Trade War is Averted

Trade War is Averted After China’s Xi Adopts a Conciliatory Tone

by Louis Navellier

April 17, 2018

Jet Fighter Image

The precision air strikes by Britain, France, and the U.S. early Saturday morning in Syria appear to be designed to avoid any escalation from an Iranian or Russian response, but Russia has vowed that there will be “consequences.” So far, it appears there is minimal risk of a major escalation.

Meanwhile, the S&P 500 rose 2% last week as trade war fears faded after Chinese President Xi Jinping adopted a conciliatory tone. That threw cold water on the overblown trade war fears that the financial media had so relentlessly propagated over the last few weeks. Specifically, President Xi said, “In a world aspiring for peace and development, the Cold War and zero-sum mentality look even more out of place.”

Xi also implied that China’s 25% tariffs on U.S.-made vehicles would be slashed. More importantly, President Xi said that China would respect U.S. intellectual property rights and work for a meaningful solution. President Trump promptly thanked President Xi in a tweet, so a serious trade war was averted.

In This Issue

Finally, after two months of headline wars and rumors of trade wars, the market can turn its attention to earnings reports this week. Brian Perry gives you a rundown of what that might mean for our portfolios, especially for dividend stocks. Gary Alexander looks at Tax Day from a new angle, thanking rich folks for their outsized contributions to the Treasury vaults. Ivan Martchev focuses on the 2-10-year Treasury spread and a “tale of two lawyers,” while Jason Bodner examines what tweets can do to markets. In the end I’ll return with a look at fantasy vs. fact and the latest readings among the various inflation indicators.

Income Mail:
Earnings Put the Rally in Focus as Risk of Military Showdown Fades
by Bryan Perry
Bulls Fight Off a “Kitchen Sink” of Market Threats

Growth Mail:
Rich Folks, Thank You for Your Generous Contributions!
by Gary Alexander
Wealth Inequality is Not the “Root of All Evil”

Global Mail:
47 Basis Points to Zero
by Ivan Martchev
The Week Michael Cohen Became More Important than Robert Mueller

Sector Spotlight:
When Tweets Create Market Storms
by Jason Bodner
Growth Sectors Began to Emerge Last Week

A Look Ahead:
Fantasies and Fake News are More Entertaining Than Facts
by Louis Navellier
PPI & CPI Inflation are Rising, but the Fed’s Favorite Indicator is Flat

Income Mail:

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

Earnings Put the Rally in Focus as Risk of Military Showdown Fades

by Bryan Perry

Following last Friday night’s coordinated missile attack by a coalition of U.S., UK, and French forces against Syrian chemical weapons facilities, there was a high level of consternation about whether the barrage of targeted airstrikes could escalate into a more dangerous and wide-ranging military engagement between backers of the Assad-led Syrian government (Russia, Iran, Hezbollah) and NATO forces.

While the attack did in fact take out several military positions and research facilities linked to chemical weapons, it had little effect on degrading Assad’s power to wage further war on rebel factions. Russian President Vladimir Putin denounced the strikes as an “act of aggression” but made no mention of possible retaliation. Russia’s defense ministry reported no casualties, either Syrian or Russian, or serious damage. So, a mutual stand down has resulted, given that the U.S., UK, and France have indicated they’ve reached the limits of their military ambitions in Syria  for now at least.

As for investors, the global stock markets have averted another potential “black swan” event. There has been no shortage of disruptive forces that have fueled wild market swings for the past 10 weeks. It was smooth sailing through the end of January and then a series of scenarios converged on the investing landscape, creating large potholes of uncertainty that took a significant toll on investor sentiment. The market was devoid of a single 2% down move for all of 2017 but there have been seven such -2% (or greater) days so far in 2018, with a lot of frayed nerves as a result.

