VIDEO: Our Plan for Palantir With Earnings Set for After Monday's Market Close

In today’s Pro Portfolio video, Chris Versace lays out our roadmap for the coming week. That means what we’ll be keying on when Palantir PLTR and Axon Enterprise AXON report after Monday’s market close, and Eaton ETN and Dutch Bros BROS later this week.

We also explain why, after last week’s July Employment Report, we’ll be combing through this week’s July Service PMI reports and why it’s even more important for us to triangulate data for the market, economy, and Pro Portfolio holdings. 

Chris also updates us on second-half 2025 EPS expectations for the S&P 500 following last week’s Big Tech results, and why the direction of that revision may surprise you. 

Transcript

CHRIS VERSACE: Hey, folks, Chris Versace here. It is Monday, August 4th. Stocks, as you can probably see, are looking to rebound from Friday's sell-off, which as we know was triggered by the July employment report, which not only showed lower than expected job creation figures for the month, but massive revisions to the May and June data. And those revisions obviously called into question the health of the overall jobs market, raised questions about the speed, the vector, the velocity, if you will, over the economy.

And as we've seen before, not really surprising. Bad news is, once again, kind of good news for the market. Bad news, of course, the economy may not be as solid as people had thought. It raises questions not only about job creation, speed of the economy, but consumer spending as well. But potential good news because it could help the Fed, excuse me, move that much more so to delivering a rate cut later this year.

Remember, Fed Chair Powell's comments coming off of Wednesday's policy decision. He really indicated that the Fed is going to stop, wait, look at the incoming data, assess the inflation risks, the speed of the economy. And of course, Friday's data came after Powell's comments. So it's not surprising that we saw the CME FedWatch tool, which tracks the market's expectations for rate cuts, to jump from around 30, 40% following Powell's comments, to north of 80% on Friday afternoon.

Is my concern here that the market could be, once again, getting out over its skis? It is possible. And I say that because we have a lot of data, not just to go for the month of July, but really all of August, before we get to the Fed's next policy decision in September.

As it relates to the data, look, we know there are issues. There's always been issues in the data. We have to be mindful of not only the source, but what the data is really trying to capture, and what it doesn't show.

Like for example, when we get the monthly report on job creation from ADP, it doesn't reflect the public sector. It's only private sector jobs. So we also know that with the employment report, it's survey-based. And the findings only improve, we believe, as more of the survey respondents come in. That's why we are mindful about the revision of data.

But we also triangulate the data. We try to find various sources, look at various data points, so we get a much better view on what's really happening, rather than relying on any one particular data point. Again, just sticking with the jobs market, yes, there's what ADP says.

There's the employment report from the Labor Department and the Bureau of Labor Statistics. But there's also what we see in the PMI reports from manufacturing and services, breaking down job creation in both, with multiple sources from ISM, and, of course, S&P Global. There is what the NFIB Optimism Index Report has to say, and others.

So we will continue to do what we do. And by that, I mean follow the data, triangulating as much data as we can to make sure that we have a real clear and consistent picture of what's unfolding, not just for the jobs market, but for the overall economy, for the consumer. But we'll also do that for the various industries, sectors, sub-sectors, and thematics, of course, for the companies in the portfolio.

Now, as we know, we are going to have a lot of data to come. The next really interesting piece of data for me comes tomorrow. That is Tuesday's July PMI for the services sector, both from S&P and for ISM. We touched on this in the July monthly roundup. But remember, the services sector accounts for 80% to 85% of US GDP.

So what it has to show on new orders, backlog, and job creation, that's going to be very illuminating, especially when we size it up against what we saw last week with the July employment report. We will, of course, take the combined July manufacturing and services data, put it together, and look at what that composite has to say about the overall economy as well.

One other thing to think about as we think about data, I know there's been a lot of conversation, really since Friday, over what President Trump is going to do. We know that he's going to name a new head of the BLS. We know that he's going to have an opportunity to name a new Fed Governor because Fed Governor Kugler on Friday announced that she would be resigning.

We'll be getting some information and potential announcements on that later this week. My view on it is that we should simply expect Trump to name someone that is a lot more Trump policy-favorable, let's call it. And for the Fed, that likely means someone who's going to be a little more dovish, calling for rate cuts sooner than later.

But this is the key. And I think a lot of people tend to forget about this, that while Fed Chair Powell is the Chair, there is an actual committee that votes. So we're going to want to pay close attention, obviously, to what Fed Chair Powell has to say, but what others that are voting members of the committee have to say. And that means that with the Fed policy meeting concluding last week, we will start to see another round of Fed speakers this week.

I believe there's a small single digit number. So we'll be curious to what they have to say, especially after the July employment report and the other data that we'll be getting this week. So a lot more to come on that front. I also wanted to quickly touch on earnings with you. Now, you might think, wow, we had a very big week last week. And boy, did we ever.

But we do have another large one ahead of us. I hesitate to say this. Some people might be like, wow, I can't believe we're only this far along. But we're only 2/3 of the way through the S&P 500 basket of 500 companies reporting.

Yes, by and large, June quarter results have come in a little better than expected. And if we look at the aggregate S&P numbers for the June quarter, they've ticked up a little bit compared to what they were the last several weeks.

And we do have another, like I said, large week. About 122 S&P 500 companies reporting this week. That's another 24%. So what it means is that, by the end of this week, roughly 90% of the S&P 500 will have reported. And we're going to get a lot more color on expectations for the back half of the year. You know we focus in on this, sizing up second half of the year EPS growth for the basket compared to the first half.

