State of Low Inflation

A “Nirvana” State of Low Inflation and High Growth

by Louis Navellier

January 17, 2018

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

Chinese City Image

The S&P 500 rose another 1.57% last week, totaling +4.21% through January 12.  The market was particularly buoyed by positive earnings revisions, running at the fastest pace in 10 years!  Meanwhile, the 10-year Treasury bond yield rose from 2.4% at the end of 2017 to an intraday high of almost 2.6%, based primarily on a Bloomberg story last week that China may stop buying U.S. Treasuries.  This move should be temporary, since there is no evidence that bond yields are rising due to inflationary pressures.

Overall, despite the economic chaos in Iran, Venezuela, and Zimbabwe, we remain in the midst of a global economic boom on every continent.  It will certainly be interesting just how long this boom will persist.  From a market perspective, it certainly looks good through at least May, since I expect wave after wave of positive corporate earnings, more dividend increases, and stock buy-backs due to corporate tax reform.

We remain in a Nirvana environment of low interest rates, low inflation, and robust economic growth; but if Treasury bond yields continue to rise, the Fed will be much more likely to raise key interest rates in March.  Still, let’s wait to see what new Fed Chairman Powell says when he takes over on February 3rd.

In This Issue

Bryan Perry makes the distinction between a market melt-up (bubble euphoria) and rising prosperity, a condition which can more easily weather market storms.  Gary Alexander reminds us that this market is the just reward for enduring the pains of 2000-09 and the slow growth of 2009-16.  Ivan Martchev still believes the dollar’s days are numbered and the bond rally can resume, while Jason looks beyond the 11 S&P sectors into some of the sub-sectors this week.  I will close with a look at the upcoming earnings announcement season and the outlook for inflation vs. Fed interest rate policy in the coming months.

Income Mail:
Teflon Bull Market Shakes Off Headline Risk
by Bryan Perry
“Market Melt Up” or Prosperity Breaking Out?

Growth Mail:
The S&P 500 Has Gained Only 3.4% per Year Since 2000
by Gary Alexander
Forget the Psycho-Babble, Focus on the Facts

Global Mail:
The Euro Starts Strong in 2018
by Ivan Martchev
No Broken Treasury Yield Trend Lines Visible

Sector Spotlight:
2017: A Big Year in Heaven and on Earth
by Jason Bodner
Looking at the “Granularity” of Industry Subgroups

A Look Ahead:
Positive Earnings Revisions Reach Record Highs
by Louis Navellier
Inflation Fears are Rising but Inflation Rates are Falling

Income Mail:

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

Teflon Bull Market Shakes Off Headline Risk

by Bryan Perry

This past week saw the market undergo its first real test of how it would manage headline risk. A Bloomberg report that China may trim or halt its purchases of U.S. Treasuries (“China Weighs Slowing or Halting Purchases of U.S. Treasuries” – January 10, 2018) prompted overnight selling in the Treasury market, sending the yield on the benchmark 10-yr Treasury note to its highest level since March 2017. The higher yields pushed equity investors to take some profits in a knee-jerk reaction.

An already weak dollar traded to new three-year lows on the China-related headline, despite robust economic growth, so some international investors are reluctant to buy more Treasury securities. As the yield curve gets steeper, this will give the Fed some potential room to raise key interest rates further, but the slide in the dollar (the latest blip on the Dollar Index DXY chart below) raises some new concerns.

United States Dollar Index Chart

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

There is no evidence that Treasury bond yields are rising due to inflationary pressures yet, so there is no need to panic that interest rates will continue to steadily raise. However, logic would have it that robust domestic economic growth, rising Treasury yields, and a reduction in the size of the Fed’s balance sheet would be bullish for the dollar as has been the pattern of past like scenarios.

Seeing the dollar break key technical support at 94.0 raises a yellow flag. Even Rick Santelli is mystified as to why the dollar is breaking down and this is right in his wheel house. When Rick is confused, we should all take notice and keep a close eye on this potential fly in bullish ointment.

Rick Santelli Image

Equities eventually reached their flat lines in the afternoon but slid back into the red following a Reuters report that Canada believes that U.S. President Donald Trump will soon pull the United States out of the North American Free Trade Agreement, or NAFTA (source: Reuters: “Canada Increasingly Convinced US Will Pull Out of NAFTA” – January 10, 2018). General Motors, which was flat ahead of the report, finished lower by 2.4% due to its heavy exposure to Mexico’s auto market. Again, without verifiable commentary from the White House or State Department, rumors create an unknown quantity of risk and then fear sets in. But for this market, fear is usually temporary.

