VIDEO: What We Expect From U.S.-China Trade Talks, Apple’s WWDC Keynote

In today’s Daily Rundown video, Chris Versace lays out our roadmap for the week, which spans May inflation data and earnings from JM Smucker SJM, Dave & Buster’s PLAY, Adobe ADBE, and Oracle ORCL. 

We also share our expectations for the start of renewed U.S.-China trade talks and  Apple’s AAPL WWDC keynote address later today. 

Chris rounds things out reminding that we have another wave of investor conferences this week, and what we’ll be listening for. 

Transcript

CHRIS VERSACE: Hey, everyone, Chris Versace here. It is Monday, June 9. And we are coming off a market that is seeing the RSI levels for the S&P 500 and the NASDAQ composite continue to chug higher. Not yet overbought, but something we will be keeping our eye on. At the same time, investor sentiment continues to flash greed according to the fear-and-greed index. And as you know, when we've seen those conditions overlap in the past, it means it is time to be cautious.

With that, setting things up, let's lay out our roadmap for the week ahead. And I want to focus on five items-- economic data, US-China trade talks, earnings-- believe it or not, still continuing-- investor conferences, and Apple's WWDC event. Let's get going.

Number one, economic data. We know that we have some big May data that the market and the Fed is going to key into because it's inflation-focused. I'm talking about the May CPI and May PPI reports. Both are expected to tick higher sequentially compared to April. No real surprise, given what we've seen both in the May ISM PMI data but also Friday's wage data found in the May employment report.

Now, obviously, the results of these two reports, the CPI, PPI, are going to impact market expectations for the Fed. And still, it's kind of hard to believe that the CME FedWatch tool indicates the market is still expecting three rate cuts in 2025. Now, if you read Friday's weekly roundup, then you saw our thoughts on how likely that is-- or I should say, not. And you also saw what we think the Fed is likely to deliver when they publish their updated set of economic projections on June 18, exiting their next policy meeting.

I'm, of course, talking about the SAP forecast tools. Typically, the Fed kind of telegraphs what the expectations are for the number of rate cuts for full-year 2025 and then what it could be in the next one or two years. If you remember, in March when the Fed last updated this, it called for two. That was before really the impact of tariffs and the rebound in inflation that we've seen. So again, we'll revisit once we have the May CPI and PPI in hands. But again, not expecting it to be very constructive for those arguing for rate cuts.

On Friday, we'll get another piece of economic data tying to inflation that the Fed is going to pay attention to. This is the preliminary June consumer inflation expectations. Now, this is kind of important because over the last few months, we've seen it tick higher in a meaningful way. In February, on a year-over-year basis, 4.3%. March was 5%, April-- 6.5%, May-- 6.6%.

Now, if we map this against the ISM data, like I was mentioning before, and the wage data, we could very well see this tick a little bit higher for the preliminary June figure. But at the same time, we do have to remember that we have seen oil prices fall. And per AAA, the average gallon of gas in the US is around $3.12-- again, per gallon. That's down about 10% year over year. And that could lead some to think that maybe these preliminary June consumer inflation expectations could be a little softer compared to the last month or two.

But then again, let's also remember the wave of companies that have already started to not only announce but instill fresh price increases as a result of tariffs. And at the same time, we've also seen other companies start to instill a fresh round of what we call "shrinkflation," in other words, charging you the same price but shrinking the overall package. And if you've gotten a bowl recently at Chipotle, well, you know what I'm talking about.

All right, let's move on to number two. That's US-China trade talks. They're expected to take place in London today. Likely topics, technology and export controls for that, rare-earth elements, and student visas. Now, as we've said before, we are hopeful for some forward progress that could give way to movement with trade talks with other countries or blocs like the European Union or Japan.

But again, our view is that trade deals take time. And when they're finally inked, it's the details, not the initial headlines during the conversations, that really matter most. So we realize there's likely to be a little bit of time. We could get some good news, but we're not counting on it just yet. That's the message. And once we see the details, we will revisit the portfolio and our thoughts behind it where we may need to-- very simple.

But I would also share with you that no matter what progress is made on these final trade deals, I would be very, very surprised if we do not see President Trump declare some sort of victory. But again, we'll wait and see what happens on that front. And we'll do the same with Trump's big, beautiful bill as it winds its way through the Senate.

That brings us to our third topic. Earnings-- again, like I said, hard to believe that with three weeks to go in the current quarter, these things are still trickling in. But we're going to lump them into two buckets, one-- and just another look at what the consumer is doing.

And I think by comparing and contrasting what we hear from J.M. Smucker's, Dave & Buster's, Victoria's Secret, and RH, the former Restoration Hardware, I think it's going to tell us, are consumers dialing back? Are they eating at home? Are they kind of pulling away from discretionary spending like at Dave & Buster's? Are they not shopping as frequently, say, at Victoria's Secret? So we'll put those puzzle pieces together. The other bucket we'll be paying close attention to is AI. And for that, we'll be listening for results from both Adobe and Oracle this week.

That brings us to topic number four. Yes, we have another wave of investor conferences this week. And once again, we and others-- investors and others across Wall Street-- will be mining company presentations for not only the latest on the current quarter when it comes to thoughts on input costs, pricing, hiring, tariffs and of course, demand, but also those same things for the second half of the year.

And based on what we learn, we will revisit the portfolio's holdings, as needed, and of course, any price targets that might need some changing, just like we did last week when we talked about with Axon, for example, but also our other comments regarding Universal Display and Elastic.

Finally, number five. Apple's WWDC event begins today with the company's keynote address. Historically, as I'm sure you know, this has been a big event that folks look forward to, even though it's technically more geared for developers than investors. Why is this important? At this event, Apple usually takes the wraps off the coming improvements in its various operating system platforms, whether it's iPhone, iPad, Mac, watchOS, tvOS, and the like.

This year, leading up to it, a lot of the headlines are kind of pointing to a big redesign across the various OS platforms, kind of making them feel a little more cohesive across all of the different products. So we'll see what that has. We will continue to listen to-- or for, I should say, anything regarding AI and Apple Intelligence. But again, a lot of what has been in the press kind of suggests that we're not going to hear a lot.

But again, our questions will be, what do we see on the devices as it results to AI and, more importantly, under the hood. And does Apple do anything with opening its models to outside developers? That could be kind of a crucial thing. But let's see what we learn. And folks, that is our roadmap for the week ahead.

As you can imagine, we are going to have quite a bit coming your way. So please be sure to check your emails, your alerts. And if we make any moves with the portfolio, as I like to say, we want you right there with us. Thanks for watching.

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