The Market Sags

The Market Sags on a Commodity Slump & Weak Earnings

by Louis Navellier

July 28, 2015

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

The S&P 500 fell 2.2% last week and could retest its recent lows near its 200-day moving average.  The two main causes were (1) a “commodity crunch” and (2) disappointing earnings. In commodities, gold hit a 5-year low and commodity-related stocks (such as copper and crude oil companies) fell due to a strong U.S. dollar and ebbing demand in China.  As for “earnings-mageddon,” several stocks fell sharply in the wake of their poor second-quarter earnings announcements.  In addition, the “seismic shift” out of multinational stocks continued, especially in the wake of disappointing results from some leading exporters.

However, just as the Dow Industrials and S&P 500 “bounced back” a few weeks ago after crossing their 200-day moving averages, I expect that the overall stock market will find firmer footing as these major stock market indices approach their respective 200-day moving averages.  I am especially encouraged that the specialty semiconductor stocks rebounded impressively last week, so money is not leaving the stock market. Instead, it is just getting reshuffled into stocks characterized by the strongest sales and earnings.

The big multinational stocks and the commodity-related stocks are having a miserable time coping with a strong U.S. dollar.  Predominantly domestic U.S. companies and small-to-mid capitalization companies continue to have a big edge, since they are not fighting the currency erosion from a strong U.S. dollar.

China remained in the news last week, since there is fear that its economy may be slowing down after the recent correction in the Shanghai Composite Index, which added to the demand for U.S. domestic stocks.

Ten Euro Note ImageThe other news last week was that the banks in Greece finally opened after a three-week hiatus.  That was the good news.  The bad news – at least for the folks living in Greece – is that most of the capital controls, including limits on cash withdrawals and money transfers, remain in place.  According to a Reuters report from July 18, Greek banks may now let customers withdraw a weekly maximum of 420 euros ($462) in one lump, instead of a daily ration of 60 euros ($66). Also, a substantially higher VAT tax and austerity measures were enacted there last week.

Politically, the biggest surprise last week came when leading Democratic presidential candidate Hillary Clinton unveiled a plan to nearly double capital gains taxes for well-off investors, from 20% (plus 3.8% Obamacare taxes) to 43.4%, with a sliding scale for assets held two to six years.  I have to tell you that her tax proposal caught me flat-footed, since I have never heard any economist argue that taxing long-term capital gains at significantly higher rates would somehow induce Corporate America to behave better.

In This Issue

In Income Mail, Ivan Martchev will examine the deflationary implications of China’s struggling economy and stock market, while Gary Alexander will examine Hillary Clinton’s capital gains tax proposal in light of its possibly negative impact on future markets. Then I’ll return to cover the mostly positive economic statistics released last week, plus some further musings on the intersection between markets and politics.

Income Mail:
More Asian Contagion?
by Ivan Martchev
Treasuries: The Bottom Is In

Growth Mail:
More Unintended Consequences from Political Meddling
by Gary Alexander
Clinton’s 1993-94 Trifecta: Housing for All, Stock Options, and Hillary Care
Senators Elizabeth Warren and Tammy Baldwin also want to Ban Stock Buy-backs
This Day in Market History

Stat of the Week:
New Unemployment Claims: Lowest in 42 Years
by Louis Navellier
Will the Fed Cut Rates in an Election Year?

Income Mail:

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

More Asian Contagion?

by Ivan Martchev

An idea I’ve often presented in Income Mail – that commodities and the currencies of commodity-producing countries reflect the ongoing deterioration of the economy in China better than the Chinese stock market – is playing out before our very eyes. This is important to U.S.-based investors as China is the world’s second largest economy (if we do not count the EU as a single economic bloc).  At $10.4 trillion at the end of 2014 according to the IMF, China’s GDP is also “heavier” in terms of manufacturing and commodity demand than the U.S. or Europe, since services and domestic consumption still play a relatively small part in the Chinese economy. China’s manufacturing-heavy economy and its “bubblicious” fixed-asset investment cycle has hit the wall and the repercussions can be seen in the commodity markets.

