VIDEO: Why We Sold Off Some American Express Shares

In today’s Daily Rundown video, Chris Versace reviews the Portfolio’s decision to lock in some gains on American Express AXP shares on Monday morning, as well as why President Trump’s August 1 tariff deadline has injected a fresh wave of uncertainty into the market. 

Chris also explains why the Portfolio will remain prudent but opportunistic as we head into the June quarter earnings season. And he discusses expectations for Amazon’s AMZN 2025 Prime Day event, shares which companies we’ll be listening to for confirmation, and why quarterly results from ConAgra CAG could trigger some Bullpen work on our part. 

Transcript

CHRIS VERSACE: Hey, everyone, Chris Versace. It is Monday, July 7. I hope you all had a fun, happy and safe Independence Day holiday. I know I certainly did, but here we are, kicking off the first full week of the September quarter. And as you probably saw, stocks are indeed trading off in response to renewed tariff and trade deal uncertainty.

And you hopefully saw that we, in response to that, as well as the shares being overbought, took some profits in American Express shares early this morning. That decision to trim back and lock in some gains on Amex were a combination of the significant move in the shares since their April lows, but also the deep overbought. And by that, we mean relative strength index reading level that the shares had coming into this week.

Stepping back a little bit when it comes to tariffs and trade deals, we're going to continue to see how the landscape develops. But our thinking is that if President Trump is coming out swinging, throwing out there this August 1 date when we could see tariff levels go back to their April 2 level, odds are there's some room for the market to be disappointed with what we're likely to hear in terms of announced trade deals in the next few days. Remember, today is the 7. The imposed trade deal deadline is July 9.

We are hearing from certain White House officials that there will be deals announced in the next couple of days, but with the market overbought-- and by that, I mean the S&P 500 and the NASDAQ composite-- I'm kind of reading between the tea leaves. Trump throwing out this August 1 deadline seems to me to suggest that there could be some underwhelming interpretation of the deals that are announced.

We've talked about this before, but it doesn't seem likely that we're going to get trade deals announced with Canada, with the Eurozone or China this week or anytime soon. So I suspect that's another reason why Trump is throwing out that August 1 date, as I talked about in our opening comments this morning, to try and reclaim the trade deal narrative.

Now, again, we're going to continue to follow these developments. But make no mistake, we will remain prudent investors when and where it makes sense. Hence, our move this morning with American Express. But we will also look to remain opportunistic. So if you just think about some of the things that we did in the last few weeks, taking the pronounced strength in the shares of Microsoft, Marvell, NVIDIA, and even today with American Express, we've used them either to build up our cash positions, given what we see ahead or to make an opportunistic move, in some cases, the shares of Alphabet, SuRo Capital.

And last week, we started a new position in the shares of TJX. Now, as we get ready for the June quarter earnings season, which is right around the corner, kicking up a gear arguably next week when we start to get big bank earnings, including those from Bank of America and Morgan Stanley, we're going to remain prudent and opportunistic investors. Now, some of the positions that we're interested in building up, TJX, obviously, it's our newest one, but also SuRo capital, ahead of what we expect to see the resumption of dividend payments given its BDC or business development company structure.

But before we get to those big bank earnings, we do have a few things we want to talk about, especially Amazon's Prime Day event this week, as well as a number of competing ones. The usual cast of characters Walmart, Target, and a few others. Now remember, Amazon's Prime Day this year has been extended to four days from two, and it's going to run from Tuesday, July 7 through Friday, July 11.

Now for context, Adobe Analytics sees the event hitting $23.8 billion across those four days. That's about a 28% or so increase year-over-year. Now, as we think about those numbers, do we have cost conscious consumers out there? We certainly do. Is there renewed tariff uncertainty, which could pull forward spending? Absolutely.

And let's remember, too, that we also have before too long, even though the July 4th holiday has just passed, the back-to-school shopping season. So there are reasons to think that we could see some pull forward in spending happen. And based on what we see in terms of comments from other companies as they start reporting, whether it's Visa, Mastercard, or even our own American Express, we're likely to have some confirmation on the degree to which shoppers opened up their wallets during Prime Day and its competing events.

Now, even though we sold some of American Express, it's that pull forward and spending, that strength in spending that we do want to capture with American Express shares, as well as the benefits of the upgrades that are coming to the platinum card membership. Remember, this is going to be the biggest that American Express has ever done. And typically, when we see that, we tend to see a nice kickup in terms of membership numbers. And we suspect that that will repeat.

We also suspect that Amazon will be packing on the benefits to the platinum card in order to draw those members. It's that membership business model as to why we continue to favor American Express shares over the more transactional-led business models for Visa and Mastercard.

Now, in addition to Prime Day and the competing events, which could be a catalyst for Amazon shares, we also have quarterly results starting this week with Conagra, Delta Airlines, and Levi Strauss. They're going to give us another dimension on consumer spending, especially I think what we hear from Conagra. Remember, they're predominantly packaged foods and frozen foods. To the extent that they see a pickup in volume, it would confirm some other signals that we're getting about consumers starting to eat increasingly at home, dialing back their restaurant spending.

If we get that, let's just say that as we move into the second half of the year, we have some ideas of a company or two that we might want to bring back into the bullpen. So we'll be watching that. And with that in mind, I would say as we think about the portfolio, we think about the bullpen, we think about what's happening this week, please be sure to check your emails and your alerts. And again, we want to make sure you're getting our latest thoughts. And if we make any other moves this week, just like we did this morning with American Express, we want to make sure that you are right there with us.

Also, too, folks, don't forget it is Monday. And as promised, we will see the return of office hours this afternoon between 4:00 PM and 5:00 PM. That's right in the portfolios forum. Hope to see you there. Thanks for watching.

At the time of publication, TheStreet Pro Portfolio was long AXP and AMZN.