VIDEO: This Week Shows the Power of the Bullpen

In today’s Daily Rundown video, Chris Versace talks about what’s driving Thursday's market rebound and recaps the decision behind our newest portfolio addition. As Chris points out, this week’s moves show the importance of the Bullpen and he  shares our plans for it in the coming weeks. 

He also discusses why we’ll be paying close attention to quarterly results after today’s market close from e.l.f. Beauty ELF and indie Semiconductor INDI.

Transcript

CHRIS VERSACE: Hey, everyone, Chris Versace here, Thursday, August 8. Stocks are rebounding today, kind of shrugging off the retreat that we saw yesterday. Candidly, earlier in the week, we said that we were likely to see the market be a little bumpy over the coming weeks. And I think that's exactly what we're seeing. But we're going to continue to stick to the fundamentals. We're going to continue to eye the technicals as we continue to plot ahead with the portfolio.

But today, we're seeing the market kind of rebound, as I said, because weekly jobless claims were not as bad as feared. And the VIX, or the volatility index is trading off after reversing and climbing late yesterday afternoon, kind of helping throw some cold water on what was a nice start to the market yesterday. But again, we're seeing some positive moves today.

And the other interesting data point that I would share is, we are seeing reports that put mortgage rates at their lowest level in around 15 months. This could start to be the beginning of breaking free the housing logjam that I talked about with you yesterday when I shared my comments regarding Builders FirstSource and Vulcan Materials. We will want to be careful here because the expectation, if we look at the CME Fedwatch tool, is that the market sees the Fed making multiple rate cuts before the end of the year.

And, look, we're going to have to continue to monitor the data, because as we started off this week, the July services PMI clearly showed that there is no recession in that part of the economy. We're going to have to continue to pay attention to the economic data. And as I've said all along, we will continue to update our thinking about the speed of the economy, about the prospects for rate cuts as we get more data.

But I will say this, that we do look forward to the Fed embarking on a rate-cutting cycle. It's not going to be one and done. This is some of the underlying thoughts that we have for several of our more interest rate sensitive positions. You could call them United Reynolds, Vulcan Materials, if you want, Builders FirstSource as well. But there could be some implications as well with other names, because to the extent that we see the Fed embark on that rate cutting cycle and deliver multiple rate cuts over the next three, four, five, six quarters, it means that hurdle rates for projects are going to come down, loan activity will likely pick up. That could be good for a number of our different positions in the portfolio. But we don't want to get ahead of ourselves, just kind of sharing that we will continue to watch how this aspect unfolds and what it could mean for the portfolio and our thinking.

But getting back to the portfolio, as you know, this week we made a number of opportunistic moves, and we are, as today, seeing some of them start to bear some early fruit. And if you already saw your alerts that we shared with you from today, then you know that that opportunistic streak continued. I say this, because we started a new position and the shares of Dutch Bros, ticker symbol B-R-O-S, with the $39 target. And we really took advantage of the overreaction that we saw early today in the company's outlook when it reported its June quarter results last night, which topped expectations. And you know that we've been kind of really keeping close tabs on the shares of Dutch Bros in the bullpen.

And today's move, along with the recent additions of Meta and Eaton, they really point to why we have the bullpen as part of the portfolio. And candidly, we've done a lot pulling out of the bullpen. But now, as we move into the later stages of the current earnings season, our plan is to use the quote, "Dog days of summer," the last few weeks of August, if you will, to start a refresh cycle for the bullpen.

It means that we'll be sharing some new ideas with you. But again, just because the stock makes it into the bullpen does not guarantee that it will make it to the portfolio. It could if the conditions are right, and we see the right risk to reward entry point. But again, we're going to embark upon a refresh cycle for the bullpen.

But we also have, as I said, the later stages of the current earnings season to go with us. And that means we're going to get a number of retail facing companies in the next couple of weeks, Walmart, next week, Home Depot as well, and then a slew of other retailers. But before we get to that, we do have earnings after the close today from Trade Desk. And this is a name that we added in the last several months as a play on the accelerating shift towards digital advertising, but also the adoption of advertising based models in the streaming world, Netflix, Disney. We're even hearing rumblings that Apple is starting to take a look at this.

So Trade Desk is going to report tonight. We previewed that earlier this week. Candidly, has anything changed in the last few days? No. We have a nice size position. If we do see something afoul with the company's earnings report, we'll see if it makes some sense to pick up some additional shares. But given the bullish comments that we saw out of Netflix, the closer move towards the presidential election, and of course, candidate Harris having to as I've said previously, kind make the American people aware of who she is, we do see the outlook for digital advertising and Trade Desk being very bright in the second half of the year.

But we also have some other earnings after the close. We've got Elf Beauty and Indie Semiconductor, which should give us some insights, or I should say additional insights into the beauty market. And the automotive chip market will, of course, be paying close attention to them given our positions in Coty on the beauty side, but NVIDIA, Marvell, and Qualcomm on the automotive side as it relates to chips. And then tomorrow morning early, Construction Partners, ticker symbol R-O-A-D will report. And that outlook is just going to give us another perspective on non-residential construction and infrastructure stimulus spending, one that we'll be picking over as it relates to Vulcan Materials, United Rentals, and Waste Management's non-residential business.

Now, before we get out of here, I do want to say, look, I know we had a busy week and barring really anything that comes out of the blue, odds are we've made our moves for the week that we're going to as it relates to the portfolio. So even though, though, we're likely to have a slower pace as we close out the week, please be sure to check your emails, check your alerts, because we want to make sure you're getting our latest thoughts. And as I just shared, we're going to have a number of them to share with you tomorrow. And if we happen to make any additional moves with the portfolio, be it tomorrow or early next week, we of course, want you right there with us. Thanks for watching.

At the time of publication, TheStreet Pro portfolio was long TTD and BROS.