Market Mood Turns Up

Market Mood Turns Up Despite News that Once Seemed “Bad”

by Louis Navellier

May 15, 2018

Last week, my headline was “The Best Earnings in 7+ Years Deserve a Better Market Than This!” and the market must have been reading what we wrote. The Dow rose seven days in a row, rising 2.34% for the week. The S&P 500 rose 2.41%, the Russell 2000 rose 2.63%, and NASDAQ rose 2.68% last week.

First-quarter announcement season is winding down and the S&P 500 has so far posted 25% average annual earnings growth and 8.3% average annual sales growth. First-quarter S&P 500 earnings have been an average 7.1% better than analysts’ consensus expectation, so it has been a stunning earnings season.

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On Tuesday, President Trump announced that the U.S. was pulling out of the nuclear inspection deal with Iran. The market initially fell, but then quickly resumed rising. No matter what other “bad” news came out, the market kept rising. With the underlying sales and earnings growth of the stock market so strong, I wonder what the financial media will cook up next to try to spook investors into selling stocks.

In This Issue

Like me, our authors are relieved that the market is finally listening to the month-long parade of stunning earnings reports. Bryan Perry and Jason Bodner report on how the “animal spirits” have returned to Wall Street, with nine of 11 S&P sectors rising, led by energy. Gary Alexander has a good-natured laugh at the many “reasons” pundits offered for stocks going down last month, including Fed policies and “peak earnings” season. Ivan Martchev sees few signs of trouble in the junk bond indicators but some signs of trouble in the emerging market bond spreads. Then, I’ll report on the global scene, inflation, and energy.

Income Mail:
Animal Spirits Return to Wall Street
by Bryan Perry
Dollar-Oil Trade Out of Kilter

Growth Mail:
Explaining Each Day’s Market Gyrations is a Loser’s Game
by Gary Alexander
Stocks Fell in Late April Because of Great Earnings (What?!)

Global Mail:
Few Signs of Trouble in the Junk Bond Market
by Ivan Martchev
…But Signs of Trouble in the Emerging Markets Spread

Sector Spotlight:
Market Shocks are Painful but (Apparently) Necessary
by Jason Bodner
Where the Key Sectors Stand – Two-Year Charts

A Look Ahead:
Inflation is Tame, Despite Rising Oil Prices
by Louis Navellier
Chaos Explodes in Venezuela and Simmers in Argentina

Income Mail:

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

Animal Spirits Return to Wall Street

by Bryan Perry

Last week’s resurgence of the stock market was very reassuring for investors, capping a seven-day rally that saw the market hold a key technical level (see chart below), inviting fresh buying and widespread short covering. All in all, the bullish camp is doing its level best to win back the narrative from the bears that have touted “peak earnings,” the threat of stagflation, geopolitical chaos, and slowing growth in Europe – all of which turn out to be overblown but are the byproduct of a culture that wants to have investors glued to the business media 24/7. After all, crisis mongering is good for business.

LargeCapIndex.png

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

Investors were able to easily digest President Trump’s Tuesday decision to withdraw the U.S. from the Iran nuclear deal. Then, buying of stocks picked up notably after profit-taking in the oil sector set in.

Nine of eleven S&P sectors closed the week in the green. The energy sector led the charge. A rebound in the crude oil futures market, which returned to a three-and a half year high, saw WTI crude futures trade as high as $71 per barrel. President Trump’s decision to restore the “highest level of economic sanctions” against Iran, OPEC’s third-largest oil exporter, carries the perception that it will likely decrease crude supply on the global market, but in reality that will likely be offset by higher U.S. and other production.

On the downside, the lightly-weighted utilities and telecom services sectors finished at the back of the pack. The consumer staples sector lagged further as Walmart weighed down the group, losing 3.1%, after the company agreed to buy a 77% stake in Indian e-commerce giant Flipkart for $16 billion, which qualifies as Walmart’s largest acquisition deal ever.

(Please note: Bryan Perry does not currently hold a position in Walmart. Navellier & Associates does not currently own a position in Walmart for client portfolios).