With a reputed China bond strike, NAFTA pullout, and crumbling dollar, the Dow, S&P 500, and Nasdaq hit their worst marks shortly after last Wednesday’s opening bell, posting losses between 0.5% and 0.7%. It looked like emotional selling would heat up and feed on itself. The notion that China would stop buying U.S. debt sent shivers through the bond market and all manner of speculation hit global trading desks.

But this “Teflon bull market” wasn’t to be denied. Investors took full advantage of the early selling pressure and stepped in as a CNBC interview with legendary investor Warren Buffett stated that he remains a net buyer of stocks, citing low interest rates and the recently passed tax reform legislation.

Interestingly, the three stories about China, NAFTA, and the dollar had nothing in common with Buffett’s comments regarding favorable interest rates and lower corporate taxes, but emotions were calmed and the ‘buy the dip’ mentality that has characterized this bull market for the past 10 years prevailed once again.

Remarkably, the Dow recovered from an early triple-digit loss and ended Wednesday’s negative headline session just short of its unchanged mark. The financial sector – the second heaviest group by weight – led all sectors last week in anticipation of Friday’s earnings releases from some leading investment houses, all of which surpassed Wall Street estimates, fueling a second day of 200+ point gains for the Dow along with similar gains by the S&P, Nasdaq, and Russell 2000 soaring to new record highs to close the week.

“Market Melt Up” or Prosperity Breaking Out?

The phrase “market melt up” is now showing up everywhere and has gotten more press than it deserves. It’s important to articulate just what comprises a market melt up. By definition, it is a dramatic and unexpected improvement in the investment performance of an asset class or broader market rally driven partly by a stampede of investors who don't want to miss out on a rise – as opposed to a more orderly bull market driven by fundamental improvements in the economy. Gains created by a melt up are considered an unreliable indication of the direction of the market, and melt ups often precede melt downs.

Based on all the recent economic data and early fourth-quarter earnings reports from several blue-chip companies, the notion of a melt up simply doesn’t hold water. For Q4 2017 (with 5% of the companies in the S&P 500 already reporting actual results for the quarter), 69% of reporting companies have delivered positive EPS surprises and 85% have reported positive sales surprises. The blended earnings growth rate for the S&P 500 is 10.2%. All 11 sectors are expected to report earnings growth, led by the Energy sector.

On December 20, Congress passed the tax reform legislation, and President Trump signed the bill into law a few days later. Since then, a number of S&P 500 companies made positive comments about the potential benefits of tax reform. Since then, the analysts have also increased their earnings expectations. The CY 2018 bottom-up EPS estimate (an aggregation of median 2018 EPS estimates for all companies in the index) increased by 2.2% (from $146.83 to $150.12) between December 20 and January 11, the largest increase in the annual EPS estimate for any three-week period since FactSet began tracking this data in 1996. At the sector level, nine of the 11 sectors have recorded an increase in their bottom-up EPS estimates during this window, led by Financials (+8.3%) (FactSet Earnings Insight – January 12, 2018).

Standard and Poor's 500 Change in CY 2018 Sector Level EPS Bar Chart

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

This market surge is being fueled by prosperity, which is defined as a successful, flourishing, or thriving condition, especially in financial prospects. Until the numbers suggest otherwise, it should be no wonder the market is repricing itself higher. Damn the naysayers, full speed ahead!

Growth Mail:

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

The S&P 500 Has Gained Only 3.4% per Year Since 2000

by Gary Alexander

Sunday marked my 50th wedding anniversary, so I tend to notice events that happen on January 14.  It was on that date in the year 2000 that the Dow Jones Industrials peaked at 11,722.98, a number that would not be eclipsed for nearly seven years.  That Friday, January 14, 2000 was a giddy time for big stocks on Wall Street, as Glaxo-Wellcome offered to acquire SmithKlineBeecham for $75.7 billion in stock.  Earlier that week, AOL announced plans to acquire Time Warner for roughly $182 billion in stock and debt.  Both deals took until December to complete due to legal hurdles and the sinking stock market later that year.

