Hotline- Louis Navellier...
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Comentário: por enquanto o mercado de taxa fixa, na europa, ainda apresenta algum potencial de ganhos, mas sobretudo se o raciocínio fôr feito em usd. Os bunds (10 anos) têm um spread relativamente aos 10ybonds de cerca de 20 pontos. Esse spread deve diminuir, e o euro deve continuar a valorizar-se relativamente ao usd.
O "awfully good value" que o Lee Thomas vê nos bunds deve ser visto numa perspectiva do investidor americano. Para um alemão é razoável, para um português já quase não tem interesse.
Depende da moeda, e da taxa de inflação. Estas duas variáveis condicionam imenso as expectativas do investidor.
Deixo aqui uma visão do Lee Tomas (um pouco suspeita, como não pode deixar de ser, até porque a Pimco tem estado compradora de dívida alemã nos últimos meses .....)
----------------------------------------------------
A central feature in many larger German towns and cities is the local Arbeitsamt - the sprawling public sector bureaucracy that supposedly puts the unemployed back to work. Living in Germany, it seems logical to translate Arbeitsamt as Unemployment Office because reducing unemployment is what that organization is all about. At least that is how one of us translated Arbeitsamt when first learning to speak German as a foreign language back in 1989. That was wrong. Arbeitsamt actually translates as Employment Office. But Unemployment Office wasn't too far off the mark. Since then Germany's unemployment has risen in the western states from 2 million to 2.7 million. Add those out of work in the reunified eastern states and 4.1 million people, 10% of the labor force, are unemployed in Germany today.
ECB to the Rescue
Fortunately, the ECB has just cut interest rates. That will fix Europe's unemployment problem, right? Unfortunately, it won't. Put simply, if your labor market does not work well, then you cannot get strong growth just by stimulating demand. Instead, as soon as growth picks up, so does inflation. And inflation may be a chronic, nagging problem even if growth is tepid. That is where Euroland is today: growth is anemic, only 0.8%, but inflation, at 2.2%, is still above the ECB's supposed ceiling of 2%. It has been above the 'ceiling' almost continuously for two years. Now 2.2% is not an intolerable rate of inflation. The ECB's inflation target of 'below 2%' is too low, and probably will be changed as soon as the ECB can decently change it without threatening its credibility. The problem is not that inflation is too high, but rather that inflation has remained stubbornly above target in the face of high unemployment and depressed economic growth. In a different time we called high inflation coupled with slow growth 'stagflation.'
During the 1970s, global stagflation was caused by (choose one or more, according to taste): OPEC; imprudent fiscal and monetary policies; demographics. In Europe today the stagflation comes from 'structural impediments.' Wages are inflexible downward. Protective labor laws prevent firms from shedding labor when times get tough, as they are right now. But companies that cannot fire in bad times will not hire in good times. Some of the highest non-wage labor costs in the world - covering statutory insurances for unemployment, pensions, health and old age care - raise the level of labor costs and prevent some willing workers - mainly the low skilled and the inexperienced - from finding employment. These laws and regulations are well intentioned, but they are worse than unproductive. They are counterproductive.
Ultimately everybody foots the bill for high labor costs. You pay once as a taxpayer, supporting an army of unemployed workers and their families. You pay again as a consumer, offered high prices and indifferent quality, especially in sectors like services where competition is limited and productivity often is low.
Deregulation worked in Europe's markets for telecommunications, electricity and gas. Prices fell, and consumers are better off for it. It seems obvious that the majority would be better off if more competition was brought to the labor market as well, but this is easier said than done. Euroland's largest economies - Germany, France and Italy - haven't exactly warmed to labor market reform. Earlier this year an assassin shot dead the architect of Italy's labor market reform bill. Germany has finally cut the cost of hiring the unemployed. But having given with one hand they took back with the other. They also raised payroll taxes. And in France, the most significant labor market 'reform' recently has been to restrict workers to spending only 35 hours per week on the job.
There are less tangible social costs to no-job policies, too. Chronic unemployment may create a permanent, alienated and discouraged underclass. It certainly contributes to the hostility workers may feel to 'outsiders' who may 'steal' their local jobs, like potential immigrants from the poorer parts of the European Union. Suspicion, parochialism and resentment is exactly the opposite of the spirit of moderation, unity and harmony that is supposed to characterize the new Europe. It is a lot easier to be moderate and welcoming if you don't risk losing your job.
The EMU Conundrum
It doesn't sound like things could get any worse for Germany, but they may.
A little inflation usually makes life easier for businessmen. If you cannot cut wages explicitly, at least a bit of inflation means you can cut wages indirectly, if you resist granting cost of living increases. Without a little inflation to grease the wheels, labor flexibility becomes even more important. Unfortunately, the more mature economies of Europe are going to have to learn to grow with inflation staying low, even if the ECB ultimately relaxes its restrictive inflation ceiling.