Fortunately, the underlying economic fundamentals have provided the necessary impetus for institutional fund managers to step in during each and every pullback and support the integrity of the primary uptrend. After the S&P 500 first fell below its 200-day moving average on February 9, that key technical line in the sand (which currently sits at 2,600) has been tested five more times in the past two weeks.

Standard and Poor's 500 Large Cap Index Six-Month Chart

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

The latest test (on Friday, April 6) could be the last for a while. It looks like the market pivoted off that test to spark last week’s rally, where buyers stepped in with conviction and short sellers ran for cover. Since February, we can see that the market has bent under an avalanche of headline news, but it hasn’t “broken’ – and this is really the big story of last week’s market – a story that investors can embrace.

It’s my view that the market held its ground in the face of a swath of negative events. Were the economy on shakier ground, these tests could have triggered a much deeper correction and a risk of recession.

Bulls Fight Off a “Kitchen Sink” of Market Threats

Consider the march of news events we’ve seen: The “tariff tantrum” between the U.S. and China sparked on March 1, followed by the resignation of the director of the National Economic Council Gary Cohn on March 6, the firing of former U.S. Secretary of State Rex Tillerson on March 13, the Fed’s interest rate hike on March 21, the passing of a massive $1.3 trillion spending bill on March 23 that dramatically widened the federal deficit, the ongoing drama surrounding Special Counsel Robert Mueller’s probe, including the raiding of President Trump’s lawyer Michael Cohen’s office and hotel room by the FBI, then the missile attacks on Syrian chemical weapons targets Friday night (Saturday morning in Syria).

And today, to fund all this action, America has a deadline to render unto Caesar (IRS) what is Caesar’s (income taxes). There are quite a few other events I could throw into this “kitchen sink” listing, but the point is that the market has withstood them all, so I would suggest that the potential move off this now compressed level could make for an extended rally phase for the balance of April that goes well into May.

First-quarter earnings season kicks off in earnest this week, so investors who have stayed patient with good stocks through this Stormy (there’s another crisis!) and volatile period should be well rewarded.

While the daily six-month chart of the S&P 500 (above) clearly shows the extreme volatility of the past three months, the weekly two-year chart (below) provides a much more constructive picture of how investors should view the market landscape. What looked like a very overbought market in late January gave way to a high-voltage pullback stemming from all the reasons noted, yet the long-term primary uptrend line that currently sits at 2,571 as of last Friday continues to be a rising rock of technical support.

Standard and Poor's 500 Large Cap Index Two-Year Chart

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

I don’t know if I’m ready to start singing the lyrics to Bobby McFerrin’s “Don’t Worry Be Happy,” but I am humming a few bars this week. And for investors seeking dividend growth, I might break out in a jig. According to data from S&P Dow Jones Indices, net dividend increases for U.S. common stocks are indicated to gain 56.9% over 2017, rising to $37.1 billion. Overall, companies in the S&P 500 returned $419.8 billion to shareholders in 2017 through dividends, a record, up from $397.2 billion in 2016.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said that 2017 “was the eighth consecutive year of higher payments and the sixth consecutive year of record payments.” He added that “conditions are favorable” for 2018 to be another record year for dividend payments.

According to the business information firm IHS Markit, global dividends are expected to rise 10% in 2018, to $1.65 trillion. That would represent the highest level of annual growth since 2014. And it’s not hard to understand why. In the U.S., companies in the S&P 500 have been hording more than $1.9 trillion in cash, which began to accumulate in response to jurisdictional tax disparities and global economic uncertainty following the Great Recession; they accelerated in the past decade as large U.S. corporations maneuvered to accumulate profits offshore in lieu of repatriating the funds and taking a big tax hit.

United States Corporations Cash Reserves Bar Chart

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

U.S. companies are sitting on a record amount of cash and dividends are a popular use for that money, along with merger and acquisition activity and stock buy-backs. There is a sea change taking place. The global reflation trade is in full swing and the return of cash flow to shareholders is at a record pace. This is why, in my opinion, the U.S. equity markets are set to extend the current rally well into 2019.