When pundits talk about the soaring stock market this year, last year, and the last nine years, they forget to mention the nine dismal years before 2009.  If you take the full 18 years from the end of 1999 to the end of 2017, the S&P 500 has only risen 82%, which works out to only 3.4% per year, annualized.  In the previous 18 years (1982-99), the S&P had grown 12-fold, which works out to a stunning 14.8% per year.

The last eight years amount to a payback – a reversion to the mean – for the crappy returns of the years 2000-09, which amounted to the worst real (after-inflation) returns of any decade in market history, so beware of any Cassandra who only measures a market from its most recent lows.  They aren’t telling you the whole truth.  They aren’t accepting the totality of market history – “for better or worse, for richer or poorer, in sickness and health” as the marriage vow puts it.  We are now enjoying the payoff for our pains.

An average 3.4% gain means the bull market can continue indefinitely.  The length of this bull market (as compared to previous bull markets) is totally irrelevant in calculating how long this bull market continues.

In the 14 months since election day, this market has been supercharged, by whatever measure:

Market Gain Since Election Day Table

Standard and Poor's 500 Index Chart

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

Notice how a flat 24 months (late 2014-2016) generated a liftoff right after election day, 2016.

If you watched the evening news, you would not believe this market could possibly rise, given the onslaught of bad news and the war of words between the President and the national press – but it is.

Forget the Psycho-Babble, Focus on the Facts

The stock market isn’t the only soaring indicator.  A lot of journalists and politicians posing as amateur psycho-analysts have diagnosed the President lately, including many quoted in a new book, “Fire and Fury: Inside the Trump White House,” by Michael Wolff.  A lot of journalists talk about the sour mood in the country or unprecedented dissension in Washington DC, but those are just words.  Whenever polls are taken among real people – especially investors and business owners – we find entirely different results.

First off, the economic indicators seemed to turn on a dime after the 2016 election results.  For instance:

The Citigroup Economic Surprise Index (CESI), an indicator of how many economic indicators deliver positive surprises, rose from a six-year low of -78.6 on June 16, 2017, to a six-year peak of +84.5 peak on January 8, 2018, and GDP rose from 1.2% in the first quarter to 3.1% and 3.2% in the second quarter.

The psychological components of the economy – optimism and sentiment – are also rising rapidly. Economist John Maynard Keynes called these our “animal spirits.”  After Trump’s surprise win, our animal spirits went from a sleep-walking “more of the same” depression (under the expected leadership of Hillary Clinton) to a somewhat-unsettling but eventually more hopeful Trump era.  Almost all surveys of consumer and business confidence began to soar in late 2016 and then kept rising, especially in late 2017.

The Consumer Optimism Index (COI), an average of the Consumer Sentiment Index and Consumer Confidence Index rose from 105.8 at year-end 2016 to 109.0 at year-end 2017.  The “current conditions” component of the COI just peaked at 135.2, its highest level since March of 2001.  The number of respondents saying that “jobs are hard to get” fell to 15.2% last month, the lowest level since July 2001.

The National Federation of Independent Businesses (NFIB) Small Business Optimism Index averaged 104.8 in 2017, its highest reading for any year in the history of the survey.  In December 2015, the main concern of small business owners was government regulation, at 21.2%.  As of the end of 2017, regulation concerns had fallen to third place, at 15.7%.  Now, a shocking 54% report that there are few or no qualified applicants for job openings, the highest in the history of that series, dating back to 1993.

Purchasing Managers Indexes(PMIs) also reflect growing business optimism.  The U.S. Manufacturing PMI grew from 54.5 a year ago to 59.7 in December, while the new orders component rose from 60.3 a year ago to 69.4 in December.  All theme M-PMI numbers were flat-lining at near 50 on Election Day.

United States Manufacturing Purchasing Managers Indexes Chart

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

The Business Roundtable CEO Economic Outlook index rose from 74.2 in the fourth quarter of 2016 to 96.8 in the fourth quarter of 2017.  That’s important because the economic outlook of America’s CEOs is highly coordinated with the growth rate in capital spending, which grew by a robust +4.6% in Q3-2017.

These are measurable levels of sentiment, not fuzzy levels of opinion or political psycho-babble.  They tell us that most business owners and investors hold out great hopes for the Trump economic agenda. When inundated with political opinion to the contrary, try to tune out the noise and focus on the provable facts.

Global Mail:

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

The Euro Starts Strong in 2018

by Ivan Martchev

While the stars are aligned for the U.S. Dollar Index to rebound in 2018 with the Fed expected to up the pace of quantitative tightening – i.e., increase the monthly runoff rate of its balance sheet as well as deliver up to four fed funds rate hikes – in the first two weeks of the year the greenback has been weak.

