The S&P 500 Rose in the First Quarter

The S&P 500 Rose 5.53% (and NASDAQ +9.82%) in the First Quarter

by Louis Navellier

April 4, 2017

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

In the first quarter, the S&P 500 rose 5.53%, while the NASDAQ rose almost 10% but the S&P 500 was virtually flat for March, down a microscopic 0.04%.  Specifically, the financial sector fell over 4% in the second half of March on fear that the “Trump trade” was fizzling in the wake of the failure of healthcare reform or the repeal of the 3.8% tax on investment income.  Furthermore, when President Trump faces a defeat, he seems to get extra perturbed and comes back fighting more than ever for the next deal, so the stock market quickly resurged last week on the belief that the Trump tax reforms will likely be passed.

Boxing Gloves Image

Interestingly, while many of the Trump-trade stocks faltered, many leading small-capitalization stocks gained strength, thanks to quarter-end window dressing as well as 90-day ETF index realignment for the smart beta and equally-weighted ETFs.  This forced ETF index buying sent some small-cap stocks soaring.

This stunning surge in small-capitalization and special situation stocks in the past two weeks has been very impressive.  Since April is a seasonally strong month (see Growth Mail, below) and earnings are likely to rise by over 10%, due to positive analyst earnings revisions, I am expecting positive returns this April.

In This Issue

In Income Mail, Bryan Perry examines three trades that seemed “locked in” in January, but didn’t work out so well.  In Growth Mail, Gary Alexander looks at history and future earnings estimates to determine whether this bull market can keep growing.  In Global Mail, Ivan Martchev revisits his bond prediction in light of the slightly-declining first-quarter 10-year Treasury yields.  In Sector Spotlight, Jason Bodner uses the “Russian Menace” to examine what’s truth and what’s fake in market-moving news reports.  And in my final column, I’ll look at oil and consumer confidence to get a handle on inflation and retail sales.

Income Mail:
2017 “Locked-In” Trades Didn’t Work Out Well
by Bryan Perry
The Chinese Fly in the Ointment

Growth Mail:
Expect a Positive April, Mostly Due to Rising Earnings
by Gary Alexander
This Market Still Has Some “Catching Up” to Do

Global Mail:
Bonds’ Political Dilemma
by Ivan Martchev
A 1% 10-year Treasury Yield Target is Still Possible

Sector Spotlight:
Our New Fixation on “The Red Menace”
by Jason Bodner
Earnings Season Will Separate Sector Winners from Losers

A Look Ahead:
Confidence Keeps Soaring to 16-Year Highs
by Louis Navellier
Energy Fundamentals Point to Lower Inflation

Income Mail:

*All content in "Income Mail" is the opinion of Navellier & Associates and Bryan Perry*

2017 “Locked-In” Trades Didn’t Work Out Well

by Bryan Perry

As a native Washingtonian, yesterday was a special day – Opening Day for the Washington Nationals baseball team. During the afternoon at the ball park, life in D.C. felt almost normal, even for a brief moment. If we can set aside our smart phones and ignore the Tweets and stop the political madness for just nine innings, we could be better off. That much I’m pretty certain about, along with death and taxes.

What’s going on inside the beltway is nothing short of political warfare. I’ve officially lost count as to how many elected officials have either committed prosecutable felonies or committed “treason,” at least as reported by the theatrical media. On a daily basis, it is becoming easier to tune out what’s happening at 1600 Pennsylvania Avenue and on Capitol Hill, and instead focus our attention on the “nuts and bolts” of how the stock and bond markets are somehow, ironically, trading in bullish tandem with each other.

The resiliency of both markets is, in my view, very impressive and demonstrates that for the first time in a long while, we are not investing in a headline-driven market. Economic fundamentals are dictating market performance more than politics. Specifically, the Fed is raising rates for the right reasons and most market participants are paying attention to the salient business fundamentals that produce top-line and bottom-line growth. It’s a very refreshing change of behavior. But heading into the New Year, things looked very different. In fact, there were some well-encamped investment themes that the crowd seemed “all in” on.