CRB Commodity Index Chart

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

The 2008-09 Great Financial Crisis low on the CRB Commodity Index was 200.34. Last week the CRB Index of 17 major commodities hit 204.77. I think we may take out the 200 level and challenge the Asian Crisis low of 182.95 in 1999. It is not at all certain that those Asian Crisis lows will hold, as China is at the end of a credit bubble, where total debt to GDP rapidly approaches 400% if one counts the shadow banking system according to estimates form Bloomberg and JP Morgan. For a developing economy dependent on manufacturing, exports, and fixed asset investment in general – including brand new empty cities, roads, and bridges-to-nowhere – this is a dangerous situation. In some regards, the mainland economy is beginning to feel like a remake of Field of Dreams, except that in this case Shoeless Joe Jackson may not emerge from out of the corn field.

What if you build it and they do NOT come?

It is true that many developed economies have similar debt loads, but it took them years to get there and they are more balanced when it comes to consumption. China's rapid and parabolic rise in financial leverage reminds me of the Roaring Twenties in the U.S., when a too rapid rise in debt levels led to breakneck GDP growth. The Roaring Twenties ended in the 1929 crash. History will tell us if the unravelling in China’s stock market that began on June 12 will turn out to be China’s 2015 crash. So far, by magnitude, it has not matched other more notable crashes; but I think it will, despite heroic meddling by the Chinese government to prevent the margin calls from delivering the necessary cascading shakeout.

Crude Oil WTI - Monthly OHLC Chart

Source: Barchart.com

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

While the Chinese stock market is still holding above its July low, courtesy of PBOC margin financing to the tune of $500 billion as reported by Bloomberg in the past two weeks, crude oil last week took out key support levels in all contracts going at least a year out. While the near-term oil contract seems to be holding above the important $41 level set in March, there is more than one devil in those details, namely: December 2015 WTI futures (CLZ15) were not at $41 in March but a tad below $52 as the market has a positive sloping futures curve. December 2016 WTI futures (CLZ16) were at $57.50 in March. On Friday, December 2015 and 2016 WTI futures closed at $49.91 and $54.75, respectively, so the WTI futures market is taking out key support levels. I think that the $41 support level in the front-month WTI futures may not hold either.

If the Chinese economy does deleverage, which is what typically happens when we have the popping of a credit bubble, we are likely to see GDP contraction and the resulting negative feedback loop not only in the commodity markets but also in many Asian economies where China is the #1 export market.

How far could oil fall in that scenario? The present surging supply and weakening demand suggests much lower prices. In the Asian Crisis, oil fell to $10. But the Chinese economy is much bigger than it was during the Asian Crisis, by the sheer size of its rising GDP and growing trade relationships in the region.

I think in the next two years, if we get a worst-case scenario and a bad recession in China, the price of oil may go below $20/bbl, and copper, the metal with a PhD in (Global) Economics, may go to $1/lb.

Energy Select Sector SPDR Chart

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

Obviously, further deterioration in energy prices causes a major hassle for the U.S. energy sector, which has been underperforming badly since mid-2014 and has taken a major hit again on a relative basis against the S&P 500 when looking at the XLE and SPY ETFs. In such oil price declines, driven by the unraveling of credit bubbles in large economies like China, the most defensive energy investments are integrated oil companies like ExxonMobil (XOM), Chevron (CVX), and Royal Dutch Shell (RDS/A). (Ivan Martchev does not hold positions in XOM, CVX or RDS/A while Navellier & Associates holds XOM for some of its clients)

Oil service companies and domestic shale producers with high costs and higher debt loads will be facing a fight for their survival as the Chinese situation promises several years of depressed oil prices. Warren Buffett dumped his entire $3.7 billion ExxonMobil stake in February as reported by Bloomberg even though typically XOM is the most defensive of oil companies due to its customary large cash pile. Warren is not one to panic easily, so he must have seen something unnerving here.