What gives?

The dollar’s main nemesis, namely the euro, has been rebounding. Since the euro is the largest component of the U.S. Dollar Index, at 57.6%, a stronger euro means a weaker dollar. After the September 2017 election that left Germany without a governing coalition, the euro weakened a bit, but last week finally saw Angela Merkel’s CDU and the Social Democrats sign an agreement to start official negotiations.

Euro United States Dollar Exchange Rate Chart

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

Still, an agreement to start negotiations to form a government is not exactly the same as forming a government. The reason for doubt is the growing rebellion in the Social Democrat party (SPD). The agreement to start coalition talks has to be approved by a special SPD party congress next Sunday, and there are signs that some key voters will cast their ballots against it.

Even if Germany forms a CDU-SPD coalition, which I hope they do, the euro is still overshooting to the upside at a time when the ECB is still in “QE mode” and the Fed is in QT (Qualitative Tightening) mode. Then we have to face the actual hammering out of a Brexit deal, which is unlikely to be easy.

From a trading perspective, the euro has run into what looks to be major area of resistance just above $1.20, which is an area that previously acted as a support level that “broke” in 2015 (see chart, above). I am using technical trading terms here. Combine them with the fundamentals lined up against the euro, and I believe we will have a down year for the euro in 2018 and consequently an up year for the dollar.

Germany Government Ten Year Bond versus Schatz Yield Chart

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

That there is hope and excitement that a government will be formed in Germany can also be seen in the German bond market, where 10-year bund yields are near a 52-week high yield of 58 basis points. Their 2-year brethren go by the tongue-twisting name of bundesschatzanweisungen, dubbed schatz notes to avoid any tongue injuries. The schatz currently sports a negative yield of -56 basis points vs. a decline to -95 basis points a year ago, before a wave of pro-EU political victories in the Netherlands and France.

After the Brexit vote (June 23, 2016), investors had such serious doubts that the EU would survive after the Brexit vote, that they pushed the schatz notes into record negative yield territory simply because the German government was viewed as least likely to default in a EU disintegration scenario. Investors were paying the German government to hold their money for them for fear of a domino effect of EU bank failures in the event of a dissolution scenario. They are still paying the German government 0.56% per year but that premium is shrinking and may shrink some more if the CDU-SDP coalition gets formed.

I suspect that the announcement of a successful coalition formation will be a time to look for a top in the EURUSD exchange rate. If such a coalition doesn't materialize, that would be even more negative for the euro. Any way I kick this around, I see significantly more downside than upside for the euro in 2018.

No Broken Treasury Yield Trend Lines Visible

There is fear in the bond market that as bond yields in Europe and Japan normalize that would mean more pressure on U.S. long-term rates. There is validity to that argument in the sense that U.S. bonds offer much higher yields than most in Europe and those in Japan and as such have been attracting more flows than would otherwise be the case from global investors.

If we have the Fed operating in QT mode and European yields rising, the 10-year Treasury yield has nowhere to go but up, right? While I would agree that the 10-year Treasury yield can rise in a QT assault from the Fed, no irreparable damage has been done so far. This is why I was a bit perplexed to see Bill Gross tweeting about a bear market in bonds starting and laying out his bear market arguments:

Bill Gross Tweet Image

As far as trendlines being broken in the 10-year Treasury yield, I don't see any such breaks.

United States Ten Year Treasury Yield Index Chart

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

The 10-year Treasury yield is mired in a downtrend that started in 1981 and, as far as I can tell, this downtrend is still intact. It is true that those trendlines may look broken on a linear chart – this is a log chart – but the breaking of trendlines is not an exact science. The terms “support” and “resistance” are areas, not exact numbers, so trendlines may look broken and the Treasury market may still turn around.

For example, the most recent such false breakout in the 10-year Treasury yield happened in the summer of 2007 when the Fed had not yet started cutting the fed funds rate in response to a collapsing mortgage bond market. If you look carefully on any chart, that trendline was clearly broken on the 10-year Treasury yield, yet the Treasury market turned around and rallied dramatically and yields fell considerably over the next year.

