José Luís Carneiro considerado o melhor líder para o PS

[BonVivant]

Hotline
December 28, 2002

This is Louis Navellier. It is Saturday, December 28, 2002.

There are several items weighing the stock market down right now so let me address them. First, we just finished the worst holiday shopping season in over 30 years. We could blame the poor weather in the Northeast that curtailed shopping. We could blame the fact that there was one week less to shop between Thanksgiving and Christmas this year.

The truth is that consumers are extremely cautious right now and even some of the discount retailers like Wal-Mart (WMT) are reporting softer sales. When consumers are being thrifty at Wal-Mart, they’re thrifty. I think we have to expect that the economy is going to be sputtering here for some time.

The evidence of that is that durable goods orders fell in November after being quite strong previously. That’s another sign that the economy is sputtering.

It will be interesting to see what, if anything, the Federal Reserve and the Bush administration will do to get the economy going. Of course, the economic stimulus package is going to be pushed through here in the next several weeks. The latest version of the dividend tax relief that we’re hearing is that dividends will be cut 50% for individuals. So instead of double taxation of dividends, once on the corporate level and once on the individual level, we’re going to now have 1.5% potential taxes on dividends.

Candidly, this is very disappointing to me. I wanted unlimited dividend relief on one level, but I’ll take what I can get. According to the dividend discount models, the stock market is 40%+ undervalued relative to bonds. If we got 50% dividend tax reduction, the stock market would be 60% undervalued relative to bonds. So it will help the market but I obviously want dividend taxes eliminated entirely because I think it will cause a lot of bond investors to flock to the market.

Speaking of bonds, bond yields are falling right now. There is a flight to quality again. Every time bond yields fall lower, there is no hurry for bond investors to go to the stock market and the stocks tend to get soft—that’s what’s been happening this week.

The other concern out there is that we have some deflationary forces in the US economy. That’s starting to subside now because the US dollar is breaking into new record lows against the euro. A weaker dollar will result in higher import prices and it will help the US manufacturing sector. Boeing just got a big order for 747s from the Chinese airline. Lockheed Martin (LMT) just got a big order for fighter jets for Poland, a NATO member. So whether these companies are starting to win these big orders due to the weak dollar or not is uncertain, but the weak dollar is certainly not hurting them.

So the dollar is going to help get rid of any deflationary forces. Also, rising oil prices are helping to do that already because gas prices are rising along with oil prices. Oil prices have been rising because of a potential war in Iraq, which looks like it may be imminent. Also, it’s more importantly near-term due to the strike in Venezuela, which has cut off oil supplies to the US as well. In fact, Venezuela is now importing gasoline from Brazil.

So there are a lot of things weighing down the market. Frankly, I hope the Fed can do a little bit more. It looks like they’ve done about all they can. But as interest rates continue to fall, the Fed could conceivably cut again. On a more important note, though, I think the Bush administration and the new Congress are going to have to get their tax relief passed as quickly as possible. I think everybody wants to run deficits now because they know the US economy is sputtering.

Whether we talk about the Democrats’ payroll tax holiday or the Bush administration’s tax plans, both parties are fighting over who can cut what. So we’re going to have deficits and we’re going to have deficit spending for a while. But it’s just because everybody wants to jump-start the economy.

Of course, I want to jump-start the stock market with dividend relief and I’ll take whatever I can get (50% is better than nothing). If the Dow would have popped 2,000 points with full dividend relief, now it might only pop 1,000 points or so now. So let’s hope that goes through.

Speaking of our stocks, I think it’s best right now to be very defensive and selective. The market has been very rotational in the past several quarters favoring consumer stocks in the second quarter, health care in the third quarter and techs in the fourth quarter. Now it’s headed to energy stocks and fortunately we have energy stocks on the buy list.

Let me just walk you through all the stocks on the buy list and tell you which are the best ones. Obviously, I’m trying to buy the leaders in each industry—stocks that are going to have great earnings announcements in the upcoming weeks. Starting with the conservative stocks, Air Products & Chemicals (APD) supplies oxygen to hospitals. It is a very conservative stock. I still have a "hold" on it. It has pulled back and is not doing a lot here but hopefully it will come out with good earnings and shore up.

Anheuser Busch (BUD) has pulled back and is trying to base here. It has been disappointing here in the past few weeks but it is basing and I think it should bounce here soon. CNOOC (CEO), the Chinese oil company, is also trying to base here. It should be benefiting from higher oil prices so I wouldn’t worry too much about it near-term. I continue to maintain my "hold" on it.

Coca-Cola (KO) has been weak. It should turn around here soon. It will be benefiting from the weak dollar. I still have a "hold" on it. ConAgra Foods (CAG) has been one of the strongest stocks on the buy list here. It has pulled back here just a tad, but you can still buy it. It is still within range.

