Tax Reform Optimism

Tax Reform Optimism Sends Markets to Fresh New Highs

by Louis Navellier

December 19, 2017

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

Hot Chocolate Snowman Image

Excitement around the imminent passage of major corporate tax reform sent all three major stock market indexes to new all-time highs last Friday. The last half of December is usually one of the best times to add new money to the stock market before it refocuses on January earnings announcements, but the prospect of a corporate-friendly tax reform bill becoming law in January only adds to the normal holiday cheer.

Despite last week’s gains, however, we remain in a rotational correction where stocks are essentially in a “washing machine” cycle. Essentially, that means stocks which rise on Monday and Wednesday tend to be down on Tuesday and Thursday, and vice versa. The good news is that the magnitude of these daily gyrations is dissipating, which is a sign that this rotational cycle should be over within just a few weeks.

I must also point out something that has been annoying me. Do you remember how the talking heads on financial shows kept saying that stock buy-backs are drying up?  Well, it turns out that stock buy-backs in the S&P 500 rose 7.5% in the third quarter vs. the second quarter, rising 15.1% in the past year. The companies in the S&P 500 paid $105.4 billion in dividends last quarter, but they bought $129.2 billion in their own shares, so companies continue to spend more on buy-backs than on dividends, as they have for 39 of the last 44 quarters, so the fake news you heard on the financial channels was another false alarm.

In This Issue

Bryan Perry leads off with some bullish projections for 2018 along with the caveat that a “flash crash” may become the “new normal” for corrections. In Growth Mail, Gary Alexander demonstrates the value of re-investing dividends and then takes a look at the latest list of global growth indicators. Then, Ivan Martchev bravely bets against the hottest market on earth at the moment – Bitcoins – while Jason Bodner gives us a lesson in physics regarding momentum in the heavens and in the markets. In my closing essay, I’ll dissect Fed Chair Janet Yellen’s final press conference on the vagaries of inflation and Bitcoin mania.

Income Mail:
Will Future Market Corrections Simply be “Controlled Flash Crashes”?
by Bryan Perry
Doing the Math on Future S&P Earnings

Growth Mail:
Re-Invest Dividends for Maximum Gains
by Gary Alexander
Global Growth Continues Rising

Global Mail:
The Absurdity of Bitcoin
by Ivan Martchev
The Alternative to Paper Money is Not Bitcoin but Gold

Sector Spotlight:
Don’t Underestimate the Market’s Inertia
by Jason Bodner
10 Fearless Forecasts for 2018

A Look Ahead:
Low Inflation Baffles Outgoing Fed Chair Yellen
by Louis Navellier
Yellen Also Warned About Bitcoin Speculation

Income Mail:

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

Will Future Market Corrections Simply be “Controlled Flash Crashes”?

by Bryan Perry

Most algorithm trading services are constructed to “follow the money” and recommend trades based primarily on technical momentum, be it long or short positions. Buying high-volume upside breakouts within a primary bull trend is the fashion trade of the day. As a result, high-frequency trading dominates the daily tape action, accounting for up to 70% of the average daily volume on the major exchanges.

Aside from an occasional flash crash, machines continue to leverage advanced artificial neural networks, which constantly self-learn in order to apply the latest best-fitting models to a particular stock or ETF.

Like it or not, high-speed trading is here to stay, and I suspect there will be other incidences of flash crash sessions like those of May 6, 2010 (the biggie), when the Dow dropped 998 points (about 9%) within minutes only to recover about two thirds of that intraday loss by the close. The next biggest flash crash was on Monday August 25, 2015, when the market opened down 5% following an 8.5% sell-off in China’s Shanghai Index, underlining the fact that today’s biggest global markets are joined at the hip.

Panic put buying with simultaneous pre-market selling of stocks fueled the 2010 sell-off, but what caused the panic? Investigators focused on a number of possible causes, including a confluence of computer-automated trades, but they concluded that there was no one particular thing that sparked the free-fall, just several contributing factors at work. That, in itself, leaves the door wide open for other similar and unexplainable scenarios and is why it is crucial to know what stocks and ETFs one owns and why.