Here's the surprising thing. I tallied the numbers from FactSet over the weekend. And yes, as I just said, the June quarter numbers have been coming in better than expected. But we saw another tick down in second half EPS growth expectations for the S&P 500. Exiting last week, it had fallen to around 6.8%. Again, EPS growth in the second half of the year compared to the first half of the year.

Here's the thing, folks. That is down from 7.9% the week before, 8.5% the week before that, and as we've shared, around 14% at the end of March. Again, something to be mindful of. Did we see the positive inflection point that we thought we might see coming off of big tech earnings last week? So far, we have not.

We do have another, like I said, 24% of the S&P 500 to report. And we'll be revisiting these expectations, what their market implications are probably this time next week as we get all of the data collected from those sea of companies reporting this week. So we'll be mindful of that.

In terms of our roadmap for the week, a couple of things. Today, starting out relatively quiet. It likely means that Washington, Trump, and any early morning earnings report will remain in the spotlight. After the close today, we do have Axon reporting. And we will be focusing in on not only the continued hardware sales, but really the mix shift towards cloud, software, and services that has much higher margins.

That also means we'll be taking a hard look at its backlog and its pipeline that it likes to talk about. I suspect that we're going to hear a lot about early AI adoption, the positive influence on its growing software and backlog sales, as well as positive implications for margins.

I think it's going to be a positive catalyst for the shares. Also, after the close, we have Palantir. Setting us up for that, this morning, they announced a simply massive $10 billion fixed price contract with the Army that spans through 2035.

And I think this will be a hot topic on this afternoon's earnings call. But remember, Palantir shares have run. We're mindful that we're going to have to likely bump up our price target again, yet again, especially after this multi-year, very, very large Army contract. But because of the sharp run in Palantir shares, remember that they will need to deliver a beat and raise quarter.

This contract likely gives them the room to do that. But here, again, given the size of the move and the shares, there could be some out there that are just not impressed by what the company puts up. We, of course, are going to take a longer term view. If we see Palantir shares sell off in the next couple of days, that could give us an opportunity to bulk up that position, which is not on the larger size for the portfolio. And we continue to believe that we are in the early days of AI adoption.

Again, that should benefit not only Axon. But we've heard similar comments from ServiceNow and others out there over the last few weeks as we connect the dots. I think we're going to hear it from Elastic, too, when they report later in the month. But here and now, our focus is going to be on Palantir shares and what they have to say after today's market close. We'll, of course, be breaking all that down for you tomorrow morning.

On Tuesday, we have not only the various service July PMI reports coming. But we're also going to get quarterly results from Eaton. Coming off the comments last week about AI and data center construction and rising CapEx, I think Eaton is going to have a very positive, a very positive earnings report and outlook. The one thing here is that stock performed extremely well for us. We're very pleased.

But it is starting to approach that 4.5% level in terms of a position size for the portfolio. So we'll have to be mindful with that. Will we have to potentially revisit our Eaton price target? I suspect that we will, most likely higher Wednesday, we've got McDonald's. We've also got Rockwell Automation, we want to pay attention to. But we'll also get quarterly results from Dutch Bros.

With Dutch Bros in particular, we are looking for the company to reaffirm the West to East expansion story. That's the key for us when it comes to the shares of Dutch Bros. We'll also be curious to hear what they have to say about input costs, coffee, for example, which is not really a large driver of their overall cost structure. But we'll also be curious about their comments about the competitive landscape.

As it relates to McDonald's, there's been some noise about them kind of expanding their beverage lineup. So we'll want to hear what McDonald's has to say and hear what Dutch Bros has to say. But for us, so long as the Dutch Bros West to East story is intact, that is a good thing for us. And we're inclined to remain patient with Dutch Bros shares.

Thursday, we got Construction Partners, another view at infrastructure spending. So we'll pay attention to that. But we'll also get earnings from Martin Marietta, a competitor to Vulcan Materials. We want to hear what they have to say about the infrastructure and concrete aggregate demand relating to it for the back half of the year. We've also got Motorola Solutions reporting on Thursday. We'll tie that back to what Axon has to say after tonight.

Some other big earnings reports coming out this week, Disney, AMD. So we're going to have a lot, as you can see, of dots to connect. And we'll be mindful of all that as we go through the week, sharing the updated tapestry of those data points with you as we go through, like you know that we do.

We're also going to keep an eye on what's emanating from Washington, also any further developments on the trade front. There seems to be some potential conversations happening this week between the US and Canada. We'll have to see what is said and update our thinking as we move through it. In terms of the portfolio, we've got just over 10% of our assets in cash.

So from here, for us to put capital to work, it's got to be compelling. But we will continue to look for opportunities, both in existing positions and any potential new ones that are benefiting from multiyear tailwinds and have superior earnings growth prospects. The bar is high. But we'll continue to look for opportunities. And with that, before we close out today's video, I just got two quick programming notes.

On Tuesday afternoon between 3:00 PM and 4:30 PM, I'll be back on with Yahoo Finance. So please tune in. We're going to cover a lot. And also, on this week's Stocks and Markets Podcast, we're going to have Jay Woods from Freedom Capital Management back. So if you've got any questions for Jay that you want me to ask, please ask them or mention them in the comment section below.

So as you can see, folks, between the roadmap, between the other things we have going on this week, it's going to be busy. So please be sure to check your emails, your alerts. We want to make sure that you get our latest thoughts. And as you know, 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 PLTR, AXON, ETN and BROS.