ENI (E), the Italian oil company with vast interests in Iraq, will be one of the major beneficiaries in a post-Saddam era. They’ll have to open up those oil fields to help fix Iraq. It has been very strong. It has pulled back slightly, but it is out of range right now. I don’t want you to chase it. It is the only stock on the buy list out of range right now and it is still one of my Top 5 stocks.

Harley-Davidson (HDI) is a phenomenal buy right now. I have to tell you that Harley-Davidson does move in an annoying manner. It tends to surge when its earnings come out and sag in between earnings season. But it will have good earnings in the upcoming weeks and that will help get the stock going. So it’s a good time to buy it.

Procter & Gamble (PG) is now leveling off. It has been very, very strong but it’s leveling off at a high level. It’s still within range. Progressive (PGR), the auto insurer, is basing right now. It’s a good buy. They have been raising auto rates around the country, so they will be reporting good earnings.

Stryker (SYK), the orthopedics company, is one of our Top 5 stocks. It has been strong and has pulled back here just a bit. It’s still within range. Teva Pharmaceuticals (TEVA), our only new pick in the past month, is a generic drug. It has pulled back and I think it’s an excellent buy right now. There is a lot of coverage of generic drugs. The Bush administration has been pushing generic drugs. Generic drugs are also raising their prices. So this company will be reporting record earnings and as long as Wall Street has an earnings focus, Teva will do well.

UnitedHealth Group (UNH) continues to base and firm up here. I still have a "hold" on it. I don’t want you to buy any more. Wrigley’s (WWY) has been very strong. It is still within range. I’m pretty happy with it.

Moving on to the moderately aggressive stocks, Dell Computer (DELL), one of our Top 5 stocks, continues to build its cash. That’s very, very important as it means they are survivors in the tech business. They’re also capturing more and more market share. They are an excellent buy right now. They’ve pulled back and have been basing near-term.

Johnson & Johnson (JNJ) is an excellent buy right now. Of course, they’re involved in coded stents. If you get angioplasty, you have to have a Johnson & Johnson stent. So they continue to benefit from that trend. I still have a "hold" on Lockheed Martin (LMT) but it has been very strong largely because it won the fighter jet order from Poland. Also, it’s strong because if there is action in Iraq, it will benefit from that.

Nissan Motor (NSANY) had been strong. It has settled down here and is still an excellent buy. They have a very strong product line. A lot of their cars models sell every single one made at full price, so I’m very pleased with Nissan right now.

TJX Companies (TJX) is one of the discount retailers that was doing well this holiday season. It has now pulled back and is settling down. I want to see its earnings come out. You can buy some more if you’d like, but I’d like to see its earnings come out. It should firm up with those earnings, but I want to see them first.

Wal-Mart (WMT) is basing right now and is an excellent buy. Their growth comes from stealing business from Safeway and Kroger. They continue to extend their supermarket business. So even though retailers may be getting soft and even Wal-Mart had soft holiday sales, they are survivors and are market leaders.

I still have a "hold" on WellPoint Health Networks (WLP). It’s holding steady here and is firming up here nicely.

Moving on to the aggressive and more powerful stocks, Bed Bath and Beyond (BBBY) is definitely the best retailer on this buy list. It is holding steady here when a lot of retailing stocks are selling off. It, of course, had record earnings last week. It is a great little company. I’m very, very pleased with it. It’s also a nesting stock. People are fixing up their homes and going to Bed, Bath and Beyond.

Fox Entertainment (FOX), one of our Top 5 stocks, has pulled back and is a great buy. Lennar Corp. (LEN), the homebuilder, had been strong. It has pulled back here. You can still buy it. Of course, homebuilding is still very firm out there, especially on low-cost homes like the ones Lennar specializes in.

Finally, Lowe’s Corp. (LOW) is basing here. It is a retailing stock, largely a nesting stock as people are fixing up their homes more than before. It hasn’t rallied much here, but I think it will have great earnings. If you ever wonder why Home Depot has been weak, it’s due to Lowe’s.

So overall, we have some strong stocks but most of our stocks are basing. We are still maintaining holds on several stocks. Some of those stocks are firming up nicely. Those that don’t I will of course sell. As we enter the new year, there is no doubt that we are not hitting on all cylinders as far as the economy is concerned. The stock market is going to be very selective.

I really think the big event is going to be the dividend tax relief. I think that’s going to be a dam break or watershed event that will cause money to go into the stock market. As it gets watered down in Congress as everybody fights over how to mess with it, they’re really going to hurt the stimulus to the stock market. So let’s hope it doesn’t get watered down too much and we get at least the 50% dividend tax relief that the Bush Administration is proposing.

If there is military action in Iraq, which seems to be increasingly likely because Colin Powell says Iraq is in breech, then the market are probably going to rally. The markets rallied 12 years ago when the Gulf War happened. I went up 40% that quarter. So we’re all going to be watching that very, very carefully.

That’s it. That’s all that’s happening. I hope everybody has a great New Year. The market is closed this Wednesday. I’ll update the hotline any time the Dow swings more than 200 points per day or the NASDAQ swings more than 100 points per day.