Daily Rundown: April 3

JD DURKIN: Good Monday morning, members. Chris Versace and I are now back once again to get you ready for the week ahead. But first, let's rewind to some of last week's biggest news. There was certainly no shortage of it. On Friday, Chris, you detailed your full review for the quarter in the members weekly roundup, but for any members out there who may have missed it, Chris, talk to me about how you're feeling about the portfolio with Q2 trading now here in full swing.

CHRIS VERSACE: So you are right, JD. In the round-- in the-- sorry, weekly roundup, we did kind of cast back the first quarter of the year, and candidly, the market was a lot stronger than I think we had expected. Really leaning into the notion that the Fed is going to have to cut interest rates. We've talked about that regarding what the CME Fed watch tool expectations are, and we continue to have a lot of concern about that.

And what we are seeing towards the end of last week was the expectations kind of dialing back more in line with what we were thinking. And then, of course, as we start the second quarter, we've got another salvo, if you will, kind of reigniting these inflation concerns with the OPEC production cut. And we continue to think that the market is more likely to come to us on the notion that the Fed is going to continue to fight that battle known as inflation, doing more and staying at higher levels rather than doing less.

So from our positioning exiting the first quarter, are we comfortable? We are for the most part. I think there's some positions that moved against us, AMN Healthcare, for example, the Inverse ETFs, but I think as the market kind of, again, comes back to our way of thinking, the Inverse ETFs are going to once again do their job for us. But there are some positions that we do have to think about.

I would say, if you put a gun to my head, was it a great quarter, good quarter? I would say it was an OK quarter for us, some positives, Axon, for example, Chipotle, and a few other positions. But we've got a lot of work to do.

JD DURKIN: If it's Monday, it's time for my favorite question when we do these sessions for AAP. Chris, is there anything you wish you could change or do differently from last week?

CHRIS VERSACE: Well, I would take a bigger picture on that, JD. I would say really the first quarter, and it probably would have been leaning into tech a little sooner than we did. Remember at the start of March, we added the shares of Marvell, and we've got a couple of other positions that we're closely watching in the bullpen, Applied Materials, as a play on the CHIPS Act, for example.

But I also think, though, that tech is ahead of itself. And I think given my comments a few minutes ago about the Fed, inflation, and where we're likely to see interest rates go compared to what the market was expecting during March, I think we're going to get a chance to pick up some of those other names probably at better prices.

JD DURKIN: All right, we'll have to now, of course, talk about the OPEC+ move. That announcement with a group of a surprise production cut of over one million barrels a day. I don't know who had expected this. Of course, we had a similar announcement in October just before the last election. Chris, what does this mean in terms of your economic outlook, and of course, the club's position in a name like XLE?

CHRIS VERSACE: Yes, so let me take the second one first because it's a little easier. We're seeing oil prices move higher. We're also seeing a number of the constituents that are tucked inside the XLE ETF move higher as well. So that is a positive without a doubt.

In terms of what is the ripple effect from higher oil prices, it does mean that we're probably going to see a move higher in fuel costs, whether that's gasoline that we pay at the pump, whether it's costs for companies, or even aviation fuel, it does mean that we're going to have probably a longer fight for the Fed to get inflation back to that 2% target. Remember, people were looking for falls in the inflation data.

We haven't really seen it. It's been stubbornly sticky, particularly for core CPI, and we saw that again kind of last week with the core PCE index. But this is a new wrinkle that, again, probably says the Fed is going to have to do more than what the market was expecting over the last few weeks.

JD DURKIN: It is, of course, a shortened trading week, but we do have a lot of jobs data heading our way, Chris, especially in the latter half of this week. So only four trading days, but a bit to go through in terms of the numbers. What are your expectations? And Chris, what will you be closely following?

CHRIS VERSACE: Well, when it comes to the employment report, JD, Fed Chair Powell has been pretty explicit that the labor market is extremely tight. So we're going to be, of course, watching the unemployment rate, but we're also going to want to pay close attention to the number of jobs created during the month of March. That would really tell us if the economy is still holding up better than it has been.

Remember, the expectation by now was that we would start to see signs of a more severe slowdown, some would call it a recession, but we haven't really seen that. Job growth has been very strong, labor market tight. So we're going to want to parse those numbers very carefully.

At the same time, given the continued focus on inflation, what are we seeing on wage inflation? And for that, we're going to tune in to two different reports this week. Most people tend to, of course, think about the typical Friday employment report this time from March, but Wednesday, we're going to get the ADP employment report. And while a lot of folks tend to look at what it says about job creation. If you dig deep in the data, it has its own comments about wage inflation. So we'll be looking at both.

JD DURKIN: Of course, we'll also get data on job opening, or the JOLTS report. We get that Wednesday, which I know you pay particularly close attention to given the club's position in AMN Healthcare. You mentioned it there a moment ago. How are you feeling about AMN heading into that report and that piece of data?

CHRIS VERSACE: So again, I feel like a little bit of a broken record here because I know AMN has been frustrating. And as we say, we like to hang our hats on what the data is telling us. As I pointed out, I think earlier last week, if we look back at the last few monthly JOLTS reports, there's been no change in the relationship of job openings, job hires for health services. That's one of the key items that keeps us bullish on the shares of AMN.

So when we get this report, we will have to revisit if there's any change in what that data is telling us. If it means that all of a sudden the number of job openings are collapsing, and that has a harsher outlook potentially for AMN, we'll factor that into our thinking, and if we have to make some moves with it, we will. On the other hand, if it continues to paint a picture of extreme tightness in the job market for health services, that will likely keep our bullish stance intact.

JD DURKIN: All right. And finally, before we wrap up, Chris, is there anything else that you think members should be watching for the shortened trading week ahead?

CHRIS VERSACE: Yeah, so we talked about the employment report. That's going to be a big thing. We also have the PMIs that are coming out this week, both the manufacturing economy and the services economy. With the services one in particular, both here in the US as well as outside, we're going to want to really take a hard look at that and what that means for Coty. We upgraded that share-- that we recently upgraded those shares, and late last week we boosted our price target.

We're also going to want to dig into some data regarding Vulcan Materials and United Rentals. That's going to be the February construction spending report. But also with Vulcan Materials, around midweek or so, we should get the March railcar loadings data that has been very favorable for Vulcan Materials over the last few weeks. We'll want to see if that continues.

JD DURKIN: The great Chris Versace, thank you. Enjoy the week ahead, my friend.

CHRIS VERSACE: You too, JD.

JD DURKIN: All right, folks, to those of you watching at home, as a final programming note, our next live call kicks off tomorrow at 12:00 PM Eastern. Chris, as well as "The Street's" editor-in-chief Sara Silverstein will be here answering some of your biggest questions. You are not going to want to miss it. Have a great day. We'll see you then.