VIDEO: What We're Watching as Apple’s New Models Hit Shelves
Here's what's on our radar screen as the market looks toward October.
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In today’s Daily Rundown video, Chris Versace discusses what we’ll be watching as we fade into the weekend. Plus, he'll touch on some homework assignments regarding price targets and ratings, as well as entry points for some of the Portfolio’s holdings.
With Apple’s AAPL new products hitting shelves on Friday as well as its iOS 18.1 beta that includes some initial Apple Intelligence features, Versace offers a reminder of what we expected for new iPhone models and what we’ll be watching early next week.
"There are a couple of things that are on our radar screen that we'll be watching as we kind of move from mid-September to the end of September into October," he said. "As these events play out, we will manage the Portfolio accordingly."
Transcript
CHRIS VERSACE: Hey, everyone. Chris Versace here Friday, September 20 and-- of what's been a relatively positive week for the market and a very nice one for the portfolio. And, of course, that happens despite what we're seeing today and it's triple witching event. If you saw our alerts yesterday, then you know that we added late in the day to our positions of both Bank of America and Morgan Stanley.
The why behind this is the incremental benefits from the Fed's action on Wednesday and what we see unfolding over the ensuing quarters-- really the 12 to 15 months-- as it moves further down that rate cut curve and what that means for both Bank of America and Morgan Stanley's respective businesses, particularly on two fronts-- one, investment management as cash on the sidelines starts to come into the market-- we've talked about this-- but also lower hurdle rates for deals. So-- and by that we mean M&As but also potential IPOs as well. And we continue to see both of them very well-positioned to capture that. I wouldn't be surprised if in the coming days we see other people latch on to this idea, helping propel these shares higher. One catalyst we will be watching for on this front will be quarterly results from Jefferies next week.
Now, of course, the pace of these expected rate cuts that the Fed has targeted-- another couple cuts this year and another 100 basis points next year is really going to hinge on the incoming data. That was made extremely clear by Fed Chair Powell this week. And odds are, when we see about a dozen or so Fed officials making the rounds next week, including Fed Chair Powell-- odds are we're going to hear them reiterate that mantra-- incoming data will matter.
Now, in addition to what we've done already with Bank of America and Morgan Stanley, I will admit that we have some additional work to do regarding some price targets, entry points, and potentially ratings for some of our holdings. Yes, this includes Builders FirstSource and United Rentals. Both have been champs. And this morning when we got quarterly results from homebuilder Lennar, and its expected deliveries in the second half of the year compared to the first half, and the fact that it sees a more robust housing cycle as we move into 2025 and beyond as the Fed continues to cut rates, these are all positives, not only for Builders FirstSource, but the residential business that we tend to talk about when it comes to United Rentals, but also Vulcan Materials and Waste Management.
So the issue here is that as much as we like the data from Lennar-- and it is positive, make no mistake-- we rarely hang our hats, as you know, on any one data point. We typically like two, preferably three data points. It gives us a lot more comfort, a lot more conviction in what we're seeing. And that, of course, allows us to make some smart moves with the portfolio. So next week we will be getting some additional August housing data-- new home sales, for example-- but we're also going to get quarterly results from KB Home.
When it comes to that and we assemble all of that with what we saw with Lennar, with what we saw with the August single family housing starts, it will allow us to start to triangulate a little bit better on what we think a potential price target revision will be for the shares of Builders FirstSource. But I will tell you this, the shares, they have had an incredible run since we added them to the portfolio. But that incredible run means that they're bouncing very closely to our $205 price target. And unless we see upside of $240 or more, odds are we're going to have to revisit our one rating on the shares of builder. It's just the way it works.
Do we see the company continuing to be well-positioned? Yes. Do we see further upside in the shares? Yes. A lot of it's going to depend on how fast the Fed cut-- cuts rates and how quickly that translates into lower mortgages and stimulates incremental housing. So we'll continue to monitor it. We continue to like it. But, again, might have to massage our one rating, maybe make it a two rating, depending on what we see.
As we talk about next week, we have to also talk about something that's unfolding today and will transpire into next week. I'm talking about Apple's new products-- iPhone 16 models, new watches, AirPods, and other things-- hitting shelves today. Also today, the company released its first beta version of iOS 18.1, which contains some initial features of Apple Intelligence. And I suspect this is designed to stoke articles and interest ahead of iOS 18.1 being launched in October. Remember, that's when Apple officially starts to share some of Apple Intelligence.
How does this connect to next week? Well, Monday, we're likely to see reports of how well these products fared and that could deliver some renewed interest. Remember, Apple, historically, tends to talk about demand being extremely strong, initial stock outs, and the like. We'll see if that happens. I'm more of the mind that because of this phased approach rolling out Apple Intelligence, we're likely to see a longer ramp in this current upgrade cycle to iPhone 16, 16 Pro, 16 Pro Max, and the like. But, again, we'll be taking a look at what that data is when we get back from Monday.
But as we think about the weekend-- and, of course, we wish you a wonderful weekend-- we will say that there are a couple things that are on our radar screen that we'll be watching as we move from mid-September to the end of September into October and what is ahead of us. Yes, of course, any tea leaves for the September quarter earnings season goes without saying, but there are a few other things. First, ongoing geopolitical tensions, particularly in the Mideast. The 2024 presidential race-- we're now seven weeks or so until that. I think that's going to start to really become a greater focus for the market. What kind of progress or not are we seeing on a potential government shutdown. And there's also the looming October longshoreman strike that could result in bottlenecks on both East and Gulf Coast ports.
And as these events play out, we will manage the portfolio accordingly as we continue to look for opportunities to put capital to work and to restock the bullpen. So I have a little bit of homework for you, that means continuing to check your emails and your alerts, especially today's weekly rundown-- sorry, weekly roundup. What am I saying? This is the rundown-- the weekly roundup as well as tomorrow's batch of the latest ripped from the headlines signals from the portfolio. So that's your work to do over the weekend. I have my work to do over the weekend regarding price targets, ratings, and some other things. So when we reconvene, we'll have a lot more to talk about on Monday, Tuesday, and the rest of next week. Have a great weekend. See you soon.
At the time of publication, TheStreet Pro Portfolio was long AAPL.