I think the 10-year Treasury may advance to 3.0% to 3.5% based on the Fed’s QT operations, but that still may not be the end of the bull market in bonds that started in 1981. The present economic cycle is long in the tooth. We have never had an economic expansion longer than 10 years in the past 240 years and this one is 8-½ years long. I would not be surprised if the Fed’s QT operations create a recession upon which the 10-year yield declines to 1% or lower.

As far as I am concerned, the bull market in Treasury bonds is not over.

Sector Spotlight:

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

2017: A Big Year in Heaven and on Earth

by Jason Bodner

A lot has happened in 2017. In the span of merely a year:

  • The moon has moved 3.8 cm away from earth
  • The sun burned off 174 trillion tons of its mass, making earth orbit increase by 1.5 cm
  • Roughly 150 billion stars were born
  • The Andromeda galaxy moved 3.5 billion km closer to us
  • The universe expanded by more than 60 trillion km

Big Year in the Universe Image

And some of you may have thought it was a boring year. Even if the heavens look stable, everything around us – including us – is in a constant state of flux. The markets have experienced quite a major rally, and while it may have seemed like everything was going up, as we highlighted last week, some sectors definitely did better than others. Let’s review this past week and the last three months.

This past week saw a huge surge for Industrials, Energy, Consumer Discretionary, and Financials. The first three gained over 3% and Financials fell just short of 3%. This is important, because this is in keeping with what’s been trending for the past three months. Our top five sectors for three-month performance are Consumer Discretionary, Energy, Financials, Info-Tech, and Industrials. All of those sector indexes are up north of 10% in 3 months. Not bad!

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

With that out of the way, and with another (historic) year behind us, it’s a good time to review not only what is happening now and what happened to the major sectors last year, but also what happened underneath in the GICS Industry Subgroups (GICS stands for Global Industry Classification Standard).

Looking at the “Granularity” of Industry Subgroups

An Industry Subgroup is a GICS category for stock description which details the specific business segment a company occupies within a sector. At last count there were nearly 150 of them. For example, if you look at the Consumer Discretionary Sector, there are about 34 Industry Subgroups. Trying to figure out a trend on those 34 subgroups may seem difficult, but over time we see rather nice trends developing.  If we dig down to this level it really helps us figure out what the push and pull on a sector is. So, a lagging sector like Energy must have stars who pull it up, and culprits who weigh it down.

Here’s the thing, like many things in life, these subgroups tend to move together. In my research, I look at thousands of stocks every day and trawl through loads of data. Not only do I find it fun, I also think it helps me to identify trends developing at detailed levels which usually snowball into much bigger trends.  One example of this is in 2014 the physical price of crude began falling. This put pressure on the Oil & Gas exploration Industry Subgroup. They all began to fall in tandem. Eventually it proved too much weight for the healthier stocks and subgroups to prop up. The whole sector began a precipitous fall. This sector implosion eventually went on to affect the entire market. All snowballs start with a few flakes.

The question is, what has been going on under the surface of the sectors recently? We can all cheer the market’s rocket-like performance of last year, but where is the next rotation coming from? I took a look at what stocks have been doing the past three months, and I am seeing some things worth bringing to your attention. Here is a table of strength and weakness at the Industry Subgroup level for all 11 sectors over the past three months according to my research:

Sector Strength and Weaknesses Table

What does this tell us? We all know that Information Technology had a stellar year. But in looking at which specific subgroups we see the strength clustering in Internet, Semis, Software, and Equipment.  Weakness was centered on Hardware Storage and Electronic Manufacturing Services. Financials strengths in Banks, Insurance, and Finance helped veil the significant weakness in REITs. Health Care was hampered by Biotechnology, while other subgroups soared. Energy has been seeing a strong technical resurgence, but stocks overall show improving-yet-still-weak fundamentals and a recovery born from depths of woe.

Utilities and Telecom were just plain weak and couple this with weakness in REITs and we see rate sensitive stocks out of favor with cash preferring more growth oriented subgroups. The theme here has been persisting for a while, and despite talk of a FOMO fueled toppy market, the fundamentals of growing earnings and sales backs up the case for continued appreciation in the market for a while to come. It won’t be without bumps, but the landscape is really great for stocks in my opinion.

Keeping an eye on what makes sectors great by looking at the Industry Subgroup clustering is a great way to get a picture of how the overall market may continue to trend. Just feeling like sector performance becomes static- that is, “Tech, Financials, Industrials, and Materials are going up,” without further analysis is really only seeing part of the picture. We may think not much goes on in terms of where we are in life vs. a year ago, but the earth is hurtling along as part of a dynamic cosmic system. Johan Wolfgang von Goethe said nicely, “There is nothing insignificant in the world. It all depends on the point of view.”

