Trump Torpedoes Market Recovery

President Trump Torpedoes Last Week’s Market Recovery

by Louis Navellier

August 27, 2019


The S&P was up 1.2% last week before Friday’s -2.64% sell-off (matched by a 623-point Dow decline). A big reason for this volatility during the “dog days of summer” is that much of Europe and New York City is on vacation. Even central bankers go on vacation – up at Jackson Hole, Wyoming in the annual Kansas City Fed conference that started on Thursday. In his speech in the Grand Tetons, Fed Chairman Jerome Powell, as expected, signaled a coming 0.25% interest rate cut at the next Federal Open Market Committee (FOMC) meeting in September, which should have boosted the stock market going into the weekend, but unfortunately, President Trump took to his Twitter account at around 11:00 am Friday to mock Fed Chairman Powell’s dovish speech, while declaring both Chairman Powell and China as “enemies” of the U.S. Then he abruptly instructed U.S. businesses to stop doing business with China.

Specifically, President Trump tweeted that “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” and added, “We don’t need China and, frankly, would be far better off without them.”  Parallel with the stock market decline, gold rose $30 to another six-year high as the dollar index fell 1%. Yikes!  Here is a link to a podcast I recorded Friday to decipher that day’s volatile market.

In This Issue

Bryan Perry has identified a specific sector set to grow rapidly over the next five years, namely the 5G tech sector. Gary Alexander lists five specific reasons why the current “inverted yield curve” phobia may be way premature and overblown. Ivan Martchev expands on that theme by examining the high-yield bond spread as well as the latest U.S./China rift. Jason Bodner takes time out for a moving personal story, which also ties in with the hidden undercurrent of market news, then I’ll close with a closer look at China.

Income Mail:
There’s a Stealth Bull Market in The Making
by Bryan Perry
A Once-in-a-Decade Technology Explosion - Retiring on 5G Technology Profits

Growth Mail:
Five Reasons Why This “Inverted Yield Curve” is Likely a False Alarm
by Gary Alexander
Warring Central Bank Policies Have Artificially Inverted U.S. Rates

Global Mail:
Junk Bonds Are (Yet Again) Not Worried
by Ivan Martchev
Why the Inverted Yield Curve is Not Completely Kosher

Sector Spotlight:
Time Out for a Personal Story
by Jason Bodner
The Hidden Strength of the Market

A Look Ahead:
President Trump Declares Economic War on China…and the Fed!
by Louis Navellier
Growth is Slowing in Europe – Lowering Their Already-Negative Interest Rates

Income Mail:

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

There’s a Stealth Bull Market in The Making

by Bryan Perry

Last week’s tumultuous market conditions put a number of investing strategies to the test – specifically, as to their viability to produce positive results against an inverted yield curve, a strong dollar, spiking gold prices, algorithmic sell programs, geopolitical tensions, the rising prospect of a hard Brexit, a Fed that is behind the curve, Presidential temper tantrums, and most of all an expanding trade war with China.

For all its current dislocation, the market has held up rather well, with the S&P 500 holding above its key 200-day moving average. Bear in mind, I’m penning this column before Monday’s opening bell, so this might well not be the case if Friday’s waterfall sell-off continues to build on itself. Mondays have been weak lately, but the strong consumer and retail earnings data of late should help attract buyers after this fresh round of selling, as we also anticipate a rate cut at the upcoming FOMC meeting on September 18.

Standard And Poors 500 Index ETF Chart

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

I noted last week that passive investing for the past 18 months has produced zero in the way of portfolio returns (in the S&P 500), and that against the current market landscape, these sideways conditions would persist indefinitely without a breakthrough in the trade war. I also noted that savvy money managers have a fantastic opportunity to win back passive investors as specific stock selection is the key to future profits.

Here is a prime opportunity for outsized profits in leading stocks in a specific sector.

A Once-in-a-Decade Technology Explosion - Retiring on 5G Technology Profits

One sector where the promise of savvy stock picking will pay off huge is 5G technology. Janusz Bryzek, the “father of the sensors,” calls the 5G revolution taking place from 2020 to 2025 “the largest growth in the history of humans” and a once-in-a-decade opportunity. It is what I call a “stealth bull market” within a very mature and extended bull market, which makes this investment proposition so compelling.

