The Best Time for Stocks Is Coming
Editor's note: You can still put your money to work amid today's uncertainty...
Many investors are unsure where the markets are headed following an impressive first half this year. But according to Louis Navellier – editor of Growth Investor for our corporate affiliate InvestorPlace – the third-quarter earnings season is poised to create a slew of buying opportunities...
That's why he stresses investors must resist keeping their money on the sidelines in order to avoid missing out on this upcoming chance for massive gains.
In today's Masters Series, adapted from the October 5 issue of Market 360, Louis analyzes the current state of the economy... shares his outlook on inflation... and talks about how investors can capitalize on today's market conditions...
The Best Time for Stocks Is Coming
September was a tough month for the stock market. And it actually ended up being a little backward...
The S&P 500 Index performed well in the first half of the month and then declined sharply in the second half. Historically, the S&P 500 is stronger in the second half of the month after tax selling has eased and quarter-end window dressing heats up.
But this year, there were a lot of distractions for investors, especially in the latter half of September.
The biggest distraction a few weeks ago, of course, was the potential for a federal government shutdown. Thankfully, the folks on Capitol Hill secured a last-minute deal to avoid a shutdown.
But that deal did little to ease investors' fears, as it was basically a Band-Aid. The House and Senate now have 37 days for more budget negotiations.
And as I've discussed in my Special Market Podcasts, these budget discussions have contributed to artificially high Treasury yields – the highest we've seen in 16 years.
In fact, the 10-year Treasury yield is now sitting at about 4.7%, and it is getting dangerously close to 5% across the entire yield curve. That's a big problem, and many are concerned that high Treasury yields could push the U.S. economy into a recession...
Today, I'll talk about what's going on with the broader economy and which stocks I'm most excited about in the months ahead...
Overall, higher Treasury bond yields have masked the fact that key inflation components are cooling off.
The U.S. Department of Commerce recently reported that the personal consumption expenditures ("PCE") index – the Federal Reserve's favorite inflation indicator – rose only 0.1% in August and 3.5% in the past 12 months. The core PCE, which excludes food and energy, also rose 0.1% in August and 3.9% in the past year.
This is good news for the PCE, which includes less owners' equivalent rent (shelter costs) than the Consumer Price Index ("CPI"). If the PCE continues to cool off, the Fed will not have to raise interest rates further.
The Department of Commerce also reported that consumer spending rose 0.4% in August, down from 0.9% in July, so consumers are becoming more cautious.
The rest of the world is struggling with higher food and energy prices, so economic growth is slowing outside of North America.
The Atlanta Fed still expects the U.S. economy to grow at a 4.9% annual pace in the third quarter, and it has cited the shrinking trade deficit and higher energy exports for its high forecast.
Just a few weeks ago, the Commerce Department revealed that the trade deficit declined 7.3% in August. Imports dipped 1.3% to $253 billion, and exports surged 2.2% to roughly $169 billion. Clearly, higher energy prices are helping shrink the trade deficit and boost gross domestic product growth.
The good news for my Breakthrough Stocks subscribers is that we've benefited from the recent inflation, as my Breakthrough Stocks Buy List is chock-full of energy stocks that have risen with the higher energy prices.
Amidst all this uncertainty, an investor's best defense remains a strong offense of fundamentally superior stocks. One reason why my Breakthrough Stocks Buy List stocks outperformed: the recent resurgence in energy stocks.
Crude oil prices have been surging higher over the past few weeks. At the end of last month, Brent crude oil prices jumped above $97 per barrel, while West Texas Intermediate crude oil prices rose to more than $93 per barrel.
While none of us are happy with prices at the pump right now – the average price of gasoline is around $4.00 per gallon nationally ($6.00 per gallon in California) – we can help offset higher gasoline and diesel prices by staying invested in strategic inflation plays.
That's why I have added multiple integrated energy companies, oil and natural gas companies, tanker stocks, and coal stocks in the Breakthrough Stocks Buy List.
Moving forward, I anticipate that my Breakthrough Stocks portfolio will continue to emerge as an oasis and exhibit relative strength, thanks to improving sales growth and exploding earnings growth.
So, I won't be surprised if many of my Breakthrough Stocks surge 100% or more in the next several months!
As the third-quarter earnings announcement season gets underway in mid-October, I expect another round of big earnings surprises from my Breakthrough Stocks.
And this is a bullish sign for investors who are paying attention...
Sincerely,
Louis Navellier
Editor's note: This isn't the only exciting development in the markets right now. You see, Louis just developed a system that allows you to use AI to make you a better investor... with the potential to triple your earnings.
That's why he recently hosted an online presentation to share how this powerful, new AI system works. Plus, he revealed the No. 1 stock he believes you should buy immediately. Click here to get the full details...