VIDEO: These Events Will Determine Trading
With a major Apple event and more on the docket, we're taking a look at where the market could be headed next.
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In today’s Pro Portfolio Daily Rundown Video, Chris Versace discusses the two events that will determine Monday's trading as well as those for the balance of the week.
Chris also reviewed today's opening comments regarding Apple’s AAPL “Glowtime” event and Universal Display OLED, and shared why two economic data points this week will be important for Fed rate cut expectations and the market.
"We do think that the Fed is likely to reset the market's expectations for rate cuts," he said.
Transcript
CHRIS VERSACE: Hey, folks. Chris Versace here Monday, September 9. And as we discussed in Friday's roundup, the first week of September was indeed a challenging one for the market. Arguably, we could say that out of the gate, September lived up to its expectation to be a challenging month for the markets. But today, so far, stocks are in the green with the vast majority of the portfolio trending higher.
There are going to be two things that we get today that I think are going to wind up telling us whether or not the market is going to close in the green. The first one, coming off of last Friday's somewhat disappointing August Employment Report, we will get the next update for the Atlanta Fed GDPNow model. And going into Friday's report, which as you know, we suspected would not deliver the amount of job creation that the market was looking for. And yes, it did disappoint.
But arguably, overall, job creation was slightly better than what the market was looking for, comparing the final print for August and the revised number of jobs for July. But what we want to pay attention to now is what the market thinks, especially when we get the Atlanta Fed's GDPNow revision. As I started to say, going into the August employment report, the latest iteration of this rolling GDP forecast clocked in around 2.1%. Later today, we will see what this update brings.
Odds are it's going to be a little lower. This could spook the market depending on how much lower it is. Remember, the market is right now grappling with somewhere between a soft landing for the economy and a hard landing for the economy. The hard landing notion is really what is giving rise to this 100 to potentially 125 basis points the market expects the Fed to deliver before the end of 2024.
Currently, expectations that the September meeting are just for 25 basis points and cuts, which means much bigger cuts in November and December. Is the market potentially getting ahead of itself? You know, we think it is. But we will continue to pay attention to the data. So the first is going to be this update from the Atlanta Fed later today.
So that's the first item that we're really watching for today, Monday. The second, of course, is going to be Apple's event, the Glow Time Event that kicks off at 1:00 PM Eastern. In our opening comments this morning with you, we shared a report from Bloomberg that says that Apple may not deliver the big wow with Apple Intelligence that is expected to turbocharge the upgrade cycle for iPhone and for some of its other devices.
What the Bloomberg report says is Apple is more likely to deliver a staged rollout for Apple Intelligence, including its offering with ChatGPT coming later this year. Now, in these opening comments, we cautioned and said that there's always a lot of chatter ahead of Apple's events. Sometimes it's right, sometimes it's wrong. In this case, we are going to have to pay very close attention to what Apple rolls out.
But if Apple does not deliver that wow factor, the market's reception is only, eh, interesting, need to see more, then we could see apple shares trade off. And we laid out our game plan for you in that opening Alert. We also shared comments for Qualcomm, which will likely follow suit with Apple. But we also discussed the latest for Universal Display, ticker symbol OLED, as you know. We've been very bullish on this name, giving the rising adoption of organic light emitting diode displays not just in smartphones, but also in tablets, in the PC market, the automotive market and others.
While we could see OLED shares trade off initially depending on what Apple says or doesn't say as it relates to Apple Intelligence, we also discussed this morning in our opening comments that Huawei and their new trifold phone received more than 2.7 million orders. This is a big deal. I think it's really going to push the smartphone market at a more accelerated pace towards foldables, not just clamshell or the types that we've seen from Samsung and a growing number of others that are simply, you know, like this. But this trifold notion, boy, that really is a potential game changer.
Typically, we tend to see smartphone vendors replicate what others are doing, especially if there's a hot splash. They're always searching for the new, new thing. But as it relates to Universal Display, it's very simple, the larger the surface area, the greater the use for Universal's organic light emitting diode chemicals and other solutions. So this is a very big positive for them in my view, as is the follow on, as is the adoption in other markets.
So if we do see Apple's event kind of sour where Universal Display shares are, we'll be watching them pretty closely. This is one that we could potentially pick up more shares of. We could also say this with Apple at the right price point. We discussed this in the Alert. And of course, the same goes for Qualcomm, again, something we discussed in the Alert.
Generally speaking, though, is the market oversold here? No, it is not. We could say that for the S&P 500. We could say that for the Nasdaq composite as well. Let's remember, September continues to be a challenging month. We do think that the Fed is likely to reset the markets expectations for rate cuts. We continue to think that there's likely to be two, potentially three rate cuts depending on what we see in the upcoming data, certainly not the 100 to 125 basis points the market is looking for.
The next data point that we're going to have to watch on all of that as it relates to the Fed and monetary policy and rate cut expectations comes Wednesday with the August CPI. Now, what we want to see is for continued progress towards the Fed's 2% inflation target. However, as we talked about in last week's ISM PMI reports for August, as well as those from S&P Global, the data points on the pricing components rose especially compared to June, especially compared to July. Arguably, prices are moving in the wrong direction.
So if we do not see much progress or no progress at all, it's going to solidify the notion that the Fed is going to likely deliver a 25 basis point rate cut next week. That's what we're expecting. Now, we'll want to fine tune those expectations the following day, Thursday, when we get the August PPI. But is there room for the market to be disappointed in these prints?
Yes, there is. Because of that-- because of that, we are going to continue to watch walk a cautious path. But we will look to be opportunistic at the same time. It's going to be kind of walking a tightrope. But that's what we're going to do this week. So I would ask, please be sure, especially this week and next week, be on extra alert so you can check your emails. We want you to get the latest thoughts that we're sharing and we want to make sure that you are right with us if we make any moves with the portfolio. So that's our video today.
We've got the Atlanta Fed GDPNow update coming, Apple's event coming. And Tuesday, tomorrow, I didn't mention it, but we will have our regular office hours, 4 PM to 5 PM ET. We hope to see you there. And we'll have much more throughout the week. Thanks for watching.
At the time of publication, TheStreet Pro Portfolio was long AAPL and OLED.
