VIDEO: Why the Portfolio Is Ending the Quarter on a High Note

In today’s Daily Rundown video, Chris Versace discusses some of the drivers of the portfolio’s gains in the second quarter, and today’s decision to add more Qualcomm QCOM.

After the close, we will be watching the banks and financial companies, and Chris also shares what data we’ll be watching next week.

More Pro Portfolio:

Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here, Friday, June 28. Last day of the quarter. Last day of the month of June. And yes, I successfully traveled back from New York, given some of the meetings and things that I did there earlier this week. Thank you so much for members for being understanding for your well wishes. I know there's a lot of disruptions going on out there in travel land. But we'll continue to work through it.

And as you saw, even those little disruptions aren't going to stop us from bringing fresh content to you, holding office hours. And as you saw earlier today, which I'll talk about in a minute, making trades for the portfolio when we have to. Now, with that, as we get ready to close out the quarter, we've been chatting quite a bit about you that there's been a little differences in the marketplace. Really, the S&P 500, NASDAQ making positive moves.

The S&P 500 market weight is tracking to be up about 4.5%, 4.6%. We'll see what the afternoon brings. The NASDAQ up a little more. Largely because AI and big tech stocks. We know the weightings in both of those indices. We've talked about it quite a bit. And of course, it's benefiting the portfolio. But when we step back and kind look at a more balanced view of the marketplace, call it the S&P 500 equal weight, that's actually down about 2.5%, 2.6% as we get ready to, again, finish up the quarter.

Now, why are we benefiting during the current quarter? Well, it's because the moves that we've made late in the March quarter and throughout this current quarter. And I know that we talked about this with you earlier this week when we had the quarterly members only call with Conway Gittens hosting. Did an excellent job. But you have to remember that it was the moves that we made with Nvidia, ServiceNow, Universal Display, Trade Desk, and others that really paved the way for the portfolio's robust performance over the last three months.

And we made another move today as we close out the quarter. And I think this is going to set us up for even more positive results in the second half of the year. I'm talking about the trade that we made today and the shares of Qualcomm. And the shares have been under pressure lately, despite a lot of positive news that really drove the shares higher during the vast majority of the current quarter. In recent days, week or so, the shares have traded off amid reports that initial AI PCs were enabled to run certain programs.

Now, I'm not really surprised by this. I think that to think everything would have went smoothly out of the gate, putting some new technology into some PCs and laptops, I think that would have been a little presumptuous. But here's the thing. Is this going to get figured out? Yes, it will. Is there likely to be some software update, some patch that is deployed? I think so.

So when we take a look at Qualcomm shares as a result of that, we had said during some office hours that we would look to pick them up if they successfully tested the 50-day moving average around 193. And they did that today. Part of why they did that, well, yes, Micron did talk about the AI on device upgrade cycle for both PCs and smartphones, which of course, is going to benefit Qualcomm.

But early this morning, there was data released about China smartphone shipments. And they rose 13%, which of course, is good for Qualcomm Universal Display. But as we shared with you, it was really what we saw underneath the headlines where foreign smartphone sales, predominantly Apple, climbed about four times faster. So when you sift through the numbers, Apple's iPhone shipments soared about 40% during the month of May, continuing the streak of positive shipment growth over the last few months. A very different picture than what we saw for the entire March quarter.

And of course, this is very positive not only for Apple, but of course, for Qualcomm, given their strong relationship. So it was the combination of the news from Micron as well as what we saw this morning for China iPhone shipments that led us to get off the bench, as I like to say, and pick up some additional shares of Qualcomm.

Now, we did not change our price target. The reason being is soon after the 4th of July holiday when everybody's back, we should be getting the June revenue report from Taiwan Semiconductor. And I think that will allow us to make a really meaningful revisit to our Qualcomm price target, factoring in what we've heard not only from TSM, but again, what we heard about recent smartphone shipments in China, and of course, Micron's comments as well.

Now, that was what we did today, after the close today. Remember, we're going to see what the results are for banks and other financial institutions who have successfully cleared the recent bank stress tests held by the Fed. Now look, we talked about this yesterday. The vast majority of banks passed with flying colors. And what we're waiting to hear is what are they going to do with dividends and share buyback programs. Odds are they will be moving higher.

So while we're very interested to hear what Bank of America and especially Morgan Stanley announce, we are going to be sizing up any increases that they make in either programs relative to the others. That'll give us a better sense of how truly impactful these increases will be. But again, I said more towards Morgan Stanley, because as we've been discussing, they're just coming off paying their fourth consecutive quarterly dividend at the same rate. And the company has a rising dividend policy bent.

So based on what we learn about Morgan Stanley's dividend, we will look to revisit our price target for it, currently around 105, slightly above the market consensus. And with that, I would just say that even though we have a holiday week next week, it is going to be busy. Not so much on earnings because we're in the quiet period, but far more on the economic data front. It's the start of the month, which, you know, I know, it means we're going to start getting the wave of start of the month data.

In this case, it's going to be for June. So we're going to start getting data for the final month of the quarter that we're closing out today. It's going to be final manufacturing and PMIs from-- end service PMIs, excuse me-- from ISM, S&P Global. We'll be getting May construction spending data. We'll be getting a ton of jobs data from Challenger Gray and their job cuts to ADP, and of course, the employment report.

And we'll be putting all of that together as we look to assess the speed of the economy as we close out the quarter, what it looks like it's going to be as we start the new quarter. And of course, we'll be looking for further progress on inflation. We did see some today in the May PCE price index data. Please be sure to check that alert. I walk through what was surprising on a good sense and what I think the Fed is going to pay close attention to given the revision, one revision in particular that we saw for the month of April.

But again, all in all, I would say that that data was positive, certainly reaffirmed what we saw in the May CPI and PPI report. But again, the data next week is a little more forward-looking compared to what we got today. So we will be really drilling down very closely. So please, even though it's going to be another one of these funky weeks with the market closed on Thursday because of the July 4th holiday, be sure to check your alerts, your emails.

We want to make sure that you are getting our latest thoughts. And if we make any moves with the portfolio, we want you right there with us. Thanks for watching.

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