The yield on the benchmark 10-year Treasury note ventured briefly above the psychologically important 3.00% mark on Wednesday, but prices for U.S. Treasuries closed the week on a broadly higher note, pushing yields down across the curve. Meanwhile, the Producer Price Index for April increased 0.1% versus 0.2% consensus, while the final demand index, less food and energy, rose 0.2%, as expected.

The key takeaway from the report is that there was a moderation in producer price inflation, yet it wasn’t significant enough to alter the Federal Reserve’s proposed monetary policies. Wholesale inventories increased 0.3% in March versus a consensus of 0.5% on top of a downwardly revised 0.9% increase (from +1.0%) in February. And the weekly MBA Mortgage Applications Index declined by 0.4%. Then, on Thursday, the April Consumer Price Index came in at +0.2% versus consensus expectations of +0.3%.

Since first-quarter earnings season has all but wound down, the focus going forward is on economic data points, which are showing further evidence of benign inflationary pressure. Hence, the market seized on the softer threat of inflation and it was “Tally-Ho!” as the bulls recaptured the narrative and high ground.

As of Friday, all four major averages are in positive territory year-to-date. The Nasdaq and Russell 2000 are clearly where fund flows are most pronounced, and rightly so because they have considerably less exposure to the recent strength in the dollar than do the heavily-weighted multinational Dow and S&P.

Dollar-Oil Trade Out of Kilter

In general, when the dollar is weak, commodities rally and when the dollar is strong commodities sell off. Lately, there has been somewhat of an aberration. For the past four weeks both the dollar and WTI crude oil have rallied in tandem with Treasury yields. While it makes perfect sense for the dollar to rally as yields rise, the rise in oil is in my view primarily the result of a perception of supply disruption from Iran.

DollarIndexVersusCrudeOil.png

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

As talk of $80 per barrel oil started making the rounds on cable business channels, the weekly Baker Hughes rig count data showed another 13 rigs coming online, bringing the total to 1,045, up by 160 rigs from this time last year. U.S. oil production is surging, primarily in the Texas Permian Basin, which has seen a renaissance in production due to advancements in horizontal drilling and fracking techniques.

As the week came to a close, the four-week dollar rally ran into profit taking as did the rally in oil prices and the yield on the 10-year Treasury fell back below 3.0% on what would be considered benign inflation data. All three of these elements of risk are still very much a threat to the primary uptrend, but stocks elevated higher after this trifecta of risk-off factors paused.

Why has the market struggled so hard to advance? Most investors are unaware of the power the financial media has to influence market sentiment at the professional level, where most of the market’s total assets are invested and traded. Mixing politics and finance was once considered irresponsible reporting, but not today. There is an ongoing media effort to undermine the bullish narrative that embraces tax reform, a de-leveraging of the Fed’s balance sheet, a stable dollar, fair trade with China and Europe, a resurgent domestic energy market, and efforts to roll back overzealous government regulations on small businesses.

The financial media has repeatedly warned investors that this market was “overvalued.” These warnings were (and still are) misleading. Somehow, the financial media forgot to report that the stock market has not gone up as much as underlying earnings. As a result, price-to-earnings ratios have been compressed and the stock market remains undervalued relative to both forecasted earnings and interest rates.

The fact that the market has been able to trade through the bearish bias and noise of financial bubbles fomented by cable and print news is in my view a testament to the strength of the underlying economy.

Sometimes numbers matter more than words, and for this market, the numbers are doing the talking now.

Growth Mail:

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

Explaining Each Day’s Market Gyrations is a Loser’s Game

by Gary Alexander

Don’t look now, but all four major stock market indexes are up for the year through Friday, May 11:

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What’s more impressive, the market rose last week in the face of what was anticipated to be “bad news.”  On Tuesday, when President Trump pulled the U.S. out of the Iran nuclear weapons accord, the market initially sold off but then finished positive. Then, on Thursday, inflation came out lower-than-expected, which could be a sign of a slowing economy (“glass half empty”) but the market took that as a sign the Federal Reserve may not raise rates four times this year, so stocks rallied on this “glass half full” news.