Dow Jones Industrial Average Flash Crash Chart

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

Computer-generated market corrections might just be the “normal” correction of the future, rather than the garden variety 5%-10% correction that plays itself out over a period of several weeks or even months. The last market pull-back to fit that profile came in the first quarter of 2016 when the S&P shed about 13% in the first two months of the year. That wave of selling was driven by crude oil renewing its free-fall to below $30 a barrel along with China's stock market tumbling into a bear market. But once again, the market had righted itself by the end of February and the bull market hasn’t looked back since then.

The S&P 500 has rallied roughly 600 points since February 2016, amassing a gain of around 28% without even a 2% correction along the way. And now with the expected passage of corporate tax reform that stands to boost earnings for the S&P 500 by 7% to 10%, depending on whose estimates you read, the prospects for a near-term move to 3,000 for the S&P are only getting brighter. Heck, that’s only 12% from where the S&P closed last Friday, and we are about to enter what should be a sizzling fourth-quarter earnings reporting season, based on the majority of the recent macro data.

Standard and Poor's 500 Stock Market Index Chart

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

From the three-year S&P 500 chart, above, it looks as if the angle of ascent is steepening, which gets the bullish chartists all lathered up and the media that much more vocal about the impending stock market correction. If everything is hunky-dory in the market, there is less need to keep an eye on the cable business news feeds, but if there is an impending sell-off, where pundits are saying it’s “just around the corner,” then more advertising dollars flow into the cable business media outlets.

Doing the Math on Future S&P Earnings

Aside from a military engagement with a formidable adversary, there is little if any reason to sell this market. Under existing 2017 tax law, it is estimated that most companies in the S&P 500 pay a corporate tax rate of about 27%, with every 1% reduction in tax rates paid by the S&P companies generating an additional $2 in earnings (source: CNBC, September 28, 2017, “Tax cut prospects are set to fire up earnings growth and the markets). This year, analysts expect the S&P 500 to earn roughly $131 per share, a 10% increase from 2016. For 2018, earnings are expected to grow by 7%, to $140.

Assuming that the effective corporate rate goes down four percentage points to 21%, as is the case in the final version of the bill, that would add $12 to earnings, bumping up 2018 estimates to $152 from $140. Applying a forward P/E of 19x to this figure generates a target of 2,900 for the S&P. That's why the market keeps holding up. The combination of expected improvement in the economy and added profits from the tax cuts indicates that we are not yet at an earnings peak and might not be for a few more years.

For Q4 2017, the estimated earnings growth rate for the S&P 500 is 10.6%. All 11 sectors are expected to report earnings growth, led by the Energy sector. From this mathematical takeaway, it’s no wonder, then, at least in my view, why markets are so obsessed with these tax cuts. The prospects of turning the second longest bull market into the longest (by a wide margin) are just now feeding into market sentiment.

For investors looking for yield, 2018 could be a record year for announced dividend increases based on rising net income and the repatriation of dollars of overseas capital set to go to work in the form of business investment, stock buy-backs, and the declaration of higher dividend payouts. The top tax rate that U.S. companies would pay on an estimated $3.1 trillion in earnings they’ve stockpiled overseas crept up to 15.5% in the final version of the GOP tax bill released last Friday after the market’s close.

After a stellar 2017, 2018 is now shaping up to be a year of many more broken records, but probably not without the rising prospect of a machine-driven, short-term, purely technical-triggered 2%-4% sharp and nasty pullback to relieve the euphoria of overbought conditions. One thing that history has shown us is that every flash crash event has been one heck of a buying opportunity. Only time will tell, but with the market getting more “robo” with each passing week, I wouldn’t be surprised if a “flash crash” becomes just another component of the “new normal” when it comes to future market corrections.

Growth Mail:

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

Re-Invest Dividends for Maximum Gains

by Gary Alexander

One of the biggest keys to long-term growth for most investors is re-investing dividends. While this is not possible for some retired investors living on their dividend income, it can be a windfall for most investors.

Right after the 1987 crash, the S&P 500 created a “total return” (TR) index, which includes re-invested dividends. In January 1988, both the S&P 500 and the S&P TR index began at 257. Today, as everyone knows, the S&P 500 is 10-fold higher at 2675.81 (+939%), but the S&P TR index is up 20-fold at 5214.10 (+1,925%). The magic of compound interest doubled an investor’s returns in the last 30 years.

