agree that this sell-off in bunds – which is also dragging the 10-year Treasury note with it – is starting to look worrisome, I don’t think we are headed for a bear market in bonds. The global deflationary backdrop is still with us and we are still witnessing a historic downshift in growth in China, which could have a profound effect on many economies in Asia as well as many commodity markets. The Chinese economy is operating on record leverage and has experienced a real estate bust of epic proportions. A deleveraging cycle in China can lead to a severe recession, which is an outcome that the majority has not even begun to consider – they are still talking about a “slowdown.”

The 10-year Treasury yield is still within a massive downtrend that started in 1981, which one veteran bond trader told me reminded him of a perfect “ski slope.” There is no indication that this downtrend is broken. The 10-year note yield will have to rise well above 3% in order for the downtrend to be called into question. I would like to remind MarketMail readers that we had one sizeable false breakout in the 10-year Treasury yield in 2007 when it closed above 5%, which immediately reversed itself in 2008 and dropped as low as 2.1%; later on, QE helped it drop to 1.39% in 2012. Since we have already made an all-time low in 30-year Treasury yield this year, a fresh all-time low in 10-year bond yields is not impossible.

That said, multiple daily closes above 2.30% do indicate a possible rise all the way to 2.60% or 2.70% in 10-year Treasury yields. What looked like a short-term correction in bonds has turned into a full-fledged rout courtesy of multiple spread trades placed between bunds and Treasuries. I think the bund market is pulling Treasury yields higher as people were short bunds and long Treasuries on the expectation for the record bund/Treasury spread to contract. That massive institutional trade has now imploded. When that leveraged self-feeding unwinding of busted spread trades stops reverberating, Treasury and bund yields may head back down. It may take a while though for the markets to calm down.

I believe there is something else driving bund yields. The Greek situation has still not been resolved. The Greeks appear to have decided to stall until the very last minute in the hope that the troika would blink and back off from their tough requirements for the release of more financial assistance. The Greeks even talked themselves out of their IMF payment using a strategy last employed by Zambia, where payments due in a given month may be bundled into one. Greece had four loan repayments to the IMF due this month, on June 5, 12, 16, and 19; but now all four payments are due on June 30 in one lump sum of $1.7 billion. While the Greeks say bundling was not their idea, it does not really matter whose idea it was. Zambia-like strategies are borne out of Zambia-like economic desperation.

Sensible people think that a Greek deal should be done, but so far Syriza does not seem like a sensible political organization. The Germans, notorious for their fiscal conservatism borne out of two World Wars and Weimar's hyperinflation years in between, have made it clear that they are ready to let Greece out of the euro, so the chances of facing the unknowable consequences of a Grexit are no longer slim.

IMF Tells the Fed Not to Hike

It looks like hiking the fed funds rate, despite its reduced importance, has become a political problem. The Federal Reserve has been hailed as an independent organization that conducts monetary policy without the directives of the executive branch. Yet last week the IMF urged the Fed to delay any rate hikes until 2016. That was just before a blockbuster jobs report that caused the Treasury and the fed fund futures markets to sell off, indicating an increased probability of a fed rate hike.

Right now fed fund futures for September 2015 indicate better than even odds of a rate hike while before the jobs numbers those odds were 46%. For December 2015 at least one fed fund rate hike appears to be already priced into the fed fund futures market.

Thirty Day Fed Funds Chart

Source: CME Group

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

December 2015 fed fund futures (ZQZ15) closed on Friday at 99.625. That means the futures market right now predicts a fed funds rate of 37.5 basis points (i.e., 100 minus 99.625) at the time of contract settlement in December 2015. As a reminder, a rising price of the fed fund futures contract means that the market predicts a lower probability of fed rate hikes by contract settlement, while a falling price of the fed funds futures contract (that can be capitalized on by shorting it) means the market is predicting rising probabilities of a fed funds rate hike by the time of contract settlement.

Obviously, that prediction of the futures market can change. Back in September 2013 this same December 2015 fed fund futures contract was at 98.55, predicting at the time that the fed funds rate would be 1.45% (or 145 basis points) in December 2015. That would have meant half a dozen quarter-point fed funds rate hikes; clearly that was the wrong prediction.

