Navellier Growth: your source for market-beating growth stocks

Poor Ben Bernanke! He’s all trapped in. Let’s look at the box he’s put himself in.

1. Lousy economic news comes out saying that the economy is being hurt by high gas prices.
2. Wall Street starts whining and moaning that Bernanke isn’t doing anything.
3. The market starts selling off. Dow down 200…no 300 points! Everyone panic!
4. Bernanke finally gives in and cuts rates.
5. The market has a huge rally.
6. For one day.
7. With lower rates, investors start dumping dollars to buy euros.
8. The lower dollar drives up commodity prices.
9. Oil hits a new high.
10. Refer to #1.

If you have a degree in economics, you might call this a vicious cycle. If you were a liberal arts major, you’d probably call it a Catch-22. Either way, it’s not good for Bernanke.

Personally, I think the Bearded One is in denial. The evidence clearly shows that stagflation—low growth and higher prices—is becoming a problem. Despite the evidence, Bernanke said last week before Congress, “I don’t anticipate stagflation. I do not think we are anywhere near the situation that prevailed in the 1970s.”

Well, we may not have the runaway double-digit high inflation rate of the 1970s, but we do have rising inflation combined with slow economic growth. In fact, things are likely to get worse before they get better. Let’s look at the evidence.

That 70s Show—the Return of Stagflation

One half of stagflation is rising inflation. The Labor Department recently reported that the Producer Price Index (PPI) rose 1% in January (a 12% annualized rate), with food prices up 1.7%, the biggest one-month increase since October 2004. Energy prices were also on the rampage and rose 1.5%, with gasoline prices at the pump rising at an even faster pace of 2.9% (a 41% annualized rate). Overall, the PPI was up 7.4% in the past 12 months, the fastest rate since 1981!

The other half of stagflation is slow economic growth. The Commerce Department recently revised fourth-quarter GDP growth, showing that economic growth came in at 0.6%, the slowest pace in five years. Under surface, the numbers are even worse. If you exclude exports and government spending, many components of the economy are now in full retreat.

The Commerce Department also reported that the demand for durable goods declined 5.3% in January. Orders for commercial planes decreased 30.5%, while military aircraft orders fell 32.6%. Hardly any orders rose—a clear indication of a rapid deceleration of the economy. The bottom line is that consumer and business spending is fizzling this year, which is why I expect negative GDP growth to be announced soon.

What to Do Now

Just today, the dollar hit another new low. In fact, some Europeans are starting to get a little miffed, according to the Associated Press.

European Union businesses said they were starting to feel the pinch, too, notably from U.S.-based buyers who pay for goods from Europe.

“We said when the euro was above $1.40 that we feel the pain. When the euro is above $1.50, it is alarming” said Ernest-Antoine Sillier, president of the EU employers' group BusinessEurope.

The unfortunately named Monsieur Sillier has a point. A strong currency isn’t very good for your domestic industries. But it can be very good for shrewd investors!

In fact, there’s an easy way for us to profit from the bind that Bernanke finds himself in. In my March issue of Blue Chip Growth, I showed investors several new stocks that are posed to benefit from higher commodity prices.

For example, I recommended Barrick Gold (ABX), which is the world #1 gold producer. Shortly after I recommended it, the company reported earnings of 62 cents a share, which was a nice increase from the 48 cents its earned last year. Compare that with many banking stocks where their profits are plunging 80% or 90%. In just three weeks, ABX is already up 8% for us.

The best part is that I see a very bright future for Barrick. The company churns out eight million ounces of gold annually and has 120 million ounces in proved and probable reserves. Any day now, gold could finally break $1,000 an ounce and that will be very good for Barrick’s huge reserves.

This is a great time to join us at Blue Chip Growth. Last year was the eighth time in the last ten years that we’ve beaten the overall market. You can sign up now for one year of Blue Chip Growth for $149.

I stand behind my service 100%. So if you decide you don’t like Blue Chip, you can cancel at anytime within the first six months and get all of your money back. I’m so confident you’ll prosper with Blue Chip that I’m willing to make this no-risk offer for you.

If you join us today, you’ll get 12 monthly issues and complete access to my full Buy List (over 50 stocks). Plus, you’ll also get my weekly e-mail updates, access to my earnings service, and much, much more.

For the last ten years, Blue Chip Growth has helped countless investors plan for their financial independence. I hope you join us today.

Sincerely,

Louis Navellier

P.S. Act fast. The Federal Reserve meets again in a few days and I expect another big rate cut, which will drive the dollar lower and commodities, like gold and oil, much higher. Don’t be left on the sidelines, buy Blue Chip Growth today.