Going back even further, when dividends were more generous, the advantage multiplies over 25-fold:

Standard and Poor's 500 Cumulative Return of One Dollar Chart

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

From 1930 to (and including) the crash of 2008-09, the total returns were more than 25-fold higher by re-investing dividends. This chart ends in 2009, but the trend continued after 2009, as the next chart shows:

Standard and Poor's 500 Total Returns Index Chart

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

The easiest way to reinvest dividends is with a dividend reinvestment plan (DRIP) through your broker, but you can also have all your dividends credited to your account, let them accumulate, and then invest in new stocks of your own choice, to freshen your portfolio with new names, as the fundamentals change. This is what I do. I like to look at old holdings with fresh eyes before re-investing dividends in that stock.

The current S&P 500 dividend yield is about 1.80%, nothing to write home about, but Bryan Perry and other analysts at Navellier & Associates are able to isolate some of the best and most consistent high-dividend stocks with attractive growth patterns, so investors don’t have to settle for sub-2% yields.

Global Growth Continues Rising

“The global economy is doing well; we’re in a synchronized expansion. This is the first time in many years that we have seen this.”

– Janet Yellen, at last week’s FOMC meeting, December 13, 2017

A year or two ago, talk of global growth – especially in Europe and Japan – would have been contrarian. But the 35-nation Organization for Economic Co-operation and Development (OECD) recently said that by the end of 2017 the eurozone economies will have grown faster than the U.S., Britain, or Japan. This is doubly remarkable since the U.S. has revived in the first Trump year – reaching 3% GDP growth during the middle two quarters of 2017 – and Japan has suddenly revived after 25 years of ultra-slow growth.

Europe’s revival is remarkable because they suffered a second severe recession right after the 2008-2009 financial crisis. During that crisis, Greece was hit by three straight financial crises in 2010 to 2012 and all four PIGS nations (Portugal, Italy, Greece, and Spain) were hit with sporadic financial crises. Then came the “Brexit” scare last year and the threat of the collapse of the euro zone this year – which didn’t happen!

Germany led the euro-recovery with an export-driven economy, helped by rising global demand for their products in Asia and America. The temporarily weak euro (in 2015 and 2016) helped eurozone exports.

Morgan Stanley expects global GDP to grow by a robust 3.8% next year, the best rate since 2011. They see emerging markets expanding at a torrid 5% rate. The global manufacturing Purchasing Managers’ Index (M-PMI) has soared from 50 (flat-line growth) in February to 54 in November. The Eurozone’s M-PMI is a scorching 60.1, led by Germany (62.5), Italy (58.3), France (57.7), and once-sick Spain (56.1).

Eurozone Manufacturing Purchasing Managers Indexes Chart

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

Some other surprisingly high November M-PMI numbers came from Japan (53.6) and Brazil (53.5).

In the U.S., there’s a lot to be said for the good feelings delivered by a 20%+ stock market year. The S&P 500 is just short of rising 20% YTD through last Friday, but the Dow Jones industrials are up nearly 25% and NASDAQ is up nearly 29%. Louis Navellier was right last January 3, when he said Dow 20,000 would be more of a “launching pad” than a ceiling – three weeks before the Dow first reached 20,000.

The Small Business Optimism Index reached a 34-year high last month and the irony is not lost when you make the political comparison of who came into office back in 1981 and who won the election last year:

Small Business Optimism Index Table

There’s a lot more good news. In the Fed’s recently released “Flow of Funds” report, total household wealth reached another record high of $96.9 trillion, up $29.1 trillion from the mid-2007 peak. In the grand scheme of things, that makes the stock market collapse in 2008 looks like a speed bump:

United States Households Net Worth Chart

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

Broken down by asset class, households hold a record $22.9 trillion in pension funds, up $7.8 trillion from the 2007 peak. Net household residential real estate equities, at $14.1 trillion, have fully recovered from the real estate collapse. Corporate equities directly held by households rose to a record $17.3 trillion, up 58% from the pre-crash peak. With the S&P 500 up over 6% since September 30 and other financial assets rising, it’s likely that total U.S. household wealth will top the $100 trillion mark at the end of 2017.

