Stocks Stage a Relief Rally

Stocks Stage a Relief Rally on News from Greece, China & Iran

by Louis Navellier

July 21, 2015

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

The S&P 500 gained 2.4% last week.  Overall, it looked to me like a “relief rally” after three major crises seemed to have peaked and then dissipated, namely (1) the Greek bailout was approved by the Greek Parliament; (2) the Shanghai Composite Index rebounded; and (3) an arms deal with Iran was hammered out.  Naturally, all of these crises could flare up again at any time, but it appears that for the time being investor concerns have diminished, so the stock market rebounded impressively last week.

Greece Flag - Maze ImageSpecifically, Greece accepted an aid deal that seemed worse (for them) than the deal they could have had a couple of weeks earlier. In what is widely being viewed as a capitulation by Greece, the rest of the euro-zone will provide a $96 billion bailout in exchange for Greece accepting tough austerity measures and fiscal reforms.  Greece must immediately (1) streamline its VAT system to broaden its tax base; (2) implement upfront measures, including pension cuts, to improve the long-term stability of its pension system; and (3) safeguard the independence if its ELSTAT statistics office.  This week, Greece must also (4) adopt a Code of Civil Procedures to overhaul its expensive civil justice system and (5) implement the EU Bank Recovery and Resolution Directive that will segregate its troubled loans.

Greece is also being forced to scale up its privatization efforts (including its electric company) and align its labor market more with the rest of the euro-zone.  In conjunction with these privatization efforts, many valuable Greek assets are being transferred to an independent fund that will pay creditors as state-owned Greek companies go private.  In the end, Germany demanded even stricter reforms by Greece.  Clearly, Germany does not trust the Greek government but will tolerate them if they implement serious reforms.

Meanwhile, China’s Shanghai Composite Index rebounded and erased about a third of its losses, but then it stalled on Wednesday and may have to “retest” it recent lows.  China’s retail investors seem to have a gambling spirit. As a result, their boom/bust cycles are more compressed (happening faster) than anything we are used to seeing in America.  Fortunately, the big Chinese ADRs that trade in the U.S. are behaving much better than the “A” shares on the Shanghai market, which are only available to Chinese citizens.

Reflecting Pool ImageThe third big development last week was the historic deal between Iran and the West on inspections of its nuclear program in exchange for lifting economic sanctions.  As a result, the U.S. will unfreeze over $100 billion in Iranian assets.  Iran is expected to double its crude oil exports within a year, so the world will soon be awash in crude oil. Although Congress must approve the deal within 60 days, President Obama has said that that he will “veto any legislation that prevents the successful implementation of this deal,” according to a CBS News report on July 14.

Both Israel and Saudi Arabia reportedly remain furious with the Iranian deal, but the fact that Britain, China, France, Germany, and Russia also participated in the negotiations will make it difficult to defeat.

In This Issue

In Income Mail, Ivan Martchev will examine the outlook for China and Greece after last week’s short-term bounce-backs. Gary Alexander’s Growth Mail will cover market history during pre-election years (like this), along with a fresh look at four common concerns back home in America.  Then, I’ll return to take a look at some of the latest flashing lights in Fed Chairwoman Janet Yellen’s economic “dashboard.”

Income Mail:
Gruyere Souvlaki, Part Deux
by Ivan Martchev
My Dachshund’s Latest Cookie Fortune

Growth Mail:
Pre-Election Years are Often the Market’s Best Years
by Gary Alexander
Meanwhile, the Same Old Worries are Keeping Stocks Flat

Stat of the Week:
Retail Sales Revised Downward
by Louis Navellier
The Inflation Picture Warms Up

Income Mail:

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

Gruyere Souvlaki, Part Deux

by Ivan Martchev

It appears that the next leg higher in the U.S. Dollar Index has begun, and it is the Greek drama that has helped get it going.  I think we may break 100 this time on the U.S. Dollar Index, which is a classic round-number resistance level, and this time we may stay above it.