By “stealth,” I mean resistant to slowing S&P profit growth, lagging Fed policy, the overreach of government regulation, political influence, commodity risk, inflation risk, deflation risk, environmental risk, and corporate budget and business investment risk. The current estimates are up to $300 billion being spent on the great 5G rollout over the next five years.


The 5G market is expected to deliver a compounded annual growth rate (CAGR) of 111% in the next five years! (source: To put this number into context, the smartphone market will enjoy a CAGR of 7.9% for the next five years, the cancer therapy market a CAGR of 8.4%, public cloud computing a CAGR of 17.4%, Internet of Things (IoT) a CAGR 21.1%, big data analytics market 30.9%.


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

The specific sub-sectors of the 5G rollout that will flourish during this period of hyper growth include: Service providers, land-based network infrastructure, wireless network infrastructure, semiconductors, testing equipment, contract manufacturing, and smartphones.

I’ve constructed a list of 25 companies, all blue-chip, big-cap stocks with liquid option chains. Investors can consider a few strategies to play the 5G boom - buy and hold, create lucrative income streams selling covered calls, selling naked puts, or buying some Long-Term Equity Anticipation Securities (LEAPS) on a basket of leading 5G stocks to leverage the 5G revolution. This isn’t a single best idea story, or a top five picks theme. It’s a broad-based investment proposition that has to happen if the Internet of Things, autonomous driving, advanced computing, or the second Internet can be constructed and realized.

According to Accenture, 5G technology alone will add an additional $14 trillion to the global economy by the year 2030.The current estimate is that global revenues from wireless Internet of Everything (IoE) devices will grow from $7.1 trillion in 2020 to a staggering $39 trillion four years later. Compared to the PC revolution in the 1980s or the smartphone revolution of the 2000s, the growth of the 5G rollout of the early 2020s will dwarf all previous disruptive technologies in history.

If investors can grasp the essence of how phenomenal the next five years of massive spending will impact the top and bottom lines of those leading companies that will bring 5G technology to its full fruition, it’s my view that investors can boost their retirement nest eggs substantially. Such a windfall of capital spending in such a short period of time within a specific tech sub-sector has never occurred before.

The best part of the 5G investment theme is that it is early, and the volatile stock market has brought down the prices of many of the leading 5G stocks. 5G is here and right now – we’re in maybe the top of the second inning, in baseball terms. The explosion in spending and stock appreciation for the 5G pure plays is yet to come but very imminent, concentrated in 2020-2025.

For many of us who are approaching retirement (or already retired) and need a big win to secure our nest eggs, this may be the last “once in a lifetime opportunity” to accomplish that goal. Do your research, pay close attention to Navellier 5G stock recommendations and maintain a 5-year focus to capture the move.

Growth Mail:

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

Five Reasons Why This “Inverted Yield Curve” is Likely a False Alarm

by Gary Alexander

The market is looking for any excuse to crater. On Friday, it was a temper tantrum from Trump. A week earlier, the Dow fell an even greater 800 points on a chorus of headlines about an inverted yield curve, which is (supposedly) a “recession indicator with a perfect track record.” In this case, the press was throwing its own curve ball. The yield curve has far from a “perfect” track record – it’s more like 50-50 – and in this case, there are several reasons to believe that this yield curve falls in the camp of a false alarm.

#1: Many “First Inversions” are False Alarms. A more accurate way of stating the correlation between the yield curve and recessions is to say that “an inverted yield curve has predicted 10 of the last five recessions … with years of advance warning.” From this chart, below, notice that many previous “first warnings” were false alarms – the yield curve inverted then un-inverted once or twice before a recession.


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

Note these false “first warnings” before three of the last six recessions:

  • Before falling into the recession of 1970, there were false warnings in 1966 and 1968.
  • Before the mild recession of 1990-91, there were false warnings in 1986 and 1988.
  • Before entering the relatively mild recession of 2001, false alarms rang in 1995 and 1998.

#2-The Leading Indicators Have Not Peaked Yet. The spread between the 10-year Treasury bond yield and the federal funds rate is just one of the 10 components of the Index of Leading Economic Indicators (LEI), but the yield curve seems to get 90% of the press coverage for all leading indicators. The July LEI reading came out last Thursday as a small increase, so it has not peaked yet. (See the latest data, below.)


