Yellen’s Cautious Language

Yellen’s Cautious Language Gives the Market another Boost

by Louis Navellier

June 23, 2015

The big news last week was the statement from the Federal Open Market Committee (FOMC), released last Wednesday, in which the Fed implied that it would raise key interest rates 0.25% later this year. Fully 15 out of 17 FOMC members seemed to agree.  Specifically, the FOMC said that economic activity has been “expanding moderately” after a tough winter, and job gains have “picked up.”  But then, Fed Chair Janet Yellen downplayed any further specific rate cuts by saying, “economic conditions are currently anticipated to evolve in a manner that will warrant only gradual increases in the target federal funds rate.”

Yellen also said that “room for further improvement remains” in the labor market.  Translated, I believe she is saying that the Fed believes that the recent economic improvement will persist and that the Fed can begin to normalize rates gradually, starting later this year, but only if the job market continues to improve.

Wall Street viewed the FOMC statement and Yellen’s comments as dovish, since she implied that the Fed will not raise rates very much. The market responded with record highs in some indexes on Thursday.

Superimposed Greek and Euro Flag ImageThe biggest financial news this coming week will likely emanate from Greece, since the Bank of Greece warned last week that its member banks may have to remain closed due to relentless withdrawals.  Greek banks are plagued by relentless outflows that hit one billion euros per day last week as Greek citizens hoard their euros and worry about a potential currency devaluation if Greece tries to leave the euro-zone.

Any potential switch from euros to another currency is problematic and unprecedented.  Fortunately, on Friday, the European Central Bank (ECB) announced that they increased the amount that Greek banks can borrow from the ECB, so hopefully that will prevent any further Greek bank closings.  However, an ATM tax and fears of other potential taxes on Greek bank accounts are still perpetuating a run on bank deposits.

The next chapter of the Greek crisis will be their June 30th debt payment to the International Monetary Fund (IMF), which many observers believe Greece will not be able to make.  I still believe that, despite all the posturing by Germany, the fact that the ECB stepped in with more capital raises the likelihood that the Greek debt will be restructured again, in exchange for some austerity measures, namely pension reforms.

In This Issue

In this week’s Income Mail, Ivan Martchev will cover these two big subjects – the Greek debt debate and the Fed’s latest moves – in more detail, while Gary Alexander’s Growth Mail will look at indications that point toward a better second half for stocks, along with some long-term challenges for the Baby Boomers’ pension plans. Then, I will return with a look at the CPI and other leading indicators released last week.

Income Mail:
by Ivan Marchev
On The Brink
The Fed Stands Pat

Growth Mail:
A Mid-Year (and Mid-Decade) Outlook: What’s Next?
by Gary Alexander
Short-Term Positives: Stock Buy-backs and Earnings Surprises
Are We Entering the “Peak Pension Plan Funding” Decade?

Stat of the Week:
No Change in Consumer Prices in the Last 12 Months
by Louis Navellier
Mixed Messages in the Rest of the Economy

Income Mail:

On The Brink

by Ivan Martchev

The Greeks appear to have a strategy that will drag the bailout negotiations out to the very last minute as a means to force the troika – i.e., the European Central Bank (ECB), the European Commission (EC), and the International Monetary Fund (IMF) – to release the funds on better terms. I would not be surprised at all if the Greeks have already secured the money for their Zambia-style bundled payments (due to be paid to the IMF on June 30) and they are pretending that they are out of cash so that the troika can bend a little.

This strategy does not appear to be working very well.

The Europeans, led by Germany, do not believe that Greece should keep borrowing in order to maintain an unrealistically-generous pension system. The Europeans know that tax collection is a big problem in Greece and that if its tax collections rise to German standards – history suggests this is nearly impossible – most Greek budget problems would go away.  Since the Greek situation is the worst case in a general trend – where fiscally-responsible First Tier EU countries are straightening out fiscally-irresponsible Second Tier countries – in my opinion, the troika is unlikely to bend much, since that would set a precedent. This simply means that we have a dangerous situation which may spiral out of control even if there is a deal by June 30, since much more financing is needed by the end of 2016. It appears that the drama is at best postponed.