We constantly hear the doomsday crowd tell us that “$13 trillion in wealth was wiped out” by the 2008 crash. Seldom do the headlines say, “$30.3 trillion of wealth was created in the following bull market.”  Apparently, the fear of failure far exceeds the thrill of success, so the press tends to feed on our fears.

Global Mail:

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

The Absurdity of Bitcoin

by Ivan Martchev

Most people that own a line of code that represents the cryptocurrency Bitcoin did not buy it in order to use it in a financial transaction – as cryptocurrency enthusiasts tout their benefits – but because it’s going up. That’s it!

Bitcoin Index (BitStamp) Chart

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

The price is rising because its chart looks like a one-way street. Money is flowing in and there is very little flowing out. This looks like what NASDAQ did in 1998-2000, and it will end in the same way, with the difference that the Nasdaq index recovered after 17 years and made a fresh all-time high last week, while bitcoin will eventually “flatline” and become roadkill.

Nasdaq 100 Index Chart

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

NASDAQ made an all-time high last week because many of the companies whose stocks crashed in 2000 now have rising sales and earnings. Some did not make it but many of those that survived have become much bigger businesses than they were in 2000.

Bitcoin is not a business. It is a line of code which people are bidding up because it’s going up. But the flipside of buying it because it’s going up is selling it because it’s going down. That part will inevitably come, the same way the Dutch stopped bidding insane monetary amounts for tulip bulbs in the 1630s.

Tulip Bulb Bubble Chart

My concern is that in this case we have the introduction of futures contracts to legitimize this absurdity, so when it does crash the effects of futures leverage will add fuel to the fire.

How will we know when there is a Bitcoin top?

We have to see a break in the market that is significant, like we saw in March 2000 in the case of the NASDAQ, followed by a failed rally that fizzles out. In the case of NASDAQ, the fizzling ended in August 2000 and then a long and protracted slide began. Again, NASDAQ came back because those surviving businesses had rising sales and earnings over the past 17 years, while Bitcoin has nothing to support it other than pure investor mania, which is why it will flatline after it crashes.

One more recent crash that is more near and dear to my heart is that of the Shanghai Composite. The crash in the Shanghai Composite was correctly predicted six weeks ahead of time on April 27, 2015 on Navellier.com, “Can Crashes Be Predicted?”

China Shanghai Composite Stock Market Index Chart

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

While it was not difficult for me to see why the Shanghai Composite was going to crash and put a more definitive time frame on it, based on incoming data of new account openings in the Chinese stock market as well as all I had found out about the financial leverage used. I have no such data for Bitcoin.

While I am certain that Bitcoin is a bubble that will end badly, I can't be as precise as was the case with the Shanghai Composite. It could end this week or the madness may continue into 2018 due to the limited numbers of Bitcoin, which top at 21 million, and the still-functioning dynamics of the Greater Fool Theory, with investors still paying rising sums of money for a line of code they don’t quite understand.

In the case of the Shanghai Composite, we have the classic “bear market rally” unfolding, where the weak rebound in the index could not recover all that the index lost in a single month like January 2016. I have a sneaking suspicion that the Shanghai Composite has not found a bottom yet, as some small-cap indexes like ChiNext never rebounded and already took out those climactic January 2016 lows. While the worst is not over for China’s stock market or economy, I am sure that after what I believe is a coming economic hard landing the Chinese market will come back, just like NASDAQ did.

Bitcoin won't come back because there is nothing behind it other than rising numbers of investors bidding rising amounts of money for a line of code. That’s the big difference. It is nothing more than an electronic tulip bulb.

The Alternative to Paper Money is Not Bitcoin but Gold

While I am on record thinking that gold may finally decline below $1,000 in 2018 – if my forecast for a rising dollar driven by tightening Fed policy and other factors works out – gold is at least a tangible alternative to paper money. Gold has a long history of surviving paper money devaluation and it tends to always go up over very long periods of time like 20 or 50 years. But gold enthusiasts forget that it can go down substantially over shorter periods of time, particularly if it gets overvalued, as it is at the moment.

Gold Price Index Chart

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

Gold is a tangible asset while Bitcoin is a line of code. If the power goes out or it gets hacked, Bitcoin disappears. If the choice were given to me to hold one Bitcoin or the equivalent in gold bullion for the next 10 years – and have no ability to change my choice other than to sell the asset after a decade is out – I would take physical gold. Because in the case of Bitcoin there won't be any “thing” to sell.