When Euroland's 12 nations irrevocably fixed their exchange rates to the euro they gave up sovereignty over short-term interest rates. The ECB now determines a single short-term interest rate for all. However, despite the convergence rules that force countries to get their inflation down before entering EMU, and despite sharing a single monetary policy, regional differences in inflation naturally persist. Inflation is highest in the countries that have the lowest incomes and are growing relatively quickly. If (i) the average inflation rate across Europe is capped by the ECB, and (ii), the less developed, faster-growing parts of Europe have inflation rates above this average, then (iii) the more economically mature parts of Europe, like Germany, must have inflation rates below the average. The rules of the EMU game mean Germany, and the other slower growing parts of Europe, should expect to suffer a chronic deflationary bias. There is no respite in sight. Inflation in Spain may fall as it matures and becomes more like core Europe, but when Europe eventually admits more rapidly growing, relatively high inflation economies in Central Europe to the EMU, the deflationary pressures on Germany will intensify. Even if European inflation drifts up to 3%, German businessmen may have to learn to prosper with only 1% inflation in their home market. Businesses in Germany cannot use inflation as a tool to compensate for inflexible labor markets unless the target for European inflation is radically revised upwards, to perhaps 4% or 5%. The chances of that happening are nil.
So on a secular basis, Germany cannot hope to avoid the increasing pressures to become more competitive, and that means painful reforms. The best Germany can hope for is a favorable window of opportunity to reform its markets - some monetary ease, then good economic times in which Germany can put its house in order. Santa came early: the ECB just cut rates by 50 bp to 2.75%. And while the ECB seems for the time being to be on hold, it looks like European inflation is going to fall sharply during the first half of 2003. (See the chart above.) Who knows, by the second quarter, with inflation running at 1% to 1.5% - well within target - perhaps the ECB will cut even more. Germany will soon have the window of opportunity to act.
If the ECB's critics are right, and Europe's main problem is too-tight money, then the recent cut (and perhaps others to come) should spark a robust recovery. We think optimists who expect that outcome are going to be disappointed. One reason to suspect tight monetary policy is not the main reason why Germany's unemployment rate is so high: just look next door, at the Netherlands. The Netherlands shares exactly the same tight monetary policy with Germany. Both are mature, high income economies. But the Dutch boast unemployment of only 2.7%. Why the difference? The Netherlands has enacted liberal labor reforms that encourage employers to hire and encourage workers to find jobs that suit them. There can be no more dramatic demonstration that labor reforms work than contrasting the experiences of the Netherlands and Germany during the past decade. (See the comparison of unemployment rates below).
-------------------------
(o gráfico indica uma evolução de longo prazo crescente no desemprego na alemanha -cerca de 10% actualmente - contra uma evolução contrária na Holanda que nesta última década conseguiu baixar a taxa dos cerca de 8% para 3%)
-------------------------------------
If we are right, if Europe's main problem is on the supply side, then juicing demand is not going to produce satisfying growth. In other words, if you thought that easier monetary policy was the key to fixing Euroland's jobless stagflation, you are about to be proven wrong. (Or we are about to be proven wrong!) Easy money can only do so much; what Euroland really needs is more competition in its markets for labor, services and goods.
In the recent past, German politicians could blame the ECB's tight-fisted policies for the German economic malaise. Now the ECB has cut, and they may cut again if, as we suspect, the European inflation figures look much better by the end of the first quarter. If, as we also suspect, it doesn't work - German economic growth remains tepid and unemployment remains high - new policies will be needed.
According to one common sense view, Germany needs a spoonful of sugar - an economic boom in Europe - to make the medicine of reform go down more easily. But a case can be made that politicians will fritter away the coming opportunity, just as they did the last time, when the U.S. bubble economy produced the right environment in which to effect German reform. A more pessimistic view is that it may take an economic crisis to force Germany to grasp the economic nettle. In other words, a recession would hurt in the short run, but it may be necessary to get Germany on the road it needs to be on.
Right now Germany lacks the air of desperation that may be needed to catalyze change. Recent scare headlines in the financial press - Germany May Be the Next Japan! - are extreme, but one similarity is telling. Germany today, like Japan a decade ago, is wealthy enough to feel that reform is more optional than obligatory. Germany may need a recession before it finds its own version of Margaret Thatcher or Ronald Reagan, both of whom stepped in as reformers only after their economies decayed to the point that the electorate was willing to try radically new policies. So it may take some 'tough love' on the part of ECB to get Germany onto a post-reform, high growth path. By running tight policy, or even inducing recession, the ECB can force German politicians to push reforms that otherwise would remain on the back burner.