According to S&P Dow Jones Indices, companies in the S&P 500 repurchased about $129.2 billion of their own stock in the third quarter of 2017, the most recent period for which it had data. That’s 15.2% above the third quarter of 2016. Fourth quarter 2017 data for buy-backs isn’t published yet but will likely show a continuation of the same bullish trends. What is most encouraging, though, is the record level of business investment, the highest since 2011. Kiplinger currently sees “core business-fixed-investment spending to jump as much as 7% following last year’s 5.3%” (Kiplinger, March 23, 2018 – “7% Gain Likely in ’18 if Trade War Is Averted”). Earnings season is finally here, and it’s beginning to look, smell, and feel like spring is in the air on Wall Street. And how nice is that?

And by the way, as nice as it is to make money, don’t forget to take time out to smell the flowers.

Growth Mail:

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

Rich Folks, Thank You for Your Generous Contributions!

by Gary Alexander

Today is tax filing deadline. What? Whatever happened to April 15?  Well, April 15 is Sunday and April 16 is Emancipation Day in DC and since any holiday in DC is a tax holiday, April 17 is tax day this year.

Since you are reading this letter, I presume you are a qualified investor with a decent income and accrued savings congealed somewhere into an investment account which you manage yourself or you have hired someone else to manage. If so, I want to thank you on behalf of the American people for paying far more than your fair share of taxes. Despite what Bernie Sanders says – and even Warren Buffett seems to imply – the rich pay the vast majority of America’s income taxes, and the new tax bill pushes the gap wider.

Perhaps nobody has ever said this to a rich person before, but “Thank you for your service to America!”

The latest year with complete IRS tax filing data is 2015. In that year, 141.2 million taxpayers reported over $10 trillion in adjusted gross income, paying $1.45 trillion in income taxes. According to the IRS, the top 1% of taxpayers paid far more (39%) total taxes than the bottom 90% combined (29.4%). Despite Warren Buffett’s remark that he paid a lower rate than his secretary, the top 1% of taxpayers paid a 27.1% individual income tax rate, which is more than seven times higher than the rate of the bottom 50% (3.8%).

Share of Income and Federal Income Taxes Bar Chart

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

The new tax bill – like almost all tax bills before it – was called a “tax cut for the rich” (and corporations), even though the rich will pay more than ever. According to Laura Saunders’ Tax Report in the April 7-8, 2018 Wall Street Journal (“In Overhaul, Top Earners to Pay Bigger Share,”), under the new tax law the top 20% of earners (those with incomes of about $150,000 or more) will pay 87% of all income taxes in 2018 vs. about 84% last year. The top 1% will pay 43% of all income taxes in 2018 vs. 38% in 2017.

Meanwhile, the lowest 60% of households (those with income up to $86,000) will pay no net federal income tax in 2018 vs. 2% in 2016. “In recent decades,” she explains, “Congress has chosen to funnel benefits for lower earners through the income tax rather than other channels, such as federal programs.”

 

This is no big problem. This is as it should be in a progressive tax system. America has designed a system where the rich pay a far higher percentage than the middle class, and where the working poor earn tax credits and benefits that wipe out their income tax liability. (This does not include payroll taxes, which are a regressive form of taxes, punishing the working poor.)  The problem is that the press and public don’t believe that this is true. By and large, they seem to have bought into the divisive class warfare that the favored 1% cheat the 99% out of their share of the national pie. They call this “wealth inequality.”

Wealth Inequality is Not the “Root of All Evil”

The Apostle Paul did not tell Timothy, “Money is the root of all evil” (I Timothy 6:10). A better reading of the original Greek is “The love of money is A root of all kinds of evil.” Going the Apostle Paul one better, Pope Francis tweeted (!) “Inequality is the root of social evil,” implying that money has value after all, if only the rich would be so kind as to give most of it away so that everyone can enjoy equal shares.

