JD DURKIN: OK, good morning, subscribers, one and all. Once again on this Monday morning, it's time now for me to be joined by the great Chris Versace for a check in the portfolio, a look at the very busy week ahead that will be for earnings, and anything else he wants to talk about. Hey, Chris. Good morning. 

CHRIS VERSACE: Good morning, JD. 

JD DURKIN: So before we get to check in on our weekly look at the portfolio, it's a very busy week of earnings. So let's start the conversation there. Last week, of course, we got our first taste of earnings season reports out from some of the largest banks. Let me start there. What were your takeaways from the information we got Friday? 

CHRIS VERSACE: Yeah, so I would say that there were two key takeaways. One, the earnings were better than expected. We could take a look at JPMorgan, Citi, even Wells Fargo. Pretty much what they said is that the banking crisis that people were fearing isn't developing as feared. I think that's a positive. And by in large, again, the economy is not falling off a cliff. 

I think the response that we're seeing today is as important. We're actually seeing some price targets move higher for the likes of JPMorgan. I think all of this sets a very favorable tone for what we're going to hear from Bank of America tomorrow. Tomorrow, of course, being Tuesday. 

We added that given the sharp pullback as a result of the concern of the recent bank failures. And I think our timing is going to be very good not only picking up the shares, but adding to the position over the last several weeks. 

JD DURKIN: So to that point about BofA tomorrow, Chris, what should members pay closest attention to you think? 

CHRIS VERSACE: I think it's going to be a couple of things. One, we want to continue to hear what they collectively as part of the big bullet banks are seeing in terms of tighter credit. So of course, we're going to want to hear what Bank of America has to say about that. We're also going to want to understand the dynamics of its loan portfolio. 

Is it continuing to see growth? Is it slowing? What does that mean for the economy, as well as its comments about the consumer and consumer credit. The one other thing that we've been kind of waiting to see is a rebound in the investment banking business. 

So I know you talked to Sarge on Friday. He shared that he was surprised that some of the investment banking business held up better than expected. We'll be looking for that as well when it comes to Bank of America. 

JD DURKIN: Lockheed Martin also on tap for tomorrow. What is on your watch list there? 

CHRIS VERSACE: So really we've seen a number of program wins during the March quarter. No real surprise. We continue to see defense spending rising not only here in the States, but also outside with the addition of Finland into NATO. We're going to hear some comments about that. 

But JD if I had to narrow it down to the one thing that I want to pay attention to when Lockheed reports, it's going to be their backlog, making sure that it continues to grow not only year-over-year, but really compared to the December quarter. As the backlog goes, so goes the company's visibility, so goes our comfort in its revenue and future earnings. 

JD DURKIN: OK, let me ask you about Elevance Health. They report on Wednesday. You upgraded and added that name earlier in the month. What are your expectations? What are your hopes for Wednesday? What are your hopes? I like that question. 

CHRIS VERSACE: Hopes and dreams? Well, we don't deal in hopes and dreams. We deal in data and facts. You know this. 


CHRIS VERSACE: But when it comes to Elevance Health, let's remember the catalyst as to why we not only added to the portfolio's position in Elevance shares, but also upgraded it to a one. It's because as we discussed with members, the initial reimbursements for Medicare in 2024 that were a little concerning would likely fade and improve somewhat with the final passage. That's, indeed, what happened. 

Given our concern about the speed of the economy, the potential for continued bumpiness, let's call it, throughout the earnings season, we do like the predictability in the base business that Elevance has. And we wouldn't be surprised if others kind of come back into that business, as well as some more defensive names, particularly if what we hear over the next couple of days is a little, again, rockier than expected. 

JD DURKIN: Chris, are there any earnings, I wonder, outside of the portfolio that you have on your radar that you would want our members to keep in mind? 

CHRIS VERSACE: Well, I'm glad you asked me that, JD. Because as you can see right here, I've got a little bit of a list. So let me just tear right through them for you. The first is going to be Taiwan Semiconductor, TSM. 

We talked about that in our note this morning with members. When we think about TSM, we have to pay attention to its two big end markets. One is smartphone. Obviously, that's going to be giving us some insight on not only Apple, but a number of other players out there-- Qualcomm, Skyworks, and the like. But also the second largest business is its high-performance computing business, better known as Data Center. 

