Why Louis is optimistic … a strong retail report … global food insecurity is rising … “there’s always a bull market somewhere” … a special event to put on your calendar
As I write Wednesday, stocks are under pressure due to disappointing earnings from retail giant Target.
Despite this weakness, legendary investor Louis Navellier believes we’re going to look back and realize we’re through the worst of it.
Let’s jump to Louis’ Platinum Growth Club Flash Alert from yesterday:
The market had its correction.
It had an incredible reversal on Friday. It’s having another good bounce [yesterday].
When I look back on the selloff, it sure looks like it was hedge-fund-related. The prime brokers that hold the hedge fund assets were forcing the hedge funds to deleverage. That’s why the crypto market was getting hit so hard. There are a lot of hedge funds that play in that space.
So, I’m very, very encouraged by the Friday rally. I’m encouraged by [yesterday’s] bounce.
I do want to remind everybody that once we gap up, we are going to stall a bit. We have to adjust to these new levels…
I think as we look back on everything, we just have to realize that the stock market likes to predict recessions that never materialize.
So, the stock market did freak out. A lot of the people who were leveraged up the ying yang got squeezed.
In the aftermath of all this, there’s a silver lining, a critical path for us to follow: And that’s any company that posts very good sales and earnings and guides higher.
***A strong retail sales number from yesterday adds to Louis’ optimism
Yesterday, we saw healthy numbers from the latest retail-sales report.
Back to Louis for those details:
We had very, very strong retail sales announced [yesterday].
Retail sales rose nine-tenths of a percent in April. But the biggest news was March retail sales were revised up to a 1.4% increase up from 0.7% previously estimated.
So, March retail sales were double what was previously estimated.
And when we dig into the details of the April retail sales report, it was held back due to the fact that sales at gas stations fell by 2.7%. So, if we exclude gas, retail sales were up an impressive 1.3% in April.
Also encouraging is that vehicle sales rose 2.2%. That means that consumers are investing big-ticket items. That’s usually a, a sign of confidence.
Louis goes on to highlight additional parts of the retail report, noting overall strength with the bottom line that “consumers are out and about.”
***However, remember that this strength is a double-edged sword
Yes, it’s good that we’re seeing the U.S. consumer continue to open her wallet.
Given that about 70% of the U.S. GDP comes from consumer spending, yesterday’s data don’t suggest imminent recession risk.
However, the strong spending has a downside – continued upward pressure on inflation.
More consumer spending means shoppers are still willing and able to pay higher prices. That translates into more demand than supply. The obvious Econ 101 outcome is higher prices.
This muddies the water as to whether or not we’ve actually hit peak inflation. It also increases the odds that the Fed remains hawkish at its next few meetings.
In fact, yesterday, Federal Reserve Chairman Jerome Powell reminded Wall Street that his focus today is on reining in inflation, even at the expense of the labor force:
If [bringing inflation down] involves moving past broadly understood levels of neutral, we won’t hesitate to do that.
We will go until we feel we’re at a place where we can say financial conditions are in an appropriate place, we see inflation coming down…
The underlying strength of the U.S. economy is really good right now. The U.S. economy is strong, the labor market is extremely strong…
We think it is well-positioned to withstand less accommodative monetary policy and tighter monetary policy.
Powell did point toward the uncertainties on the supply side that involve Europe and China:
Of course, we do monitor global events, and global events have been important to our economy.
The war in Ukraine is something that has upset the global commodity picture, while also threatening the global world more broadly.
***On that note, chaos continues to darken Europe and the developing world
Back to Louis, highlighting what’s happening in Europe:
The economic data to Europe has been very discouraging. They’re very close to the Ukrainian situation there…
Britain’s industrial production has declined. The eurozone’s industrial production has declined.
Europe is really teetering on a recession right now.
Yesterday brought a frightening news story. We learned that one out of four Britons are now skipping meals because of inflation and/or food scarcity.
Meanwhile, more than four out of five are worried about their future.
In a survey of 2,000 Britons conducted by Ipsos and Sky News, 89% said they were concerned about how the cost-of-living crisis would affect the country as a whole over the next six months, while 83% were concerned about their personal circumstances…
The findings come after Bank of England Governor Andrew Bailey said Monday that rising prices and food-scarcity issues from the war in Ukraine were a real worry for Britain and many other parts of the world.
“There’s a lot of uncertainty around this situation,” Bailey told the Treasury Committee at the House of Commons.
“Sorry for being apocalyptic for a moment, but that is a major concern,” he said.
Of course, for as bad as it is in Britain/Europe, the developing world faces worse conditions.
From the United Nations:
On top of already “high prices driven by robust demand and high input costs” resulting from COVID-19 recovery, the FAO chief noted Ukraine and Russia as important players in global commodity markets, explaining that uncertainty surrounding the war has prompted further price increases.
Wheat, maize, and oilseed prices have surged in particular.
At 160 points, the FAO Food Price Index reached its highest level ever in March, averaged 158.2 points in April, and remains today at a historical high.
***We’re seeing this food insecurity begin to curb governmental policy
G-7 foreign ministers warned over the weekend that the war in Ukraine is increasing the risk of a global hunger crisis. This is because Ukraine has been unable to export grains, fertilizers and vegetable oil, while the conflict is also destroying crop fields and preventing a normal planting season.
This has increased the reliance on nations from other parts of the world for these products. But some of these countries, concerned about supplies for their own citizens, have imposed restrictions on exports.
This is the case in India, for example, which announced Saturday a ban on wheat sales “to manage the overall food security of the country.”
It’s not just India. There’s also Egypt, Kazakhstan, Kosovo, and Serbia.
You can see this dynamic playing out in the Teucrium Wheat Fund (WEAT) below.
It’s trading at levels not seen in roughly seven years.
***This is a good reminder that there’s always a bull market somewhere
Our CEO Brian Hunt sent an internal email earlier this week making this point.
Yes, 2022 has been brutal for the average stock. But markets are not one great monolith that rise and fall in unison. Even in broad bearish conditions, there are pockets of bullishness – or as Brian likes to say, “there’s always a bear market somewhere.”
To illustrate, in his email, Brian pointed toward three stocks now trading at new highs: Cenovus, a top Canadian oil producer…
Murphy USA, a refiner based here in America…
And Scorpio Tankers, a top oil shipper…
It’s a good reminder that when times get bad, don’t stick your head in the sand. Instead, widen your gaze to find the pockets of the market that are benefiting. They’re out there.
Of course, if Louis is correct, the market is turning a corner, so hopefully we’ll be seeing many new highs in the coming months.
***Before we wrap up, a date for your calendar
Next Tuesday at 4 p.m. ET, Louis is hosting a special event called the Great American Wealth Shift.
We’ll bring you more details in the days to come. But here’s Louis explaining what this is about:
Ideas don’t move stocks. People don’t move stocks.
MONEY moves stocks.
It’s the only thing that moves a stock.
And I created the ultimate system — a proprietary “money flow monitor” that points me to where the biggest money flows are happening next…
And just recently it pointed to me to a mass money EXODUS looming on the horizon… the biggest I’ve seen in years – one that could catch millions of American investors off guard…
It’s not all bad news. Louis sees money not leaving the market, but rather, flowing into a different sector:
Just as money is fleeing one industry… I’m predicting billions are about to flow into another, making a lot of people wealthy.
I’m going to be going over all the details during the event.
Again, more details to come, but for now, put next Tuesday at 4 PM ET on your calendar. Click here to reserve your seat.
Have a good evening,