I see the same thing.

Treasuries: The Bottom Is In

The effects of the Chinese situation are likely to be highly deflationary via the decline in commodity prices and more importantly via the effect on global trade, particularly in Asia where China has proactively nurtured trade relationships in order to increase its influence in the region. This is why when the wheels came off on the Shanghai Composite near the lows in early July, December Eurodollar futures (GEZ15) hit a fresh contract high. The same happened with December 2015 fed funds futures (FFZ15). (As a reminder, the forecasted interest rate at the time of settlement is 100 minus the contract price.)

EuroDollar - 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 market is telling the Fed NOT to hike interest rates, based on the action in euro-dollar and fed funds futures, but will the Fed listen? If the Fed does go ahead and hike, even in a token manner, it is entirely possible that they will reverse course in 2016 or simply stop hiking.  No central bank should be hiking interest rates in a deflationary environment as the ECB found out in 2011 with their miscalculated rate hike, which was later reversed.

Ten Year Treasury Note - Monthly OHLC Chart

Source: Barchart.com

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

If we are indeed operating in a global deflationary environment, this suggests that the intermediate term sell off in the Treasury market on the heels of the expected Fed rate hike has run its course. There is still time for 10-year Treasury yields to make a fresh 52-week low below the 1.65% level set in January this year. This should also put them on course to set a fresh all-time low below the 1.39% level, set in 2012; but that may come in 2016. If we set that all-time low in 2015, that would mean that the global deflation emanating out of China has arrived much faster.

Bank of America Merrill Lynch High Yield Option-Adjusted Spread Chart

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

We are in an expanding credit spreads environment again.  That means risk assets are “risky” and their risk is increasing as credit spreads are expanding. It was easy to see that a sell-off in energy would cause a sell-off in the junk bond market as the shale boom in the U.S. was financed with a mountain of junk debt in the past five years, with ever-shrinking cash flows servicing it. I think those credit spreads are headed much, much higher in due course.

Just like the Asian Crisis in 1998 and many emerging markets crises before it, the U.S. economy has emerged again as a relative island of safety in the world.  But China today is much bigger than all of those emerging markets crises, so the uncertainty as to the possible outcome is also proportionately bigger.

Growth Mail:

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

More Unintended Consequences from Political Meddling

by Gary Alexander

“The man whose public spirit is prompted altogether by humanity and benevolence will respect the established powers and privileges even of individuals, and still more those of the great orders and societies, into which the state is divided….The man of the system, on the contrary, is apt to be very wise in his own conceit; and is often so enamored with the supposed beauty of his own ideal plan of government that he cannot suffer the smallest deviation from any part of it….He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.  He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from which the legislature might choose to impress upon it.” [Emphasis added]

– Adam Smith, “The Theory of Moral Sentiments” (1759)

It’s time to update Adam Smith’s 256-year-old treatise with some more inclusive pronouns. We now have several “women of the system,” including Presidential candidate Hillary Clinton and Senator Elizabeth Warren, who are devising “ideal plans” to regulate the 320 million pieces on our vast national chessboard.

Last Friday, Hillary Clinton proposed a near-doubling of the capital-gains tax rate for the highest earners, for assets held under six years. Her plan doesn’t hurt low-income taxpayers. It only applies to top-bracket filers, thereby playing the class warfare card.  Their intent seems to be, Don’t tax you; don’t tax me. Tax that rich guy viciously.

Under the Clinton plan, according to last Friday’s , July 24th, 2005, Wall Street Journal, “investments held between one and two years would be taxed at the normal income-tax rate of 39.6%,” plus the extra 3.8% tax to help fund Obamacare. To qualify for the “low” 20% rate, says the Journal, you must hold the investment for at least six years.