Johan Wolfgang von Goethe Quote Image

A Look Ahead:

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

Positive Earnings Revisions Reach Record Highs

by Louis Navellier

Quarterly earnings season begins to escalate this week.  The quarterly earnings calendar generally runs from mid-January to mid-February in something like a bell curve of reports, peaking on February 1.  This week, 133 companies of the Russell 1000 will report, followed by 379 in the following two weeks, with the peak reporting day coming on Thursday, February 1, when fully 65 companies file their reports.

According to Bespoke Investment Group (“Analysts on the Offensive,” January 9, 2018), there have been a record number of positive earnings revisions in the last few weeks, mostly due to the new tax law.  In Bespoke’s calculations, “The four-week rolling spread between the number of upward and downward analyst EPS revisions for S&P 500 stocks is at a record high.”  They further add that this is “the first time in 10 years that every sector has had a positive revisions ratio heading into earnings season.”

Unfortunately, this does not imply that the market will soar higher over the next month, since those high expectations are already “baked into the cake.”  In fact, Bespoke added, “In the seven prior quarters where there were more positive than negative revisions, the S&P 500 averaged a decline of 1.18% during earnings season with positive returns just 43% of the time.”  The one difference between now and then is the passage of the new tax law, which involves a whole new set of calculations for corporate profits.

Inflation Fears are Rising but Inflation Rates are Falling

In the New Year, I’ve seen a lot of warnings about a return to higher inflation rates, but I will predict that inflation rates fall from last year’s six-year highs above 2% to somewhere under 2% this year.

Last Thursday, the Labor Department announced that its Producer Price Index (PPI) declined 0.1% in December, the first monthly decline in 18 months.  The core PPI, excluding food, energy, and trade, rose 0.1%.  For all of 2017, the PPI rose 2.6% after rising 1.7% in 2016.  Although 2.6% is the biggest annual increase in six years, energy prices dominated the rise, so any long-term “core” threat is still uncertain.

On Friday, the Labor Department announced that its Consumer Price Index (CPI) rose 0.1% in December, in-line with economists’ consensus estimate.  The full-year CPI rose 2.1%.  The core CPI, which excludes food and energy, rose 0.3% in December.  Most of December’s rise was due to higher housing and rental costs, but excluding these housing costs, the outlook for consumer inflation remains relatively tame.

The news on the energy front tells me that inflation may remain tame in January, too.  Natural gas prices firmed up due to a record weekly inventory drawdown from the recent Arctic Blast.  Interestingly, the Midwest, Northeast, and South warmed last week as the Arctic Blast moved to Europe and caused snow to fall in the Sahara Desert.  In the U.S., prices at the pump should remain soft since the Energy Information Administration (EIA) reported on Wednesday that gasoline and distillate (e.g., diesel, heating oil & jet fuel) inventories rose by 4.1 million and 4.3 million barrels respectively in the latest week. Overall, energy prices seem to be stabilizing, which is good news on the inflationary front for January prices.

America was scarred by high inflation rates in the 1970s.  Over the subsequent decades, the Fed has been fighting “phantom inflation,” a mythical inflation monster, so it will be interesting to see how the new Fed Chairman Jerome Powell will address any inflation threat when he takes over on February 3rd.

Universal Product Code Image

The other big news on Friday was that the Commerce Department announced that retail sales rose 0.4% in December, in-line with economists’ consensus estimate.  November’s retail sales were revised up to 0.9% and I would not be surprised if December’s retail sales will be revised higher, since the Commerce Department seems to be a bit behind in measuring on-line sales.  For all of 2017, retail sales rose a healthy 4.2%, rising to a 5.5% annual rate in the fourth quarter, which bodes well for fourth-quarter GDP growth.

Also, consumer borrowing surged $28 billion in November, the largest monthly rise in 16 years.  As of the end of November consumer credit has grown 8.8% in the past 12 months.  In November, economists were expecting consumer borrowing to grow by $18 billion, so the fact that consumer spending is growing much faster than expected is indicative that some economists may also be underestimating fourth-quarter GDP growth, since consumer spending accounts for approximately 70% of overall GDP growth.


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.

Marketmail Archives Trade Summary

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.

Marketmail Archives