Still, what business does the IMF have in meddling in the Fed’s affairs? The giant egos that sit on the Federal Reserve board may be nudged a tad towards tightening if Christine Lagarde, who does not have a Ph.D. in Economics, tells the Fed what not to do.

Philosophically, Lagarde has a valid point. The second largest economy in the world (China) is downshifting dramatically and may be coming dangerously close to a hard landing. While the bad news is not on the front pages yet, Chinese monthly economic releases all show further deterioration.  You thought the deflation coming out of Europe and Japan was bad? Wait till you see the deflation that may be coming out of China towards the end of 2015.

In my opinion, the slow economic data in the first half of 2015 in the U.S. will reverse itself and show improvement in the second half. In the last three years we have seen a peculiar weakness in the first half, which has then been resolved in the second half. The U.S. economy seems to have developed some 21st century seasonality where weakness in the first part of the year is followed by second-part re-acceleration. If that happens, the Federal Reserve may decide to hike. Whether it should is completely another matter.

In my opinion, Lagarde is right – the Fed shouldn’t raise rates this year. Because if the Fed hikes rates, given the state of the global economy, it may promptly turn around and reverse course, just like the ECB did in 2011.

Growth Mail:

Inventions Transform Lives and Lift Markets

by Gary Alexander

“Only one thing can allow a business to transcend the daily brute struggle for survival: Monopoly profits.”

– Peter Thiel, “Zero to One” (2014), page 32

In the upcoming Freedom Fest in Las Vegas (July 8-11), I have the opportunity to moderate four panels and debates with some of the greatest minds in America. One of those debates will be between Peter Thiel – the co-founder and ex-CEO of Pay Pal, and a current venture capitalist and hedge fund manager – and John Mackey, co-founder and co-CEO of a major health-oriented chain of grocery stores.  Both men have written recent best-sellers: “Zero to One” by Peter Thiel and “Conscious Capitalism” by Mackey and Raj Sisodia.  After reading both books, I don’t think these two men will disagree that much. Both books favor creating unique new products and services that generate great profits and a better world.

The upcoming debate between Thiel and Mackey is titled, “Monopoly Power: Has Competition been Oversold?”  Taking the affirmative, Peter Thiel will expand on the principles in his book, “Zero to One”:

“If you want to create and capture lasting value,” he says on page 25, “don’t build an undifferentiated commodity business.”  Meanwhile, Mackey argues that “Businesses – suffused with higher with purpose, leavened with authentic caring, influential and inspirational, egalitarian and committed to excellence, trustworthy and transparent, admired and emulated, loved and respected – are not imaginary entities in some fictional utopia.  They exist in the real world, by the dozens today but soon to be by the hundreds and thousands.”

A Nation of Tinkerers – Great and Small

One Car Garage ImageFrom the one-car garage in Palo Alto where Bill Hewlett and David Packard met in 1938, to the nearby garages of Steve Jobs and Steve Wozniak, these tinkerers keep bringing us miracles.  America rewards their creativity through patent laws, which protect inventors from the expropriation of their life’s work by knock-offs. In a similar vein, copyright law protects the written word.  (It was on this date in 1790 that the first U.S. copyright for a book was given to something as prosaic as “The Philadelphia Spelling Book.”)

Turning to technology, it was on June 8, 1887, that Henry Hollerith applied for a patent on the punched-card calculator he had invented.  Once the patent was granted, he entered a contest sponsored by the Census Bureau to make the 1890 Census easier to count.  He won the contract and used his machine to tabulate the 1890 census.  His invention gave birth to “Hollerith machines,” run on punched cards.

