Seek Quality Stocks

Seek Quality Stocks – and Avoid Trendy “Bubble” Stocks

by Louis Navellier

December 1, 2015

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

We are now in the seasonally strong time of year for small capitalization stocks. An early “January effect” already seems to be underway, but there is a developing market trend that makes me very uncomfortable.

Credit Card ImageMall traffic on Black Friday was noticeably lighter than in previous years, but Cyber Monday is shaping up to be more important.  Bespoke Investment Group polled 1515 U.S. consumers last week and reported on Friday that 32.7% of U.S. consumers are planning to shop most often at Amazon.com, more than Walmart (15.8%), Target (8.6%), Macy’s (4.8%), and Costco (0.9%) combined. The reason this concerns me is that Amazon’s dominance in Consumer Discretionary ETFs has become excessive. On November 13, Bespoke reported that the Consumer Discretionary sector is up over 8% this year on a capitalization-weighted basis; but it is down 1.84% on an equally-weighted basis.

I must warn you that there are some bubbles out there that might be pricked. Bespoke Investment Group last Friday said that the top 1% (the 30 biggest-cap stocks) in the Russell 3000 at the start of 2015 are up 6.6% year-to-date, while the other 99% (2970 stocks) are down 3.2%. Another bubble that was recently “pricked” was Chipotle Mexican Grill, which in the past several weeks plunged approximately 24% in three big downdrafts propelled by a 3-cent earnings miss ($4.59 per share vs. $4.62 estimates) and two separate E coli scares.  We have already seen Priceline.com plunge over 15% in the past few weeks and it still trades at a P/E ratio of 26.

The problem is that fund managers keep piling into the very few big-cap stocks that keep rising – in part because of their buying pressure. I hate to be a party pooper, but I feel obligated to warn you that the leadership of the stock market is shockingly narrow.  Instead of jumping on this trendy bandwagon, I urge you to seek out fundamentally superior stocks with strong sales, accelerating earnings, and reasonable price-to-earnings multiples of approximately 16 times their forecasted 2016 earnings.

In This Issue

This week, Ivan Martchev will dissect the James Bond-like air war over Turkey, with implications for the price of oil and the euro, while Gary Alexander will take the temperature of market sentiment and hazard a contrarian guess at what the bearish forecasts imply for 2016. Jason Bodner will take a look at one-week and (more importantly) three-month sector performances to see which sector recovered fastest, and then I will offer my analysis of the latest positive GDP revision and other key indicators at home and in Europe.

Income Mail:
The Geopolitics of Oil – a Real-Life 007
by Ivan Martchev
Euro: Parity by New Year?

Growth Mail:
When Bulls Turn Bearish, There’s Hope
by Gary Alexander
Two Time-Tested Analysts who Marry History with Reality

This Week in Market History:
December – the “Free Lunch” Month
by Gary Alexander
Historic Market Turnarounds in Early December

Sector Spotlight:
A Few Winners Can Supercharge a Portfolio
by Jason Bodner
Leadership since the Late-August Correction

Stat of the Week:
Third-Quarter GDP up by a Healthier 2.1%
by Louis Navellier
European Confidence Rising – Despite Unrest

Income Mail:

*All content in "Income Mail" is the opinion of Navellier & Associates and Ivan Martchev*

The Geopolitics of Oil – a Real-Life 007

by Ivan Martchev

“Judge a man by his questions rather than his answers.” -- Voltaire

Barrel Rifling ImageIn the James Bond film, “Tomorrow Never Dies,” media baron Elliot Carver uses an encoder device to send a UK military ship off course into Chinese territorial waters to provoke a war between China and the United Kingdom. The goal is to replace the current Chinese government with one that would give Carver exclusive broadcast rights in their country. After reading a Carver media report of the incident as a Chinese attack, the British Minister of Defense orders the Royal Navy to recover its sunken ship and possibly retaliate, while leaving MI-6 and its finest agent James Bond only 48 hours to investigate its sinking. James Bond, as he usually does, diffuses the situation in the last minute preventing a costly war.

The downing of a Russian SU-24 bomber jet by the Turkish military after it entered Turkish airspace raises eyebrows. The released Russian radar data shows no violation of Turkey’s borders while Turkish radar data shows the opposite. One has to wonder if someone got the idea from watching too many James Bond movies, as such systems are highly accurate and it is unlikely that one of them is hopelessly off the mark.

