VIDEO: Looming Updates That Could Move 3 Key Positions

As August closes and September begins, market attention is turning to a fresh wave of inflation data, employment figures and a Federal Reserve meeting that could reshape rate expectations heading into the fall.

Today’s video breaks down what this week’s ISM pricing data, wage trends and geopolitical developments could mean for portfolio positioning — from a homebuilding-adjacent stock holding to a trucking name riding a a confluence of tailwinds, and union discussions that could remove an overhang on the shares of Boeing (BA).

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Transcript

Hey everybody, Chris Versace here, and it’s Monday, August 31st — the last trading day of the month. While it’s been a good month for the market and for the Portfolio, developments over the last few days, including the weekend, have us ending the month on a bit of a whimper. Last week, Fed Chair Kevin Warsh’s Jackson Hole comments rekindled market expectations for a rate hike in September.

Over the weekend, renewed fighting in the Middle East pushed oil prices — and some other commodity prices — higher, while reported traffic through the Strait of Hormuz dwindled once again. All of that has August ending on a whimper just as we’re heading into September, the final month of the current quarter. And much like us, you’re probably already seeing headlines about how September tends to be one of the worst months for stocks.

That has us preparing not only for what’s ahead in September — a rash of economic data, the Fed meeting, investor conferences — but also focused on what this week’s data says about inflation, one of the key topics the market has been focused on and that, as of last week, we know for certain the Fed is focused on too. With that in mind, we’ll be watching the price data in ISM’s August Manufacturing and Services PMI reports, due out Tuesday and Thursday.

Remember, the flash August PMI from S&P Global showed a softening in inflation pressures, but oil and gas prices have bobbed and weaved a bit since that report came out on August 21st. Our view is that the pricing data in ISM’s August report has the potential to reshape expectations for what next week’s CPI and PPI data will show — and by extension, rate-hike expectations for September. If ISM’s pricing data shows another step down in inflation pressures, the market will probably be relieved. That said, we also have to be mindful of where oil prices go over the next two weeks ahead of the Fed meeting.

In addition to the pricing data, we’ll be focused this week on job creation — especially after the surprise downside July employment report — as well as wage data. Unlike others, we’re not simply going to say “the monthly employment report says this.” We’ll continue to triangulate the job-creation and wage data, because what we’re really trying to isolate is the gap between wage growth and inflation pressures, and what that means for the consumer and where they’re likely to spend as we head into the holiday shopping season.

Here’s the backdrop: when we looked at the July personal income and PCE price index data last week, both were running at 3.7% year-over-year — personal income and the PCE price index were essentially evenly matched. To the extent wage data gets eclipsed by inflation pressure, that tells us the consumer will feel more pressure, and their ability to absorb higher prices won’t hold up as well as it has over the last few months. So if we see inflation pressures tick higher while wage pressures tick lower, that’s a signal worth watching for the Portfolio’s retail-facing positions — Costco, TJX, and Amazon.

We’ll also be watching the inflation data this week alongside the impact of President Trump’s expected meeting with oil executives tomorrow. Our thinking is that we could see some bombastic headlines about the size of any deal, but the reality is that given the time needed to increase production in Venezuela — which we think will be a critical part of this meeting and its outcome — any pronounced impact is more likely a 2027 event or later. Still, the market could react positively to Trump’s comments.

We’ll be weighing all of this against our position in Builders FirstSource (BLDR). We laid out our thinking in an alert earlier today, and it points to the position potentially being dead money — given where mortgage rates, oil prices, and gas prices sit, along with the recent pullback in purchase mortgage applications through July and August. That tells us we’re unlikely to see a big rebound in demand for Builders FirstSource. It also tells us that as demand stays subdued — some would say continues to fall — home builders will keep leaning on sweeteners and incentives to close deals, which means any margin rebound at the builders is likely further out. What we learn this week should shape our thinking on whether Builders FirstSource remains in the Portfolio — whether ISM’s pricing data brings a positive surprise, or simply confirms that any rebound in housing demand, and therefore demand for Builders FirstSource, is further out than we thought.

A couple of other things before we close out today’s video. One data point we’ll be watching as we move into September is the flash heavy-truck orders for August — something we track closely for our position in PACCAR (PCAR). Truck order levels have been very robust over the last several months, driven by a combination of trucking demand and activity, the expensing provisions under the One Big Beautiful Bill that cover heavy trucks, and the EPA mandate we’ve discussed before, which will raise truck costs starting in the back half of the first quarter of 2027.

That robust demand means order books are largely filled for this year, with production being pushed further into 2027 than it was at this point last year. That also gives heavy-truck manufacturers like PACCAR some pricing leverage. Rising order books tend to lead to higher production levels and more favorable pricing on the backlog, which, combined with better fixed-cost absorption, points to meaningfully better earnings leverage and bottom-line performance out of PACCAR over the next several quarters. That keeps us bullish on the shares, and we have room to add to the position — something we’ll be weighing as the orders data comes in and we work through the rest of this week’s data and events.

Finally, we’ll be watching the shares of Boeing (BA) today, as the company meets with SPEEA — the union that recently rejected its latest contract offer and authorized a potential strike in early October. We know Boeing management is intensely focused on increasing deliveries, earnings, and cash flow, and we continue to think a contract between Boeing and SPEEA will emerge. As word gets out about today’s meeting and any progress, we’ll be sure to discuss it with you. If a deal is struck, that could be a nice catalyst for us to add further to the Portfolio’s position in Boeing — a clearer path to rising production and delivery levels means Boeing tapping its massive multi-year backlog, which gives way to more earnings leverage and cash flow. That’s what the market is focused on when it comes to Boeing shares.

Before we wrap up, a few housekeeping items. After today’s market close, we’ll publish the August monthly roundup. Because of that — and because we’ll be chatting with Josh Lipton at Yahoo Finance right at the close today — we’re moving this week’s Portfolio Office Hours to tomorrow, Tuesday, September 1st, in the forum between 4 and 5 p.m. Eastern time. Given the events and data on deck, we expect plenty to cover. As we move through the rest of today and into office hours, please check your emails and alerts, especially this week — we want to make sure you’re getting our latest thinking, and if we make any moves in the Portfolio, we want you right there with us. Thanks for watching.

At the time of publication, TheStreet Pro Portfolio was long BA, BLDR, and PCAR.