Recessions are bad for people, but they are good for bonds. That makes the European fixed income market look awfully good value.
Dr. Lee R. Thomas, III
Managing Director, PIMCO
O "awfully good value" que o Lee Thomas vê nos bunds deve ser visto numa perspectiva do investidor americano. Para um alemão é razoável, para um português já quase não tem interesse.
Depende da moeda, e da taxa de inflação. Estas duas variáveis condicionam imenso as expectativas do investidor.
Deixo aqui uma visão do Lee Tomas (um pouco suspeita, como não pode deixar de ser, até porque a Pimco tem estado compradora de dívida alemã nos últimos meses .....)
----------------------------------------------------
A central feature in many larger German towns and cities is the local Arbeitsamt - the sprawling public sector bureaucracy that supposedly puts the unemployed back to work. Living in Germany, it seems logical to translate Arbeitsamt as Unemployment Office because reducing unemployment is what that organization is all about. At least that is how one of us translated Arbeitsamt when first learning to speak German as a foreign language back in 1989. That was wrong. Arbeitsamt actually translates as Employment Office. But Unemployment Office wasn't too far off the mark. Since then Germany's unemployment has risen in the western states from 2 million to 2.7 million. Add those out of work in the reunified eastern states and 4.1 million people, 10% of the labor force, are unemployed in Germany today.
ECB to the Rescue
Fortunately, the ECB has just cut interest rates. That will fix Europe's unemployment problem, right? Unfortunately, it won't. Put simply, if your labor market does not work well, then you cannot get strong growth just by stimulating demand. Instead, as soon as growth picks up, so does inflation. And inflation may be a chronic, nagging problem even if growth is tepid. That is where Euroland is today: growth is anemic, only 0.8%, but inflation, at 2.2%, is still above the ECB's supposed ceiling of 2%. It has been above the 'ceiling' almost continuously for two years. Now 2.2% is not an intolerable rate of inflation. The ECB's inflation target of 'below 2%' is too low, and probably will be changed as soon as the ECB can decently change it without threatening its credibility. The problem is not that inflation is too high, but rather that inflation has remained stubbornly above target in the face of high unemployment and depressed economic growth. In a different time we called high inflation coupled with slow growth 'stagflation.'
During the 1970s, global stagflation was caused by (choose one or more, according to taste): OPEC; imprudent fiscal and monetary policies; demographics. In Europe today the stagflation comes from 'structural impediments.' Wages are inflexible downward. Protective labor laws prevent firms from shedding labor when times get tough, as they are right now. But companies that cannot fire in bad times will not hire in good times. Some of the highest non-wage labor costs in the world - covering statutory insurances for unemployment, pensions, health and old age care - raise the level of labor costs and prevent some willing workers - mainly the low skilled and the inexperienced - from finding employment. These laws and regulations are well intentioned, but they are worse than unproductive. They are counterproductive.
Ultimately everybody foots the bill for high labor costs. You pay once as a taxpayer, supporting an army of unemployed workers and their families. You pay again as a consumer, offered high prices and indifferent quality, especially in sectors like services where competition is limited and productivity often is low.
Deregulation worked in Europe's markets for telecommunications, electricity and gas. Prices fell, and consumers are better off for it. It seems obvious that the majority would be better off if more competition was brought to the labor market as well, but this is easier said than done. Euroland's largest economies - Germany, France and Italy - haven't exactly warmed to labor market reform. Earlier this year an assassin shot dead the architect of Italy's labor market reform bill. Germany has finally cut the cost of hiring the unemployed. But having given with one hand they took back with the other. They also raised payroll taxes. And in France, the most significant labor market 'reform' recently has been to restrict workers to spending only 35 hours per week on the job.
There are less tangible social costs to no-job policies, too. Chronic unemployment may create a permanent, alienated and discouraged underclass. It certainly contributes to the hostility workers may feel to 'outsiders' who may 'steal' their local jobs, like potential immigrants from the poorer parts of the European Union. Suspicion, parochialism and resentment is exactly the opposite of the spirit of moderation, unity and harmony that is supposed to characterize the new Europe. It is a lot easier to be moderate and welcoming if you don't risk losing your job.
The EMU Conundrum
It doesn't sound like things could get any worse for Germany, but they may.
A little inflation usually makes life easier for businessmen. If you cannot cut wages explicitly, at least a bit of inflation means you can cut wages indirectly, if you resist granting cost of living increases. Without a little inflation to grease the wheels, labor flexibility becomes even more important. Unfortunately, the more mature economies of Europe are going to have to learn to grow with inflation staying low, even if the ECB ultimately relaxes its restrictive inflation ceiling.