Why would Turkey, which is officially fighting ISIS as part of a broad coalition, take down a Russian jet, which is also fighting ISIS? Even if the Russian jet did enter Turkish airspace for 17 seconds (as the Turks reported to the UN), the only reasonable conclusion is that the Turkish fighter jet was waiting right there to hit it with a heat-seeking missile while still over Turkey (as the Turks say). It would seem there is precious little time for all of the above-mentioned maneuvers to have happened over Turkish territory.

How could such a rogue attack occur? In March 2015 in a paper entitled “ISIS EXPORT GATEWAY TO GLOBAL CRUDE OIL MARKETS1,” Dr Alec D. Coutroubis, principal lecturer at University of Greenwich in London, and George Kiourktsoglou, visiting lecturer at University of Greenwich, examine the specific evidence of how ISIS moves stolen oil. Dr. Coutroubis is well-connected in the Middle East with substantial business activities in the region. The paper has dozens of well-researched references, including witness accounts, which point to Turkey as a major exporting hub for stolen oil.

Taking into account the depth and breadth of referenced sources in their paper (available for review at ISIS and Crude Oil Exports) and the numerous convoys with oil and petroleum products moving towards the Turkish border, one has to conclude that the Turkish government is well aware of who brings the oil into Turkey and who moves it on the global markets from the major port of Ceyhan. After all, those tanker trucks cross from ISIS-controlled border checkpoints on the Syrian side and the drivers of the tanker trucks have to document to Turkish customs officials what it is that they are transporting and where it is going, as per standard procedure. It is peculiar then to note that as the aerial bombardment of tanker convoys by the Russian Air Force dramatically intensified in recent weeks so as to drain ISIS of the flows of oil money, the Russian bomber was downed by a Turkish military fighter jet.

Stopping Islamic State Image

It is commendable that the U.S. government urged the Turkish government to close the border with Syria on Friday (see November 27, 2015 WSJ, “U.S. Urges Turkey to Seal Border”). The question is: Why now, after the painfully obvious dynamics of the stolen oil trade and movement of arms and reinforcements by ISIS has been known for a couple of years? We should not forget that the former name of ISIS/ISIL – now Islamic State – evolved from Al Qaeda in Iraq.

Crude Oil - West Texas Intermediate - Daily OHLC Chart

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

I was mightily surprised to see that after such a major geopolitical (and seemingly poorly-planned) “blunder,” the price of oil registered what is known in trading circles by the rather peculiar term of “dead-cat bounce,” the idea being that if you throw a dead cat from high enough it is likely to register some sort of a rebound, but that would not change the fact that it is still dead and it is not going anywhere.

If ISIS oil stops flowing on global markets, the price of oil will likely not budge much; but the price of oil may move higher after a major escalation of the Syrian conflict that seems destined sooner or later to spill over into Iraq, with ISIS on the defensive this time. The price may move quite a bit more if this conflict broadens beyond the Levant. Those are unknowable events, with the caveat that the downing of the Russian jet just made geopolitical spikes in oil more likely.

If we did not have this geopolitical mess at the moment, I think oil prices would be declining. This is the seasonally weak time of the year for crude oil demand and if we add to that the cyclical complications of the #1 consumer of oil, China, which has yet to hit an economic bottom, the fundamental backdrop for oil is rather negative.

Keep that in mind next time you try to bottom-fish in the energy sector.

Euro: Parity by New Year?

The ECB is meeting on December 3 and the euro is about a cent away from a 52-week low. By the time you read this, we may be in new low territory for 2015. The question is: Are we headed for parity (a $1 euro) before the end of this year?

Euro Versus Dollar - Daily OHLC Chart

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

The way I see it, the ECB has two choices – either to disappoint the market or to surprise it but pressing harder on quantitative easing. Staying the course at the present level of QE or lifting the foot off the monetary pedal would count as a disappointment. Accelerating QE would be the other choice.

I think the ECB will accelerate QE because I believe the Europeans do not have a choice. Their QE operation can be characterized as “too little too late” as deflationary pressures had already set in and bank lending was shrinking before they started with it. This suggests to me that they are likely to opt for upping the QE ante as they surely have understood that they are behind the curve on deflation.

European Central Bank Lowers Rates Chart

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

One option is to sink both the refinancing rate and the deposit rate into negative territory. That way, if you want to borrow from the ECB (refinancing rate) you would end up with more money than if you took out a loan: Wouldn’t that be something? And if you deposit at the ECB, you get an even bigger haircut.

One has to marvel at the intricacies of modern day central banking and wonder how long the global financial system would tolerate such unorthodox experiments with monetary economics.