Greece Inflation Rate Chart

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

Inflation during the drachma years was a big problem for the Greeks. There is no denying that the introduction of the euro brought inflation down in Greece and in many of the other troubled Eurozone countries, but their turbocharged economic growth led to many asset price bubbles which, at least in the case of Greece, are now unwinding. The worst-case scenario is for the Greek banks to collapse without an ECB funding lifeline, which was increased yet again last Friday.

The ECB’s emergency funding will be under review this week. I think the chances are good that such funding will be used as a political lever. Last week the Greek central bank requested more than three billion euros but was granted an increase of 1.1 billion euros on Wednesday, taking the total in emergency funding to 84.1 billion euros. Deposit withdrawals from Greek banks have exceeded four billion euros this month, but this number seems low-balled as there are lines forming in front of Athens’ ATMs as a Cyprus-type bank holiday is becoming increasingly likely.

In my opinion, using the ECB to turn off the monetary spigot and impose capital controls would be one way for the troika to get the Greek government to bend as it would put tremendous pressure on the Greek economy. In that regard, a managed crisis in the Greek banking system spearheaded by the ECB’s monetary vise would be a lot better than Greece leaving the euro.

This week we are likely to see further negative headlines from Greek banks which have been experiencing accelerating outflows as the June 30 deadline approaches.

Greek Bank Deposits by Households and Corporations Chart

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

Over the past week we also saw the expected safe-haven bid in both bunds and Treasuries. Such safe haven buying may only get stronger as June 30 approaches and no deal is reached. The German 10-year bunds, which garnered so much attention as they zoomed from yielding 0.05% in April to over 1% in June, now yield 0.75% at last count. The bunds may revisit those recent low yields if a worst-case scenario for Greece materializes, with potential corresponding sell-offs in formerly-problematic euro-bond markets.

Euro Bund - Monthly Nearest OHLC Chart

Source: Barchart.com.

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

Even though a move from 0.05% in yield to over 1% seems rather dramatic, if one looks at the bunds in terms of price (see above) the bull market may still be ongoing. I believe that buying bunds at super-low yields is unlikely to make investors any money if held to maturity; the buyers of bund futures are not holders to maturity but leveraged institutional traders. Those appear to be the same kinds of traders that pushed 10-year Swiss government bonds to -0.30% in early 2015, with Swiss government bond rates since rising from that low.

Switzerland Government Ten Year Bond Chart

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

In this case, buying government bonds at negative yields may also be considered a currency strategy. Before the Swiss National Bank (SNB) removed the 1.20 EURCHF floor in mid-January Swiss government bonds were already trading at record lows yields. The removal of the EURCHF floor immediately handed large gains to foreign unhedged holders of Swiss government bonds as the Swiss franc appreciated rapidly.

While the Swiss franc move was not anticipated by most traders, the Greek situation has been a slow motion train wreck for the last five years, accelerating in the last six months. In my opinion, a worst-case scenario and a Grexit may cause the bunds to behave in a similar manner to the way Swiss government bonds behaved right before and after the EURCHF floor disappeared.

The Fed Stands Pat

The doves on the FOMC committee seem to be prevailing as language from the statement suggests that any interest rate hikes will be pushed further into the future. As can be estimated by the contract prices,trading in euro-dollar and fed funds futures suggested a 50% chance of a September rate hike. After the Fed meeting that chance has fallen to 32%.

Thirty Day Fed Funds - Daily Line Chart

Source: Barchart.com.

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

The December 2015 fed funds futures contract (in black) is within a cent of an all-time high and at present appears to forecast one quarter-point Fed rate hike. The December 2016 fed funds futures contract (in green) is within several cents of an all-time high. At present, it appears to forecast four quarter-point fed funds rate hikes by the end of 2016. The differential between the December 2015 and December 2016 contracts has been narrowing as the market has been pricing fewer and fewer fed funds rate hikes.