Coming into the first week of January, there were three crowded trades that seemed like “a lock,” as far as the smart money was concerned. The first was the U.S. Dollar Index (DXY), set to roar higher against all other major currencies. Also, the yield on the 10-year Treasury boasted a 3.0% handle that seemed on the rise, while bank stocks were going to continue to bolt higher on widening net interest margin spreads. (Please note: Bryan Perry does not currently own a position in DXY. Navellier & Associates, Inc. does not currently own a position in DXY for any client portfolios.)

Select Sector SPDR Exchange Traded Funds Charts

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

For income investors, the great news within this backdrop is that dividend growth strategies – which are a hallmark of Navellier-style investing – have staged a bullish leg up heading into earnings season, due to the rising tailwinds from the Fed’s dovish policy statements, low inflation expectations (due to a soft energy market), a weaker U.S. dollar, and a firmer bond market. But could there be a fly in the ointment?

The Chinese Fly in the Ointment

On the flip side of that rosy outlook for U.S. dividend investors, I’m always looking for some unknown, large-scale, well-concealed event that could throw the global financial markets a ‘systemic’ left hook.

When translating “a fly in the ointment” from English to Chinese, it looks like this:

美中不足之處;令人掃興的東西(或人.

Just when it seems like the coast is clear – with China demonstrating a pattern of renewed economic stability – an underreported story crossed the tape that got almost no mention from business media outlets, and yet it’s a story that should be in every investor’s peripheral view. It involves the complex market of repurchase agreements within member banks in China’s not-so-transparent financial system.

The repurchase market is seen as the lifeblood of a monetary system. Without it, banks can't really operate. China's repo market nearly seized up two weeks ago, prompting the People's Bank to perform emergency triage. Here’s what happened: Every so many hours, institutions tally up how much cash is coming in their doors and how much is going out. Unlike what we learn in graduate banking school, this exchange never nets out at zero. Enter the repo market. Banks with excess cash lend that cash (at a friendly interest rate) to those that are short. The borrowing bank also deposits some securities for the lending institution as a guarantee it will return the money tomorrow. Sounds reasonable, right?

Remember when the U.S. Federal Reserve said Lehman Brothers didn't have sufficient collateral when it let the investment bank collapse back in 2008? (Check out the 2011 movie “Margin Call” for a re-enactment.) Bankers are a suspicious lot by nature, and they suspect each other more than anyone else. When a rare default happens, they start hoarding cash, even if they know they can get their money back by selling some of the securities that were pledged. Well, that’s what’s happening now in China.

China's central bank injected hundreds of billions of yuan into the financial system after some smaller lenders failed to make debt payments in the interbank market. The interest rate on overnight borrowings soared 78 basis points from the prior week to 3.28 percent, making the yield to borrow for a single day higher than the 3.14 percent five-year yield that Chinese government bonds pay.

This repo hiccup normalized after a few liquidity injections. After all, nothing is more comforting than knowing the central bank has your back. This time, however, it may be more complicated, particularly if missed payments are the start of a trend. It transpired that the China Securities Depository and Clearing Corp., which oversees exchange-traded notes, plans to allow financial institutions to use only AAA-rated company securities as collateral for short-term loans when Chinese banks tend to be a bit more generous than their Western counterparts, which typically only accept their own government’s debt as collateral.

The new AAA-rating requirement means at least half of the securities traditionally pledged as overnight collateral will no longer qualify, and in my book, that raises a Chinese red flag. Whether that played a part in some interbank defaults isn't clear. However, investors should pay close attention to this situation because it has the ability to sow the seeds of rapid dislocation that could spread beyond the Great Wall.

Growth Mail:

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

Expect a Positive April, Mostly Due to Rising Earnings

by Gary Alexander

“March came in like a lion and left like a lamb.” – an ancient saying nobody seems to be able to source.

The S&P 500 rose just over 5.5% in the first quarter, but March was almost perfectly flat.  After touching 2,400 intra-day on March 1, 2017, the S&P meandered sideways-to-down for the rest of the month.  The biggest concern is that the Trump bump may be over after his Obamacare-repeal-and-replace plan clearly failed.

But April could be a different story.  According to Bespoke Investment Group (In “April Seasonality,” March 31, 2017), April is the best stock market month in the last 50 years and 20 years – by a long shot.  April has risen in 16 of the last 20 years (80%), the highest success rate of any month in the same time period.