This underlines the fact that it’s not really the news itself that moves markets but the overall mood of the investing public. The news is just an excuse. The news can be read one way or the other. That has always been the case. The mood in May has turned positive. Maybe it’s the weather. Maybe it’s taking action in Iran and Korea. Lately, I’ve read three books on Socionomic theory edited by Robert Prechter, showing that the social mood determines the outcome of market trends more than the nature of any external events.

Here is a table of how we think in terms of external causality (the news) instead of Socionomic causality:

ExternalCausality.png

When I saw that line “Outraged people seek out scandals,” I couldn’t help thinking of the national media.

There are all kinds of examples of this crazy “what caused the market to rise (or fall) today?” game, but the wildest one in recent years is the fear of the Fed raising rates. Pundits say rising rates will send stocks and gold reeling, but they fail to look at the last Fed rate-raising cycle in 2004-2006, when both stocks and gold soared while the Fed raised rates in 17 consecutive FOMC meetings over a two-year period.

Stocks Fell in Late April Because of Great Earnings (What?!)

The most ridiculous recent case, as I showed last week, was of stocks going down in late April due to great earnings, since it was “peak earnings season,” as if earnings can’t get any better. Yes, they can get a lot better than this! Earnings can keep growing strongly, just not as rapidly as they grew last quarter!

Earnings growth of this magnitude is unheard-of this late in an economic recovery. Earnings this high should guarantee that the current recovery should last at least another two years. Earnings and economic growth this robust don’t just turn down on a dime. They tend to decelerate more gradually over time.

Earnings are up so much that the Price/Earnings (P/E) ratio for the S&P 500 has fallen sharply, even though prices are slightly up for the year-to-date. According to Ed Yardeni, writing last Thursday, May 10, the forward S&P P/E “dropped from a high of 18.6 on January 23 to a low of 15.9 on May 3.”

PriceEarningsRatio.png

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

Yardeni adds that “Thanks to Trump’s tax cuts at the end of last year, this weekly measure of industry analysts’ consensus estimates for earnings over the coming 52 weeks has been soaring…” and because these forward earnings estimates have been “soaring,” the forward P/E ratios have been falling sharply.

What’s to explain this negative mood when earnings are soaring? If earnings can’t be any better, then some professional pundits feel that they have to complain about something or they appear Pollyanna-ish. Mark Mobius has enjoyed a legendary 30-year career as global fund manager for Franklin Templeton. He gave interviews on April 23 predicting a 30% market crash and then upped the ante. Nine days later, he saw a 40% market crash! His reasons are fairly vague, but bad news can always grab the headlines.

In his April 23 interview with the London-based Financial News, Mobius said, “I can see a 30% drop. The market looks to me to be waiting for a trigger to tumble.” Asked what that trigger could be, he said, “You can’t predict what that event might be – perhaps a natural disaster or war with North Korea,” but he said that it could be exacerbated by a “snowball effect” caused by algorithmic trading systems.

Nine days later on CNBC, Mobius said, “The catalyst I believe will come from continuing increases in interest rates.” He also reiterated that “any event could also be a trigger.” Pardon me, I’m just an amateur without 30 years of managing funds, but that’s not any kind of serious analysis. It’s like shooting a rifle into the sky. The market knows all about interest rates and North Korea, and both fears have cooled off.

Next time someone asks you why stocks went up or down today, say “Because the mood changed on Wall Street.” That will be more accurate than almost anything you will hear from the talking heads on TV.

Global Mail:

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

Few Signs of Trouble in the Junk Bond Market

by Ivan Martchev

By becoming the second-longest economic expansion in the 242-year history of the United States, the present nine-year boom is certainly long in the tooth. It is natural in such an elongated expansion for one to look for signs of trouble in the economy as recessions and bear markets tend to coincide. That’s when earnings tend to shrink the most for the S&P 500. Other than a flattening yield curve (below), normal in a mature expansion and Fed tightening cycle, there are no other real signs of trouble in the bond market.

