Quarterly Market Outlook Reports
Each Quarter, our team of portfolio managers meet to discuss the trends of the previous and upcoming quarter. We assemble the trends, the impact to our portfolios and discuss which moves are prudent for the coming weeks and months. And we deliver this analysis to you every three months.
Third Quarter, 2023
The good news is that we survived September and the threat of a federal government shutdown. The bad news is that we started October with surging Treasury bond yields, so concerns over out-of-control federal spending persist. The federal debt ceiling was lifted with a 45-day funding plan, and when it has to be renewed in November, it should pass, since Congressional members like to go home for Thanksgiving.
The public fascination with government bond yields has gone viral. For example, Treasury bonds were recently #2 in Google’s search engine, behind only the Taylor Swift/Travis Kelce relationship. This is undoubtedly undermining …
Second Quarter, 2023
The breadth and power of the overall stock market improved notably in the second quarter. At the end of April, only eight NASDAQ stocks accounted for virtually all the S&P 500’s year-to-date return. At the end of May, twenty stocks accounted for virtually all the S&P 500’s year-to-date return as breadth and power improved. Then the annual June Russell reconstitution caused many small cap stocks to surge as liquidity improved.
The NASDAQ 100 (NDX) recently reduced the weight of its seven largest stocks by market capitalization and the other 93 stocks in the NDX index were the beneficiaries. The bottom line is the breadth and power of the overall stock market …
First Quarter, 2023
The first quarter had some dramatic developments but finished on a positive note. Thanks to the Silicon Valley Bank crisis, Treasury yields plunged and will likely cause the Fed to stop raising key interest rates. Although the Federal Open Market Committee (FOMC) raised key interest rates 0.25% as anticipated, this could be the last key interest rates hike.
At his press conference after the FOMC statement Fed Chairman Jerome Powell came off as dovish, which the financial markets like and responded positively. However, Treasury Secretary Janet Yellen was also testifying in front of Congress on Wednesday during Powell’s press conference …
Fourth Quarter, 2022
The fourth quarter started with several violent short covering rallies and helped to mark a definitive stock market bottom. Not only was October a strong month, but November also started on a positive note. The stock market temporarily lost its “mojo” in December after a hawkish FOMC statement and new interest rate fears emerged. The next Federal Open Market (FOMC) statement will be on February 1st, and we are anticipating a dovish statement due to moderating multiple inflation reports.
As you have repeatedly heard, the Fed never fights market rates, so if Treasury yields continue to moderate with better inflation reports, then the FOMC has to stop …
Third Quarter, 2022
The third quarter was supposed to end on a positive note since the Fed’s September 21st key interest rate hike was supposed to be the last big 75 basis point increase. Unfortunately, the Fed is also shrinking its balance sheet by $95 billion per month and driving Treasury yields higher, so the Fed has to continue to raise key interest rates to “catch up” with market rates. In fact, all the gains from the rally in Treasury bonds since
mid-June have been wiped out, as the 10-year Treasury bond yield has soared close to the 4% level.
The other factor that caused this surge in Treasury yields was that the core rate of inflation resumed rising in August, even when energy prices were …
Second Quarter, 2022
Despite a horrible start to the year and all the talk about a recession, amazingly there is no “earnings recession.” The top-down strategists are completely out of sync with the boots on the ground analyst community, which is more positive. Frankly, the analyst community is smarter than the macro strategists that keep calling for a recession.
As always, we are entering the second-quarter announcement season “locked and loaded” with strong forecasted sales and earnings. Furthermore, in the past three months, the analyst community has revised their average consensus earnings estimate significantly higher, so we are expecting another round of earnings surprises in the …
First Quarter, 2022
The first quarter stumbled out of the gate, but finished strong during March’s quarter-end window dressing. The big change in the Navellier portfolios is that we have added companies we believe will profit from inflation to our portfolios. Specifically, energy, fertilizer, food, and shipping companies are more prevalent in our portfolios. These companies have pricing power and are benefitting from the stagflation that has enveloped the world in the wake of Russia’s invasion of Ukraine, which has further disrupted commodity markets and global supply chains.
While Europe is slipping into a recession, the U.S. remains an oasis around the world. The U.S. manufacturing sector is benefitting from strong order backlogs, while the U.S. service sector …
Fourth Quarter, 2021
As 2022 has commenced, a rotational correction out of many powerful growth stocks into beaten up value stocks has been the New Year surprise. This is referred to as a “mean reversion rally” and will not be sustainable. In fact, most value rallies fizzle within four to six weeks. This time around, the initial weakness in NASDAQ this year caused CNBC’s Jim Cramer to tell investors to sell growth and buy value stocks. So far this year, energy and financial stocks have been the leaders. However, the biggest problem we have with Jim Cramer’s value declaration is that it will soon be “every stock for itself” when the fourth-quarter announcement season commences.