1. http://www.marsecreview.com/wp-content/uploads/2015/03/PAPER-on-CRUDE-OIL-and-ISIS.pdf

Growth Mail:

*All content in "Growth Mail" is the opinion of Navellier & Associates and Gary Alexander*

When Bulls Turn Bearish, There’s Hope

by Gary Alexander

“Bears make headlines, bulls make money.” – Bernard Baruch (1870-1965)

Analysts often publish their next-year forecasts in December.  Some are issued in late November.  “Black Friday” took on new meaning when I read two articles last Friday about new bearish forecasts for 2016.

First, Fortune reported that “Goldman Sachs’ top strategists predict that stocks will once again disappoint next year. Goldman predicts the S&P 500 will go nowhere in the coming year, ending 2016 at 2100.”

Since the S&P closed Friday at 2090, a 10-point gain in the next 13 months is decidedly underwhelming.

Goldman cited “a headwind of rising interest rates, a strengthening dollar, and stalled profitability.” According to Fortune (in “Goldman’s Incredibly Depressing Predictions for 2016,” by Stephen Gandel, November 25), Goldman’s lead analyst, David Kostin, said “only 6% of the time during the last 40 years has the median stock traded at a P/E multiple higher than it does today.” Goldman analysts also argue that aggregate P/E multiples tend to fall 10% in the six months following the Fed’s first interest rate move.

This, of course, assumes that there will be a “first” hike in December, followed by more hikes in 2016.  We have argued here that it will be either “one and done” in December, or perhaps even “none and done.”

Fortune also reports that “Goldman says that earnings per share for the average S&P 500 company will rise by about 10% in 2016,” so they’re essentially saying that P/E ratios will fall on rising earnings.

A second “Black Friday” article (“One of the most bullish Wall Street strategists just offered one of the most bearish outlooks for 2016 we’ve read yet,” by Akin Oyedele in Business Insider, November 27), said that BMO Capital Markets’ analyst Brian Belski is preparing clients for a correction in 2016.

Belski and his team published their 2016 outlook to clients last Wednesday, saying, “We believe the S&P 500 will likely suffer its first calendar year loss since 2008.” His year-end 2016 target is the same as the Goldman team: 2100 on the S&P 500, despite the fact that he believes we are in the midst of a multi-year secular bull market.  He cites negative sentiment about “the most doubted, second-guessed, and, frankly, hated stock market rally in history.” In the long term, however, Belski and his team ironically believe that “annualized stock-market returns will most likely be 8% to 10% on average over the next 3-5 years.”

In which case, I would ask, why try to “time the market” with a perfect exit and entry-point strategy?  Why not just ride out any “boring” year – if that’s what 2016 will be – and not attempt two great guesses?

Belski published the following chart, which (if my eyes don’t deceive me) foresees an 8% market rise in the year following the start of bull market corrections – like what recently happened.  Sounds good to me!

Standard and Poor's Normalized Price Based on Performance Chart

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

Meanwhile, sentiment among average investors remains gloomier-than-average – and it has been that way for a long time.  The American Association of Individual Investors (AAII) polls its members weekly and the results are published every Thursday.  Last week, the ratio was 32.4% bullish and 26.0% bearish with a whopping 41.6% being neutral.  The bullish percentage has been below the long-term average (38.73%) in 36 of the last 38 weeks, and the percent of neutrals has been above average for 44 of the last 46 weeks.

Percentage of Bulls, Bears, and Neutrals: Last Three Weeks Table

As I have long maintained, there is less likelihood of a serious crash without a manic buying spree preceding it.  Bubbles must be inflated before they can burst.  While specific overpriced stocks can indeed crash – as Louis Navellier warns, above – it is unlikely that the total market will collapse when sentiment remains neutral-to-negative.  Contrarian theory says that nearly “everyone” must be invested (with “nobody” on the sidelines to buy) before there can be a crash like we saw in 1929, 1987, 2000, or 2008.

Two Time-Tested Analysts who Marry History with Reality

I believe Brian Belski will be right in his long-term prescription for moderate growth in the S&P 500 in the next 3-5 years.  I also follow the time-tested research of two other analysts who marry their love of market history with a respect for the new realities that face us today.  Specifically, Sam Stovall wrote in S&P Capital IQ last week (“U.S. Investment Policy Committee Notes”) that “a 2.8% projected increase in U.S. GDP in 2016 and an 8.0% rise in S&P 500 EPS” implies a 12-month S&P 500 target of 2250.