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

Notice how the Leading Indicators are far more reliable: Every time they trend down, a recession follows, but there is plenty of warning, averaging 10-20 months before each of the last four major recessions:

  • The Leading Economic Indicators (LEI) peaked 14 months before the 1979-82 recessions began.
  • The LEI peaked 17 months before the mild 1990-91 recession began
  • The LEI peaked 10 months before the fairly mild 2001 recession began
  • The LEI peaked 20 months before the severe 2008-09 “Great Recession” began

Bottom line, the 10 Leading Indicators are far more reliable than the inverted yield curve alone. The LEI give us an average 15-month lead time from its peak – a peak which has not arrived yet.

#3-There is No Sign of a Recession Yet. Last week, July retail jumped 0.7% month over month and a 5.4% annual rate for the three months through July, matching its fastest pace since the end of 2017, with online sales growth of +14.7% year-over-year. The Atlanta Fed’s GDPNow forecast is 2.2%, not super-charged but comfortably positive. Second-quarter revenues rose 5% year-over-year to a new record high, and earnings are about to recover from their slump. Earnings are expected to grow +10.4% next year.

This version of an “inverted yield curve” is much different than past instances in that there are no signs of banks restricting their lending. In fact, it appears that lower mortgage rates are helping the housing market since the National Association of Realtors announced that existing home sales rose 2.5% to an annual rate of 5.42 million. If the Fed keeps cutting interest rates in 0.25% increments, the U.S. economy should keep responding positively. The consumer also has a lot of dry powder. The savings rate was at a high 8.1% in June and personal savings rose to a record $1.3 trillion over the past 12 months through June.

Warring Central Bank Policies Have Artificially Inverted U.S. Rates

The inverted yield curve has been created by two conflicting central bank trends – ECB rate cuts and Fed rate increases. Without these warring central bank trends, short and long rates never would have inverted.

#4-Overseas Negative Rates Pushed Long-Term Treasuries Down. With $17 Trillion in negative interest rates in Europe and Japan, global investors have no choice but to invest in U.S. Treasury bonds if they want a positive yield in a major global reserve currency with sufficient liquidity on global markets. The currency markets are a multi-trillion-dollars-per-day market. This massive rush into U.S. dollar-based instruments has strengthened the dollar and pushed U.S. interest rates artificially down, so this is not your normal “inverted yield curve,” and therefore not based on a slowing economy or the threat of a recession.

In a normal world, U.S. rates would be higher. A year ago, at Aspen Institute’s 25th Annual Summer Celebration Gala, JP Morgan Chase CEO Jamie Dimon warned that the 10-year U.S. Treasury bond yield could go much higher. Speaking in August 2018, he said, “I think rates should be 4% today. You better be prepared to deal with rates 5% or higher—it’s a higher probability than most people think.” Most pundits agreed. They feared deficits (from tax cuts), inflation (from tariffs), and more QT (from the Fed), but they overlooked the fact that U.S. bonds were tied to the negative trend in German and Japanese yields.

In effect, Germany has been driving interest rates off the cliff, and the U.S. is just a passenger on the bus:


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

#5: The Fed Raised Short-Term Rates nine Times in three Years, Artificially Creating an Inverted Yield Curve. For seven years, President Obama enjoyed near-zero interest rates, but as we entered the 2016 election year, the Federal Reserve finally raised rates from the 0% to 0.25% floor up to 0.25% to 0.50%. Then, the Fed raised rates eight more times in 2016 to 2018, probably going a step too far in December 2018, precipitating a near-20% market correction and slowing the economy. This move, along with the collapse of long rates due to Europe’s negative rates in 2019, created the artificial inversion of the yield curve, so don’t let the bears scare you about inverted yield curves. This time really IS different.

Global Mail:

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

Junk Bonds Are (Yet Again) Not Worried

by Ivan Martchev

As the drums of the U.S.-China trade war beat louder, one has to keep in the back of one’s mind where the point of no return is. It is probably not a specific “point,” but a gray area that is a moving target, depending on how badly the U.S. and other global economies get hurt. For example, hurting the Chinese economy also hurts Germany, due to the large trade turnover between those two countries. Germany, in turn, is the economic engine of Europe and much closer to a recession than most people think.