Politicians have made great hay out of courting votes by rubbing this grievance raw. President Obama called wealth inequality “the defining challenge of our age,” even though the gap apparently widened under his watch. I say “apparently” because most such calculations are based on raw income data, not total income from welfare booster shots, including unemployment insurance, Social Security, Medicare, Medicaid, food stamps, aid to needy families, and the Earned Income Tax Credit (EITC) for low wage earners. Put them all together and the income gap shrinks significantly – as they are DESIGNED to do.

In an extended section (“Income Stagnation Myth”) of his new book (Predicting the Markets), Ed Yardeni calculates that all these extra income elements have raised the real median (mid-point) personal income per household by 26% from 1999 to 2016 to a record $121,553. That figure is an astonishing 46% above the Census Bureau’s $83,143 reading. That’s because people report their salaried income pretty accurately but the Census Bureau does not include their share of the $1.2 trillion in Medicare and Medicaid benefits, their Supplemental Nutrition Assistance Program (SNAP) food stamps, or their public housing, or their employer-provided benefits, such as health insurance, or EITC for low-income workers.

In his chapter on Inequality in Enlightenment Now, author Steven Pinker shows how, “When poverty is defined in terms of what people consume rather than what they earn, we find that the American poverty rate has declined by 90 percent since 1960, from 30 percent of the population to just 3 percent” (p. 117).

World per capita Gross Domestic Product Chart

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

In addition, the rapid eradication of poverty in China, most of the rest of Asia, Latin America, and even Africa is happening so fast that it may go down in history as the greatest miracle of the last 50 years.

When looked at globally, the wealth inequality gap is closing rapidly. Steven Pinker cited an interesting anecdote (on page 108 of Enlightenment Now): While many wealthy investors lost about half of their net worth in the financial crisis of 2007-09, Chinese laborers doubled their salaries. Globally, the poor are getting richer far faster than the rich. That should please everyone – including the Pope…and Bernie.

Global Mail:

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

47 Basis Points to Zero

by Ivan Martchev

The Presidential Apprentice Season 2 has so far turned out to be significantly more dramatic than Season 1. In fact, the escalation in dramatic tension has higher ratings but the drama is almost too hot to handle. While the stock market did indeed ignore the dramatic twists and turns of the reality-TV-like President’s first year in office, investors have begun to react negatively to the increased dramatics of his second year.

For instance, Chinese trade frictions pressured the stock market in March and the bond market rallied when the Fed was rumored to be on course to accelerate the pace of rate hikes and balance sheet runoffs.

United States Ten Year Government Bond versus United States Two Year Note Yield Chart

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

Because of the present Federal Reserve rate-tightening policy, the 2-year Treasury note yield (which is most sensitive to the fed funds rate) is rising faster than the 10-year note yield (which is more sensitive to inflation and economic growth). That has created a new cyclical low in the 2-10 spread of 47 basis points last week. That’s not a lot of basis points left to the dreaded zero boundary – also known as an inverted yield curve – which has predicted every one of the last five recessions.

Yield Curve Chart

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

Any kind of real trade war – not the threat of a trade war that we have seen recently – can cause a recession in the U.S. and in China at the same time. A real and prolonged trade war could cause a global recession as the U.S. and China are the #1 and #2 global economies. In the last global recession – the Great Recession of 2008-2009 – U.S. unemployment rose to 10%. The Smoot-Hawley Tariff Act of 1930 caused the biggest collapse of trade in the 20th century and is credited with turning a bad recession with 8% unemployment into the Great Depression with unemployment hitting 25% two years after it was enacted.

United States Unemployment Rate Chart

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

I don't think the President wants to turn his “Make America Great” slogan into “Make America Enter Another Great Depression,” but he could do it if he is not careful. As I have mentioned previously, the full name of the Smoot-Hawley Tariff Act reads pretty much like a general summary of the President’s election-year promises: “An Act to provide revenue, to regulate commerce with foreign countries, to encourage the industries of the United States, to protect American labor, and for other purposes.”