United States Dollar Index - Daily OHLC Chart

Source: Barchart.com

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

The largest component of the U.S. Dollar Index – the euro, with a 57% weighting – went down on the news that the Greeks took a bailout with more draconian conditions than the ones available before their glorious free-gyros-for-all referendum on July 6, which the majority voted overwhelmingly to reject.

It appears that Alexis Tsipras’ suggestion to Mr. Gus Portokalos to use gruyere instead of feta (due to the ongoing cheese shortage in the country courtesy of the bank holiday) in souvlaki, the popular Greek dish, has not gone over well with the Hellenic populace. This is why Mr. Tsipras is going to govern with a minority cabinet as numerous members of his own Syriza party voted against the bailout in parliament, including his own energy minister and his outspoken former finance minister. As those draconian measures attached to the bailout are implemented, Tsipras’ weakened government is likely to fall, hopefully to be replaced with a national unity government.

FTSE Greece 20 ETF - Daily Line Chart

Source: Barchart.com

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

With the Greek stock market closed along with Greek banks last week, Greek investments listed on the NYSE, like the Global X FTSE Greece 20 ETF (GREK) and the National Bank of Greece (NBG), went down on the bailout news. (Neither Ivan Martchev nor Navellier & Associates have positions in either security).

The amateurish political maneuverings of PM Tsipras and his ministers basically took a somewhat stable situation when they came to power in January and pushed it over the edge with massive capital flight out of the country as well as a lengthy bank holiday. So now the already weak Greek banks will need another recapitalization, further eroding the already-eroded equity in the banking system. That means NBG stock at 99 cents may actually be expensive if there is going to be dilution to the shareholders in the bank.

Basically, the euro went down because the Hellenic situation is far from fixed and even with a bailout agreement Greece may yet leave the euro as debt haircuts are not permitted under euro-zone membership rules.  But as the IMF has suggested over the past week, breaking away from the unity of the troika that had been lecturing Greece, the Hellenic republic has an unsustainable debt load and the present bailout adds to it. For the situation to be fixed, Greece may have to leave the euro in order to get the debt haircut.

But Greece is just one of the weak links in the common currency. It is very difficult to run a unified monetary policy without a unified Treasury department.

Euro Dollar Exchange Rate Chart

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

The euro may have been in existence only since 1999, but it is possible to extrapolate its exchange rate using the currencies that it is composed of, going back over half a century. Since 1958, the euro has been as low as 69 U.S. cents in the great dollar overvaluation in the mid-1980s – which was the result of Paul Volcker’s years at the Fed and his success in breaking the back of inflation with very high interest rates.

Given that Greece is not “fixed” yet, where is the euro headed?

The Europeans are pressing ahead with QE policies as the Fed is mulling how to hike rates in the U.S. and embark on quantitative tightening. If history is any guide, I believe the EURUSD exchange rate may not stop at parity (1-to-1). While the euro is tradable via the Currencyshares Euro Trust (FXE), as well as some leveraged ETFs and ETNs, there are numerous other ways to capitalize on this currency move. (Neither Ivan Martchev nor Navellier and Associates have positions in FXE)

Russell 2000 iShares Versus S&P 500 SPDRs Chart

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

Since last October, the small cap sector in the U.S. has been the place to be as there is less sales and earnings compression resulting from the surge in the dollar and the fall in the euro. Small caps are generally domestically-oriented, as are mid-caps, and they have shown resilient profit growth in an environment where earnings for the S&P 500 grew just 0.1% in the first quarter.

I am watching with great interest where Q2 earnings will end up, but given that I believe EURUSD will not stop at 1-to-1 and consequently the U.S. Dollar Index is likely to rise well above 100, I think that the multinationals in the U.S. market will have problems for the rest of 2015, which may extend into 2016. (Neither Ivan Martchev nor Navellier & Associates have positions in IWM or SPY – the Russell 2000 and S&P 500 ETFs.)

My Dachshund’s Latest Cookie Fortune

My dog Doxie the dachshund had a few more fortune cookies since I penned “補倉(“Bǔcāng”) = Margin Call. His latest fortune read: “Wisdom comes from experience.” Even though it is widely accepted that dachshunds may very well be the most intelligent of dog breeds, I doubt that Doxie will get any smarter by hearing those wise words, although he has surely deepened his peculiar fondness for fortune cookies.