Stovall doesn’t believe the projections of a mediocre 2016 have much validity, based on market history:

“Since 1945, there have been 10 times that the S&P closed up less than 3% or down less than 3%.  In the subsequent calendar year, the S&P was up an average 12.8% and was higher 80% of the time. It was flat for a second year only once: 1948, when it fell 0.7%.  Therefore, history says, but does not guarantee, that while two flattish years in a row are possible, they are not likely.”

It looks like the S&P might close 2015 in that “mediocre” category (up or down less than 3%).   As I scan the year-ending figures since 1960, here are the last eight times the S&P closed up or down less than 3%:

Last Eight Mediocre Years Were Followed by Double-Digit Gains Table

The average gain after a neutral year since 1960 was +18.25%, and all years were double-digit positive.

Market history is dominated by double-digit years, up or down. There are in fact very few mediocre years.  Since 1950, 46 years have been up or down in double digits while only 19 have changed by single digits.

I also align with Ed Yardeni’s 2016 S&P 500 projection of 2300, based on $127 S&P 500 earnings in 2016 and $136 in 2017.  In his November 23 Morning Briefing (entitled, “Thanksgiving.”), he explained: “Multiply that last number – which would be forward earnings at the end of next year – by a forward P/E of 16.9, and the result is 2300.” Like me, Yardeni cites low bullish sentiment as a “great contrary indicator.”  He also points out that the S&P is already up 11% from its September 28 low.

Don’t forget that most of the earnings erosion in 2015 has been in the energy sector, and that won’t carry over into 2016, when year-over-year comparisons of energy earnings will be based on 2015’s lows.

While America seems to be turning bearish (or at least remaining neutral), I see confidence rising to a 4-1/2-year high in Europe, despite uncontrollable deflation, near-zero growth, rising terrorism, uncontrolled and unassimilated immigrants, a demographic time bomb of low-birth native populations, cradle-to-grave welfare promises, continuing problems in Greece and other moribund economies, and myriad other ills.

As I showed here last week, European markets are far surpassing U.S. markets this year, despite Europe’s problems. Last Friday, I read in a Bloomberg report (“Euro area confidence at highest in four years as ECB mulls stimulus,” November 27) that the prospect of the ECB lowering interest rates below -0.2% is generating confidence!  In that piece, Bloomberg wrote, “An index of executive and consumer confidence stood at 106.1 in November, the European Commission in Brussels said Friday, and October’s reading was revised to the same level from an initial 105.9. The figures are the strongest since May 2011.”

Due in part to the dismal sentiment in the U.S. and a misplaced confidence within Europe, I will make this prediction for 2016: The S&P 500 will grow more than most euro-zone stock market indexes in 2016.

This Week in Market History:

*All content in "This Week in Market History" is the opinion of Navellier & Associates and Gary Alexander*

December – the “Free Lunch” Month

by Gary Alexander

Something odd happened last December.  The S&P 500 dropped 0.42%.  Although insignificant in the grand scheme of things, a down December is rare. The S&P 500 had risen for the six previous Decembers (2008 through 2013), and in 25 of the previous 30 Decembers (1984 through 2013).  The only significant (over 3%) decline in any recent December was a 6% drop in December 2002.  December is among the top three or four months in the last 100 years, 50 years and 20 years, according to Bespoke Investment Group:

Standard and Poor's 500 Last 100 Years Chart

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

Since World War II, the S&P 500 has risen 1.8% on average each December vs. 0.7% for the average of the other 11 months, according to Sam Stovall, the S&P 500 Capital IQ strategist.  December has risen 78% of the time and declines have been small.  “You can call December the free-lunch month,” he says.

Here are some memorable market weeks falling in early December:

Historic Market Turnarounds in Early December

On December 2, 1940, a seat on the New York Stock Exchange changed hands for just $33,000, the lowest price for a seat in the last century. The previous low was set in 1899, when a seat sold for $29,500.

On December 3, 1968, the DJIA reached its late-1960s bull market peak of 985.21. It then proceeded to fall 35.9% in less than 18 months, reaching a low of 631.16 on May 26, 1970.

The DJIA fell to its lowest point in the last 50 years in the week of December 2-6, 1974. The DJIA fell over 41 points (-6.6%) that week, reaching 577.6 on December 6.

On Thursday, December 3, 1987, the DJIA fell 72.44 (-4%) to 1776, then dropped to 1766 the next day, threatening a test of the October 19 lows of 1738.   On the same day, Gold peaked at $504 and started falling, not to regain $500 until 2005; but the stock market began its long recovery the following week.