From a shorter-term tactical perspective, the stock market should rally in April as the current earnings season is expected to be good and World War III may have been averted with those precision air strikes in Syria by the U.S., UK, and France. Since there had been no full investigation by the Organization for Prohibition of Chemical Weapons (OPCW), one could say that those strikes were premature, as it would make zero sense for the Syrian Army to use such weapons with ISIS on the run.

Posture of Syrian Regime and Allies Map

To define what “ISIS on the run means,” one can hardly find them on a recent map of Syrian warring party positions. I think I see a small gray area of ISIS control in the lower left corner of the map, so if my eyesight is correct Bashar al-Assad must be an absolute idiot to use chemical weapons on a retreating foe. And since the Russians coordinate major Syrian Army operations to the point where there had been numerous Russian commanders directly leading the operations of most Syrian Army units, that would mean that Bashar al-Assad was likely acting against what the Russian commanders wanted, which sounds even more ludicrous, as they just bailed out his country from falling under ISIS control.

The Week Michael Cohen Became More Important than Robert Mueller

While both Michael Cohen and Robert Mueller are attorneys, one is the President’s personal lawyer (at least until last week, before the FBI raided his office and residences), while the other has been appointed Special Counsel by the Department of Justice to oversee possible collusion of Russian meddling into the 2016 Presidential election. Those investigations are important for investors as they could derail the President’s whole economic agenda and are beginning to look surreally-Nixonian in outcome.

Michael Cohen Image

Michael Cohen had been under surveillance for months. Attorney-client privilege has its limitations; it does not apply if Cohen is involved in criminal acts and the Justice Department clearly thinks that those limits apply in this case. And all the senior officials that have signed off on the FBI raid are Republican appointees. With DOJ officials, it does not matter if they are Republicans or Democrats when it comes to the law of the land. If they suspect criminal activity, they will prosecute to the fullest extent of the law.

When asked by the federal judge overseeing the case to produce a client list for his law practice, Cohen’s lawyers couldn't do so. This is why Cohen has been ordered to appear in court Monday and produce his client list himself. The FBI has suggested that his client list may contain only one person – the President of the United States – which is why Mr. Cohen just became more important than Mr. Mueller.

It should be an interesting week.

Sector Spotlight:

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

When Tweets Create Market Storms

by Jason Bodner

Songbirds have two different voice boxes. One is used for high pitches, and the other is used for the low pitches. They can be used together to make complex songs. And each species of bird has different songs. The simple relaxing sound of tweeting birds is actually a collection of complex communications.

Birdsongs project anything from finding a mate to warnings, friendly communication, and more. Birdsong may sound like background noise to us because we can’t hear it as detailed as a bird can. According to bird scientist Donald Kroodsma, birds hear four times more than a human. If you get a chance, listen to some very-slowed-down birdsong. It’s fascinating and might change your perspective on birds.

For us in the human world, tweeting birds can be a soothing sound, but the modern tweet has taken on a different connotation. Love him or loathe him, no one can argue that President Trump’s 140 characters of twitter comments have impacts, deep and wide. With markets in a heightened state of volatility since early February, these “tweet bombs” have moved markets, as evidenced by last week’s market action.

Tweet Bomb Image

Over the last week, the broad equity indexes performed strongly when looked at on a five-day scorecard:

  • NASDAQ Comp: +2.77%
  • Russell 2000: +2.39%
  • S&P 500: +1.99%
  • DJIA: +1.79%

Yet when you look at the day-to-day level, we see several examples of how tweets moved the markets. For instance, on Wednesday April 11, President Trump tweeted the following bombshell:

President Trump's Bombshell Tweet Image

The markets were understandably volatile in the wake of that tweet. The news media picked up on this right away. This illustrates yet again how the media and news outlets have to be viewed at least in part as entertainment. Media survives on advertising revenue. In order to see these ads, the viewer has to be seduced into watching the content. President Trump is a polarizing figure, which makes for compelling viewing, but as we can see from the following chart, the weight of the Syria tweets on the market were perhaps more convenient for immediate commentary as opposed to any long-term change in price trends.