When Euroland's 12 nations irrevocably fixed their exchange rates to the euro they gave up sovereignty over short-term interest rates. The ECB now determines a single short-term interest rate for all. However, despite the convergence rules that force countries to get their inflation down before entering EMU, and despite sharing a single monetary policy, regional differences in inflation naturally persist. Inflation is highest in the countries that have the lowest incomes and are growing relatively quickly. If (i) the average inflation rate across Europe is capped by the ECB, and (ii), the less developed, faster-growing parts of Europe have inflation rates above this average, then (iii) the more economically mature parts of Europe, like Germany, must have inflation rates below the average. The rules of the EMU game mean Germany, and the other slower growing parts of Europe, should expect to suffer a chronic deflationary bias. There is no respite in sight. Inflation in Spain may fall as it matures and becomes more like core Europe, but when Europe eventually admits more rapidly growing, relatively high inflation economies in Central Europe to the EMU, the deflationary pressures on Germany will intensify. Even if European inflation drifts up to 3%, German businessmen may have to learn to prosper with only 1% inflation in their home market. Businesses in Germany cannot use inflation as a tool to compensate for inflexible labor markets unless the target for European inflation is radically revised upwards, to perhaps 4% or 5%. The chances of that happening are nil.
So on a secular basis, Germany cannot hope to avoid the increasing pressures to become more competitive, and that means painful reforms. The best Germany can hope for is a favorable window of opportunity to reform its markets - some monetary ease, then good economic times in which Germany can put its house in order. Santa came early: the ECB just cut rates by 50 bp to 2.75%. And while the ECB seems for the time being to be on hold, it looks like European inflation is going to fall sharply during the first half of 2003. (See the chart above.) Who knows, by the second quarter, with inflation running at 1% to 1.5% - well within target - perhaps the ECB will cut even more. Germany will soon have the window of opportunity to act.
If the ECB's critics are right, and Europe's main problem is too-tight money, then the recent cut (and perhaps others to come) should spark a robust recovery. We think optimists who expect that outcome are going to be disappointed. One reason to suspect tight monetary policy is not the main reason why Germany's unemployment rate is so high: just look next door, at the Netherlands. The Netherlands shares exactly the same tight monetary policy with Germany. Both are mature, high income economies. But the Dutch boast unemployment of only 2.7%. Why the difference? The Netherlands has enacted liberal labor reforms that encourage employers to hire and encourage workers to find jobs that suit them. There can be no more dramatic demonstration that labor reforms work than contrasting the experiences of the Netherlands and Germany during the past decade. (See the comparison of unemployment rates below).
-------------------------
(o gráfico indica uma evolução de longo prazo crescente no desemprego na alemanha -cerca de 10% actualmente - contra uma evolução contrária na Holanda que nesta última década conseguiu baixar a taxa dos cerca de 8% para 3%)
-------------------------------------
If we are right, if Europe's main problem is on the supply side, then juicing demand is not going to produce satisfying growth. In other words, if you thought that easier monetary policy was the key to fixing Euroland's jobless stagflation, you are about to be proven wrong. (Or we are about to be proven wrong!) Easy money can only do so much; what Euroland really needs is more competition in its markets for labor, services and goods.
In the recent past, German politicians could blame the ECB's tight-fisted policies for the German economic malaise. Now the ECB has cut, and they may cut again if, as we suspect, the European inflation figures look much better by the end of the first quarter. If, as we also suspect, it doesn't work - German economic growth remains tepid and unemployment remains high - new policies will be needed.
According to one common sense view, Germany needs a spoonful of sugar - an economic boom in Europe - to make the medicine of reform go down more easily. But a case can be made that politicians will fritter away the coming opportunity, just as they did the last time, when the U.S. bubble economy produced the right environment in which to effect German reform. A more pessimistic view is that it may take an economic crisis to force Germany to grasp the economic nettle. In other words, a recession would hurt in the short run, but it may be necessary to get Germany on the road it needs to be on.
Right now Germany lacks the air of desperation that may be needed to catalyze change. Recent scare headlines in the financial press - Germany May Be the Next Japan! - are extreme, but one similarity is telling. Germany today, like Japan a decade ago, is wealthy enough to feel that reform is more optional than obligatory. Germany may need a recession before it finds its own version of Margaret Thatcher or Ronald Reagan, both of whom stepped in as reformers only after their economies decayed to the point that the electorate was willing to try radically new policies. So it may take some 'tough love' on the part of ECB to get Germany onto a post-reform, high growth path. By running tight policy, or even inducing recession, the ECB can force German politicians to push reforms that otherwise would remain on the back burner.
Recessions are bad for people, but they are good for bonds. That makes the European fixed income market look awfully good value.
Dr. Lee R. Thomas, III
Managing Director, PIMCO
- Mensagens: 195
- Registado: 11/12/2002 2:48
- Localização: Paço de Arcos
Hotline- Louis Navellier...