Best Months in the Last Fifty and Twenty Years Tables

Perhaps the spring weather, or tax refunds, or the funding of retirement plans has something to do with the supremacy of April over the other 11 months, but this year earnings growth should boost returns, too.

Most of the top earnings analysts see 10% or greater earnings growth (year-over-year) in the first quarter. (Earnings announcements will run from April 10th to about May 15th.)  Economist Ed Yardeni and his team see S&P 500 1Q earnings rising 10.3%.  Part of the rise comes from weak comparisons from a year ago, as well as a return to profitability in the energy sector and rising profits in the Financial and Tech sectors.

In addition, Sam Stovall wrote last week (in CFRA’s “U.S. Investment Policy Committee Notes,” as quoted in Barron’s, April 3rd) that “history implies that the final tally will likely be even better, as actual EPS exceeded initial estimates in each of the last 20 quarters, and did so by an average of 3.7 percentage points.  Therefore, first quarter EPS growth could end up being close to 14%.”

One reason for rising earnings is that the U.S. dollar had been generally weak in the first quarter (the WSJ dollar index is down 3%), removing a major headwind to earnings for large multinational exporters.  The U.S. dollar is down sharply vs. some key trading partners: The dollar is down 9.7% to the Mexican peso in the first quarter, -7.5% to the South Korean won, and -4.8% to the Japanese yen.  In addition, economic growth outside the U.S. has been improving, increasing demand for many U.S. products.  Growth rates are rising in Europe, Japan, China, and many emerging markets.  This tends to favor large multinational companies.

First-quarter revenues are slated to rise by about 7%.  According to Ed Yardeni (in “Many Happy Revenues,” March 29, 2017), “The global economy is showing more signs of improving in recent months. That’s already boosting revenue growth for the S&P 500.”  Yardeni pointed out that an increase in the volume of U.S. business sales naturally tends to parallel the rise in S&P 500 revenues (see chart, below):

Standard and Poor's 500 Total Revenues and United States Business Sales Chart

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

This recent growth in sales isn’t evident at your local malls, as super-sellers on the Internet are generating the lion’s share of revenue growth in recent years.  Last month, the U.S. Census Bureau reported that online shopping rose to a record $521 billion (annual rate, seasonally adjusted) in January, representing a record 29% of total retail sales (combined online and in-store sales).  This trend shows no sign of ending:

Online Retail Sales Chart

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

This Market Still Has Some “Catching Up” to Do

Many analysts still say that this eight-year-old bull market is “long in the tooth,” or “overextended,” or “overbought.”  In saying this, they are measuring this bull market from its birth date (March 9, 2009) rather than over a longer period of time, including market ups and downs.  If you go back 17 years to the birth of the new Millennium in early 2000, the annualized stock market gains have been well under 3%:

Annualized Stock Market Gains Table

This comparison, of course, is just as unfair as measuring from the bull market’s birthday.  As I wrote in these pages back in May, 2009, a bear market of historic proportion (2007-09) implies a bull market of equally historic proportions – since the market, over time, tends to revert to its mean growth rate.

Taking decades at random, we can compare the last 10 years to the previous five decades and see that the S&P’s gains since March of 2007 are historically weak – the second worst decade of the last six decades.

Standard and Poor's 500 Worst Decades Table

Measuring from 60 years ago, March 31, 1957, when the S&P 500 stood at 44.11, the S&P 500 has risen by 5,256%, which works out to an average compounded growth rate of 6.9% per year, or 95% per decade.

Market returns since 2000 or 2007 are clearly sub-par, so it stands to reason that the current market can continue to “catch up” to its historical norms of about 7% annual growth, or nearly 100% per decade.

Global Mail:

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

Bonds’ Political Dilemma

by Ivan Martchev

While some indicators of the Trump reflation trade – most notably crude oil and the U.S. dollar index – have improved in the last week of the first quarter (ending last Friday), others have barely budged. The most important indicator showing a reversal of the Trump reflation trade is the U.S. Treasury market, where 10-year Treasury yields ended the quarter at 2.39%, after ending the previous year at 2.45%.

