JD DURKIN: Good morning, Action Alerts Plus subscribers. I'm "The Street's" JD Durkin talking with Chris Versace here from the floor of the New York Stock Exchange. Good morning, my man.

Thanks for being here as always. All right, let's get things kicked off here in our conversation with the latest pieces of economic data. No shortage of things to talk about here, my friend-- PCE to manufacturing, PMI. What this morning is catching your attention?

CHRIS VERSACE: So, I mean, I hate to say it, JD, but we have to pay attention to all of it. As we saw yesterday, Fed Chair Powell came out and said that it does look like the Fed might be taking softer steps. No clues on the terminal rate for where the Fed funds rate might actually wind up but he did say that the Fed is going to be watching the data.

That means we have to be watching the data. So what did we see? You know, the PCE price index, a key indicator by the Fed, came in a little softer than expected but still up big, as we can say, year over year.

But what really bothers me more so is what we saw in the ISM manufacturing data. And I say that because it rolled over into contraction territory on the headline number. New orders were again for the second month in a row in contraction territory. And we've shared with AAP members the tight correlation between S&P 500 revenue and the ISM manufacturing PMI data. And I'm afraid to say, JD, it confirms our view that we're likely to see expectations for 2023 come down despite what the Fed is doing.

JD DURKIN: Is there a difference between the reality of what the data says and perhaps how the markets and even the Fed may be reading it?

CHRIS VERSACE: Yeah, 100%. So if you're in the Fed, what are you looking for, right? You want to see slower job growth. You want to see inflation start to denote at the margins, come down and then hopefully come down even more so in the coming months.

But if you're the market, you're trying to understand, what is the outlook for revenue and earnings for the current quarter but really going into 2023? And that's why focusing on that S&P-- sorry, the ISM data is really critical here. It's a very, very tight correlation.

And we've been sharing with AAP members our concern about the outlook for 2023, whether it's the continued inflation, higher interest rates to fight it, slowing manufacturing and services economy, dollar headwinds, you name it. There's a number of reasons to be concerned. And I think that we're going to start to see more rate cuts-- sorry, more expectation cuts for 2023 in the coming days and weeks because of the economic data that we are getting today and then in the coming months.

JD DURKIN: And of course, we did hear, as you just alluded to there, Chairman Jay Powell speaking at Brookings Institute yesterday. Any other top takeaways for you. What that's feel like? That's always the go-to question, right, after a high profile press conference or something. Oh, what's your top takeaway? But it is an important one for context.

CHRIS VERSACE: Well, it is. I mean, so I guess there would be really two. One is that when you look at the CME Fed Watch tool that tracks expectations for the Fed funds rate, it really didn't move, right? So that tells us that the market was widely expecting what Powell had to say regarding December.

Remember, he indicated, ah, we could see smaller rate hikes. So again, not exactly bowling us over. I think what's key is what Powell did not say. He did not indicate where the Fed is likely to end raising the Fed funds rate, simply saying what he said before.

We have more work to do. We need to see inflation down on a sustained basis. And we're going to continue to do this until the job is done.

So I think that last part is far more important. There are some thoughts out there that we could see a rate cut in the back half of 2023. And I think Powell really squashed that idea.

JD DURKIN: Absolutely. Is this week's jobs report, since today is Friday Eve-- some people call it Thursday, but we will get the jobs numbers from the Bureau of Labor statistics tomorrow morning-- more important to watch than ever before? What's your read on tomorrow?

CHRIS VERSACE: Yeah, I do think. So a lot of people keyed in on the ADP employment report for November. It showed demonstrably slower job growth.

But what a lot of people didn't really zero in on is what it said on wage gains. So the ADP report has a couple pieces to it. One is wages for people who stayed at their job-- so just regular increases-- and then people who change jobs. And both were up significantly, but really, job changers, up more than 15% year over year.

That is a hot, hot, hot wage number. So we want to see what the employment report for November has to say. If it matches that, that's going to confirm some of the other data that we're getting that the Fed's fight on inflation is going to be a longer road than previously expected.

JD DURKIN: I do want to ask you about Costco. That company saw more than $19 billion, that's billion with a B, in sales in the month of November. Marks a sharp decline from the previous-- at least previous few months. That wholesaler has been a pretty bright spot.

As a lot of retailers noted, changes in consumer behavior this earnings season. We've heard that they're kind of scattershot in terms of where they've landed the last few weeks. Is that story beginning to change, I wonder?

CHRIS VERSACE: I don't think so. So, the context on this is Costco shares are trading off. The print for their November US comp sales adjusted for the dollar and gas, we're about 4.6%.

And I think the concern with that figure is it's slower than it was in October, slower than it was in September. So there's obviously some concern that maybe Costco is slipping here. And I would have to say I don't think that's happening at all for a couple of reasons.

One, we have to remember the context. Costco's US same store sales are up over 9% in November of 2021. So it has a very, very tough comparison. But two, if we just reflect on the comments that we saw about traffic during the all-important Black Friday to Cyber Monday shopping period, you know, Costco was simply balls to the wall busy whereas others like Target, which I personally walked through, were kind of like tumbleweeds and ghost towns. So I think what we're going to see in the coming days as we get more data, including the November retail sales report, the November Mastercard SpendingPulse report as well, is that Costco continues to be a bright spot because consumers are leaning into what they have, which is value as they look to stretch their shopping dollars that they do have. So I think for us at the portfolio, this pullback could actually be an opportunity to nibble on the shares.

JD DURKIN: Yeah, great context there for people who follow the portfolio to keep on track with there. You've got ChargePoint reporting after the bell today. You've been bullish on that name, my friend, picking up shares as recently as Tuesday if I'm not mistaken. Anything in particular that you will be looking for in this report?

CHRIS VERSACE: Well, let's remember, right, that the play that the portfolio has with ChargePoint isn't necessarily one that is one day, one week, one month, one quarter, right? This is a longer term play on the multi-year buildout in EV charging stations as the auto industry, not just passenger cars but also fleets and trucks, converts over from combustion engines to EVs.

So again, multi, multi-year. The one thing we really want to hear is more defined timing on when the company starts to see the flow of funds tied to the Biden infrastructure law. We should start to see that kick in some time in the first half of the year, but it would be really great if they can narrow that down for us. That's, to us, the key focal point.

JD DURKIN: Yeah, that's a great, great reminder there with regards to that bill and the DC or Capitol Hill implications on all of this. All right, thanks a lot for taking the time today, Chris. Good to have you.

CHRIS VERSACE: Thank you.

JD DURKIN: You got it, man. All right, and members, please, please, please keep sending all of your questions and to us at AAP club at thestreet.com. We hope to answer as many of them as possible during next week's live members call. And that's going to do it for today. We will be back with another rundown tomorrow, and we'll see you then.