Sector Spotlight:

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

Don’t Underestimate the Market’s Inertia

by Jason Bodner

Isaac Newton’s first law of motion (inertia) states that an object at rest stays at rest and an object in motion stays in motion unless acted upon by an unbalanced force. Newton’s first law is observed as galaxies march on their trajectories through space unchallenged. In a few billion years, when Andromeda and the Milky Way galaxies collide, the law will be present in full force. On earth, inertia is responsible for much in nature and is the basis of many modern inventions, such as rockets, bullets, and automobiles.

Examples of Inertia Image

This force of motion also embodies the principle of conservation of momentum. Naturally, we can observe these forces in markets as well. There is a force of momentum in individual stocks, whose prices go up merely because they are already going up. There is also a clear momentum of sectors, and of course momentum of the overall market itself. In the long run, we can discount momentum as insignificant in comparison to value and fundamental-based factors, but in my opinion, momentum – unless acted on by outside forces – is every bit as important in financial markets as in rockets and galaxies.

10 Fearless Forecasts for 2018

The reason I am relating the market to its underlying inertia is that I was asked this past week to make some predictions about where the market will go in 2018. Now, I've never been much of a “predictor,” as I base my analysis on what the market shows me it is beginning to do, which brings me to these “beliefs”:

  • I believe that once tax reform dies down in the media and interest rates increase modestly, I would expect the intensity of the equity rally to cool.
  • I believe that government bond yields will persist to be not-enticing-enough to draw significant investment out of equities.
  • I believe the taxation policy will continue to favor dividends, not harm them.
  • Should dividend yields continue to grow and offer a tax preferred return profile over bonds with the added kicker of historical capital appreciation of stocks, I believe the equity market will continue to have an inherent bid, as it has for 100+ years.
  • I believe volatility will remain low, with the potential wrinkle of lowering hedge fund returns. As benchmark indexes run away, hedge funds become incentivized to take more risk to earn a return that struggles to keep up with index returns. This could throw in a catalyst for higher volatility.
  • Once the dust settles in the profit taking selling pressure, I believe investors will realize that growth multiples and margins offered by technology firms won't be matched elsewhere.
  • I believe that sectors like energy and financials are in recovery but are not yet leaders.
  • I believe that any significant market disruption in 2018 will likely be geopolitical in nature.

Based on this set of beliefs, I estimate that the end of 2018 will find:

  • The S&P 500 Index up 10.5%.
  • The S&P 500 Information Technology index up 16.8%, with growth tech leading value tech.

Now, here’s the reality of what we have seen in the last week and the last year.

The sector strength we have seen in the past 12 months and more has been led by a mile, by Information Technology. I feel as though I am beating a dead horse here, but IT’s growth percentages and profit margins are higher than any other sector. A large part of this is due to scalability, especially in the software industry, which has a similar profile to drug manufacturing. There is a large up-front sunk cost to development, but once a unit prototype is made and then replicated, margins shoot ever higher with each sale. The main difference between IT and, say, Healthcare is that it costs literally billions of dollars to bring new drugs to market whereas new software development costs are constantly trending lower.

As we look to our weekly progress of the sectors, Telecommunications was the weekly winner with a 4% surge, but is still one of the two losing sectors year-to-date with a -6.9% performance. according to FactSet. However, bear in mind that the Telecom sector has the lowest number of stocks. Energy is the only other sector with a negative TYD performance of -8.2%. As I pointed out before, energy’s resurgence is from awful levels of performance both on a fundamental and technical basis.

The past six months has shown powerhouse performances by Real Estate and Financials, due in no small part to expected tax reform and moderate rate increases which should help bolster margins for lenders, at least a bit anyway. This leaves us with one sector which has been newsworthy recently. Information Technology posted a 6-month run of +18.13% and a YTD run of +37.4%. Now keep in mind, this is after the multiweek “cool-off” in Infotech where chip stocks have seen selling pressure.

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

Anything that runs for some time should be expected to see some profit-taking and when it comes, news headlines will clamor for a reason to persuade nervous investors to sell. The truth is the fundamentals of Information Technology have not changed drastically at all. In fact, the only real notable difference is a nominal lowering of the P/E ratio. Margins and growth metrics remain strong and the general population largely agrees that innovations in technology will be powering the economy forward for years to come.