While six basis points is not a large decline in long-term interest rates in a quarter, it is still a decline. The 2/10 spread which is the difference in yield between 2- and 10-year Treasury notes (generally referred to as the slope of the yield curve) ended the first quarter at 114 basis points. It ended 2016 at 125 bps.

United States Ten Year Government Bond Chart

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

Why are 10-year Treasury yields not rising, given that we had a Fed rate hike in the first quarter? I used to say the political risk in Europe infused a lot of caution into governmental bond markets, but the failure of the Republican majority in Congress to repeal and replace Obamacare suggests there is political risk in the U.S., too. Because Obamacare is tied to many taxes, this likely means a smaller tax cut later this year.

For the time being, let’s put the growing pains of the new Trump administration aside and focus on the first round of the French Presidential election coming April 23rd. It would be interesting to see if Treasuries can decline below 2.31%, which is the lowest yield they had last quarter, or for the euro to trade below $1.034, which is the lowest EURUSD cross rate so far in 2017. (Friday’s euro closed at $1.0653.)

I bet both Treasuries and the euro can trade more defensively, particularly if Le Pen wins sufficient votes to enter the May 7th runoff. That will cause investors to bite their nails until the second round of the French presidential election. The same is true for 10-year German bunds which closed at 0.3280% on Friday. Meanwhile, the two-year ‘Schatz’ continues to have a decidedly negative yield, closing last week at -0.74%. I think it is entirely possible to see another case where both 10- and 2-year bunds have negative yields, particularly if we have adverse outcomes in the elections in France and later (September 24th) in Germany.

Euro Exchange Rate with the United States Dollar Chart

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

This action in the U.S. Treasury market reminded me of a surreal correlation between U.S. government bond yields and the largest bank on the Old Continent, Deutsche Bank (DB). I call this correlation “surreal” because one line (in green, below) is a risk-free interest rate in the U.S. while the other (black line, below) is the equity part of the capital structure of a gigantic bank in Germany. (See my June 24, 2016 MarketWatch article, “A look at the global economic malaise though Deutsche Bank.”)

Deutsche Bank Ag - Daily Line Chart

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

While the lines diverge sometimes, this correlation has continued to hold over the past nine months in the same surreal fashion. U.S. 10-year yields spiked after the election and so did Deutsche Bank stock, pulling back when U.S. yields dipped and vice versa. Clearly, a dissolution of the EU and Eurozone is a major risk to Deutsche Bank as the expected bank failures and sovereign defaults are likely to result in high losses weakening further its already weak financial position. Despite the rebound after the U.S. Presidential election, DB stock is still well below the levels it saw in the 2008 Financial Crisis. The shares fell as low as 24 cents in 2016.

Deutsche Bank Ag - Monthly OHLC Chart

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

I think that if the EU and the Eurozone dissolve, DB may survive with a German government bailout. I don't think the Germans can afford to let the biggest bank in Germany fail, but since they have been known to engineer highly dilutive bailouts – as is the case with the second biggest bank in Germany, Commerzbank – we are likely to see a much lower DB share price in this scenario. How low DB stock can go would be impossible to say until we know how dilutive such a theoretical bailout may be.

A 1% 10-year Treasury Yield Target is Still Possible

Under a scenario of a Eurozone dissolution, possibly coupled with a Chinese currency devaluation in 2017 or 2018, the U.S. Treasury market is likely to see safe-haven flows that push prices to new highs and yields to new lows. In addition to that, we are likely to see global deflation pressures intensify.

One-hundred Years of the United States Ten Year Government Bond Chart

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

Given that scenario, I maintain my target of 10-year Treasury yields below 1% by the end of President Trump’s first term in office on January 20, 2021. For that to happen, we would need to see a Eurozone dissolution or Chinese hard devaluation, or both, and at this point those are only theoretical possibilities.

Finally, there is the question of the present U.S. economic expansion, which at 93 months (starting in June 2009) is the third longest on record. The two longer economic expansions lasted 120 months (March 1991 to March 2001) and 106 months (February 1961 to December 1969). I know the Trump team has big plans to rejuvenate the economy and make America great again, but so far those plans are short on details – which, as we all know, are the devil’s favorite place to hide.