But what about the U.S. economy? President Trump has maintained the view that because the trade imbalance is so lopsided in favor of Chinese exports to the U.S. – about $400 billion in their favor – the trade war hurts the Chinese more than it hurts the U.S. Maybe that has been true, so far, but the question is if that will continue with the election cycle heating up in the next 14 months and the Chinese making targeted moves to hurt his reelection prospects – like stopping purchases of U.S. agricultural products.

If the U.S. economy were weak, bond investors would be running away from junk bonds, but they aren’t.


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

The largest and most liquid junk bond ETF is iShares iBoxx $ Corporate Bond (HYG). That sensitive barometer of the health of the U.S. economy hit a fresh 52-week high on Friday, just before all hell broke loose after Mr. Trump's Twitter account announced the new tariff hikes. The chart (above) is a total return chart, so it includes the substantial yield this ETF produces, which is currently 5.2%. (Other chart services show charts on price action only, which makes the chart look much different.) Also, there isn’t that much duration risk as the effective duration of the high-yield bonds in the portfolio is 2.88 years.

It is true that the economy is probably not all that weak right now and that the sharp escalation of the trade war via much higher tariffs and outright cessation of purchases from Chinese state buyers can make it weaker, which is why it’s important that the trade war does not escalate any further.

What about credit spreads, which is another way (instead of price) to look at junk bonds?


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

The latest reading of the BofA ML U.S. High Yield index closed with a spread of 416 basis points over the relevant risk-free rate (Treasury yield). The Federal Reserve Bank of St. Louis does not report this index in real time, but because of the couple of days’ lag, the Friday reading would be closer to 450, which is considered low. The same Master High Yield Index reached a spread to the relevant Treasuries of almost 900 basis points, or double the present level, in the summer of 2011 during the Eurozone Crisis, as well as in early 2016, during the prior sharp slowdown of the Chinese economy. Also, for comparison purposes, during the sell-off in late 2018 the Master index reached a spread of 550 basis points.

The point is that the high-yield market is not too worried about the state of the U.S. economy. When the selling started in October 2018, the high yield index was remarkably calm, as it is today, which told me that the fourth-quarter sell-off was not driven by a deteriorating economy, as it is today. As the fourth-quarter sell-off progressed, the high-yield market followed the stock market lower, which would not be the case in a deteriorating economy. Historically, high-yield bonds should lead stocks lower if the economy is deteriorating, or it should lead stock higher, if the economy is making a turn after a recession.

Why the Inverted Yield Curve is Not Completely Kosher

Much has been said about the inverted 2-10 spread, which has been flipping in and out of negative territory of late and closed on Friday at just a single basis point. Does that mean a recession is coming?


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

Today’s inverted yield curve is not the same as the inverted yield curve of 2007. Back then, and in all prior inversions, we did not have massive global quantitative easing, and what’s more important, but related to global QE, the $15 trillion in negative-yielding global government bonds in developed markets.

That the ECB and BOJ QE distorts the Treasury yield curve and Treasury yields in general is pretty clear. If we did not have that problem in Europe, I doubt 10-year Treasury yields would be hovering near 1.5%. They would probably be 2.5%-3.0%, which would most certainly not cause the yield curve to be inverted.

There are a number of things that The Donald and his counterpart, The Sun Tzu Disciple from Beijing, can do to make that inverted yield curve a self-fulfilling prophecy, but I do not believe they have done them yet, even after Friday’s Tweet storm.

Sector Spotlight:

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

Time Out for a Personal Story

by Jason Bodner

It’s there if you look…

In 1837, Charles borrowed $1,000 (about $25k today) from his dad and, along with school pal John, he started his shop in New York City. After three days, sales were only $4.38, leaving doubts about their startup. Two years later, he married John’s sister and started a family. He had six kids. He also had been building his business, fabricating jewelry of the highest order. His “Tiffany & Co.” still exists today…


His daughter Annie in-turn had a daughter Alfreda, who married Hiram Bingham III, who explored Machu Pichu and brought it to worldwide attention in 1911. Their son, Hiram Bingham IV, was Vice-Consul serving in Marseilles, France during WWII. In 1939, his job was to issue visas for passage to the United States. The Vichy government signed an armistice with Germany after Hitler’s invasion. The U.S. was not yet at war and wanted good relations to the Vichy government. Therefore, the U.S. State Department discouraged visas and showed little compassion for refugees.