Henry Ford and Thomas Edison are the usual poster boys for American inventiveness and business acumen, but inventions can come from the strangest and most unlikely sources.  Since music history is one of my hobbies, here is a short profile of three musical tinkerers born June 9 – 100 to 125 years ago:

Today marks the centennial of the birth of Les Paul (born Lester William Polsfuss, in Waukesha, Wisconsin on June 9, 1915). In addition to being a great musician, he was a world-class inventor.  He is the only person in both the Rock and Roll Hall of Fame and the National Inventors Hall of Fame. He virtually invented the solid-body electric guitar in the late 1930s (making rock ’n’ roll inevitable). He was also a pioneer in creating electronic overdubs in the late 1940s.  He and his wife Mary Ford overdubbed several tracks on big hits like “How High the Moon.” He also invented delay effects, phasing effects, and multi-track recording. He invented the neck-worn harmonica holder, which allowed him to play the harmonica while also playing guitar.  While experimenting on electronic effects, he nearly died from an electrocution in 1941.  In 1948, he shattered his right arm and elbow in a near-fatal accident.  His option was amputation or having his arm set at a fixed angle for life.  He selected a guitar-playing angle, just under 90 degrees.  Les Paul was an active jazz guitar player in New York City well into his early 90s.

Another Musician/inventor was Fred Waring (born June 9, 1900 in Tyrone, Pennsylvania). He worked his way through Penn State as an architectural engineering major with a side interest in music. He aspired to join the Penn State Glee Club, but was rejected at every audition.  He settled on leading his own band, Fred Waring’s Pennsylvanians, which became a best-selling band for Victor Records in the 1920s. In the 1930s, he added a men’s chorus. In the 1940s and 1950s Fred Waring’s Pennsylvanians scored a string of choral hits, leading to the Fred Waring Show on CBS, running six years, 1948-54, but Waring is probably best known now as the inventor of the Waring Blender, which he patented in 1938. In 1954, when Waring left TV, he had already sold his millionth blender, a contraption that is still popular today.  In fact, many a jazz singer has been interrupted in the middle of a nightclub ballad with the sound of Waring’s margarita-mixing monster, forcing some singers to question whether Mr. Waring was a friend or an enemy of music.

Another all-American musical birthday today is Cole Porter, born June 9, 1891 in Peru, Indiana. He wrote inventive words and music for hundreds of tunes and dozens of successful shows, like Anything Goes (1934) and Kiss Me Kate (1948). In his spare time, he was an avid reader.  He learned five foreign languages and took astronomy classes.  He had a telescope set up in his New York penthouse apartment. As a result, some of his songs bring the moon and stars closer to earth, such as his “trip to the moon on gossamer wings” (from “Just one of those Things”) or “In the Still of the Night, as I gaze through my window at the moon in its flight, my thoughts all stray to you.”)  Porter’s date of death (October 15, 1964) was also a red-letter day. It was the day China exploded its first atomic bomb and Nikita Khrushchev was forcibly retired from leadership of the Soviet Union. It was also the day St. Louis Cardinal pitcher Bob Gibson defeated the New York Yankees in Game 7 of the World Series. The Yankees had been American League champions in 22 of the 29 previous seasons (and World Champions in 16 of 29 years), but they would not make a trip back to the World Series for another 12 years (until 1976) after this day’s defeat.

The stock market barely responded to China’s bomb, Russia’s coup, or the Yankee swoon.  The S&P 500 stayed in a narrow trading range of 84.08 to 85.22 all during October 1964 (but it’s up 25-fold since then).

P.S. Not all of the information I’ve brought you today has a practical application in stock picking, but my main purpose is to encourage readers to stay in the stock market and to use Louis Navellier’s research to find today’s market-leading companies that can create their own “monopoly” style business profits.

Stat of the Week:

280,000 New Jobs Added in May – Plus Positive Revisions for March

by Louis Navellier

Warehouse Worker ImageThe big news last week was that the Labor Department announced that May payroll jobs rose 280,000, substantially better than the economists’ consensus estimate of 225,000 and the largest monthly increase since December.  What I especially liked in the latest payroll report was that, for the first time in 2015, there were no substantial downward revisions to previous months.  Instead, March payrolls were revised up 34,000 (to 119,000).  This positive revision for March appears to be a big deal, since the double accounting for people holding two temporary jobs was largely responsible for some of the previous downward revisions.

The other positive detail in the May payroll report was that average hourly earnings rose 8 cents (+0.3%) to $24.96 per hour.  Ironically, the unemployment rate rose to 5.5% in May, up from 5.4% in April, since 397,000 more people were looking for work.  Labor force participation rose to 62.9% in May, up from 62.8% in April.  Overall, the May payroll report was a pleasant surprise, especially the positive revisions.