So we're going to really want to drill into that as it relates to our shares of Marvell. But remember, too, that Taiwan Semiconductor is the largest chip foundry. So a lot of folks, us included, will be paying very close attention to what it has to say about its capital spending. There's a report out this morning that they are going to trim their 2023 capital spending budgets. 

We've been concerned about this given the end markets that they touch, generally speaking. And that's kind of kept us on the sidelines with some semiconductor capital equipment companies, including Applied Materials that's in the bullpen. We want to keep tabs on this because the expected ramp in the Chips Act and that particular program is why we're going to pay-- extra special attention to what ASML and what Lam Research has to say when they report later this week. 

And of course, you can't think about EVs without keeping tabs on what Tesla has to say, especially CEO Elon Musk. They report later this week. And we're going to want to pay attention to the outlook that they see, but also what they see in terms of their margins given not one, not two, not three, five price cuts so far in 2023 and what those implications are for our shares for Ford Motor. 

JD DURKIN: What was that name, Elon-- Elon Musk? I'm unfamiliar. 

CHRIS VERSACE: Yeah, I think he had some spaceship launch today, I think, right? 

JD DURKIN: Would have had a spaceship launch today. It was scrubbed. But yes, we will follow that story as well. Turning our attention now to last week. Chris, while I have you, for members who may have missed an alert or two, you upgraded Trinity Capital from the bullpen. Why now? Why this name? 

CHRIS VERSACE: So I'll give you three reasons for that. One is when we first started looking at the shares, they were higher and they came down to the $11ish level. So that's a good risk reward in part because of the second component, which is that as we've discussed with members, the more distance that we put from the recent bank failures, the more comfortable we can be that we're returning to a more normalized environment for the banks. And again, what we heard from JP Morgan, Wells Fargo, Citi last week really suggests that that is happening, as well as some other comments from a number of Fed officials last week and the week before. 

So that's two reasons. But the third reason is typically whenever we see a certain set of companies fall by the wayside, no matter what the industry is, it could be retail, it could be tech, it could be others, there tends to be a vacuum that has to be filled. And we see Trinity filling that role for small, medium-sized lending. So we expect them to actually be a net beneficiary of these recent bank failures. 

JD DURKIN: Certainly can't forget our weekly hindsight is 20-20 check-in. Before we wrap up, anything from last week that you wish you could change if you had a time machine or you had the powers of Doctor Strange and you could somehow go back in the multiverse. What would you do differently? 

CHRIS VERSACE: I would use the time stone, if I catch the reference correctly, fellow Avenger, to contemplate some of the moves that we made. We had a number of moves in the portfolio last week. And as we exited the week, we saw some other positions encroach slowly upon our price targets. So it's always difficult to choose one or two to trim when we have three or four to do so. 

So I think the learning from last week would be if market continues to trend a little bit higher, we see certain positions continue to chug a little bit higher as well, we could see some additional trimming here before we get into the down and dirty of the March quarter earnings season. 

JD DURKIN: All right, Chris, finally, anything else that you would like members to know before we wrap up today's show? 

CHRIS VERSACE: We continue to see this dynamic unfolding in the marketplace where people are concerned understandably about the speed of the economy, but the continued inflation that we're seeing. Typically, that's going to have a dueling narrative, if you will, between what's going on. And for us, it means we're going to pay close attention to some of the economic data this week. 

Yes, we get some regional Fed data from April. But it's really going to be what we get on Friday with the flash PMI data from S&P Global for April. Remember, the new orders are really going to tell us, hmm, what is the month of May likely to start off on? 

Those two components, right, just as earnings season is kicking into a higher gear, will kind of give us some greater insight as to the direction of revenues for the S&P 500. In other words, are we likely to see more downside in terms of guidance? So that's the big thing that we'll be paying attention to in addition to everything else. 

JD DURKIN: All right, the great Chris Versace, thank you for another wonderful conversation. Enjoy the week ahead, Chris. Great to have you. 

CHRIS VERSACE: You as well, JD. 

JD DURKIN: All right, folks, that's going to do it for another Monday. Have a great week, members. We'll see you next time.