Jacques was born in Vienna, Austria, in 1920. Nazi Germany annexed Austria in the Anschluss of March 1938. Jacques was only 17 when he was arrested, just for being Jewish. He was crafty enough to escape a workcamp. He headed to Italy and then France through Ventimiglia. He was arrested in Nice days later and imprisoned for nearly a year at Camp-des-Milles, a French internment camp in Aix-en-Provence.

That’s when he was brought to Hiram Bingham IV’s office, skin and bones, living on 500 calories a day, in shackles. He hadn’t bathed in a month. Bingham was outraged and ordered his cuffs removed. He was given a bath and some clothes. Bingham gave him a visa for a ship that sailed to America on March 30th, 1940. In doing so, Bingham defied authority. He was yanked from his post but not before he saved 2,300 Jews from certain death, as Camp-des-Milles’ prisoners were usually bound for Dachau, a death camp.


Jacques would have been sent to Dachau, but instead, Bingham sent him to America. He slept on Central Park benches for a few weeks. Speaking no English, he became a dishwasher learning Yiddish from Puerto Ricans in the Jewish deli kitchen. He joined the U.S. Army, married a beauty, had five kids, and crushed the American dream. He had the biggest house on the block and bought himself a Rolls Royce in 1980. He got a special license plate: GEMACHT, which means “made it” in German, his native tongue.

Jacques Bodner was my grandfather. He died in 2007, but his car was a classic. It was eventually sold to an enthusiast in France, who read the original bill of sale tracing it back to Jacques. He hunted down my father eager to learn more about the car. The story blew him away. So, he took the car back to its roots: Camp-des-Milles. He parked it right up front, and gave the concentration camp the proverbial finger:


I knew I was the grandson of a holocaust survivor, but it turns out that my story goes far deeper, woven into the Tiffany fortune, Machu-Pichu, a life-saving rebel diplomat, and now it is honored in museums.

It’s there if you look. And sometimes the hidden stuff is the most important stuff.

The Hidden Strength of the Market

At face-value, the market showed growing strength last week – but then Trump tweet-bombed a trade war retaliation against China’s retaliation, so Friday was ugly. But volumes were thin early in the week, when the market rallied, and on Friday’s sell-off. This echoes my earlier sentiment that the selling was not over.

Still, the selling wasn’t even close to mid-August levels, and the market still sits at a 2850 support level:


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

Selling was heavier in Discretionary, Materials, and Energy. Buying was in Utilities. But keep in mind, two weeks ago, we saw big selling everywhere, especially Energy. That typically marks near-term bottoms, which it did. Compare last week’s big money buying and selling to the week ending August 9th:


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

A few things you need to know:

  • The big money buying index is at 48.8% but falling. That means selling is outweighing buying. If it falls below about 45%, that usually means “look out below.”


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

  • BUT- should the market fall, it will be a buying opportunity. I have continually discussed why the U.S. is the oasis in global markets. Growing sales and earnings, low interest rates, low tax rates, and “best in show” remain the reasons.
  • This is summer volatility with low liquidity and low participants. I told you it would be bumpy.

Expect trade rhetoric to continue and volatility to persist a bit. September is also a volatile time. Markets tend to rally at the end of the year – last year being the one exception. The bull still has room to grow.

Remember that when things look to be one way, that doesn’t mean they will turn out that way. After World War II, Hiram Bingham IV was asked why he did what he did, and he answered: 

My boss said: ‘The Germans are going to win the war. Why should we do anything to offend them?’ And he didn’t want to give any visas to these Jewish people. So, in a way, I had to do as much as I could.”

That’s also why we write to you about the markets as we see them. Always do what you can in all endeavors.