Ten weeks in office is not long enough to judge the Trump administration, so I have not made up my mind on the likelihood of Trump policies extending the present economic expansion beyond 120 months. But, if six months have passed and the Trump administration is still spinning its wheels without any sign of the tax reform the stock market is waiting for, we will likely start seeing some disappointed investors. We are not at that point yet, but we have to be mindful of the consequences of the U.S. President talking up the stock market, and how that correlates to what he can deliver on the tax and infrastructure fronts.

With all those caveats, I think my 1% target on 10-year Treasury yields has a better than 50-50 chance of happening by January 20, 2021.

Sector Spotlight:

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

Our New Fixation on “The Red Menace”

by Jason Bodner

There is a dark red cloud looming over the Trump administration – namely, Russia. The media clearly are seizing every opportunity to keep Russia in the forefront of the headlines. As Trump and his cabinet battle allegations and innuendo, it seems like a good time to learn some interesting things about Putin’s home country. Russia has put in a lot of effort over the years showing the world they do things harder, tougher, and bigger. Putin mastered this reputation, which has of course spawned endless memes…

Putin Riding Shark Image

Russia seems to do a lot of things in a big way. For a country that is bigger than Pluto in land area, it may interest you to know that 70% of Russia is Siberia. Russia also hosts the largest global nuclear arsenal (more than 8,400). Also, the average Russian consumes nearly five gallons of alcohol per year (double the danger limit), and 20% of the world’s fresh, unfrozen water resides in a single lake in Russia, Lake Baikal.

Russia is not without its quirks, however. For instance, beer wasn’t officially considered alcohol until 2013, and it is currently illegal to tell children about the existence of gay people. And here’s a blow to the Russian ego that is rarely mentioned: Apple’s stock is worth more than the entire Russian stock market.

In recent months, the news media seem obsessed with the Trump/Putin relationship, but this long-distance  “bro-mance” seems to have little effect on the markets. In fact, after the much-beleaguered healthcare bill fell apart, the market was bummed for only an hour or so. It keeps rising, but indications of institutional buying remain on the low side, while signals of selling have picked up (compared to the average for the past three months). This causes me to suspect how long this market can continue to rally.

Last February 14th here, I wrote: “With all 11 sectors on the rise since the November election, I expect that we will witness a rotation soon. While the market is undeniably rising with each passing week, the one factor that keeps me from getting swept away with the euphoria is the institutional activity monitors that I follow. That data tells me that the market continues to be consistently ‘overbought.’ Now, a market can remain in a protracted overbought state for a long period of time, but just as every determined salesperson thinks, ‘Each no brings me closer to a yes,’ the market is telling me, ‘each new high brings us closer to a correction.’”

On February 14, 2017, the Russell 2000 closed at 1396.65. On March 22, 2017, it troughed out at 1345.60, a drop of nearly -3.7%! Yet we continue to see most of the S&P 500 sectors chugging along in positive territory.

Russell 2000 Stock Index Chart

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

Here is the line-up for the last week, quarter, and six-month periods:

Standard and Poor's 500 Daily, Weekly, Quarterly, and Semi-annual Sector Indices Changes Tables

Despite all the excitement about Tech this past week, the winner was Energy, which posted a 2.20% gain, most of which happened on Tuesday and Wednesday. Yet for the last three months, Energy is our biggest loser at -7.30%. Information Technology is undoubtedly our best 3-month performer at +12.16%.

This past week saw Energy, Consumer Discretionary, Materials, and Information Technology rise by 1% or more, while the losers were Consumer Staples, Telecom, and Utilities.

Earnings Season Will Separate Sector Winners from Losers

To really feel which sectors should continue higher, earnings season will tell all. According to FactSet’s March 31, 2017 Earnings Insight, 79 S&P 500 companies have issued negative guidance, while 32 companies have issued positive guidance.  We are still a few days away from the unofficial earnings season kickoff, which traditionally starts with Alcoa’s reporting on April 10th. Looking back to Q4 2016, Information Technology saw 88% of companies report earnings come in above expectations and 68% report revenues above estimates. Telecom was worst in terms of earnings, and Utilities was worst in terms of revenues (see chart, below).