On Monday, December 1, 1997, the DJIA gained 190 points (+2.4%), rising from 7823 to 8013.  For the week of December 1-5, the DJIA gained 326 points (+4.2%).

Sector Spotlight:

*All content in "Sector Spotlight" is the opinion of Navellier & Associates and Jason Bodner*

A Few Winners Can Supercharge a Portfolio

by Jason Bodner

As we sift through the piles of dreary news the media brings us each day, it helps to focus in on the data. There can be no better indicator of the health of a stock, group, or sector than its price. At the end of the day, all of the suppositions and theses of investors become moot when a closing price is published. For at that moment, that is what the market determines its worth to be. But as we take a step back from hourly, daily, or even weekly data, the picture begins to emerge. This is not unlike staring at a pointillism picture. If you stare point-blank at the painting, you see a jumble of meaningless colored dots. When you stand back, the image unfolds and you are staring at “A Sunday Afternoon on the Island of La Grande Jatte.”

A Sunday Afternoon on the Island of La Grande Jatte Image

“A Sunday Afternoon on the Island of La Grande Jatte” by Georges Seurat – Art Institute of Chicago, Public domain in the U.S.

Just like a few people in the foreground overshadow many in the background, a few stocks can dominate a portfolio.  In many portfolios it’s not uncommon to have a few shining stars account for a significant portion of one’s total return. Oftentimes, just a handful of stocks outperform all other winners and losers combined.

When navigating volatile markets like our current one, perhaps the greatest insulation to shock would be a high level of scrutiny when selecting investments. Looking back through history, we come to find that some of the best performing stocks of recent (and less recent) times all share common characteristics. Finding companies which boast growing revenues, growing earnings, high margins, and reasonable multiples can often result in identifying longer-term success stories. It may not be surprising to find that a portfolio can deliver an envious return profile based on just a few of these stocks.

Naturally, a good place to begin searching for stocks like these is to begin looking at which sectors and industry groups have been exhibiting leadership. In the recent tumult of the stock market, that’s been a little bit difficult, as sectors and groups have been rotating positions as leaders and laggards on what has seemed like a weekly basis at times. This past holiday week was typical with light volume. What I did notice though, is that even as the S&P 500 finished the week essentially flat, many higher quality stocks turned out a great performance. Let’s see how the sectors performed this past week, and then take a look at what is possibly more meaningful – the 3-month returns of all the sectors:

Standard and Poor's 500 Sector Index Tables

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

Consumer Staples was the winning sector last week, posting positive returns each trading day. Energy helped buoy the market, finishing +1.32% for the week due mostly to Tuesday’s +2.19% performance, due to Turkish-Russian military tension. It is interesting to note, that we have recently seen larger daily and weekly fluctuations in energy prices, with little or no news; so this past week’s volatility is nothing out of (what has recently become) the ordinary. Utilities was our weakest sector with a -1.62% return.

Leadership since the Late-August Correction

We all know that the U.S. equity market put in a low August 25th. What is telling is how the sectors have emerged since then. Looking at 3-month returns of the S&P sector indices, we can see clear leadership.

As I have discussed before, the S&P 500 Information Technology Index has been showing us that capital has been steadily flowing into the area. This began with some M&A activity in Semiconductors, and then gathered steam with some great earnings reports and guidance from strong companies. Internet and Software names continue to be the engine of strength here. The one thing to be aware of is that a lot of money has gone into a few names, most of which are large cap, well-known names. This doesn’t boost confidence in a sector the same way that general accumulation across the board does. That said, however, the index is up 8.35% in the past 3-months (using the August 28 close). Let’s look at a 1-year and 3-month chart of the S&P 500 Information Technology Index to see just how dramatic the rise has been:

Standard and Poor's 500 Information Technology Sector - Daily OHLC Chart

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

Almost as strong as Info-tech was Consumers. The S&P 500 Consumer Discretionary Index for the week was not terribly exciting; it posted a 0.22% gain. But when we look at its 3-month returns, we see that there is a lot to celebrate. Even in the face of concerns over slowing growth, and shrinking earnings, the index is up 7.28% in three months. This has been largely attributable to Retail. Now, the Retailing group was not a place investors wanted to be in the middle of November, but much of the selling pressure has seen a recovery. On September 29th, the S&P 500 Retailing Industry Group Index put in a closing low of 1146.54. Since then, it has rallied almost 13.5% to close 1308.88 this past Friday.

