VIDEO: Why We'll Be Extra Vigilant This Weekend

In today’s Daily Rundown video, Chris Versace explains why recent comments from President Trump will keep us vigilant over the weekend when it comes to tariffs and trade conversations between the U.S. and China. 

We touch on our playbooks for Elastic ESTC and Marvell MRVL, and how that may be affected by any Trump-induced trade escalation in the coming days. 

Chris also offers a thumbnail sketch of the May data coming our way next week, something we’ll cover in much more detail later with the Pro Portfolio’s May Monthly Roundup.

Transcript

CHRIS VERSACE: Hey, everyone, Chris Versace here as we close out May and get ready for the final month of the current quarter. Now, if you look at the market today, it certainly looks like we're going to end it on a down note, following potentially renewed trade tensions between the US and China. If you missed it last night, Treasury Secretary Scott Bessent said talks between the two countries have stalled. And today, President Trump-- no surprise-- accused China of violating a preliminary trade deal, with Trump posting, "So much for being Mr. Nice Guy," on social media.

Now, this tells us that we're likely to see, in our view, a replay of Trump's recent efforts with the European Union. Remember, he threatened a tariff increase recently to jump start tariffs. And of course, the EU started to play ball, saying that they would fast track trade conversations. Now, what this likely means is that we're going to want to be mindful and watchful over the weekend to see if Trump does something next over the weekend, or even early next week, to jump start those same conversations with China.

Now, as we get ready to close out the month, despite today's move lower, May was actually a very good month for the market and a very good one for the portfolio. And I would argue that, despite the overreaction we are seeing in the shares of Elastic and Marvell, the portfolio is still poised to close May on a year-to-date basis ahead of the S&P 500.

Now, backing up a bit, if you missed our notes regarding Elastic in Marvell, you probably just heard my comments saying that the reaction we're seeing in the market today is a downside overreaction. Well, we explain our rationale for that in those trade alerts. We walk through not only their current quarters, but the outlook for the upcoming ones. And when I tell you that what we saw pretty much reaffirms our bullish case for both stocks, that is indeed the case. Please, be sure to read through those alerts in detail, and you'll understand what we're talking about after digesting not only the earnings reports, but management's conference call comments. And again, you'll understand why we remain bullish on both and understand our plan for both shares.

What that plan is pretty much in keeping what we've seen in the past when we see a positive fundamental outlook and, what we would call, a negative overreaction in the shares. Our plan, therefore, is to remain on the sidelines today, potentially early next week, and let the market absorb that negative overreaction while we wait in the wings to take advantage of what we see as a dislocation between the share price and that improving fundamental outlook. Again, be sure to read the alerts in full, and you'll understand what I am referring to hear about the favorable outlook, both for Elastic and for Marvell.

Now, we also have to be mindful of what I just said a few minutes ago about President Trump. If we do see him come back with a escalated trade war, increasing tariffs on China, we're going to want to let that be absorbed in the market, as well. So again, it's another reason for us to be paying close attention to any trade-related developments over the weekend, because they could influence how we start off June. And that might mean for us taking another day, maybe another day or two, to let that be absorbed in the shares of Elastic in Marvell, as well.

Now, as we think about next week, not only do we have to be mindful of those events that could be coming out of the current administration, but we also have to recognize that we will have a date-filled week next week that will allow us to craft a clearer picture when it comes to the speed of the economy, inflation, and the Fed's other aspect of its dual mandate, job creation. Of course, I'm referring to the data that will be the ISM PMIs for May, ADP's employment change report for May, and the May employment report.

Again, as we assemble all those pieces, we'll have a much clearer sense as to the picture of the economy, inflationary pressures, which we suspect, based on the flash May PMI report from S&P, are likely to pick up in the month of May, as well as overall job creation. We'll also, as we start off the month of June, be on the lookout for the May revenue reports from Taiwan Semiconductor and Foxconn, and those-- excuse me-- because those should bring another layer of support, in addition to what we saw this week from NVIDIA, what heard from Dell, what we heard from HP, and others. They should bring those two reports from TSM and Foxconn additional layers of support for several portfolio holdings.

Also next week, we will see the return of office hours on Monday afternoon. And of course, we'll have another podcast conversation and much, much more to share with you. Before we get to all of that, however, we will want to make sure that you peruse the May monthly roundup that will be coming your way a little bit after we close the market today. Inside that monthly roundup, as we do each and every time, we will be reviewing all of the portfolio's positions, recapping the portfolios moves during the month of May, and setting you up for what's to come in the month of June.

Trust me when I say, you won't want to miss it. And with that, let me get back to putting the finishing touches on that May monthly roundup and wish you a wonderful weekend. We'll see you back here on Monday.

At the time of publication, TheStreet Pro Portfolio was long ESTC and MRVL.