A Global Bull for 2007

01/12/2007 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Renowned growth investor Louis Navellier is bullish on world equities in 2007. He foresees strong economic growth worldwide, stable energy prices, lower US interest rates and the emergence of the euro as the world's leading currency...

"A lot of important economic data will be released in the next few weeks, and I expect it to be mostly good. I anticipate that the bears will lose their ammunition when waves of positive economic news arrive from Asia, Europe, Latin America, and North America.

"However, the strong economic growth could be disrupted by some of the same culprits this year--namely, Iran's bad behavior, as well as the potential for higher energy prices. As you can imagine, Iran is not happy that the United Nations Security Council imposed sanctions on its trade in sensitive nuclear materials and technology.

"However, the overwhelming defeat of the party behind Iran's fiery President, Mahmoud Ahmadinejad in recent elections may signal a new pragmatic government is emerging--although Iran's more cooperative tone may be another misleading message to further its ambitions to build a nuclear bomb. (Editor's note: Supreme Leader Ayatollah Ali Khameini recently vowed that Iran would not give up its nuclear program.)

"Still, if energy prices remain stable and there are no major terrorist flare-ups around the world, I expect that 2007 will be another booming year for worldwide economic growth.

"It appears the euro surpassed the US dollar as the world's favorite reserve currency (although the dollar is still the preferred "underground" currency): The value of euros in circulation has exceeded the value of US dollars worldwide.

"As of October 31, there were $759 billion US dollars in circulation worldwide, compared with 610 billion euros. At current exchange rates (of $1.32 per euro), those euros are now worth $805 billion. The fact that China and other countries with trade surpluses are trying to diversify from the US dollar into a broader basket of currencies should support the euro's rise to global prominence in early 2007.

"One reason that the euro remains strong is the perception that the European Central Bank (ECB) may continue tightening interest rates. By contrast, many believe the US Fed is much more likely to cut interest rates than raise them in the upcoming months.

"The Bank of England and the ECB pride themselves in maintaining strong currencies, even though strong currencies also impede export-oriented businesses. But it will be interesting to see if any other central banks also rush to cut rates to stimulate their economies. If this happens, 2007 may turn out to be a much stronger year for economic growth than most experts anticipated."

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