A Look Ahead

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

President Trump Declares Economic War on China…and the Fed!

by Louis Navellier

President Trump’s Friday morning outburst was in response to China announcing $75 billion in new tariffs on U.S. products. Furthermore, by late Friday, President Trump said that the U.S. would raise the tariff to 30% (up from 25%) on $250 billion in Chinese goods effective on October 1st (instead of in December) and to 15% (up from 10%) on another $300 billion in Chinese imported goods effective on September 1st!  I think it is safe to say that the U.S. is now “at war” with China, namely an economic war.

As I mentioned on my Friday podcast, President Trump was at a G7 meeting in France at the time, and he always seems to get in a bad mood at these G7 meetings, since he no longer gets along very well with some of these world leaders. In the process of his outburst, however, President Trump has escalated worldwide recession fears and has thereby driven down market interest rates further, so much so that the Fed may have to cut a lot more times than they planned, simply since the Fed never fights Treasury rates.

Speaking of the Fed, the minutes from their July FOMC meeting were released on Wednesday and those minutes revealed that they viewed the July key interest rate cut as a “recalibration” rather than the start of a new easing cycle. The FOMC minutes also viewed the trade spat with China as a “persistent headwind,” which signaled that the Fed would be carefully monitoring the economic news. For the time being, the FOMC minutes said that the economy continued to be “in a good place,” but the “global economic growth had been disappointing.” The minutes also implied that more rate cuts may be coming since “continued weakness in global economic growth remained a significant downside risk.”

In the meantime, President Trump must be starting to worry about domestic economic growth, since last week he criticized Fed Chairman Powell’s “horrendous lack of vision” and called for the Fed to cut key interest rates by a full 1%!  Naturally, the Fed may eventually do what President Trump wants, but they will most likely cut rates in four separate 0.25% increments at their FOMC meetings, which come only every six weeks or so. One of the problems that Fed Chairman Powell has – other than the relentless criticism from President Trump – is that there is still a vocal minority of hawks on the FOMC and – since Chairman Powell has to build a consensus – he cannot immediately do what President Trump wants.

The Trump Administration also seems very sensitive to how the stock market interprets the ongoing trade negotiations with China, which can now be characterized as an economic war. Specifically, the White House has been using economists Peter Navarro and Larry Kudlow to update the media about (1) the status of trade negotiations, (2) any impact on the U.S. economy, and (3) how the stock market is not very worried about the China trade tiff. Although the financial media has been stirring the pot on any adverse impact from the trade negotiations, the market has been resilient, until Friday. However, I suspect that the financial media and mainstream media as well will now be blowing the new economic war with China out of proportion, since President Trump seemed to “lose it” on Friday, showing that he has a real temper.

Growth is Slowing in Europe – Lowering Their Already-Negative Interest Rates


The slowing global growth rates for China and Europe continue to weaken their underlying currencies and put downward pressure on interest rates. Last week it was reported that inflation in the Eurozone in July slowed to a 1% annual pace (down from a 1.3% annual pace in June) and is now at the lowest level in over two years. With inflation retreating, the European Central Bank (ECB) now has a new excuse to conduct more quantitative easing and cut its already negative key interest rate of -0.4%.

Speaking of negative-yielding government debt, on Thursday, Germany held a 30-year government bond auction that resulted in the first-ever auction with negative bond yields. Fully 87% of the almost $17 trillion in negative yielding government debt is in Japan and Europe, which are characterized by aging demographics and a high savings rate. Bank stocks have fallen 23% in Japan and 24% in Europe in the past 12 months, since flat yield curves and negative interest rate are bad for bank operating margins.

I should add that the European Central Bank (ECB) minutes were released last week and policy makers were apparently receptive to both interest rate cuts (e.g., even more negative than -0.4%) and asset purchases (i.e., quantitative easing). The Eurozone is a mess, especially with Brexit coming October 31.

Speaking of Brexit, Prime Minister Boris Johnson was in Germany and France last week to meet with German Chancellor Angel Merkel and French President Emmanuel Macron. The primary Brexit concerns seem to be alternatives to a border between Ireland and Northern Ireland as well as a renegotiation of any EU exit fee. Although Ms. Merkel seemed flexible, Mr. Macron is not, so the odds of a “no-deal” Brexit are rising, which should boost the British pound and hurt the euro around late October or early November.

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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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