Hotline
December 21, 2002
This is Louis Navellier. It is Saturday, December 21, 2002.
We had some very good news this week. Bed Bath and Beyond (BBBY) had outstanding earnings of $0.25 versus Wall Street’s $0.23 estimate. The stock exploded after the earnings announcement. So that’s good news.
ConAgra Foods (CAG) also released earnings this week a penny better than analysts’ estimates. There was an extraordinary charge, but the analysts were anticipating that. So ConAgra is really strong.
Lennar Corp. (LEN) guided higher for fourth-quarter earnings which will come out in January, and for all of 2003. So that stock is strong.
So earnings are working. I have to you that I’m very, very pleased with how the market is rewarding stocks that have good earnings. What we saw with Bed Bath and Beyond, ConAgra and Lennar’s forecasts is that the stocks that are forecasting good earnings or announcing good earnings are going to be very, very strong. There are gong to be a lot more earnings announcements in January. So I’m ecstatic about how our stocks should perform in the upcoming weeks.
The whole market is firming up. Another very strong stock on the buy list is ENI (E), the Italian oil company with vast interests in Iraq. Colin Powell gave a speech stating that the Iraqi weapons report was inadequate. And obviously, it looks to everybody that the US is preparing for war on Saddam. You would think that companies that do business in Iraq would be scared, but ENI is rallying because they’re going to open those Iraqi oil fields in a post-Saddam Hussein environment. ENI should prosper. So don’t view any potential military actions as negative on the stock market. If anything, the market is going to rally.
We receive many emails from subscribers each week and this week we’ve received a lot of emails about Coca-Cola (KO) because they are no longer providing short-term earnings guidance. The media has been very critical of this including outfits like Business Week. I think a lot of investors feel good that Coke is going to do what is best long-term versus try to live quarter to quarter. So I think that even though Coke is a "hold" in our system, I think you’re going to see it firm up pretty nicely here. I did downgrade it to a "hold" because of their lack of earnings guidance, which was not well received on Wall Street. But I think you’ll see it firm up here sooner than later.
The other thing is that we get a lot of emails expressing concern that the market will collapse as a lot of people are forecasting that. I have to be honest with you—people forecast collapses in the market because they’re trying to sensationalize it. I’m much more obsessed with the flow of funds.
If you study the market, you know that the flow of funds has improved considerably. The market was plagued by very severe outflows this summer in June and especially July. And then the outflows started to get better because companies started to buy their stocks back after July 24th.
The real thing that stemmed all of the outflows from the market was the fact that bond yields started to rise on October 9th and bond yields continue to drift higher. If you got out of the stock market, there is nowhere to go. Buying bonds right now is terribly wise. In fact, the portfolio manager for one of Vanguard’s bond funds said he wouldn’t buy bonds at this juncture because if yields go higher your principal is going to erode.
So you could lose money in buying bonds. And because bond investors have started to lose money, especially in corporate bonds this year, a lot of that money will return to the stock market and it will return seeking higher dividend yields. The stock market’s dividend yields are very favorable when compared with bond yields. According to Dividend Discount Models, most people say that the stock market is at least 40% undervalued.
If we get our dividend tax relief that I expect from the Bush administration and the new Congress, dividends will be tax-free. There might be a cap put on it, but I hope not. So everybody is going to go to the stock market and get their tax-free dividends and this will drive the market higher. So please don’t listen to people telling you the market is about to collapse—it’s not. It’s been a horrific environment for the market these past three years, but it bottomed on July 24th and retested the lows on October 9th and actually made slightly new lows. It has been bouncing along the bottom and quality stocks like we have are meandering higher. So I feel very good right now.
Trent Lott’s resignation as Senate Majority Leader will obviously help the stock market focus on President Bush’s economic agenda. So I’m very, very optimistic that this is going to really help the market. And, again, if there is military action in Iraq, it will be positive. The last time we had military action 12 years ago, it was up 40% in the next quarter. I don’t know if we’ll do 40% in the first quarter next year, but of course, I’ll try.
Let me tell you what the best stocks are right now in the buy list. Starting with the conservative stocks, Air Products & Chemicals (APD) is still a "hold" in our system but it is recovering.
Anheuser Busch (BUD) is basing right now and it’s a good buy here. CNOOC (CEO), the Chinese oil company, we have a "hold" on. It’s a little soft here but I’ll be honest with you—it’s starting to recover because of the situation with Venezuela restricting oil supply. Oil companies are starting to firm up here because of this. CNOOC was soft but it’s getting stronger now.
Coca-Cola (KO) is a bit weak here. I expect it to base shortly. There is no doubt that its failure to provide short-term earnings guidance has hindered it, but long-term, I think it will help. And they can always up their dividend yield anyway. That will reward investors. They may not up their dividend yields a lot if the dividend relief is passed.