As with all such elegant plans, the specific social-engineering details get complicated: Investments held for two to three years would be taxed at 36%; those held three to four years would face a tax of 32%. But in this rapidly-changing world, six years is an eternity. Imagine an investor has doubled a stock position in three years but the stock starts to fall on weak earnings and eroding fundamentals. Should he pull the trigger and face a huge tax bill, or hold on and hope for a rebound?  Why should the tax rate for a stock sale become a primary consideration when weighing the long-term value of owning that specific stock?

In Greenville, South Carolina last Thursday, Mrs. Clinton said: “I’m proposing policies that will make our economy stronger; that will promote both strong growth and fair growth but will do so with a longer-term perspective. That’s what I think is best for the country. I think it’s also best for business, whether they agree with it or not.” [Emphasis added]  Aha! There’s the very essence of the hubris of the “person with a system.”

If all this sounds familiar, you’re right. In the 1990s, the Clintons floated some similar “ideal plans.”

Clinton’s 1993-94 Trifecta: Housing for All, Stock Options, and Hillary Care

When Bill Clinton first took office in 1993, Hillary Care occupied the First Lady.  Although that plan was scuttled in 1994, we now have Obamacare some two decades later.  However, there were two other major plans which passed and had severely destructive unintended consequences, despite their noble intentions.

First, President Clinton made a campaign promise that no CEO should be paid more than $1 million per year. Clinton’s first budget plan created section 162(m) of the Internal Revenue Code, which stated that companies could only deduct the first $1 million of compensation for their top five (later top four) executives from their corporate taxes. “The idea was to discourage companies from paying in excess of $1 million, as any additional compensation would be taxed.” (Source: Washington Post, August 16, 2012)

It didn’t work out that way. According to a 2012 report (“Taxes and Executive Compensation” by Temple University’s Steven Balsam, published by the Economic Policy Institute) there was a broad exemption for “performance-based” pay above $1 million. Stock options were considered performance-based pay and hence deductible in excess of $1 million. So, unsurprisingly, businesses starting paying their executives more in the form of stock options. This carrot promoted skewed incentives for many corporate executives.

Secondly, in 1994, President Clinton began pushing home ownership as the Great American Dream for minorities and first-time home buyers with marginal credit ratings.  According to Peter Coy, writing in Business Week (February 27, 2008), Clinton’s administration “went to ridiculous lengths to increase the national homeownership rate. It promoted paper-thin down payments and pushed for ways to get lenders to give mortgage loans to first-time buyers with shaky financing and incomes.” (President George W. Bush and the Republican Congress also pushed this unrealistic goal of every family owning a home.)

According to Joseph R. Mason, finance professor at Drexel University’s LeBow College of Business and a senior fellow at the University of Pennsylvania’s Wharton School Economics, Clinton’s “National Homeownership Strategy” began in 1994 when he directed HUD Secretary Henry Cisneros to come up with a plan for creative measures to promote homeownership. (Source: “A National Homeownership Strategy for the New Millennium” by Joseph R. Mason for Criteron Economics, February 26, 2008.) The worst idea in HUD’s plan, which did not pass, was to let first-time homebuyers use their IRA and 401(k) retirement savings (with no penalty) for a down payment. (This was in 1994, right before the biggest five-year stock market surge in 60 years.)

For 50 years after World War II, home ownership rates hovered around 64% to 65%, but the Clinton and Bush drive to put millions of unqualified borrowers into homes pushed the homeownership rate to 69.4%.

Home Ownership Rate Chart

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

The housing market collapse of 2006 led directly to the financial crisis of 2008, which became a very real hell paved with the best of intentions – a “creative” plan to hand out Christmas gifts to unqualified buyers of new homes. Joseph Mason concluded in his paper: “It strikes me as reckless to promote home sales to individuals in such constrained financial predicaments.”  Sure enough, the homeownership rate as of March 31, 2015 is back to 63.8%, according to Commerce Department data (Source: WSJ, April 28, 2015).