In my opinion, not even the Fed knows how many rate hikes there will be by December 2016 as it will be truly bizarre to be hiking interest rates if inflation remains negative in 2016. The Chinese economy is slowing down notably, courtesy of a busted real estate market at a time of record leverage in the Chinese financial system, and that suggests that one more large commodity price decline may be on the horizon. How the Fed will be hiking rates if there is a time of negative inflation readings and a potential hard landing in the world’s second largest economy is difficult for me to see.

Eurodollar - Daily OHLC Chart

Source: Barchart.com.

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

Theoretically speaking, if one wanted to capitalize on when the Fed would, or would not, be hiking interest rates, one could do so with Eurodollar futures which tend to have contracts that are more liquid than fed funds futures and contract expirations that extend further out in time. They are very similar to fed funds futures as they hedge interest rates in the Eurodollar market, which is highly correlated to short-term U.S. interest rates. In this case, the contract implies an interest rate of 100 points minus the three-month London interbank offered rate (LIBOR) for spot settlement on the third Wednesday of the contract month. A price of 97.45 signifies a deposit rate of 2.55 percent per year.

At one point in 2007, the December 2015 Eurodollar futures contract was predicting a fed funds rate of almost 6% in December 2015 and a 3-month dollar LIBOR rate of almost 6.5%.  At last count, the 3-month dollar LIBOR stands at 0.28%. The wide range of December 2015 Eurodollar futures tells us how well the majority of traders can look into the future.

Growth Mail:

A Mid-Year (and Mid-Decade) Outlook: What’s Next?

by Gary Alexander

“The equity markets don’t care about the absolutes of good or bad.  All the equity markets care about is whether things are getting better or worse.  In my view, they are getting better.”

– Jeffrey Saut, Chief Investment Strategist, Raymond James (Barron’s, June 1, 2015)

The S&P 500 rose 0.76% last week, flirting with new highs last Thursday, while NASDAQ and the Russell 2000 made new all-time highs last week.  But the biggest market trend, as we approach the middle of the year, is that there is NO TREND at all.  Stocks are remarkably level so far in 2015.

The S&P 500 hasn’t made a move (up or down) of more than 3.5% so far in 2015, according to Bespoke Investment Group (“The Year of the Sloth,” June 8, 2015).  In that report, Bespoke said that there have been only three years in history (1952, 1993, and 2004) when that index has not been up or down more than 5% at any time through early June. This begs the question about where the next big move might take us – up to a euphoric figure like Dow 20,000, or into a steep drop.

The Bespoke Report of June 19 added these historical precedents: In the 10 years during which the S&P 500 stayed closest to where it had started the year during the first 117 trading days, he found that the S&P 500 had risen by an average 6.6% in the rest of the year in those 10 years. Paul Hickey of Bespoke said that “a sideways market can be a correction in time, not price. Expect things to drift higher from here.”

In his interview with Barron’s (“It’s Still Early Days in the U.S. Stock Market Rally,” June 1, 2015), Jeffrey Saut, Chief Investment Strategist at Raymond James, also sees a 6.6% gain for the rest of 2015.  He sees a rise to 2250 on the S&P 500 by year’s end – a 6.6% gain from last Friday’s close of 2110.

Here’s another 6.6% figure to notice: The small-stock Russell 2000 Index is up 6.6% so far this year, vs. just 1.1% for the Dow Industrials and 2.5% for the S&P 500.  Since early February of this year, Louis Navellier has been proclaiming a “seismic shift” in market leadership, due to the strong dollar, as the big multinational firms lag the small- to mid-cap domestically-oriented firms.  That has been happening.

Longer-term, Saut says we are less than halfway through this bull market.  He sees “4300 on the S&P 500 sometime in 2023 or 2024.”  While investors worry about “political dysfunction inside the Beltway, ISIS and a lack of GDP growth,” he sees those things getting better. For instance, he sees GDP picking up in the second half and he sees evidence that Congress and the President are co-operating more these days.

Investor sentiment is still skittish.  The latest American Association of Individual Investors (AAII) poll, for the week ending June 17, shows that only 25.4% are bullish, the seventh week in a row below 30% bullish – the longest streak since 2003.