Standard and Poor's 500 Consumer and Retailing Sector Chart

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

The third biggest winner for the past three months has surprisingly been Industrials.  The S&P 500 Industrials Sector Index is up 6.84% since August 28th. Building Materials and Electronics have seen strength while Transportation and Trucking names have seen weakness. In fact, quietly, the S&P 500 Building Products Index posted a 21.77% gain from its closing low of 269.15 on September 29th!

Standard and Poor's 500 Industrials and Building Products Sector - Daily OHLC Chart

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

As we identify which sectors and groups are leading, we can begin to look more closely at which stocks are the catalysts, and we can identify which ones are the leaders. Just as the wealth of a few can eclipse the collective wealth of almost 50 countries, a few great stocks can propel an entire portfolio forward.

As Vincent van Gogh once said, “Great things are done by a series of small things brought together.”

Stat of the Week:

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

Third-Quarter GDP up by a Healthier 2.1%

by Louis Navellier

The surprising news last week was that third-quarter GDP was revised up by the Commerce Department to a 2.1% annual pace, up from a previously estimated 1.5% annual pace.  The primary reason for the upward revision is that the inventory of unsold goods rose to $90.2 billion vs. an initial estimate of $56.8 billion.  Consumer spending was revised to a 3% annual pace, down from 3.2%, as initially estimated.  Imports were revised up to 2.1% (from 1.8% previous estimated), while exports were revised down to 0.9% growth (down from 1.9%), so the trade deficit put downward pressure on GDP.  Additionally, adjusted pre-tax profits declined 1.1% in the third quarter – the third decline in the past four quarters.

Shopping Consumers ImageOverall, the consumer remains the primary driver of overall GDP growth. Speaking of the consumer, the Conference Board on Tuesday announced that its consumer confidence index plunged to 90.4 in November, down from a revised 99.1 in October.  This was truly a shock, since economists were expecting consumer confidence to be 100 in November.  Furthermore, this is the lowest level for consumer confidence since September 2014 and a major concern.  The present situation component declined to 108.1 in November, down from 114.6 in October.  Even worse, the future expectation component plunged to 78.6 in November, down from 88.7 in October, which is the lowest level in two years.  Lynn Franco, the director of economic indicators at the Conference Board said, “The decline was mainly due to a less favorable view of the job market.”  So if the Fed is looking for an excuse to not raise key interest rates in December, plunging consumer confidence could be a factor; but I suspect that the November payroll report and the October payroll revision next Friday will be much more influential.

On Wednesday, the Commerce Department announced that durable goods orders rose 3% in October, following a revised 0.8% decline in September and a 2.9% decline in August.  In the first 10 months of 2015, durable goods orders have declined 4.2% vs. the same period in 2014, which is indicative of a strong U.S. dollar impeding durable goods orders.  In October, orders for commercial planes surged 81% and helped to substantially boost transportation orders, even though automotive parts orders declined 2.9%.  Excluding the volatile transportation sector, durable goods orders rose a more modest 0.5%.

In the first 10 months of 2015, durable goods orders, excluding transportation, have declined 2.7% from the same period in 2014.  The best news was that orders for core capital goods, which is indicative of increasing business spending, rose 1.3% in October, even though core capital goods shipments declined 0.4%.  Overall, the improvement in October durable goods orders came as a welcome relief.

European Confidence Rising – Despite Unrest

While confidence is fading in the U.S., Markit reported last Monday that its composite Purchasing Managers Index (PMI) for 5,000 companies in the euro-zone rose to 54.4 in November, up from 53.9 in October and reaching the highest level since May 2011.  The new orders component on the Markit PMI is also at its highest level since mid-2011.  Interestingly, France’s composite PMI declined to 51.3 in November, down from 52.6 in October, and it appears that the horrific terrorist attacks have had some impact.  Overall, despite a cautious Belgium and France, the euro-zone is still on track for improving economic growth.

Despite a resurging euro-zone, the euro continues to remain weak relative to the U.S. dollar on anticipation of the European Central Bank cutting key interest rates further on December 2nd.  As the U.S. dollar continues to rally, commodity prices remain weak, so copper remains especially soft.  Crude oil prices rose on Tuesday after it was announced that Turkey shot down a Russian jet fighter that crossed into Turkish airspace.  Naturally, tensions in the region caused crude oil prices to rise; but I expect that crude oil will settle back down as supply and demand forces resume their long-term impact on oil prices.


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.

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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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