Lastly, this leaves us with the momentum of the overall market. Since March 2009, the bull market in the S&P 500 Index is now on a 104-month run, totaling +291%. This is rivaled only by the 113-month run from October of 1990 to March 2000, rising 417%. I think it’s safe to say that the overall momentum of the market is strong, intact, and largely in favor of future appreciation. Going back to the 1870s, the 1929 market crash still looks severe, but the market momentum of the last 85 years should not to be ignored.

Full Historical 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.

I see 2018 as a strong (+10% or more) market year. Henry Ford may have summed it up best:

Henry Ford 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.*

Low Inflation Baffles Outgoing Fed Chair Yellen

by Louis Navellier

At her final FOMC press conference, outgoing Fed Chair Janet Yellen said that her only regret was that she was not able to get inflation UP to the Fed’s 2% mandate. Yellen is one of many FOMC members who seemed puzzled by how globalization and productivity gains kept core inflation from reigniting.

Well, on Tuesday, the Labor Department announced that the Producer Price Index (PPI) rose 0.4% in November for the third consecutive month. Wholesale energy prices rose 4.6% and continue to be the primary catalyst for wholesale inflation, but excluding food, energy, and trade, the core PPI rose 0.4%.

On Wednesday, the Labor Department announced that the Consumer Price Index (CPI) also rose 0.4% in November and was in-line with economists’ consensus estimate, due largely to a 3.9% increase in energy prices. Excluding food and energy, the core CPI rose only 0.1%, below economists’ consensus estimate.

Recent energy price increases are one-time events and should not turn into a long-term trend. A variety of forces are converging to boost energy prices. First, OPEC crude oil production is now running at the slowest pace in six months. Second, a major North Sea pipeline was shut down for repairs, which could last for the next few weeks. Third, both the American Petroleum Institute and Energy Information Administration reported significant declines in crude oil inventories. Finally, strong global economic growth is helping to boost crude oil demand, which is unusual during the lower-demand winter months.

Due to the lack of core inflation and a flattening Treasury yield curve, I believe that the new leadership at the Fed should be cautious about raising key interest rates further in 2018. In fact, last Wednesday, two Federal Open Market Committee (FOMC) members – namely Chicago President Charles Evans and Minneapolis President Neel Kashkari – voted against the 0.25% hike in key interest rates to 1.25%.

Yellen Also Warned About Bitcoin Speculation

Bitcoin Crytocurrency Image

Not surprisingly, Yellen was asked about Bitcoin and said that it is “not a stable source of value” and is “a highly speculative asset.”  Yellen elaborated that “Bitcoin at this time plays a very small role in the payment system” and added that “it does not constitute legal tender.”  Translated from Fedspeak, that means that the Fed will not be allowing any U.S. banks to accept any Bitcoin deposits.

Specifically, Yellen said, “The Fed doesn’t really play any regulatory role with respect to Bitcoin, other than assuring that banking organizations that we do supervise are attentive, that they are appropriately managing any interactions they have with participants in that market, and appropriately monitoring anti-money laundering, bank secrecy act responsibilities that they have.”  Again, translated from Fedspeak, the Fed assumes that criminals are utilizing Bitcoin to avoid tax authorities – a not-so-veiled warning.

Finally, the most amusing Bitcoin news last week was on Wednesday, when CNBC reported that Bitcoin “hits” are now exceeding Kardashian hits on Google. Personally, I have some clients now asking me to buy Bitcoin for their managed accounts and I have to explain that I am not licensed to buy unregistered securities and currencies. The fact that Bitcoin futures are coming will be the easiest way to jump on the Bitcoin bandwagon, but since I am not licensed for futures trading, I will not be able to add Bitcoin to any client accounts. I predict that the SEC will not allow ETFs to invest in Bitcoin, so a regulatory showdown is likely coming. In the meantime, if you want to ride the Bitcoin boom, stocks that could benefit from Bitcoin and other cryptocurrencies transactions are NVIDIA (NVDA) and PayPal (PYPL). (Please note: Louie Navellier does not hold a position in NVDA and PYPL in mutual funds. Navellier & Associates does currently own a position in NVDA and PYPL for client portfolios).


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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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