ConAgra Foods (CAG) looks pretty strong right now. It’s obviously basking in the wake of its good earnings. ENI (E), the Italian oil company, is incredibly strong in anticipation of a war in Iraq. If the oil fields in Iraq were opened to more exploration, ENI would benefit from that. So far, the stock is rallying. Of course, oil prices are firm because of the Venezuelan strike.
Harley-Davidson (HDI) is an excellent buy. It’s trying to break out right now. Harley-Davidson will release more good earnings and the stock will rally here soon, so it’s a great time to buy Harley-Davidson near-term.
Procter & Gamble (PG) looks pretty strong right now. This is one of the leading stocks on the Dow and one of the best performing stocks this year.
Progressive (PGR), the insurance company, is basically basing. It’s a phenomenal buy right now. Stryker (SYK), the orthopedics company, looks very strong. It’s still one of our Top 5 stocks.
Teva Pharmaceuticals (TEVA), our new addition, actually sold off sharply in the last three days. It was interesting. They had a very favorable summary court judgment for some of their generic drugs. I think people aren’t reading that newswire properly; if they read it, they’ll realize that this is a very bullish event for Teva Pharmaceuticals. So I expect it to firm up really quick here. It is a phenomenal buy.
United Health Group (UNH) is basically basing here. We are still maintaining our "hold" on it. Wrigley’s (WWY) looks really strong right now.
Moving on to the moderately aggressive stocks, Dell Computers (DELL) is a phenomenal buy. It’s trying to break out right now. Johnson & Johnson (JNJ) is a good buy right now—it’s still getting stronger here.
Lockheed Martin (LMT) exploded even though we have a "hold" on it because everybody senses there is going to be a war in Iraq. Guess who will benefit from that war? Lockheed will. And Lockheed will benefit anyway from the defense budget. I am holding this stock because it’s coming roaring back.
Nissan Motors (NSANY) is a phenomenal buy right now. It’s one of my favorite stocks. It just missed being one of our Top 5 stocks. TJX Companies (TJX) is very strong and it’s looking good. It’s going to be one of the winners this holiday season.
Wal-Mart (WMT) is basing here. I think it’s a very good buy. WellPoint Health Networks (WLP) is still a "hold" in our system but it’s basing and it should be OK in the long term.
Moving on to the aggressive and more powerful stocks, Bed, Bath and Beyond (BBBY) is the stock of the week because of its phenomenal earnings. It looks wonderful. Hang on—this is one of my favorite stocks.
Fox Entertainment (FOX) has pulled back and is a good buy right now. It’s still one of our Top 5 stocks. Lennar Corp. (LEN), the homebuilder, looks strong because it guided higher both for its fourth quarter earnings forecast and for next year.
And Lowe’s Corp. (LOW) is an excellent buy this week. It’s trying to firm up here.
So a lot of stocks are starting to break out and even some of our "holds" are doing well like Lockheed Martin (LMT). Other stocks are very good buys right now, but you’re seeing the market firm up here nicely. You’re seeing earnings work and I’m ecstatic about that because we’re going to have a lot of good earnings come out in mid-January. And I really expect that the cream will rise to the top and the stocks on our buy list will get more and more dominant here and be leading the market.
So this is a wonderful time to be an investor. As far as I’m concerned, this is as cheap as it will ever get. Just looking down the road here, you can see that it will be a lot stronger. If double taxation of dividends is eliminated, we’ll see a huge explosion in the market. The question is whether or not the dividend tax relief will be capped or unrestricted—I’m voting for unrestricted. I think it could cause the Dow to go up over 2,000 points because investors won’t be paying taxes on dividends. Let’s hope that happens. We will get dividend relief, but let’s hope it’s unrestricted.
I only see good things going forward. Even the war will be deemed as a positive event as ENI (E), the Italian oil company, is demonstrating. That’s not a good reason to go to war, but it’s not going to hurt the market. if anything, it will help the market. It did 12 years ago.
The market will close at 1 on Tuesday, and it will be closed all day on Wednesday for Christmas. The January issue of Blue Chip Growth is now live on the Web site. Also, you may have noticed that we made a few changes to the home page to make it a little easier to read. The Quarterly Earnings Results have moved to the right side (just below the Subscribe/Renew buttons).
So that’s it. I hope everybody has a wonderful holiday. I’ll keep updating the hotlines any time the Dow swings more than 200 points per day or the NASDAQ swings more than 100 points per day. So I’ll keep talking to you during fast market conditions. And I’ll update this hotline next Saturday as I always do.
Again, everybody have a wonderful holiday. Things can only get better. We’re going to have a nice little mini year-end rally. The real fireworks will commence in January.