P.S. To his credit, Bill Clinton also signed the Taxpayer Relief Act of 1997, which lowered the top capital gains tax rate from 28% to 20%. It was signed into law on August 5, 1997 – in tandem with the Balanced Budget Act of 1997.  The budget was balanced two years later.  Maybe Hillary should follow Bill’s lead!

Senators Elizabeth Warren and Tammy Baldwin also want to Ban Stock Buy-backs

Stock buy-backs have greatly exceeded new stock issuance during this bull market. According to economist Ed Yardeni, in his morning briefing for July 6, citing the Fed’s Flow of Funds Accounts, nonfinancial corporations’ net new issuance of stocks totaled minus $2 trillion from the first quarter of 2009 to the first quarter of 2015. Over the same time period, outstanding nonfinancial corporate bonds rose $1.5 trillion to a record $4.5 trillion.  Yardeni also says that as a result of buy-backs and mergers, the Wilshire 5000 held just 3,666 stocks as of January 31, 2015, down from 7,562 in mid-1998.

According to Bloomberg, Senator Elizabeth Warren said on June 15, “Stock buybacks create a sugar high for the corporations. It boosts prices in the short run, but the real way to boost the value of a corporation is to invest in the future, and they are not doing that.” According to Ed Yardeni, writing on July 8, Warren is also co-sponsoring legislation reminiscent of the Clinton attack on CEO pay, in something called the “Stop Subsidizing Multimillion Dollar Corporate Bonuses Act.”

Wisconsin Senator Tammy Baldwin agrees with Senator Warren. She wrote a letter to the SEC on April 23, 2015, which said, “A growing body of research suggests that the vast amounts U.S. corporations have spent to repurchase their own stock is a chief cause of the stagnation of American wages and investment.”

You can love or hate their views, but my point is that well-intended legislation changes market behavior in ways that result in an array of unintended consequences. These consequences are not “unexpected” to free-market economists, however. I’ll predict right now that if share buy-backs are banned or punished and interest rates remain low, companies will borrow money to buy shares of other companies, not their own.  The result will be more gigantic conglomerates and too many “too big to fail” Goliaths – which will draw the attention of meddling politicians once again, as they continue to try to solve the problems they cause.

This Day in Market History

Now for a stroll down memory lane, with a focus on governmental meddling in the markets in years past.  (Note: I collected these historical snapshots from hundreds of history books and reliable data sources in the late 1990s for a regular column that was posted each day for another financial Website.)

On July 28, 1841, the U.S. Senate narrowly passed the Fiscal Bank Bill, an initiative of the Whig party, which called for the creation of the Fiscal Bank of the United States, which amounted to a revival of the Second Bank of the U.S., which President Andrew Jackson killed in the 1830s.  On August 16, President John Tyler said he would veto the bill, and the idea quickly died, so the U.S. thrived without a central bank for 125 years (1788 to 1913).

War Trench ImageOn Tuesday, July 28, 1914, Austria-Hungary attacked Serbia and World War I officially began.  Stock markets around the world collapsed (most markets in Europe were closed by the end of the week), and the price of gold soared.  On Wall Street, volume hit 1,020,000 shares. On Thursday, July 30, panic selling on the New York Stock Exchange reached 1.3 million shares, the highest volume since the Panic of 1907.  Stock prices crashed, many falling 20% to 30% in one day.   GM fell from $59 to $39 (-34%).  Even Bethlehem Steel, which figured to profit from making war armaments, was down 14%.  That night, exchange officials decided to close the NYSE.  The U.S. market was totally closed from July 31 to December 14, 1914, and then partially closed until April 1, 1915.

