October is living up to its reputation of being a “scary” month, rather than its reputation as a seasonally strong month so far. As of this writing, all of the major indices are down this month.
Now, one factor behind the weakness is the surge in Treasury yields.
For example, stocks turned lower on Monday after the 10-year Treasury yield broke above the 5% level for the first time since 2007. The 30-year Treasury yield also broke above 5% last week.
So, I’d like to use today’s Market 360 to take a closer look at how elevated rates can hurt the economy. I know the high rates have scared some investors out of the market, but that doesn’t mean that you should be spooked, too.
The truth is that now is a great time to invest in stocks, but there is a catch… they must have superior fundamentals. So, also in today’s Market 360, I’ll explain why a stock’s fundamentals matter, as well as share an exciting new strategy to make quick profits off of fundamentally superior stocks.
Let’s jump in.
The Toll of High Interest Rates
The problem with elevated rates for an extended period of time is that it’s killing several corners of the U.S. economy and initiatives.
For starters, high interest rates have hurt the housing market. The 30-year mortgage rate rose to 7.7%, and, in turn, mortgage demand fell to a 28-year low (since May 1995).
I should also add that existing home sales declined 2% to a 3.96 million annual pace. In the past 12 months, existing home sales have dropped 15.4% and are now running at the slowest pace in 13 years (since October 2010). There were only 1.13 million homes for sale in September, or an 8% year-over-year decline. First-time homebuyers only represent 27% of sales, down from 40% historically. So, high mortgage rates have restricted existing homes sales.
High interest rates around the globe are systematically killing green energy projects, since most projects have to be financed. Most green energy projects have to be financed, and since interest rates are no longer near zero, the payback on new wind and solar projects has become increasingly uneconomical. As an example, Arizona followed in California’s footsteps and curtailed solar electricity reimbursements that are sold back to the grid. This has discouraged solar panel installations.
Furthermore, the big offshore wind turbine project in the Northeast has been postponed after six Northeastern governors asked the Biden administration for aid, since currently offshore wind turbines are forecasted to be cost prohibitive.
Fundamentals Matter
In the current high interest rate environment, you want to stay laser-focused on the fundamentals. The fact of the matter is we’re now in the third-quarter earnings season, and this is when companies with superior fundamentals tend to shine as investors shift their attention back to fundamentals.
Case in point: TechnipFMC plc (FTI).
TechnipFMC is what some might call an architect to the energy industry, in that it provides project life cycle solutions for the energy industry. It also boasts stunning fundamentals.
This morning, the company reported blowout results for its third quarter. Adjusted earnings surged 600% year-over-year to $0.21 per share, up from $0.03 per share in the same quarter a year ago. Revenue increased 18.7% year-over-year to $2.06 billion. The consensus estimate called for earnings of $0.19 per share on $1.98 billion in revenue.
Following the stunning earnings report, shares of FTI surged more than 10% today to a new 52-week high – despite the broader market pullback. Investors’ reactions to TechnipFMC’s earnings tell me that earnings are working, which is great news for those who invest in fundamentally superior stocks.
Your Best Bet for Quick Profits
With interest rates soaring and squeezing the economy, I know many folks want cash now – especially with earnings season opening up new investment opportunities.
Here’s the good news: I believe I’ve found a great way to help folks do just that.
It involves fundamentally superior stocks and an artificial intelligence system called the New Intelligence.
This New Intelligence is an AI system that can predict the share price of almost any stock 21 trading days into the future… with up to 82% accuracy. In fact, it flagged FTI two weeks before the stock rallied on its strong earnings results today.
It looks at 120 different factors and updates overnight, which amounts to a billion data points at any given moment to show you the best recommended course of action for every single stock you search.
Essentially, the New Intelligence “teaches itself” how to accurately predict future stock prices by seeing how close it comes to its original predictions… and then adjusting its reading day by day.
Sincerely,
Louis Navellier
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
TechnipFMC plc (FTI)