Here is a chart of the price of Crude Oil, which tells the story of how the oil price rally became supercharged after this tweet surfaced but then dropped back into its longer-term upward channel.

West Texas Intermediate Crude Oil Tweet Dip Chart

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

Now don’t get me wrong: Watch the news and absorb the content but draw your own conclusions. It’s important to have an agnostic, data-driven analysis of the market. What I see is a market still wrestling with itself and trying to find firm footing. In order for the market to emerge on the path of a bullish run again, we need to see sector leadership emerge. The fact is, we just haven’t seen a clear leader. Our best recent hope is Energy, but for several weeks Energy’s leadership looks like a “least-bad” type of scenario.

Here are the top three sectors for the previous five weeks, showing how “defensive” the market has been.

Top Three Sectors in the Previous Five Weeks Table

Utilities, Telecom, and Real Estate appear three times each. Those are the sectors that are often favored in weak equity markets since their dividends offer typically higher yields than are available in the fixed income markets. The growth-heavy sectors are nowhere to be found in the top lists after March 5-9.

Growth Sectors Began to Emerge Last Week

This past week was a bit more promising. We saw Information Technology come back to the top three sectors list followed by Materials. The energy sector’s massive surge came on the back of crude oil’s rise. Of course, this was aided by Trump raising the prospect of military action, which materialized Friday evening. But again, this price action was swelling beforehand. Many times, there is no story at the time of a change in price action. The stories come later. But a basic premise of my research is that someone always knows something in advance. It’s in their interest to keep it quiet and let the stories come later…

We still remain in a sloshing-around cycle, like a tumble dryer. I am bullish on the market due to strong fundamentals and expected stellar upcoming sales and earnings reports, but in order to have my thesis confirmed, I need to see a leading sector emerge. It just hasn’t happened yet. I have my eyes on Energy, Consumer Discretionary, Financials, and Infotech. It’s still a wait-and-see game for now, but I suspect a sector will soon lead us out of the volatility.

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

I like being long stocks in a strong earnings cycle rich with record-setting numbers. The economy is strong, growing, and vibrant. Tax reform is working its way to the bottom lines of corporate America. The setup is fantastic for stocks. I believe we are in for a big bull run. Stay the course and look to the future.

“No one would have crossed the ocean if he could have gotten off the ship in a storm.”

– Charles Kettering

A Look Ahead:

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

Fantasies and Fake News are More Entertaining Than Facts

by Louis Navellier

Despite the fact that tariffs are now expected to diminish and no trade war has broken out between the U.S. and China, CNBC was in Iowa last Thursday talking about China imposing tariffs on U.S. pork!

Soybean Field Image

Let me say this clearly: Any new Chinese tariffs on pork, soybeans, and other major U.S. exports to China is a fantasy, just like the CNBC statements that “no one will drink Mexican beer” under President Trump, just after the 2016 Presidential election. What is really going on is that since President Trump won in the states that produce most of the pork and much of the soybeans grown in the U.S., some pundits on CNBC are propagating scary forecasts in swing states to try to help sway the November mid-term elections.

Naturally, this “fake” financial news allows unscrupulous short sellers and traders to manipulate selected stocks. I remain amazed that these fantasies of what “might” happen (which I call fake news) are allowed on the air, thereby aiding and abetting unscrupulous Wall Street operatives. Since Wall Street is really a manic crowd that reacts rather than thinks, it is imperative that investors recognize when the financial media is making up news to stir up fears designed to make financial markets unnecessarily volatile.