December 21, 2002
This is Louis Navellier. It is Saturday, December 21, 2002.
We had some very good news this week. Bed Bath and Beyond (BBBY) had outstanding earnings of $0.25 versus Wall Street’s $0.23 estimate. The stock exploded after the earnings announcement. So that’s good news.
ConAgra Foods (CAG) also released earnings this week a penny better than analysts’ estimates. There was an extraordinary charge, but the analysts were anticipating that. So ConAgra is really strong.
Lennar Corp. (LEN) guided higher for fourth-quarter earnings which will come out in January, and for all of 2003. So that stock is strong.
So earnings are working. I have to you that I’m very, very pleased with how the market is rewarding stocks that have good earnings. What we saw with Bed Bath and Beyond, ConAgra and Lennar’s forecasts is that the stocks that are forecasting good earnings or announcing good earnings are going to be very, very strong. There are gong to be a lot more earnings announcements in January. So I’m ecstatic about how our stocks should perform in the upcoming weeks.
The whole market is firming up. Another very strong stock on the buy list is ENI (E), the Italian oil company with vast interests in Iraq. Colin Powell gave a speech stating that the Iraqi weapons report was inadequate. And obviously, it looks to everybody that the US is preparing for war on Saddam. You would think that companies that do business in Iraq would be scared, but ENI is rallying because they’re going to open those Iraqi oil fields in a post-Saddam Hussein environment. ENI should prosper. So don’t view any potential military actions as negative on the stock market. If anything, the market is going to rally.
We receive many emails from subscribers each week and this week we’ve received a lot of emails about Coca-Cola (KO) because they are no longer providing short-term earnings guidance. The media has been very critical of this including outfits like Business Week. I think a lot of investors feel good that Coke is going to do what is best long-term versus try to live quarter to quarter. So I think that even though Coke is a "hold" in our system, I think you’re going to see it firm up pretty nicely here. I did downgrade it to a "hold" because of their lack of earnings guidance, which was not well received on Wall Street. But I think you’ll see it firm up here sooner than later.
The other thing is that we get a lot of emails expressing concern that the market will collapse as a lot of people are forecasting that. I have to be honest with you—people forecast collapses in the market because they’re trying to sensationalize it. I’m much more obsessed with the flow of funds.
If you study the market, you know that the flow of funds has improved considerably. The market was plagued by very severe outflows this summer in June and especially July. And then the outflows started to get better because companies started to buy their stocks back after July 24th.
The real thing that stemmed all of the outflows from the market was the fact that bond yields started to rise on October 9th and bond yields continue to drift higher. If you got out of the stock market, there is nowhere to go. Buying bonds right now is terribly wise. In fact, the portfolio manager for one of Vanguard’s bond funds said he wouldn’t buy bonds at this juncture because if yields go higher your principal is going to erode.
So you could lose money in buying bonds. And because bond investors have started to lose money, especially in corporate bonds this year, a lot of that money will return to the stock market and it will return seeking higher dividend yields. The stock market’s dividend yields are very favorable when compared with bond yields. According to Dividend Discount Models, most people say that the stock market is at least 40% undervalued.
If we get our dividend tax relief that I expect from the Bush administration and the new Congress, dividends will be tax-free. There might be a cap put on it, but I hope not. So everybody is going to go to the stock market and get their tax-free dividends and this will drive the market higher. So please don’t listen to people telling you the market is about to collapse—it’s not. It’s been a horrific environment for the market these past three years, but it bottomed on July 24th and retested the lows on October 9th and actually made slightly new lows. It has been bouncing along the bottom and quality stocks like we have are meandering higher. So I feel very good right now.
Trent Lott’s resignation as Senate Majority Leader will obviously help the stock market focus on President Bush’s economic agenda. So I’m very, very optimistic that this is going to really help the market. And, again, if there is military action in Iraq, it will be positive. The last time we had military action 12 years ago, it was up 40% in the next quarter. I don’t know if we’ll do 40% in the first quarter next year, but of course, I’ll try.
Let me tell you what the best stocks are right now in the buy list. Starting with the conservative stocks, Air Products & Chemicals (APD) is still a "hold" in our system but it is recovering.
Anheuser Busch (BUD) is basing right now and it’s a good buy here. CNOOC (CEO), the Chinese oil company, we have a "hold" on. It’s a little soft here but I’ll be honest with you—it’s starting to recover because of the situation with Venezuela restricting oil supply. Oil companies are starting to firm up here because of this. CNOOC was soft but it’s getting stronger now.
Coca-Cola (KO) is a bit weak here. I expect it to base shortly. There is no doubt that its failure to provide short-term earnings guidance has hindered it, but long-term, I think it will help. And they can always up their dividend yield anyway. That will reward investors. They may not up their dividend yields a lot if the dividend relief is passed.