FactSet's Earnings Insight Scorecard Bar Charts

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

So at this point, we must wait for earnings to start trickling in. Energy should, at bare minimum, outperform year-over-year comps, which I suspect is why we have been seeing outperformance by that sector of late. Information Technology continues to impress, and I suspect we will continue to see strong earnings and revenues in the sector. When we look at the performance at industry classification level, the top three 3-month performers according to Fidelity were Health Care Technology, Technology Storage and Peripherals, and Internet & Catalog Retail. Three month losers in the Industries were Energy Equipment & Services, Oil, Gas & Consumable Fuels, and Multiline Retail.

While we wait and see what earnings season brings us, we can all sit back and relax and enjoy the news-driven soap opera, which has all the intrigue and drama of a Hollywood film. For instance, Trump is on record boasting of his relationship – and also denying it. He loves Putin, but he also said he doesn’t know who Putin is. There was contact with Russia. There was no contact with Russia.

Trump and Putin Image

While we wait for earnings, grab some popcorn and tune in. Just don’t expect Putin to cry… I’ve heard he is very sensitive about being quoted as saying, “I think happiness is love.”

A Look Ahead:

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

Confidence Keeps Soaring to 16-Year Highs

by Louis Navellier

After a shaky Monday, the market revived strongly last Tuesday after the Conference Board announced that its consumer confidence index soared to 125.6 in March, up from 116.1 in February.  This was well above economists’ consensus estimate, which called for a decline to 114.1.  Most economists were apparently expecting a bit of a pullback after consumer confidence surged in February.  In fact, March turned out to be the fifth strongest relative reading ever recorded.  In addition, this was just the seventh time that the consumer confidence index exceeded economists’ consensus expectation by over 10 points!

I must note, however, that the latest Conference Board survey was completed on March 16th, before the defeat of healthcare reform in the House of Representatives, so it will be interesting if that impacts consumer confidence in the upcoming months.  Even with that caveat, consumer confidence has essentially gone “parabolic,” reaching the highest level in 16 years.  Basically, consumers have become far more optimistic about the job market in terms of both their present situation as well as their future expectations.

In contrast, the Commerce Department reported that consumer spending only rose 0.1% in February, even though personal income rose by 0.4% and the savings rate rose to 5.6%.  Since tax refunds have been slower to arrive than they were last year, this may have hindered consumer spending a bit in February.

I also expect that first-quarter GDP will be running well below the fourth-quarter GDP annual pace, which was revised up to 2.1% last Thursday due to an upward revision in consumer spending.  As a result, the Fed may remain dovish, since inflation is moderating and consumer spending remains lackluster for now.

Energy Fundamentals Point to Lower Inflation

OPEC is notorious for its infighting and quota cheating.  Last week, the compliance arm of OPEC finally demanded that its members curtail their crude oil production to get in-line with their previously-stated quotas.  Specifically, Kuwaiti Oil Minister Issam Almarzooq, OPEC’s compliance chairman, demanded cuts of 1.2 million barrels per day.  Saudi Arabia is cutting its crude oil production by 800,000 barrels per day to try to make up for the non-compliant OPEC members, but that is not enough to boost oil prices.

Oil Pipelines Image

Crude oil prices rose last week, but prices are down 5.8% for the first quarter.  With crude prices staying around $50 per barrel, inflation is contained for the time being.  In the meantime, the Fed’s favorite inflation indicator, the Personal Consumption Expenditure (PCE) index, rose 0.1% in February and is now up 2.1% over the past 12 months.  This is the first time that the PCE has been officially above the Fed’s 2% inflation target, so if the PCE does not fall below 2%, then more Fed key interest rate hikes are likely.

U.S. crude oil inventories rose to a record 534 million barrels in the Energy Information Administration’s latest weekly report, but the oil price remains high enough for fracking in the Permian Basin to continue to grow steadily.  This relative stability in crude oil prices bodes well for many domestic energy companies.  Furthermore, since the energy sector is expected to post strong first-quarter earnings, due to favorable year-over-year comparisons, I expect that many energy companies will surge in the coming weeks.


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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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