VIDEO: We're Outperforming the S&P 500, But This Is Not a Sprint

In today’s Daily Rundown video, Chris Versace lays out what the portfolio will be focused on this week.

Items we will be watching include a barrage of Fed speakers, the latest SLOOS report, and Apple's AAPL product event tomorrow. 

Transcript

CHRIS VERSACE: Hey, everyone. Chris Versace here Monday, May 6. Before we get started with the week ahead, let's talk about the week that was. And last week, we closed the book on the month of April, which was, as you know, a down month for the market, its first since October.

But it is fair to say that the market found some footing at the start of May. More importantly, I would like to share with you that our efforts over the last several weeks to continually reposition the portfolio, bulk up our exposure to certain portfolio holdings has paid off. Last week, we actually moved past the S&P 500 on a year-to-date basis.

And while I am happy about that, we should be happy about that, we do have to realize that this is not a sprint. This is a marathon. When we're talking about creating wealth, it is a long-term journey. And don't get me wrong, we are pleased, but we have to recognize that there are eight more months in the year, there is a longer road ahead, and we've got a lot of work to do.

So that's what we'll continue to do, focus on the data, whether it's for, certain aspects of the economy, sectors, thematics. We'll also continue to focus on technicals, both for the market, individual positions, using them to help guide our hand when it comes to perhaps adding more of a certain position or trimming back one that has simply had a phenomenal run. As we do all of that, we'll continue to remain prudent and disciplined investors, listening to the economy and the data.

Now, let's talk about this week. Equity markets aren't oversold, and candidly, there's very little in the way of fresh economic data. So based on what we know, there's really going to be a two, maybe three buckets of activity during the week that could drive the markets. First, we have at least 10 Fed speakers this week.

And remember, this comes off of Fed Chair Powell giving the market a bone last week by saying that he does not see any additional rate hikes on the table. We also saw with Friday's April employment report that the pace of job creation slowed lowest level in six months. We also saw the year-over-year wage gains slow compared to recent months as well.

And that has some folks kind of kicking around the idea that maybe rate cuts could be pulled forward now from what was previously thought. But look, I'm not going to sugarcoat it. We're going to continue to follow the data, like I said. And what we saw in last week's April ISM PMI reports, particularly the prices paid data, which catapulted higher, reaching the highest levels so far in 2024, that is really going to push back against that argument.

My thinking has been that the Fed is not going to hang its hat on any one particular data point when it comes to either the economy or inflation. It's going to continue to triangulate around and that's what we're going to do. And that brings me back to this week with 10 plus Fed speakers.

The market is going to want to hear their interpretation of recent economic data, especially last week's, but it's also going to want to get a sense of, What are the Fed members thinking in terms of when might be the right time to cut rates? If you remember, right before the policy meeting, it was really looking like, two, maybe one, some even saying rate cuts might slip to 2025. So we'll want to get their updated views as we go through the week.

I expect there will be some conflicting opinions, some more hawkish, some more dovish. But we're going to, again, triangulate around them as we move forward with the portfolio. The second thing that we're going to be looking out for is earnings. Yes, yes, earnings, the pace does continue.

And even though most of big tech has already reported and we've got a little bit of a wait until NVIDIA reports later this month, we still have three portfolio companies reporting this week, Axon, Cody, and Trade Desk. There will also be a variety of others that we're going to want to pay attention to. GlobalFoundries [? Arm ?] construction partners and many, many more. What we'll be doing inside of those non-portfolio earnings reports is collecting data points, helping sharpen our focus for the road ahead.

We also have two other things I want to point out for this week. One comes at 2:00 PM today. We'll get the latest Senior Loan Officer Opinion Survey report from the Fed, much better known as the SLOOS report. We'll be looking into that for what it says about loan activity and the prospect for loan activity, kind of circling back to our position in Bank of America, but also for what it could mean for the economy as well.

And then the other event I want to mention, no surprise, it's going to be Apple's iPad event on Tuesday. That would be tomorrow. They are expected to introduce a new round of iPads, first refresh in about two years. The higher-end models are expected to have organic light emitting diode displays, nice confirmation for our position in Universal Display. And that position, by the way, moved extremely well last week.

Here's the thing, we continue to see the adoption of that display technology only accelerating as we move through the coming quarters. And I would point out that ahead of Apple's event tomorrow, more positive news for Apple shares. Apple's manufacturing partner, Foxconn, reported that its April revenue rose 19% year-over-year. Two key things here.

One, strong artificial intelligence demand for AI servers, benefiting their data center cloud business, obviously, going to be very positive for our shares of NVIDIA and Marvell. But Foxconn also said that its smart consumer electronics business, which includes smartphones, showed significant growth year-on-year in April. That, of course, is going to be interpreted as very positive for Apple, but also for our shares of Qualcomm as well.

I will say that just stepping back and looking at the Foxconn report, it suggests that when Taiwan Semiconductor releases its April revenue report in the coming days, it too should be a positive report. That tends to get a lot of attention for data center, high performance computing, and smartphone. So again, that confirmation would be another positive catalyst for our shares of NVIDIA, Marvell, Apple, Qualcomm, and I would argue, Universal Display.

Well, folks, that is today's video. Thanks for watching. Please be sure to check your alerts, check your emails. As you know, we want to make sure you're getting our latest thinking and if we make any moves with the portfolio, we want you to be right there with us. Thanks for watching.

At the time of publication, TheStreet Pro Portfolio was long AAPL.