VIDEO: 3 Stocks on Our Shopping List
Today could be a volatile day, but upcoming data will be more important.
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In today’s Rundown video, Chris Versace shares why, between triple-witching and potentially lower market trading volumes, Friday could be more volatile than usual.
Comments from Fed Governor Christopher Waller about a potential July rate cut are lifting the market, but we explain why we’ll continue to follow the data. With that in mind, the next key data point is Monday’s June Flash PMI report.
Closing out today’s video, Chris discusses which positions could see some prudent trimming ahead and which three stocks are on our shopping list.
Transcript
CHRIS VERSACE: Hey, folks, Chris Versace here. It is Friday, June 20. End of the week, but potentially a volatile one. As we discussed on a recent Stocks & Markets podcast with good friend of the portfolio, Bob Lang, today is a triple witching day. We also have simmering tensions in the Middle East. And the market, as you've probably read during the Juneteenth holiday, is still waiting to see what President Trump is going to do. We'll find that out sometime in the next two weeks.
So a bit of a incremental overhang. My suspicion is Trump is going to wait and see if more diplomatic efforts prove out. But we've also got lingering trade deal conversations with the EU, the UK, Canada ahead of the July 9 deadline. But signs, as you've probably seen, again, from your reading, point to a base layer of tariffs remaining in place, which means there's going to be some degree of inflation to work through, as Fed Chair Powell said Wednesday afternoon, through the system.
And it could be something less than feared. But as we've said before, we'll reiterate again, until we have firm trade deals with known, excuse me, details, there is going to be a bit of an uncertainty overhang, especially as we get ready for companies to issue or update their guidance for the second half of the year. Now if we think about that, that was essentially Fed Chair Powell's message on Wednesday, waiting to see the impact of tariffs work their way through the system.
And from our perspective, it's a logical one because we did see some pre-tariff inventory building. And, as we know, subsequent restocking amid tariffs could lead to some inflationary pressures. But what's fascinating to me in some respects is that this morning, Fed Governor Waller said the Fed couldn't cut rates as soon as July, which far sooner than what the markets were expecting. The consensus going into the Fed meeting earlier this week was for a September rate cut, so Waller's comments are giving some lift to the market.
But on the one hand, I would say it reminds us that there's no one person that dictates Fed policy decision. It is a committee. But I also think that Powell's line of reasoning is a lot more logical, and that is the path that we want to follow. But as you're probably going to guess, yes, I am going to say that we will continue to follow the data, updating our thinking as fresh information becomes available.
And the next big piece of data on that front is going to be on Monday, when we get the Flash June PMI data. This will give us another fresh insight into what's going on in terms of trends of employment, new orders, and, yes, the trends for input and output costs. So we'll want to be comparing and contrasting all of those compared to what we saw in May and in April, and following that linear revelation, and again, course-correcting the portfolio as we need to.
Now on any given day, all of the things I rattled off for the market would be a bit to chew through. But today in particular, I would argue, is a bit of an anomaly given the Juneteenth holiday yesterday. So we could see lower-than-usual trading volumes as Wall Street sneaks in a four-day weekend. When we see lower volume days, that means that from time to time, it could exacerbate moves or swings in the market, or even in individual stocks, especially higher beta ones.
We talked about beta earlier this week. And on Monday, we published our updated portfolio table that included each position's beta. I would suggest, folks, that you refer back to it. And in the comment section below, I will link to that alert. Now we will keep in mind that on a day like today, we could see some, like I said, wider-than-usual swings, especially in those higher beta names. We'll factor that into our thinking, but we will also continue to watch positions, like Microsoft, that have had a significant run and are in overbought territory.
And we'll also be keeping our eye in particular on two positions, Marvell and NVIDIA. And the reason being is that they too have had meaningful runs, and they are flirting with being about 4.5% of the portfolio. So if we see the market push higher, rest assured we will do the prudent thing. But I will share this. As we do look at that table I just mentioned that we published on Monday, we're also seeing that a couple of our positions, Costco, Elastic, ServiceNow, are flirting with the pickup points that we shared with you.
Now interestingly enough, as it relates to Elastic and ServiceNow, Wells Fargo published a note that was particularly interesting, talking about AI adoption. And it kind of reaffirms a number of the signals that we've shared with you. In the note, it talked about productivity gains of 30% to 40%, especially when it comes to some key areas-- co-generation, sales and support, and handling, I guess you'd call it, rote or mundane tasks. That's the language they used.
So in that same note, Wells Fargo called out ServiceNow shares as a prime beneficiary. But when we think about those three big buckets of productivity gains, we would throw in Palantir and Elastic as well. So again, Elastic and ServiceNow kind of flirting with those pickup points. And as it relates to Palantir, because I'm probably going to get some questions on this, yes, we know where the shares are relative to our price target. We're waiting for some fresh developments to revisit that price target.
One of the ones that we're really waiting on is the company's next AIPCon event, which, if the patterns hold, could be later this month. So we'll have to take a look and go from there. But what I would say is this. Consider my comments. Today could be a volatile, low-volume day. Let's get through it, and we'll go from there. But coming up, we have much more to share with you today. We also have, because today is Friday, the next iteration of the Weekly Roundup.
Saturday brings a next Ripped From the Headlines, Confirmation Points and Signals alert to you. And then Sunday, we've got something a little bit lighter, a little more fun with the next, as I like to say, hot bowl of Sunday soup. So with that, folks, sit back, check your emails, check your alerts, enjoy the weekend. It's going to get a little hotter. But rest assured, no matter how hot it gets, we will be back here with you on Monday.
