VIDEO: Our Road Map for the Coming Days

In today's Daily Rundown video, Chris Versace lays out the week’s road map, from retailer earnings, the flash August PMI report and Fed Chair Powell’s Jackson Hole comments coming on Friday.

Coming off last week’s positive week for the market, Versace also provides an update on why TheStreet Pro Portfolio will be watching position sizing and price targets this week.

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Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here. Monday, August 19. Quick heads up-- I am subbing for Doug Kass over in the daily diary today. So please head on over.

We're going to have a lot of commentary there. We already do, but we're going to have a lot more throughout the late morning and afternoon. And believe me, I don't want you to miss it.

In terms of the portfolio, we already have some comments out just talking about a few things that are going on this morning. First, Estee Lauder reported horrible, horrible guidance. And as I shared in an alert with you, it really reaffirms the decision that we made last week to first downgrade and then ultimately work our way out of Coty. Even when I look through Estee Lauder's quarterly results, you know, even the fragrance business was only up marginally, some roughly 1% or something like that.

So, hard to write home about. And then, of course, the guidance, one of the questions that I'm sure the folks are going to ask is, well, Chris, if this is so bad, why is the stock up? You have to realize that they've also announced a CEO change.

And I think that is taking some of the bite out of it. We'll have to get through the earnings call and, of course, see what others on Wall Street think. But to me, this is exactly what I was concerned about, which was weaker than expected guidance coming out of Coty when they report their quarterly results this week.

We made the nice move to move over into Dutch Bros, and that has been panning out. We've got some other things that we want to be adding too. So we'll be talking more about that over the next couple of days.

But remember what we have through the balance of the week. We're going to have another wave of retailer earnings-- MacY's, Target, TJX, and the like. So we're going to get another look at the consumer and prospects for consumer spending.

Remember, a lot of folks were very jazzed by the July retail sales report, but we do have some element of pull forward. That's why we will be focusing more on the guidance that we get from these upcoming retailers. We also have the Fed meeting minutes, which, candidly, I think are going to be a little backward viewing when we get them on Wednesday afternoon.

Of course, everybody's waiting to see what Fed Chair Powell has to say on Friday, and I shared my thoughts with you in the weekly roundup on Friday. But just quickly, I think Powell is going to acknowledge the continued progress on inflation, but he's going to stop short of saying anything particular. You know, maybe he might say that the risks of monetary policy are not so much on the inflation side. They're more on the employment side.

And that means that we will, of course, have to watch more coming data. One of the big data sets this week is the flash PMI report for August. It's the first real data set we're going to get for August.

When we move through it, we're going to want to see a few things. First, what does it say about the manufacturing economy? Because the last few months, whether it's the ISM or the S&P, PMI data, it's shown that part of the economy has been contracting, which means the service side of the economy has been carrying it.

So, are we seeing a turn in the manufacturing side, and what are we seeing on the services side? Are backlogs rising? Are new orders continuing to grow, saying that the services economy can continue to carry the overall US economy?

And underneath it, we're going to want to see what is said about those two different parts of the economy as it relates to inflation and employment. It's that employment one that I think is going to catch a lot of eyes. If you remember the July employment report-- excuse me, July employment report was softer than expected.

If the tea leaves inside the flash PMI report suggest a further erosion in the number of job gains in the month of August, I think the market's going to get increasingly comfortable with a September Fed rate cut. But we do have a lot of data to go between now and then, and how that influences the Atlanta Fed GDPNow model will be something that we continue to watch.

And that's going to help delineate between whether the prospects for the Fed are just 25 basis points in September or potentially something more. So that's kind of the big stuff for this week. We're going to continue to watch positions that are climbing closer to 4.5% in terms of a position size for the portfolio.

There could be some prudent trimming there. We're also going to watch stocks that are encroaching upon their price targets as well. We'll be looking to see, are there reasons potentially to nudge those price targets higher? And if not, then we might have to do some prudent moves with the portfolio as well.

So, I will say this. Even though it's going to be likely a lower volume week than we've seen, please be sure to check your alerts. Check your emails. We want to make sure you're getting our latest thoughts, and any moves that we might make with the portfolio, we want you right there with us. Thanks for watching.