The Chinese government, however, may be better served to read more such cookie fortunes. If they had read this one, they might have been able to figure out that they are leading China down the path of economic ruin.

Shanghai Composite - Daily OHLC Chart

Source: Barchart.com

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

We finally found out (after the Chinese government purposefully leaked the number) how much money they are throwing at re-inflating the biggest bubble in margin financing that the world has ever seen.

The dollar value of the credit lines extended in the last week by the PBOC and mainland state-owned lenders to China Securities Finance Corp. (CSFC), the margin leverage enabler and regulator on the Chinese exchanges, is $483 billion. Over 12% of the free float of the Chinese equity market, or 2.2 trillion yuan, was borrowed as of the June 12 market peak.  Because this is measurable margin via official exchange reports, the actual margin ratio may be closer to 20% if one includes off-exchange shadow margin leverage that is not included in the official numbers but is believed to be 1.0-1.5 trillion yuan.

I think this may end badly based on the notion that the only thing that keeps stocks up over time is rising sales and earnings. China has gotten itself in the peculiar situation where as the economy grows, total profits do not grow but total indebtedness grows much faster. Such a debt-driven growth economic cycle has hit the wall and the effects are profoundly deflationary as a busted real estate market and a problematic stock market weigh on the economy. The Financial Times reported on July 15th that:

“China’s National Bureau of Statistics on Wednesday rejected suggestions that the inflation gauge it uses is flawed and exaggerates the country’s real economic growth rate.

Before the release of Wednesday’s second-quarter gross domestic product estimate, China’s nominal GDP growth rate had plummeted from almost 20 per cent to 5.8 per cent since 2011, a much sharper decline than the inflation-adjusted figures that have trended downwards from 9.5 per cent to 7 per cent over the same period.

The difference between this year’s first-quarter nominal and real growth figures implied that the so-called GDP deflator — a broad measure of inflation that covers all types of goods and services — was negative, at -1.2 per cent, for only the third time in nearly two decades. That transformed the government’s 5.8 nominal growth figure into 7 per cent real growth — bang on Beijing’s growth target of “about 7 per cent” for the full year. But it also implied that China suffered from nearly unprecedented deflation in the first quarter.

Analysts calculate that [the deflator] has stabilized at 0.1 per cent [in Q2], compared with -1.2 per cent in the first quarter. In other words, nominal GDP growth rebounded from 5.8 per cent to 7.1 per cent between the first and second quarters.”

To see deflation resulting from a busted real estate market at a time when the Chinese financial system is operating on record leverage is not uncommon. Actually, it should be expected. What is uncommon is for a government to actively inflate a stock market bubble via margin leverage as a tool to fight the effects of the bust in the real estate market. This has resulted in a dual crash situation in both real estate and stocks, and I have great doubts that this policy will lead to a benign outcome.

Shanghai Composite in 2015 Chart

Source: Bloomberg.com

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

The Shanghai Composite has rebounded, given the Chinese authorities’ intervention, but it may still end up looking like the Dow in 1929, with similar economic consequences. This is because the 1929 crash had dramatic use of leverage, to the tune of 10X, even though such borrowing was off the exchange – similar to the Chinese shadow banking system – so there is no official data to show that much of NYSE’s float was borrowed back in 1929.

If the Shanghai Composite has indeed crashed – and I believe it has – there are two ways things will play out from here. The first option is the Dow 1929 example, where the initial unravelling was very fast due to the extreme use of leverage. The Chinese authorities seem to be meeting the massive margin call with close to $500 billion in margin financing, so for the time being the fast unravelling scenario is on hold.

E-Mini Nasdaq - Weekly Nearest OHLC Chart

Source: Barchart.com

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

The second, more “normal” type of scenario, is like the NASDAQ crash in 2000. After the initial better-than-30% decline from March to May 2000, the decline stopped in the vicinity of the rising 200-day/40-week moving average, exactly as the Shanghai Composite did. In 2000, the technology index rallied on light volume until September of 2000, when the real bear market started. Then, too, we had no sales or earnings to justify the prices paid for tech stocks at the time.