Short-Term Positives: Stock Buy-backs and Earnings Surprises

According to Oliver Renick, writing in Bloomberg on June 19 (“Record Cash Wrung from Bond Market to Cover U.S. Stock Buybacks”), over $460 billion in corporate stock buy-backs were announced in the first five months of 2015. In many cases, companies are floating low-yielding bond issues to fund these share buy-backs. In my opinion, one of the reasons for the accelerated buy-backs in 2015 is that companies expect the Fed to raise rates, so they’re accelerating buy-backs to beat any rate increase (if it happens).  This trend has been going on for over six years, since the Fed’s near-zero interest rate policy (i.e., zero to 0.25%) has been in effect since late 2008. According to the same article in Bloomberg, S&P 500 firms have bought $2.7 trillion in shares in the last six years, which helps fuel this bull market.

As for earnings, the first quarter turned out to be better than expected. S&P 500 earnings rose by 1.4%, which may sound puny, but analysts had expected a decline of 4% at the start of earnings season. The second quarter might deliver a similar surprise. Industry analysts currently estimate that S&P 500 earnings will be down 4.5% y/y this quarter. While energy earnings are depressing overall earnings, oil is recovering enough so that energy companies may not depress earnings in the second half of this year.

If you want some more historical evidence that this year’s market might pick up in the second half, take a look at my November 17, 2014 column, in which I covered three historical trends worth examining: (1) the second half of the decade is more bullish than the first half; (2) years ending in “5” are particularly strong; and (3) the third year of a Presidential cycle (like this one) is the strongest year in the 4-year cycle.

But this week, let me turn toward a longer-term examination of the demographics of pension funding.

Are We Entering the “Peak Pension Plan Funding” Decade?

Baby Boomers (born 1946-64) are in a race toward funding their looming retirement. The Census Bureau says that Americans aged 65 and older will increase from 47.8 million in 2015 to 79.2 million in 2035, rising in percentage terms from 14.9% to 21.4% in 2035. Boomers began turning 65 in 2011, but a more important benchmark comes next year, when they begin turning 70, since (1) the largest Social Security payments are for those who wait until they turn 70 to start receiving benefits; (2) too many Baby Boomers have delayed saving for retirement so they must work until age 70 and accelerate their savings; and (3) investors in pension plans must begin taking money out of tax-deferred plans in the year they turn 70-1/2.

A 2014 Gallup poll showed that 40% of Boomers aged 50-64 expect to work past age 65, and a recent Harris poll showed that workers in their 50s have a median retirement kitty of just $117,000.  Many Baby Boomers now have the unexpected cost of adult children living with them, while they are also spending more than expected on health care.  The resulting combination of a long expected life span in retirement with a lifetime of sub-par retirement savings is causing many Baby Boomers to delay their retirement.

Real United States Median Household Income versus Retiree's Share of United States Adult Population Chart

Source: American Enterprise Institute (AEI), Carpe Diem blog.

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

From 2009 to 2014, the number of retired Americans grew by 5.5 million, the biggest five-year surge in American history and more than twice the 2.5 million gain in the previous five years. If “demography is destiny,” the red line in this chart will continue its sharp ascent through the 2030s.  In the meantime, the retirement of so many relatively high-paid workers in their 60s has caused real median household income (blue line) to stagnate, as older workers are replaced by younger, less experienced, lower paid workers.

Golfer ImageThe official Social Security retirement age is 66 for those born 1943 to 1954. They will turn 70 from 2013 to 2024. Social Security offers a sliding scale of benefits depending on whether you start at age 62, 66, or 70, with the latter figure delivering more dollars if you live into your 80s; so many working Americans are electing to start benefits at age 70. According to the Financial Industry Regulatory Authority (FINRA) individuals must take a Required Minimum Distribution (RMD) from a traditional 401(k) or IRA by April 1 of the year following the year they turn 70-1/2.  If a retiree does not deal with these tax consequences over the course of his lifetime, his heirs may inherit a huge single-year tax bill.

