PPI inflation comes in softer… Trump threatens tariffs on EU alcohol… why Luke Lango just pulled the trigger on new “buys”… ignore the macro, focus on micro
This week’s second inflation gauge came in below forecasts this morning.
Following yesterday’s softer-than-expected Consumer Price Index (CPI) report, today’s Producer Price Index (PPI) report showed that wholesale prices were flat in February.
The PPI data showed no gain following January’s 0.6% jump. Dow Jones economists had forecasted a 0.3% increase.
Core PPI dropped 0.1%, also against a forecast for a 0.3% gain. This was the first negative reading since July.
This is welcome news. Unfortunately, any tailwind it might have provided stocks was offset by the latest in President Trump’s trade war.
This morning, Trump threatened a 200% tariff on alcohol from France. From the president on Truth Social:
The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky.
If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the U.S.
Keep in mind that Trump still plans to announce another round of “reciprocal” tariffs in April that are likely to include the EU.
As I write, Wall Street is trading lower on the news. Recently, Trump downplayed the selling pressure in the stock market. And this morning, Treasury Secretary Scott Bessent echoed that sentiment:
We’re focused on the real economy… I’m not concerned about a little bit of volatility over three weeks.
As so, as we wrote in yesterday’s Digest – yet would prefer to stop writing – the trade war continues…
But as the market sells off again, our hypergrowth expert Luke Lango just recommended new “buys”
Let’s track his logic to help us as we navigate the volatility in our own portfolios.
To establish context, let’s begin with Luke’s game plan from earlier this week. From his Innovation Investor Daily Notes on Tuesday:
Hold and wait. Buy the dip and pile into growth stocks on signs of a technical bottom and rebound.
Reach for protection and play defense on signs of a technical breakdown.
When Luke wrote this, the market had just lost two key support levels he was monitoring. For the S&P 500, it was the 250-day moving average (MA). For the Nasdaq-100, it was 19,440.
This “19,440” level was important because it corresponds with “4% below the Nasdaq-100’s 200-day MA.” Here was Luke with the significance:
[The Nasdaq-100] has crossed below its 200-day moving average precisely 11 times before since 1990.
All 11 times, the market was either on the cusp of a big rebound or big breakdown – and which way it went depended on how the market acted in the subsequent two weeks.
Luke went on to explain that if the Nasdaq-100 could remain within 4% of its 200-day MA (19,440), stocks always rebounded over the next 12 months, with average gains of over 25%.
But if the Nasdaq-100 fell more than 4% below its 200-day moving average over the subsequent two weeks, stocks always slumped into a bear market.
So, Luke’s market game plan was simple: Monitor whether the S&P and the Nasdaq-100 could recapture these critical levels.
This brings us to yesterday when both the S&P and Nasdaq-100 popped
Back to Luke and his updated analysis from yesterday afternoon:
The Nasdaq 100 has reclaimed the critical 19,440 level (or about 4% below its 200-day moving average, which is historically a “make-or-break” level for the index).
The S&P 500 has snapped back above its 250-day moving average — another historically significant “make-or-break” level.
And here’s the kicker: the S&P’s Relative Strength Index (RSI) just bounced out of oversold territory after only two days — a setup that, historically, has preceded massive 12-month rallies.
Given the strength, Luke pulled the trigger on four new “buy” recommendations in his Innovation Investor service yesterday afternoon (this follows five recommendations on Monday).
Luke was direct about the risk that the market isn’t done falling. But here was his thinking:
History shows that moments of significant market volatility often become excellent buying opportunities or the start of major market crashes.
Currently, technical data suggests the former is more likely. So, we are accelerating our efforts. We may be wrong, but we believe it is a risk worth taking.
As I write Thursday, the S&P and the Nasdaq-100 are barely below Luke’s respective lines-in-the-sand.
We’ll keep you updated.
Some investors are getting out of today’s market for one reason – Trump and the unpredictability of his tariff wars
But as the markets react to every Trump-centered headline, it’s important to maintain perspective on what he’s attempting to do.
With this in mind, let’s turn to legendary investor Louis Navellier. From his Flash Alert podcast yesterday in Breakthrough Stocks:
If we do tit-for-tat tariffs, in the end, trade will become freer because the U.S. has more leverage than other countries. So, the ultimate goal is to have free trade, but everybody has to compete fairly…
Obviously, there’s a lot of people in the media who aren’t fans of President Trump, and they’re taking shots at him. Of course, he can be a bit erratic, but the ultimate goal is to have free trade, and this is really up to Howard Lutnick.
Now, I know Howard Lutnick personally – my son went to school with his son. He was actually in part of my business a long time ago, and I think he’s a wonderful guy. I’m very comfortable with Howard.
He’s also going to be a cheerleader for America, that’s what the Commerce Secretary normally is – they just run around telling everybody how great things are and move your business here to America. And the ultimate goal is to have trillions of onshoring…
President Trump will be President Trump. He can be entertaining at times, and be frustrating. But I do think as frustrated as the financial media has been, they do not foresee the future of what’s really happening.
If your anxieties remain, consider adopting Louis’ approach to the markets…
Ignore the headlines and focus on stocks with fundamental strength.
This is how Louis has amassed one of the best, and most envied, long-term track records in our industry.
Louis has always put fundamental strength at the heart of his market approach. To illustrate, here are the eight criteria that must be present for him to consider recommending a stock:
- Increasing sales growth
- Expanding operating margins
- Earnings growth
- Positive earnings momentum
- Positive earnings surprises
- Positive earnings revisions
- Strong free cash flow
- Healthy return on equity.
The fundamental strength of a specific stock is vastly more important to your personal wealth than where “the market” might be going based on a president or some macro influence.
As just one example, consider Archrock Inc. (AROC). Louis holds this oilfield services company in his Breakthrough Stocks portfolio.
In the first half of 2022, when investors panicked about runaway inflation and the Federal Reserve’s rate hikes, the S&P fell 14% through June 1. Over the same period, AROC spiked 42%.
Bottom line: A focus on fundamentals is what makes or breaks portfolios.
If you remain skeptical, I’ll add that this is Warren Buffett’s approach as well.
From Buffett, speaking at 1994’s annual Berkshire Hathaway Inc. (BRK.A, B) meeting:
You may have trouble believing this, but Charlie (Munger) and I have never had an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good.
If we think a business is attractive, it would be very foolish for us to not take action on that because we thought something about what the market was going to do…
Guesses about what’s going to happen in some macro way just doesn’t make any sense to us.
Bottom line: Ignore the macro. Focus on the micro.
On that note, if you missed Louis’ event earlier today – The Next 50X NVIDIA Call – it was all about the “micro” of one specific stock
From Louis:
My system is flagging another stock that I believe could be the next NVIDIA with 50X profit potential. This is a small-cap stock protected by 102 patents with close ties to NVIDIA.
And here’s why the timing couldn’t be better…
See, I think something big is about to happen.
For weeks, NVIDIA CEO Jensen Huang has been downplaying quantum computing, calling it decades away. But now, NVIDIA is hosting an entire Quantum Day (or what I like to call “Q Day”) event on March 20.
Why?
I believe NVIDIA is about to stake its claim in the quantum computing space. And when it does, this little-known top pick could erupt overnight.
Earlier today, I revealed everything you need to know about Q-Day – including details on my No. 1 stock pick that could explode in the wake of NVIDIA’s announcement.
You can check out a free replay by clicking here.
We’ll keep you updated on all these stories here in the Digest.
Have a good evening,
Jeff Remsburg