I am not sure yet which scenario will unfold here. In the meantime, I would keep a close eye on the commodity currencies, like the Australian and Canadian dollar, and the price of hard commodities and particularly oil, which seem to be weakening as Chinese economic data seems to be removed from reality.

Australian Dollar United States Dollar Exchange Rate Chart

Source: Barchart.com

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

The Canadian dollar has already taken out its 2009 lows (see chart) and the Australian dollar is headed in that direction. I think the Australian dollar may take out its 2009 lows soon, given the pressure on commodity prices and the fact that China is Australia’s biggest trading partner. While the PBOC can meet massive margin calls in the stock market and can keep the value of the yuan pegged to the U.S. dollar, it does not have the firepower to meddle in energy and metals markets nor to keep the Canadian and Australian dollars from depreciating.  Both reflect a massive economic problem in China.

Growth Mail:

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

Pre-Election Years are Often the Market’s Best Years

by Gary Alexander

2015 is “a pre-presidential election year, which is by far and away the best year of the 4-year cycle. Since their last loss in 1939, the third year of the cycle is up 16.0% on average for the Dow and 16.3% for the S&P 500. Since 1971, NASDAQ averages a whopping 30.9% in the third year of the 4-year cycle.”

– Stock Trader’s Almanac, November 25, 2014

We’re one year away from the Presidential nominating conventions – which will happen in consecutive weeks, July 18-28, 2016.  Ten days ago, I heard two Presidential candidates speak at Freedom Fest, but there wasn’t much excitement about either candidate.  In fact, I have yet to meet anyone who is truly excited about any particular candidate.  It’s mostly a question of finding the least objectionable contender.

Maybe that’s why the stock market has seemed so anemic this year – at a time when history tells us that the market often delivers some outsized gains.  With data going back to 1833, The Almanac Investor shows that pre-election years have averaged double-digit gains, including gains in every cycle since 1940:

Dow Gains in Pre-Election Years Since 1940
 Source: The Almanac Investor and Yahoo Finance 
  Year     Gains  
1943 13.8%
1947 2.2%
1951 14.4%
1955 20.8%
1959 16.4%
1963 17.0%
1967 15.2%
1971 6.1%
1975 38.3%
1979 4.2%
1983 20.3%
1987 2.3%
1991 20.3%
1995 33.5%
1999 25.2%
2003 25.3%
2007 6.4%
2011 5.5%
Average 16.0%

 

By contrast, the Dow was down 1.14% in the first half of 2015 – a huge disappointment for those of us who believe that the four-year Presidential cycle is one of the more reliable historical indicators, since it reflects our collective national desire for “hope and change” every four years in the election cycle. So far this year the Dow has flat-lined, but here’s what a typical pre-election year in the last 29 cycles looks like.

Dow Jones Pre-Election Years Chart

Source: Seasonalcharts.com

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

The Almanac Investor has researched an even-more dramatic series of numbers chronicling the huge (over 48%) Dow gains from the mid-term-election-year lows to the pre-election year highs since 1914.

Dow Gains from Mid-Term Election Year Lows
to Pre-Election Year Highs
 Source: The Almanac Investor and Yahoo Finance 
  Years     Dow Gains  
1914-15 +89.6%
1918-19 +63.0%
1922-23 +34.1%
1926-27 +49.7%
1930-31 +23.4%
1934-35 +73.6%
1938-39 +57.6%
1942-43 +56.9%
1946-47 +14.5%
1950-51 +40.4%
1954-55 +74.5%
1958-59 +55.5%
1962-63 +43.2%
1966-67 +26.7%
1970-71 +50.6%
1974-75 +52.7%
1978-79 +21.0%
1982-83 +65.7%
1986-87 +81.2%
1990-91 +34.0%
1994-95 +45.2%
1998-99 +52.5%
2002-03 +43.5%
2006-07 +33.0%
2010-11 +33.9%
Average +48.6%

 

Last year’s low point in the Dow was 15,340. If the Dow gains “only” 33% (the norm in the last two election cycles), the Dow could top 20,000 later this year. That doesn’t seem likely now, but as the pre-election buzz grows during the autumn months, we might see a pre-election market surge develop.

