In his podcast addressing the markets today, Louis Navellier offered the following commentary.
If you wish to listen to this commentary, please click here.
Evaporating Recession Fears
Treasury yields and commodity prices (especially crude oil) are rising this week in anticipation of a robust global economy. The Atlanta Fed is forecasting 3.2% annual GDP growth in the first quarter. So now that it appears that the Fed is essentially done raising key interest rates, recession fears have essentially evaporated.
Q4 2022 hedge fund letters, conferences and more
So you might be wondering what is the next fear that might envelop the stock market. The federal government’s deficit ceiling is an impending crisis that Congress will debate in the upcoming months and hopefully, we will not embarrass ourselves too much.
Another potential glitch is the ongoing Russian invasion of Ukraine. Although both sides seem to be “reloading” for another clash, they have to wait until the “mud season” is over.
French President Emmanuel Macron and other allies are wary of humiliating Russia, so there are some cracks emerging in the NATO alliance. The U.S. escalation against Iran-backed militias in Syria is another concern, especially now that Iran will soon likely have a nuclear weapon.
The protests in France have now expanded to Germany, where a transport strike is now shutting down air, train and public transportation. Inflation in Europe remains much higher than in the U.S., so workers are restless.
The French protests started over French President Macron raising the retirement age to 64 (up from 62) without any legislative debate. However, now the French protests are now largely in opposition to President Macron, who recently survived a no-confidence vote, but remains unpopular and will not be seeking to be re-elected.
When a politician has domestic problems, they typically like to blame foreign governments. The U.S. is no different, since after members of Congress tormented Russia for several years, they recently turned their attention to China and have escalated the rhetoric as you may have seen during the TikTok Congressional hearing.
Odd Market Leaders
Amidst ongoing uncertainty, The Wall Street Journal reported that Apple and Microsoft are the new market leaders and now have their highest weightings ever in the S&P 500 at a combined 13.3%.
However, Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT)’s forecasted first-quarter sales and earnings are truly pathetic, so I think there is a great chance that many fundamentally superior stocks, such as NVIDIA Corporation (NASDAQ:NVDA), are poised to break out and emerge as new market leaders in the wake of their stunning first-quarter announcements.
New Fears
In times of uncertainty, our best defense remains a strong offense. I expect that now that springtime is here, the national mood will improve, which is just another reason that April is a seasonally strong month.
Now that the Fed and interest rate fears have diminished, all that is left is for inflation fears to continue to cool off. Wholesale prices were actually negative in February, so there is definitely hope on the inflation front.
I expect that the breadth and power of the stock market will gradually improve as more evidence of an economic recovery emerges. A good example is that new home sales have risen for three consecutive months and mortgage rates have fallen for six consecutive weeks.
Although home sales are still down year over year, there are “green shoots” appearing. Instead of a 15% stock market, where the best A-rated stocks have been performing the best, I am hoping that as the stock market’s breadth and power expands, we will soon be in an 18% market, where we will finally have more A-rated winners.
Coffee Beans
A 91-year-old Colorado man took an approximately 24-mile trek to become the oldest person to cross the Grand Canyon rim-to-rim on foot. John Jepkema said he prepared for the five-day backpacking hike by walking 5-8 miles a day for four months. Source: UPI. See the full story here.