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

In this Fed tightening cycle, one has to view the yield curve slope with a grain of salt as long-term interest rates are not as market-driven as they were in previous economic cycles. With the monthly run-off rate of the Fed’s balance sheet having grown from $10 billion in late 2017 to the present rate of $30 billion, the Fed will let more than $200 billion of bonds mature from its balance sheet, whose proceeds the New York Fed (FRBNY) will not reinvest. Therefore, the Fed’s balance sheet will shrink by that amount.

The Fed balance sheet runoff rate is forecasted to grow to $50 billion per month in late 2018 – dare I say it could be even more? – which will mean that at least $600 billion of bonds will be run off the Fed's balance sheet in 2019. Needless to say, those amounts combined with the trillion-dollar annual deficits emanating from the combination of the Trump tax cuts and increased spending may cause long-term interest rates to stay elevated and therefore “manipulate” the yield curve and prevent it from inverting. The yield curve in this cycle may not be as good of an indicator of a recession as in the prior five cycles due to the tsunami of Treasury bonds coming from the Fed and the recently-impregnated federal deficit.

If the yield curve may turn out to be overwhelmed by the Treasury tsunami, where in the bond market should we look for clues as to the end of the economic cycle? Simply put: Look to the junk bond spreads. With that in mind, I went to the Federal Reserve Bank of St. Louis website and plotted the BB, B, and CCC spreads to the relevant Treasuries on a single graph (below).

JunkBondSpreads.png

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

In this case, I plotted the BB and B spreads on the left scale (left) and put the CCC spreads on another scale on the right, as the magnitude of the CCC spread is so much bigger and it otherwise distorts the chart. What we see here is that the BB and B spreads are as tight as they have been for this economic cycle and they have significantly improved since the mid-cycle spread widening in 2015 and 2016 driven by the crash in commodity prices and fears of a hard landing in China, which so far have been unfounded. While CCC spreads are not as tight as they have been in this cycle, they have narrowed notably in 2018. If “junkier” bonds see spreads narrowing in 2018, this has to be viewed as a positive economic signal.

Keep in mind that the junkiest of junk on our chart is “CCC or below” while the other two junk categories are cleaner BB and B bonds. The “CCC or below” is a relatively small part of the junk bond market and relatively illiquid, but it can offer insights as to how bond investors view prospects for the U.S. economy. By the looks of credit spread narrowing in the junkiest of junk bonds, they do not appear to be worried.

…But Signs of Trouble in the Emerging Markets Spread

While CCC spreads are shrinking in the U.S. – most likely due to the Trump tax cuts – emerging markets corporate debt is showing signs of trouble both in the investment grade (IG) and high yield (HY) categories. Here too I put the IG scale on the left and the HY on the right due to the wide divergence in rates.

CorporateDebt.png

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

The fact that the IG and HY spreads in emerging markets are expanding should not be surprising to anyone as the dollar has begun to rally on the heels of expensing interest rate differentials and moves on the trade front. Since I think the U.S. Dollar Index can rise quite a bit further by the end of 2018 (to over 100) and even into 2019, then I would expect that emerging markets IG and HY spreads should continue to expand at a brisk pace, which can turn out to be quite problematic.

DollarIndex.png

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

Enterprising minds are urged to read a paper published on November 20, 2017 on the Federal Reserve Bank of St. Louis website called “Global Debt Is Rising, Especially in Emerging Economies.” The first chart shows total debt by advanced economies, emerging economies (ex-China), and China-only debt.

TotalDebt.png

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

Then there is a breakdown of emerging markets borrowing by currency, where yen- and euro-denominated borrowing has been tame, while dollar borrowing has gone off the charts.

EmergingMarketsBorrowers.png

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

If the dollar is rallying and emerging borrowers have to service their debts in dollars with cheaper local currencies, their cash flows are shrinking in dollar-denominated terms. If the dollar rallies much further, as I think will happen, those emerging markets borrowers’ cash flows would shrink a lot more.

In such a scenario, one should stay away from emerging markets debt and equities, as a big dollar rally can cause a financial crisis in vulnerable emerging markets that have been on a dollar-borrowing binge.