Meanwhile, the Same Old Worries are Keeping Stocks Flat

Louis Navellier and Ivan Martchev have covered Greece and China in detail, so I’ll focus on the domestic concerns I hear about the most.  At Freedom Fest (and here in my home town), the concerns I hear most about are (1) rising debt, (2) a slow economy, (3) an overvalued market, and now (4) natural disasters.

The latter concern hit home here in the Pacific Northwest last week when the July 20 New Yorker came out with a long feature article by Kathryn Schulz entitled: “The Really Big One: An earthquake will destroy a sizable portion of the coastal Northwest.” (It went on line a week earlier, July 13.) One In the article, one FEMA official said, “our operating assumption is that everything west of Interstate 5 will be toast.”  One Fox News review of the article by Shepard Smith and Professor Michio Kaku was viewed over 9.1 million times on Facebook since it was aired July 15. Professor Kaku closed the Fox News segment by saying, “In the lifetime of some of our viewers, they may see Portland and Seattle destroyed.”

This all sounded familiar, so I took out my stack of New Yorkers and found the September 4, 2014 edition, which contained a similar article about an even scarier explosion in Yellowstone National Park:

“The geysers, hot springs, mud pots, and fumaroles of Yellowstone National Park are the visible face of a vast, seething ocean of molten magma six miles deep. The super-volcano beneath Yellowstone has so far erupted three times: 2.1 million, 1.3 million, and 640,000 years ago. By the crude math of those who have a fearful cast of mind, this means that a fourth eruption is now due.”

OK, so bad news sells to those with “a fearful cast of mind.”  What else is new?  There are hurricanes in the Southeast, bitter cold in the north, earthquakes on the West coast, and tornados in the middle of the continent. I’ve lived through earthquakes in California, hurricanes in New Orleans, and a volcanic eruption in Washington.  Where should I hide?  Life goes on until it doesn’t.  There’s no escaping nature.

Turning to the more predictable threats of debt, slow growth, and market valuations, I’m afraid that the same spirit of “bad news sells” infects those areas of study as well.  Several friends have asked me about debt. I often respond by asking them, “how much wealth do we have to offset that debt?”  Debt is one side of the ledger.  Assets must be placed on the other side.  The Federal Reserve disclosed on June 11 that our net U.S. household wealth reached a record $84.9 trillion at the end of the first quarter of 2015. Meanwhile the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, released on May 12, 2015 calculated that the level of household debt was “only” $11.85 trillion as of the same time frame (the quarter ending March 31, 2015), up just 0.1% over the previous quarter.

The federal deficit is a serious problem and we need to elect some more responsible leadership to address our entitlements crunch, but the federal government also has huge assets, including over 600 million acres of land (and mineral rights to 755 million acres), plus several huge dams, aircraft carriers, and National Parks, including the presumably-doomed Yellowstone.  A 2013 report issued by the Institute for Energy Research (“Federal Assets Above and Below Ground,” January 17, 2013) said the federal government’s oil and gas resources alone were then worth $128 trillion, or about seven times the current national debt.

Turning to economic growth, the first estimate of second-quarter GDP will be released next week. Gene Epstein, Barron’s economics columnist, made a case for 3.5% growth in his June 29 and July 13 columns.  He predicts 3.5% U.S. GDP growth in the second quarter and for “the next few calendar quarters.”

