“The world has changed” …the significance of Tuesday … what Louis sees coming from the Fed and the market … where to be invested today … a big event with Louis this afternoon

After Tuesday’s inflation news and market bloodbath, it’s time for a great “re-set.”

That’s the perspective of legendary investor Louis Navellier.

But if you think that means Louis has turned bearish on the entire market, think again.

Today, we’ll get all the details as we eavesdrop on Louis’ recent subscriber-only market update podcast. We’ll talk about inflation, interest rates, Fed policy, which stocks to be in today, and far more.

You’ll even hear why this re-set has led Louis to walk-back a strongly-held conviction he’s had that we’ve highlighted several times here in the Digest.

But we’ll also learn why Louis believes the market is going to surge in the next several months.

Before we jump in, a quick note…

Louis is holding a special event today at 4 PM ET called the “Under $10 Stock Event”.

It centers around a small group of stocks that not only have everything Louis looks for—growing revenues, expanding margins, and exploding earnings—but they’re selling for less than $10 a share.

It’s a free event in which Louis will be giving away one of his favorite stock recommendations to all attendees.

We’ll circle back to this with a few more details at the end of today’s Digest. But now, let’s get Louis’ latest thoughts on the market influences that are impacting your portfolio today.

What prompted the need for this great re-set?

To set the stage, here’s Louis from Tuesday’s Market Alert Podcast from Accelerated Profits:

The world has changed, and it’s not because the Russians are in retreat from Ukraine.

Treasury yields are now a lot higher than we ever anticipated… all of the rally since mid-June is gone… and the Fed is going to have to raise rates a lot more than any of us thought.

So, folks, [Tuesday] is a great re-set because of soaring treasury yields, and the Fed can never ever, ever fight that.

Wall Street got faked out. It anticipated something that didn’t happen.

All bets changed [on Tuesday] when rates went higher.

Louis walks through the dominos that led to Tuesday’s market bloodbath and the ensuing re-set.

In short, last week there were rumblings on Wall Street about the CPI coming in negative. Obviously, that didn’t happen. The CPI climbed 0.1% instead.

While that doesn’t seem too terrible, Louis points out that the problem is in “core” inflation – it’s rising. It had been declining every month since March. So, its sudden resurgence is a big problem. It means that inflation is structural.

Wall Street saw all of this on Tuesday, realized it had been pricing in a different economic environment, and had to abruptly recalibrate its position on inflation and the Fed.

This recalibration manifested in the bond market with surging yields and in the stock market with plummeting prices.  

With this context, let’s return to Louis for his take on the Fed:

If I was running the Federal Reserve, I would definitely do a 100-basis-point increase on September 21st next week.

The Fed is now under pressure to raise rates to as high as 4%.

If the Fed increases rates by 75 basis-points, the federal funds rate will be at 3%. [The market has rates pegged at] 3.75% to 4% – that’s where Wall Street is now, that’s where treasury yields are headed.

So, that means [the Fed] probably is going to have to raise rates in November.

This ties into the “walk-back” I noted at the top of today’s Digest.

Going into Tuesday, Louis was calling for a 75 basis-point hike from the Fed in September, after which he believed they’d be done raising rates for the year.

No more.

Back to Louis:

This comment I had earlier about the Fed not raising rates in November going into the mid-term elections – all of that is off now.

The Fed probably has to ignore all the political pressure in D.C. to do what they have to do.

The interest rate environment we have now is a lot higher than we ever anticipated. So, that means we have to hit the re-set button.

What does this re-set mean for your portfolio?

Louis points out that the surge in interest rates has led to a much stronger dollar. He says that a strong dollar “destroys multinational earnings. Over half the earnings of the S&P come from outside of America.”

So, where do investors want to be now?

Back to the podcast:

Today is a day you should buy commodity stocks that are profiting from inflation.

What are those?

Your energy stocks, food stocks, fertilizer, your shipping stocks – I know shipping rates have peaked, but they’re still elevated. They’re still producing great earnings. They’re still funding extraordinary dividends.

The truth of the matter is that commodity stocks are the place to be.

In detailing this position, Louis points toward analyst forecasts that are now calling for negative S&P earnings in both the 3rd and 4th quarters. That’s going to be a macro headwind for the broad market.

Back to Louis:

Your best defense is a strong offense of fundamentally superior stocks profiting from the current inflationary environment.

So, if you can have stocks that have real earnings growth and real sales growth, positive analyst earnings revisions, you’re in the catbird seat.

Even though the broad market faces these headwinds, a study of history suggests a bullish bounce is coming

Before you write off the broad market, Louis highlights a research report from one of his favorite data shops, Bespoke. He explains why there’s a silver lining to Tuesday’s selloff:

When we get these big selloffs, usually the market is about 5% higher a month later. And about 15% higher three months later.

Now to increase your chances of being in a stock that’s going to enjoy this type of recovery, Louis says to focus on domestic stocks (avoiding the strong dollar that’s eroding earnings from multinationals), and, of course, load up on energy stocks.

So, let’s recap this “re-set”:

• Inflation remains a big problem as core inflation is rising
• The Fed isn’t likely to be done for the year after its hike next week
• Your best bet for portfolio protection is commodity stocks, specifically top-tier oil plays
• If history is right, the massive drop on Tuesday means we’re in for a double-digit bounce over the coming three months

Join Louis today to learn about a “once-in-a-decade-phenomenon” for market returns

As we noted at the top of today’s Digest, today at 4 PM ET, Louis is holding a special event. It focuses on stocks that have all the traits that Louis looks for in a powerhouse investment, but with the twist of low share prices – specifically, under $10.

Here’s more from Louis:

Even with all of the negative news, I still wouldn’t jump out of the market right now. I think the turn is coming sooner rather than later, and there are plenty of exciting opportunities out there.

In fact, a once-in-a-decade phenomenon that opens a small window for potentially huge gains from certain low-priced stocks is happening right now.

The last time this happened, I recommended 16 stocks that later went up at least 1,000%, including a gain as high as 7,749% on Netflix.

I will explain it all in my special Under $10 event, today at 4 p.m. Eastern time.

I’ll also reveal the name, ticker symbol and much more about an amazing company that is currently trading for less than $10 per share – and is especially well-positioned to benefit from this phenomenon.

I can’t believe how downright rock-bottom cheap Wall Street is giving away the great growth stocks I love!   

I honestly believe that most of the stocks I’ve got my eye on will never sell for these prices again.

Join Louis today to get all the details, as well as his free stock giveaway. Hope to see you there.

Have a good evening,

Jeff Remsburg