Sector Spotlight:

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

Market Shocks are Painful but (Apparently) Necessary

by Jason Bodner

They say, “No pain, no gain.” Sometimes that can be profoundly true. Consider the case of Jason Padgett, an athletic kid who never understood much math as a student. He never made it past pre-algebra. One day he got mugged outside a bar and sustained a heavy beating, which injured his brain, but in a way that changed him significantly. When he healed, he saw the world in pixels and geometric shapes. He suddenly understood the concept of “pi” and could hand-draw complicated fractals, like the one below:

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It seems the market shock that began last February and the subsequent negative market performance may have been like an injury from a bar room brawl, which helped us to see more clearly. Last week saw some impressive performance. All the broad equity indexes were up more than 2% for the week. This brought the Dow Jones Industrial Average and the S&P 500 positive for the year. Strength came from a huge week in energy: up nearly 4%. Financials, Industrials, and Information Technology were all up more than 3 % for the week. Utilities and Consumer Staples were the only losing sectors for the week.

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February’s bomb blast rocked the markets. Volatility exploded as volatility products imploded. The ripples were felt deep and wide and the market has seen heightened volatility since. There have been significant sector rotations and unpredictable price action. But all of this has been taking place with a backdrop of stellar sales and earnings reports.

Here’s what’s interesting: I noted last week a visible slowing of sell signals mixed with an uptick of buy signals. Since then, the S&P 500 has rallied +2.29% as of this writing. The VIX has had some notable behavior as well. The CBOE Volatility Index is at 13.32 right now and hasn’t closed this low since January 26th. Remember January 24th is the date my indicators said the market was overbought and signaled a warning of pending volatility and lower prices. As the volatility drains out of the market and buying seems to resume, these are both good signs. So where do we go from here?

Where the Key Sectors Stand – Two-Year Charts

The S&P Information Technology Index closed at 1233.97 on March 12th. After that, there was talk of a “tech wreck” and slowing growth all over the media. On May 10th The index closed at 1229.46: less than 1% off its all-time high set in March. I admit, I have a special place in my heart for Infotech as so much of the global market innovation and future growth seems to reside there. This recent bullish action is good for the market. If Technology leads, it means growth is alive and well: Despite the peak growth momentum concerns which pressured the market in recent weeks.

The January 26th Market peak coincided with the peak for Consumer Discretionary Index. It closed that day at 868. Right now, it’s trading at 833.83 which is less than 4% off its all-time high. The sector is seeing recent strength from more positive sales and earnings reports.

Energy (XLE) has rocketed 10% higher since April 10, when I first started to see signs of unusual institutional buying in Oil & Gas stocks. It’s soared almost up to January highs after a -13.5% fall. That’s the great news. The not-so-great news is that it appears we are getting dangerously close to overbought levels. I think we should expect a pullback in energy (O&G stocks particularly) in the near future.

The S&P 500 Financials Index also peaked January 26th at a closing high of 490.56. As I write this, the index sits at 467.95; just over 5% from its all-time high. For those who may cringe at down 5% from the high, I’d like to remind you that on June 27, 2016 it closed at 286.62. Put in perspective, today’s trading level represents a 61.5% rally in less than two years. Wow!

What about weakness? Let’s start with the badly-injured Consumer Staples Index, which closed January 24th at 601.5. As I write this, it is trading at 507.33, down 15.5% from that peak. For Telecommunications we have to look further back for its all-time peak. This was December 3, 1999 at 311.42. If we look back at the two-year high, made July 6th, 2016 at 183.02, the S&P 500 Telecommunications index is now at 146.55, down -20% from the 2-year high and -53% from the all-time high. Ouch!

Here is what these two-year statistical stories (plus CBOE volatility) look like in chart form:

KeySectors.png

I am bullish. We may experience a “steam vent” or pullback of some kind, but the market is trying to find its feet as the aftershocks from February’s shock. Growth-heavy Info-tech is leading again, along with Energy, Financials, Industrials, and Consumer Discretionary. These are the sectors we want to see leading. They are growth and revenue engines for the market and the economy. While I have heard fear and talk of the yield curve approaching inverted levels, recession still feels far away. Inflation has not run rampant yet and the economy and backdrop for American companies still seem favorable to keep fueling growth.