My personal experience could help explain the dilemma of the Boomers.  I will turn 70 in the middle of July, so I’m not technically a Baby Boomer.  My wife and I were born in the last years of World War II so we are at the leading edge of the “Pig in a Python” (the colorful metaphor for the Baby Boomers moving through their stages of life – from Spock kids, to campus protestors, to bureaucrats, to retirees).

Based on the evidence of slow savings accrual by most Baby Boomers, I believe that most of them will keep working and keep socking away the maximum into their retirement plans, primarily using stocks and mutual funds, helping to lift the market over the next decade.  Since Baby Boomers turn 70 between 2016 and 2034 (mid-point 2025), the Pig in the Python may be net stock buyers for another decade before the inevitability of aging will turn them into net sellers of pension plan holdings, very possibly depressing the market.

In the meantime, Social Security and Medicare costs will begin pushing the federal deficit higher unless politicians dare to touch the Third Rail and modify (i.e., reduce) benefits.  For the last several years, I have examined this dilemma as moderator of the New Orleans Investment Conference political panel. It seems to me that Charles Krauthammer has the best solution to this problem: (1) raise the median age of retirement to 70 (from 66); and (2) means-test the benefits, so that those who don’t need it don’t get it.

In one such panel, Dick Armey, former House Majority Leader and an economics professor, was adamant about the unfairness of this second solution – breaking a financial contract with retired workers – but such dramatic moves may be necessary to avoid a federal fiscal collapse in the 2030s.  (See Thomas Donlan’s editorial in the June 22 Barron’s, “Doing the Numbers” for details on the coming fiscal crisis.)

I’m confident in the demographics and fundamentals supporting stocks for the rest of 2015 and probably for the rest of this decade, but I’m not so confident about the 2020s – unless our politicians wake up.

Stat of the Week:

No Change in Consumer Prices in the Last 12 Months

by Louis Navellier

One reason that the Fed may be reluctant to raise key interest rates is that inflation has yet to build up any meaningful momentum. Last Thursday, the Labor Department announced that the Consumer Price Index (CPI) rose 0.4% in May, the largest monthly gain in more than two years.  Economists were expecting the CPI to rise 0.5% so, believe it or not, May inflation was actually less than expected.  Gasoline prices rose 10.4% in May and were largely responsible for the jump in the overall CPI.  A possible concern for the Fed is that hourly wages declined 0.1% in May. (Fed Chair Janet Yellen has often stated that she wants to see real wage growth before raising key interest rates.) Excluding food and energy, the core CPI rose only 0.1% in May.  In the past 12 months, the CPI is unchanged, so there is no evidence of any inflation threat.

Mixed Messages in the Rest of the Economy

The other economic news last week was mixed.  Last Monday, we learned that Industrial Production fell 0.2% in May, vs. a consensus expectation of +0.2%.  Manufacturing is still on track for a slight (1%) gain in the second quarter, but a decline in mining due to low commodity prices led to sagging May industrial output.

Open House Sign ImageAlso on Monday, the housing market index (HMI) survey of homebuilders rose to 59 in early June from 54 in May, well above the 56 consensus. All three components rose sharply: current sales (+7 points), expected sales (+6 points), and homebuyer traffic (+5 points). The HMI is up from 52 for all of 2014, 51 in 2013, 34 in 2012, and an abysmal 16 in 2011 as the housing market recovers from a depressed level.

On Tuesday, housing starts came in at a disappointing 1,036,000 annual rate, well below the consensus of 1.09 million and down from the upwardly-revised 1.165 million in April – which was a catch-up month after the harsh winter weather cut into housing starts. Overall, the strengthening in housing over the last two months is offsetting weakness in manufacturing, making the overall growth picture more positive.

In summary, the economic news has picked up lately, so investor optimism should begin to rise; but the economy hasn’t risen fast enough to make the Fed committed to raising rates more than once.  Additionally, we are in earnings pre-announcement season, with second-quarter earnings announcements starting in early July.


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.

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