Speaking of volatility, now that the S&P 500 has retested its February 8th low four separate times, with trading volume drying up on the last retest, it appears that most of the selling pressure has been exhausted. My head trader pointed out that many of our favorite stocks have been “melting up” on light trading volume, which raises the question of what will happen when trading volume picks up. My answer is that they could explode to the upside with higher trading volume if they report stunning first-quarter sales and earnings! So please fasten your seatbelts. Hang on and enjoy some potential “explosions” to the upside.

PPI & CPI Inflation are Rising, But the Fed’s Favorite Indicator is Flat

The economic news last week was mostly about inflation. On Tuesday, the Labor Department reported that its Producer Price Index (PPI) rose 0.3% in March, substantially higher than economists’ consensus of a 0.1% increase. The core PPI, excluding food, energy, and trade, rose 0.4%. This marks the third month in a row that the core PPI has risen 0.4%, fueling inflation fears. In the past 12 months, the PPI and core PPI have risen by 3% and 2.9%, respectively, so it definitely appears that inflation is brewing.

On Wednesday, the Labor Department reported that the Consumer Price Index (CPI) declined by 0.1% in March, substantially below economists’ consensus for a 0.2% increase, but the core CPI, excluding food and energy, rose 0.2% in March, which was in line with economists’ expectations. A 4.9% decline in gasoline prices in March was largely responsible for the CPI’s decline. In the past 12 months, however, the CPI and core CPI have risen 2.4% and 2.1%, placing them above the Fed’s 2% inflation target.

Despite the PPI and CPI rising above 2%, the Fed’s favorite inflation index, the Personal Consumption Expenditure (PCE) index, is at 1.6% and has not hit the Fed’s 2% target since 2011, so the Fed may not raise rates again until the PCE hits 2% and market rates also rise. Last week, the FOMC minutes were released, revealing that inflationary pressures softened in late 2017, which bolstered the argument that the Fed may delay raising key interest rates. The FOMC minutes also discussed the costs and benefits of allowing the U.S. economy to run “hot” and discussed how the Fed might raise rates to slow growth.

Speaking of inflation, I should add that crude oil prices rose last week on President Trump’s tweet that there would be a U.S. military action in Syria that could impact crude oil prices. Still, the recent rise in crude oil prices seems to be predominantly related to seasonal demand and tightening inventories. At current price levels, many crude oil companies and refiners are poised to make steady, predictable profits, so I expect that the energy sector is now on the verge of delivering its most profitable year since 2014.


It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Click here to see the preceding 12 month trade report.

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier's judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report.

Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor's holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings.

Past performance is no indication of future results.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE: The performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier's Growth Investor, Louis Navellier's Breakthrough Stocks, Louis Navellier's Accelerated Profits, and Louis Navellier's Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters' reported performances should be considered mere "paper" or proforma performance results. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier & Associates' Investment Products and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters and advertising materials authored by Louis Navellier typically contain performance claims that do not include transaction costs, advisory fees, or other fees a client may incur. As a result, newsletter performance should not be used to evaluate Navellier Investment Products. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or performance claims, should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier's composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report. Request here a list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months, please contact Tim Hope at (775) 785-9416.

Marketmail Archives Trade Summary

It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Click here to see the preceding 12 month trade report.

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier's judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report.

Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor's holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings.

Past performance is no indication of future results.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE: The performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier's Growth Investor, Louis Navellier's Breakthrough Stocks, Louis Navellier's Accelerated Profits, and Louis Navellier's Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters' reported performances should be considered mere "paper" or proforma performance results. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier & Associates' Investment Products and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters and advertising materials authored by Louis Navellier typically contain performance claims that do not include transaction costs, advisory fees, or other fees a client may incur. As a result, newsletter performance should not be used to evaluate Navellier Investment Products. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or performance claims, should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier's composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report. Request here a list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months, please contact Tim Hope at (775) 785-9416.

Marketmail Archives