I should add that the Labor Department also reported on Friday that its broader household survey rose 272,000 in May, which was encouraging, since in previous months, the household survey was reporting less job growth than the payroll survey.  I should also add that on Wednesday, ADP reported that private payrolls rose to 201,000 in May, the highest level in the past four months.  Especially encouraging was robust small business job growth of 122,000, compared to 65,000 for medium-sized businesses and only 13,000 for large businesses. Typically, small business job growth equates to rising business confidence.

The U.S. Economy seemed to start “Thawing Out” in May

The job picture isn’t the only set of positive numbers for May growth. On Wednesday, the Fed released its latest Beige Book survey of all its 12 districts.  The survey was surprisingly upbeat, saying that “overall economic activity expanded during the reporting period from early April to late May.”  The Dallas district reported that economic activity was slowing “slightly” and the Cleveland district reported “slight” growth, but the other 10 Fed districts reported “moderate,” “modest,” or “steady” growth.

The good news continued with the Institute of Supply Management (ISM) manufacturing index, which rose to 52.8 in May, up from 51.5 in April, substantially higher than economists’ consensus estimate of 51.8 and a sign that businesses are likely starting to rebuild depleted inventories.  The ISM new orders component rose to 55.8 in May, up from 53 in April, while its employment index rose to 51.7 in May, up from 48.3 in April.  Purchasing managers commented in the ISM survey that the bottleneck from the West Coast port slowdown has improved considerably, which is encouraging.  Overall, 14 of the 18 industries surveyed reported an expansion, so the ISM survey was definitely upbeat.

Later in the week, the ISM non-manufacturing (services) index slipped a notch to 55.7 in May, down from 57.8 in April.  Although the ISM non-manufacturing index is now at a 12-month low, any reading above 50 still signals an expansion, so a 55.7 reading is still signaling that the services sector remains very strong.  The ISM new orders component slipped to 57.9 in May, down from a robust 59.2 in April.

The one piece of bad economic news last week came from the Commerce Department, which reported that consumer spending was flat in April, a sign that consumers remain cautious.  Consumer spending is now running at the slowest pace in several years, which does not bode well for overall GDP growth.

Interestingly, personal incomes rose 0.4% in April and the savings rate rose to 5.6%, up from 5.2% in March.  Also interesting was the fact that the Fed’s favorite inflation indicator, the Personal Consumption Expenditure (PCE) index, was unchanged in April and has risen only 0.1% in the past 12 months, so there is virtually no sign of inflation – another indication that it appears unlikely the Fed will raise rates anytime soon.

Cargo Container Ship ImageThe Commerce Department also reported on Wednesday that the trade deficit plunged 19.2% in April to $40.9 billion as exports rose 1% to $189.9 billion and imports rose 3.3% to $230.8 billion.  This was the largest monthly drop in the trade deficit in six years!  Exports are now running at the highest level in 2015 and there is no doubt that the West Coast port slowdown had impacted trade and caused exports to plunge in March.  So it appears that the trade deficit may not be as big a drag on GDP growth in the second quarter as it was in the first quarter, even though a strong U.S. dollar is making U.S. exports more expensive.  Overall, the April trade deficit was very good news and indicative of stronger GDP growth.

Finally, HSBC reported last week that its China Purchasing Managers Index (PMI) rose to a final reading of 49.2 in May, up from 48.9 in April.  According to HSBC, China’s export business declined at the sharpest rate in nearly two years, which may be indicative of a broad global slowdown.  China’s official PMI is typically higher than the HSBC survey, which only surveys purchasing managers at 420 manufacturers.  Interestingly, The Wall Street Journal reported on Tuesday that part of the worldwide deflation dilemma is due to the fact that Chinese manufacturers have been reluctant to curtail their production as demand drops, so there is currently a worldwide surplus of solar panels, steel, and tires. (The Labor Department reported that the price of tires has fallen for 23 of the past 32 months, due to this glut.)

Overall, the latest Beige Book survey, the jobs report, and most of the other economic indicators appear to be more positive, but not positive enough to justify any near-term interest rate increase, in my view.


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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