Fortunately, the fourth-quarter announcement season has arrived and we have already seen relative strength …
Third Quarter, 2021
The third-quarter was essentially a “washing machine” where stocks “sloshed” around. The bumpy summer months are now over and the seasonally strong time of year is now here. October has been strong in the past 20, 50 and 100 years, according to our friends at Bespoke. November is even stronger, and December is also strong. The strongest seasonal month is actually January, when new pension money likes to pour into the stock market. So essentially, the next four months should be wonderful.
Our fundamental growth stocks are poised to announce wave after wave of better than expected third-quarter sales and earnings announcements in the upcoming weeks. The analyst community revised their consensus earnings estimate up over 14.9% for our …
Second Quarter, 2021
So far this year, dividend growth stocks have been the stars and are anticipated to continue to perform well due to collapsing bond yields. These same collapsing yields also helped our growth stocks in June after China did a commodity “dump” to squelch soaring material prices.
We are clearly in an inflationary environment that is expected to persist due to accommodative central banks. The latest catalyst for bond yields collapsing was the European Central Bank’s (ECB) recent announcement that it would tolerate up to 2% annual inflation over the “medium term” and essentially ignored the current annual inflation target of just below 2%. So just like the Fed, the ECB is going to allow inflation to temporarily “overshoot” its inflation targets. The ECB essentially …
First Quarter, 2021
Our growth portfolios oscillated with the interest-rate-driven rotation in the market in recent weeks, but finished March on a strong note thanks to quarter-end window dressing. Furthermore, this relative strength has continued in April and our growth portfolios seem truly excited about their upcoming first-quarter earnings announcements. We believe the average stock in our growth portfolio will post stunning sales and earnings growth in the upcoming weeks, as you can see in the following link:
The first-quarter announcement season will represent “peak” sales and earnings momentum …
Fourth Quarter, 2020
The fourth quarter was the strongest quarter that we can remember for small-to-mid capitalization stocks. Essentially, many of our small-to-mid growth stocks “melted up” on light trading volume in an “early January effect.” These small-to-mid growth stocks, as well as many of our international growth stocks, have continued to perform well due to the “real January effect” that is caused by higher trading volume and fueled by new pension funding.
Our growth and dividend stocks are “locked and loaded” for the upcoming fourth-quarter announcement season. The year-over-year comparisons …
Third Quarter, 2020
The third-quarter was quite interesting. The stock market experienced net redemptions but continued to rally on relatively light trading volume. Nowadays, Citadel’s algorithms largely control stock prices. So the question that we are asking ourselves is if the stock market can rally on light trading volume, then what happens when trading volume soars?
As mentioned on a recent Navellier podcast, there is a lot of cash on the sidelines that is waiting to pour intothe stock market once the uncertainty of the Presidential election is resolved once and for all.
Second Quarter, 2020
Our stocks have rebounded impressively since late March, especially our growth stocks, which are now defensive compared to dividend stocks as they are less affected by COVID-related shutdowns. As always, we are entering the upcoming earnings announcement season “locked and loaded” with fundamentally superior growth stocks that are characterized by 21.2% average annual sales growth and 79.8% average annual earnings growth. Furthermore, in the past three months,
First Quarter, 2020
Our dividend growth and conservative growth stocks have rebounded impressively in the past four weeks. As we have said repeatedly, good stocks bounce right back and that is exactly what has happened since the late March lows. We expect to continue to sell selected stocks into strength as we concentrate on the crème de la crème and anticipate holding fewer stocks in the upcoming months due to the fact that the economic recovery is anticipated to be very narrow.
Fourth Quarter, 2019
2019 was a year of great stock market performance and flat earnings. In some respects, it was the opposite of 2018 when earnings were up more than 20% while stocks were down. Yet if we take the averages for both years for both EPS growth and stock performance, the two years were pretty normal—on average. The 4th quarter of 2019 will be the last lackluster quarter for the S&P 500’s earnings. Looking forward to 2020, the S&P 500 will be having much more favorable year-over-year comparisons, so we expect positive guidance from many flagship companies.
Third Quarter, 2019
Our dividend growth and conservative growth stocks are “locked and loaded” for the upcoming third-quarter announcement season. We are exiting the seasonally weak months for small-to-mid capitalization stocks and are now on the verge of when small-to-mid capitalization stocks tend to surge from an early “January effect” and remain strong well into the New Year.
Second Quarter, 2019
Our growth stocks continue to steadily appreciate and exhibit significant relative strength compared to the S&P 500. In fact, our Large Cap Growth portfolio just posted its strongest outperformance relative to the S&P 500 and is leading all our other growth portfolios year-to-date, which are also having a good year.