In bullet summary form, here is Mr. Epstein’s case for 3.5% GDP growth now and in the near future:

  • Consumer Spending could rise at a 3.25% annual rate in the second quarter vs. just 2.1% in the first.
  • Personal Income rose 0.5% in both April and May, “the biggest two-month increase in more than a year.”
  • Household Wealth surged to $84.9 trillion last quarter, “boosting consumption via the wealth effect.”
  • Sales of new and existing homes reached multi-year highs in May, fueling further consumer spending.
  • Increased Capital Spending “can’t be far behind,” since it tends to follow rising housing and sales.
  • The Small Business Optimism Index rose to 98.3 in May, its highest level so far this year, and
  • Job Openings, “a good proxy for labor demand,” reached another record high of 5.4 million.

Although these economic statistics will likely continue to be “mixed” and somewhat below the powerful growth surges of the 1980s and 1990s, the overall trend of economic statistics has been improving lately.

As for the stock market, we keep hearing that this bull market is “long in the tooth” and due for a fall, but Morningstar magazine (June/July 2015 edition) gave us a new way to look at markets.  Morningstar measures a market expansion from the time the market returned to its previous peak.  Viewed that way, the current recovery is 39 months old, much shorter than expansions in the 1950s (146 months), 1980s (134 months), and 1990s (135 months).  Furthermore, stocks returned 697.7% in the 1950s expansion, dividends included.  The 1980s saw a total return of 435.5%, and the 1990s, 523.2%.  Today’s expansion is only 56.6% through March 31, 2015 (see Morningstar Magazine, June/July, page 26, “Global Briefs.”).

Youthful Bull Market Chart

Source: Barron’s, July 20, 2015

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

Ed Yardeni opened his July 14 Morning Briefing (which he titled “Playing the Averages”) by saying:

“This bull market has been a tough one for most chart technicians, especially the ones who tend to be bearish. Every time that the S&P 500 has dropped below its 50-day moving average, they said it was a bearish signal. They said that the signal was especially bearish when the index dropped below its 200-day moving average. In fact, the selloffs turned out to be buying opportunities.”

True, something bad could happen – including earthquakes, market crashes, crises in faraway places, or a super-volcano in Yellowstone– but as long as we humans are free to grow and prosper, we will likely do so.

Stat of the Week:

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

Retail Sales Revised Downward

by Louis Navellier

The economic news last week was mixed. On Wednesday, the Fed released its latest Beige Book survey, which showed that all 12 Fed districts reported “modest” or “moderate” growth. That’s the good news.

However, the biggest disappointment came on Tuesday, when the Commerce Department reported that retail sales in June declined by 0.3%, which was substantially below economists’ consensus estimate of a 0.2% rise.  Furthermore, April and May retail sales were revised down to unchanged (from 0.3%) and a 1% increase (from 1.2%), respectively. Over the past year, retail sales have risen by only 1.4%.  Due to downward retail sales revisions, I expect economists to revise their second-quarter GDP forecasts lower.

The Inflation Picture Warms Up

Inflation seems to be warming up. On Wednesday, the Labor Department announced that its Producer Price Index (PPI) rose 0.4% in June, substantially higher than economists’ expectation of a 0.2% rise.  The core PPI, excluding food and energy, rose 0.3% in June.  Overall, the price of goods rose 0.7% in June, while the price of services rose 0.3%, so it appears that inflation is brewing on the wholesale level.  Still, over the past 12 months, the PPI has declined by a net 0.7%, due largely to lower energy prices.

On Friday, the Labor Department announced that its Consumer Price Index (CPI) rose 0.3% in June, in-line with economists’ consensus estimates.  Excluding food and energy, which rose by 0.3% and 1.7%, respectively, the core CPI rose 0.2%.  In the past 12 months, the CPI has risen by just 0.1%, so there is no evidence of widespread inflation yet, but inflation appears to be brewing over the past couple of months.

Rice Planter ImageAnd finally, China’s National Bureau of Statistics announced on Tuesday that the country’s GDP grew at a 7% annual pace in the second quarter, beating economists’ consensus estimate of 6.8%. A spokesperson for the National Bureau of Statistics said that these figures were not inflated but were “hard won,” according to a Reuters report on July 15. China is clearly sensitive to the fact that some skeptics think it is fudging its economic statistics, but their second-quarter GDP growth was welcome, even if there is still some skepticism about Chinese statistics.


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.

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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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