ConAgra Foods (CAG) looks pretty strong right now. It’s obviously basking in the wake of its good earnings. ENI (E), the Italian oil company, is incredibly strong in anticipation of a war in Iraq. If the oil fields in Iraq were opened to more exploration, ENI would benefit from that. So far, the stock is rallying. Of course, oil prices are firm because of the Venezuelan strike.
Harley-Davidson (HDI) is an excellent buy. It’s trying to break out right now. Harley-Davidson will release more good earnings and the stock will rally here soon, so it’s a great time to buy Harley-Davidson near-term.
Procter & Gamble (PG) looks pretty strong right now. This is one of the leading stocks on the Dow and one of the best performing stocks this year.
Progressive (PGR), the insurance company, is basically basing. It’s a phenomenal buy right now. Stryker (SYK), the orthopedics company, looks very strong. It’s still one of our Top 5 stocks.
Teva Pharmaceuticals (TEVA), our new addition, actually sold off sharply in the last three days. It was interesting. They had a very favorable summary court judgment for some of their generic drugs. I think people aren’t reading that newswire properly; if they read it, they’ll realize that this is a very bullish event for Teva Pharmaceuticals. So I expect it to firm up really quick here. It is a phenomenal buy.
United Health Group (UNH) is basically basing here. We are still maintaining our "hold" on it. Wrigley’s (WWY) looks really strong right now.
Moving on to the moderately aggressive stocks, Dell Computers (DELL) is a phenomenal buy. It’s trying to break out right now. Johnson & Johnson (JNJ) is a good buy right now—it’s still getting stronger here.
Lockheed Martin (LMT) exploded even though we have a "hold" on it because everybody senses there is going to be a war in Iraq. Guess who will benefit from that war? Lockheed will. And Lockheed will benefit anyway from the defense budget. I am holding this stock because it’s coming roaring back.
Nissan Motors (NSANY) is a phenomenal buy right now. It’s one of my favorite stocks. It just missed being one of our Top 5 stocks. TJX Companies (TJX) is very strong and it’s looking good. It’s going to be one of the winners this holiday season.
Wal-Mart (WMT) is basing here. I think it’s a very good buy. WellPoint Health Networks (WLP) is still a "hold" in our system but it’s basing and it should be OK in the long term.
Moving on to the aggressive and more powerful stocks, Bed, Bath and Beyond (BBBY) is the stock of the week because of its phenomenal earnings. It looks wonderful. Hang on—this is one of my favorite stocks.
Fox Entertainment (FOX) has pulled back and is a good buy right now. It’s still one of our Top 5 stocks. Lennar Corp. (LEN), the homebuilder, looks strong because it guided higher both for its fourth quarter earnings forecast and for next year.
And Lowe’s Corp. (LOW) is an excellent buy this week. It’s trying to firm up here.
So a lot of stocks are starting to break out and even some of our "holds" are doing well like Lockheed Martin (LMT). Other stocks are very good buys right now, but you’re seeing the market firm up here nicely. You’re seeing earnings work and I’m ecstatic about that because we’re going to have a lot of good earnings come out in mid-January. And I really expect that the cream will rise to the top and the stocks on our buy list will get more and more dominant here and be leading the market.
So this is a wonderful time to be an investor. As far as I’m concerned, this is as cheap as it will ever get. Just looking down the road here, you can see that it will be a lot stronger. If double taxation of dividends is eliminated, we’ll see a huge explosion in the market. The question is whether or not the dividend tax relief will be capped or unrestricted—I’m voting for unrestricted. I think it could cause the Dow to go up over 2,000 points because investors won’t be paying taxes on dividends. Let’s hope that happens. We will get dividend relief, but let’s hope it’s unrestricted.
I only see good things going forward. Even the war will be deemed as a positive event as ENI (E), the Italian oil company, is demonstrating. That’s not a good reason to go to war, but it’s not going to hurt the market. if anything, it will help the market. It did 12 years ago.
The market will close at 1 on Tuesday, and it will be closed all day on Wednesday for Christmas. The January issue of Blue Chip Growth is now live on the Web site. Also, you may have noticed that we made a few changes to the home page to make it a little easier to read. The Quarterly Earnings Results have moved to the right side (just below the Subscribe/Renew buttons).
So that’s it. I hope everybody has a wonderful holiday. I’ll keep updating the hotlines any time the Dow swings more than 200 points per day or the NASDAQ swings more than 100 points per day. So I’ll keep talking to you during fast market conditions. And I’ll update this hotline next Saturday as I always do.
Again, everybody have a wonderful holiday. Things can only get better. We’re going to have a nice little mini year-end rally. The real fireworks will commence in January.
- Mensagens: 197
- Registado: 10/11/2002 23:04
- Localização: Alentejo
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