As we meander along to potentially all-time highs around the corner, the focus should remain clear. Find the best quality stocks with superior fundamentals. These companies usually continue to grow. These are the companies to bet on. And with the market’s wind at our backs, stock picking should be more fun.

The markets are powering higher after showing some intriguing signs of reversal. This may mark progress since February. It could be the start of a new impressive leg-up for stocks. The data is supporting a lull in volatility and a potential resurgence in Info tech. Should this and other growth sectors regain strength, it could lead the market higher. Enduring this volatility has not been fun, but it may have been productive.

Shakespeare said it well: “Let me embrace thee, sour adversity, for wise men say it is the wisest course.”

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A Look Ahead:

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

Inflation is Tame, Despite Rising Oil Prices

by Louis Navellier

By pulling out of the Iranian nuclear deal, President Trump appealed to the citizens of Iran that the U.S. wants Iran to prosper after 40 years of its current regime keeping that country isolated from much of the world. There will be some short-term tensions, since the Iranian currency is extremely weak. It is likely that new economic sanctions could force the Iranian currency to collapse, fueling inflation there. Due to rising tensions in the Middle East, crude oil prices could keep rising in the upcoming months, pushing the dollar higher, but that does not mean that inflation levels will rise persistently higher in U.S. markets.

On Wednesday, the Labor Department announced that the Producer Price Index (PPI) rose 0.1% in April, substantially below economists’ consensus expectation of a 0.3% rise. The core PPI, excluding food, energy, and trade, rose 0.1% in April, which is a welcome relief since economists expected the core PPI to rise 0.4%. In the previous three months, the core PPI rose 0.4% each month. In the past 12 months, the PPI rose 2.6%, while the core PPI rose 2.5%. A stronger U.S. dollar will eventually help to moderate commodity price inflation, so some more price relief may be on the way, despite higher crude oil prices.

On Thursday, the Labor Department announced that the Consumer Price Index (CPI) rose 0.2% in April, which was below economists’ consensus expectation of a 0.3% rise. The core CPI, excluding food and energy, rose only 0.1%, which was below economists’ consensus estimate of 0.2%. In the past 12 months, the CPI rose 2.5% and the core CPI rose 2.1%. Despite a 3% rise in gasoline prices, consumer prices remain remarkably low. Nonetheless, I expect that the Fed will increase key interest rates at its next Federal Open Market Committee (FOMC) meeting in June, due to higher market interest rates.

Chaos Explodes in Venezuela and Simmers in Argentina

Israel warned Iran last week that if missiles rain on Israel they will “pour” on Iran. In fact, after over 20 missiles were fired into Israel from Syria, Israel responded on Thursday by firing over 70 missiles at Iranian targets in Syria. Clearly, the tensions in the Middle East remain high, but chaos also escalated in Venezuela last week and The Wall Street Journal reported last Thursday that Venezuela’s oil shock may be worse “than the biggest estimates of what could happen to Iran if sanctions were re-imposed.” That risk stems from Venezuela’s dependence on importing lighter varieties of crude to mix with the heavy oil it produces, since it relies on products imported from the U.S. to enable its thick oil to be transported.

Argentina.jpg

Last week, Argentina opened talks with the International Monetary Fund (IMF) to seek a financial aid package 17 years after defaulting on its debt and 12 years after cutting ties with the IMF. This is a huge move, since previous regimes cut ties with the IMF and current President Mauricio Macri is striving to clean up the mess left by the disastrous Kircher regime. The previous week, Argentina’s central bank raised its key interest rate to 40% on Friday May 4, up from 33.25% the day before and 30.25% the day before that. Argentina’s peso has lost 25% of its value in the past year. Macri is striving to reverse years of protectionism and high government spending by his predecessor, Cristina Fernandez de Kirchner.

Argentina’s currency crisis is expected to continue and since the country is a major exporter of soybeans, U.S. farmers are watching what is happening carefully, since this crisis may also impact soybean prices, which is a major U.S. export. Since Macri wants to cooperate with the IMF and encourages opening up the Argentine economy to global trade, I expect that the IMF will likely come to Argentina’s aid.


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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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