In his podcast addressing the markets today, while commenting on bargain hunting, Louis Navellier offered the following commentary.
Nasdaq/S&P Retest
The stock market’s “capitulation” selling on Monday was essentially a “retest” of recent lows for the NASDAQ Composite and S&P 500.
Q1 2022 hedge fund letters, conferences and more
Natural gas prices are down sharply today because there's a problem with an LNG plant in America. That is unfortunate but it just shows that the reason natural gas prices have been high is we have been exporting it to Europe.
Bargain Hunting
Bespoke Investment Group documented that when the S&P 500 has fallen over 20% in the past 14 times since 1946, the median return in the next month is 2.89%, the next three months is 5.71% and the next year is 23.9%. In other words, the stock market is grossly oversold, so it is time to go bargain hunting in fundamentally strong stocks.
I would recommend stocks that have earnings. That includes energy, fertilizer, food, shipping, and some specialty semiconductors.
The Labor Department on Tuesday announced that the Producer Price Index (PPI) rose 0.8% in May and has risen 10.8% in the past 12 months. The core PPI, which excludes food, energy and trade margins, rose 0.5% in May and 6.8% in the past 12 months. Believe it or not, wholesale PPI and core PPI back in March were running at an annual pace of 11.5% and 7.1%, respectively, so wholesale inflation is starting to cool off.
Wholesale energy prices surged 5% in May, while food prices were unchanged. Wholesale truck freight rose 2.9% in May, so it will be interesting how that impacts retail trade margins. Overall, higher energy prices, especially distillates, like diesel and jet fuel, continue to ripple through the U.S. economy.
Bad Sign?
Tomorrow, we are going to have the retail sales report and we want to see that retail sales were growing faster than inflation. The contrary would be a bad sign. That's a sign that consumers are retrenching and they are in trouble. Now, we know retail sales are going to be up because gas prices are up, but we want to see retail sales exceeding the surge in energy prices.
Coffee Beans
Despite the volume and value of Russian fossil fuel exports decreasing since the invasion of Ukraine, Russia was still making around 40% more money off its exports of oil, gas, and coal in May 2022 than it did one year earlier. This is due to the fossil fuel prices on the world market that inflated even before the start of the war on Ukraine. Source: Statista. See the full story here.
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