On July 28, 1933, The World Economic Conference broke up, after meeting in London for much of the summer (June 12 to July 27).  The Dow fell from 108 to 88 in the last two weeks of July in reaction to the inability of representatives from 66 countries to devise any plans to revive global trade. The Depression was at its deepest. Hitler was running Germany and most nations were still stuck in “beggar thy neighbor” trade policies. At the meeting, most nations favored liberal trade measures, but the new U.S. President Franklin D. Roosevelt refused to liberalize trade.  Instead, he banned the export of U.S. gold and devalued the dollar by 41% just six months later.

Stat of the Week:

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

New Unemployment Claims: Lowest in 42 Years

by Louis Navellier

The economic news last week was mostly encouraging.  On Thursday, the Labor Department reported that new claims for unemployment in the week ending July 18 declined 26,000 to 255,000, the lowest level since 1973; but claims are notoriously volatile in the summer, so we’ll see what happens next week.

House For Sale ImageOn Wednesday, the National Association of Realtors reported that existing home sales rose 3.2% in June to an annual pace of 5.49 million, the fastest annual pace since February 2007.  In the past 12 months, median home prices have risen 6.5% to $236,400.  Growing mortgage demand is starting to put upward pressure on long-term interest rates, so the yield curve continues to get steeper due to the housing boom.

On Thursday, the Conference Board announced that its index of Leading Economic Indicators (LEI) rose 0.6% in June, while May was revised up to a 0.8% increase. The consensus of analysts’ expectations posted by Thomson Reuters had predicted a 0.2% rise in June.

Overall, I’d still say that the Fed is not likely to raise key interest rates until there is evidence of real wage growth, but that may change if second-quarter GDP growth – whose initial estimate comes out this week, on July 30 – surprises to the upside and long-term interest rates continue to rise, forcing the Fed’s hand.

Will the Fed Cut Rates in an Election Year?

Speaking of the Fed, on Friday the Fed accidently published their internal staff forecasts for GDP growth, inflation, interest rates and unemployment. (See “Fed Accidentally Released Confidential Staff Projections,” by Christopher Condon and Craig Torres for Bloomberg Business, July 24.)  The result of this leaked series of forecasts showed that the Fed only expects 2.31% annual GDP growth in 2015, with the Personal Consumption Expenditure index rising 1.15% in 2015. They see a 0.35% Fed Funds rate in 2015 and an unemployment rate to be 5.34% in 2015.  Interestingly, the Fed’s forecasts for GDP growth, inflation, and unemployment were not significantly different in 2016; but the Fed Funds rate was forecasted to rise to 1.26% in 2016.  So essentially, the Fed’s own staff is forecasting a “one and done” 0.25% Fed Funds rate hike in late 2015 and up to four 0.25% Fed Funds interest rate hikes in 2016!

The only problem with this internal forecast is that, historically, the Fed does not like to raise key interest rates during a Presidential Election year, so I’m wondering if the Fed’s economic staff is politically naïve.

Speaking of politics, I think that Hillary Clinton’s capital gains tax proposal has no chance of passing.  I think she is merely pre-empting some of the populist arguments that influential Senator Elizabeth Warren has been making – that stock buy-backs are artificially boosting stock prices.  As a big proponent of stock buy-back programs, I do not think that anything is “artificial” with stock buy-backs. I truly believe that these stock buy-backs reduce volatility as well as boosting underlying earnings, which is good for the overall health of the stock market.  Again, I have never heard the argument that favorable long-term capital gain tax rates are causing Corporate America to mismanage their businesses at the cost of American workers.

Furthermore, since Hillary Clinton did not propose raising taxes on qualified dividends from 20% (plus 3.8%) to 39.6% or more, if she got her way and raised capital gains taxes in 2017, it seems that logically, Corporate America would just decide to boost their dividend payments higher, since a 20% qualified dividend rate is much more attractive than Hillary’s 39.6%, 36%, 32%, 28%, and 24% new capital gains tax brackets!

I certainly hope that Hillary Clinton was not serious with her proposal to boost capital gain taxes and that her proposal was just a “trial balloon,” to win over the Elizabeth Warren wing of the Democratic Party.


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.

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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.

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