JD DURKIN: Good morning, AAP members. And a big welcome back to our very own, Mr. Chris Versace, back at it on a Monday. Chris, how you doing?

CHRIS VERSACE: Recovering from some lag. But otherwise, ready to get back at it, JD.

JD DURKIN: I'm sure you are. And it's a perfect week for you to be ready to get back at it here, my friend. Talk to me about your top priority for this week-- what a busy one it promises to be-- as you get back to business, my friend.

CHRIS VERSACE: Oh, it is going to be a huge week. We've got a lot of inflation data that we're going to want to carefully pick over ahead of the Fed's meeting that finishes up on Wednesday. The market is saying, ah, I think that the Fed officials are going to skip a rate increase. But of course, we've seen that expectation flip-flop over the last few weeks based on the latest data.

So when we get the core CPI data for May tomorrow and the core PPI data for May on Wednesday, it's really going to signal to us what the Fed is really likely to do. And then after that, we've got retail sales for the month of May, as well as some other things going on as well.

So it's going to be a very, very busy week. But we're going to take a very measured approach with the portfolio. I say that because exiting last week, the S&P 500, the market barometer, was within spitting distance of its high for the year in terms of its PE valuation. At the same time, we know that money continues to flow into tech stocks. People are still trying to capture AI. Odds are, the market's going to get a little toppy here, maybe a little frothy. So again, we will want to proceed carefully.

JD DURKIN: If you had to bet, Chris, what is your bet for what happens on Wednesday? Fed-wise, that is.

CHRIS VERSACE: So my thinking on the Fed is, unless the CPI data comes in much hotter than expected, I think the Fed is going to say, you know what, we've done a lot over the last five, six quarters. Let's take a beat and let that sink into the marketplace. But I also think, too, that the Fed really wants to have a better sense of the tightening that's been unfolding as a result of recent bank failures, what is that doing to the credit market.

And of course, we won't get that until we have the July Sluice report. So I think it's going to put them in a position of, we can afford to wait. And let's remember, too, that they can always do more in the back half of the year when it comes to the Fed funds rate.

JD DURKIN: We finally have at least one reference to the Sluise report, which means now it's a party. Let's talk about ChargePoint. The stock sold off on news that GM will be joining Ford in inking a charging partnership with Tesla. Chris, why aren't you worried that Tesla will monopolize the overall charging space?

CHRIS VERSACE: So there's a couple of things going on here. And I'm really glad that we got the chance to discuss this. So first and foremost, Ford and GM are going to have access in 2024 to 12,000 charging stations. When we sit back and we see the need for roughly half a million charging stations, it tells us that let's not overthink this. Let's not get lost in the sauce, as we like to say, because there's a rising tide that's going to lift a lot of boats here. Tesla is not the only charging station company around. In fact, that's not even its core business.

But I think the other context to think about here is, when we see this upswell that's unfolding for the buildout in the EV charging network, it's a lot like what we're seeing on infrastructure spending or even the CHIPS Act. And in those arenas, no one is saying only Vulcan Materials can benefit, only Caterpillar can benefit, right? They know that there's a rising tide that's going to lift a number of companies, their businesses, their revenues, and of course, their earnings. Same thing with the CHIPS Act. And we have exposure with that, thanks to Applied Materials.

So I think a calmer, cooler head is called for here. Am I happy that ChargePoint has continued to get beaten up? No. But I do think that with the test of time in the next few quarters, as that spending that we heard about from Orion Industries continues to flow for the buildout of EV charging stations, we won't be so concerned where ChargePoint shares are today.

JD DURKIN: And it's an interesting day we're having this conversation. It's not off to a smooth start on this Monday. The stock is down more than 10% year to date. Chris, what is your message for members who might be frustrated by some of those losses in the stock?

CHRIS VERSACE: Look, I've shared my feelings about and this level of frustration. But what we do here is lean into the data. And we continue to see more EVs being sold. The fact that Ford, GM, and Tesla are coming together says that we're likely to see standards in the EV charging market finally solidify. In other industries, when we've seen that, that's been a very positive thing and allows for more rapid adoption.

So there's a number of reasons to be positive here. I would just say, let's be patient. And where we have room to pick up the shares at an extremely compelling area, like we did last week, we'll do that. And even when we build out our full position for newer members, we will let you know when and where to pick up those ChargePoint shares.

JD DURKIN: Chris, the S&P specifically has been hovering right around that 4,300 level now for a couple of sessions. How do markets overall look to you as we head into those two key pieces of inflation data, CPI and PPI, on Tuesday and Wednesday of this week respectively?

CHRIS VERSACE: Yeah. So as I said a few minutes ago, when you look at it from a valuation perspective, the S&P 500 closed last week at 19.4 times 2023 earnings. Let's remember, over the last year, it peaked at 19.5 times. So that says that we need to see something to really push the S&P 500, and therefore the market, higher, demonstrably higher. And there's a lot of questions in there about the speed of the economy, what the Fed is going to do, when they may or eventually cut interest rates.

But to me, the bigger question that's bubbling up-- and I touched on this in our morning comments this morning to members-- is earnings expectations for the S&P 500 in 2024. Currently, they're expected to grow more than 11 and 1/2% compared to 2023. That is a huge number. And I think until we have a sense as to that, yes, this is possible, I think the market is probably likely to be a little toppy here.

At the same time, we've got the CBOE's volatility index down at levels we have not seen since early 2020. And that tends to be a level of complacency. So if we get any little hiccup, we could see the market trade off. So again, my comments earlier this morning, we're going to move, at least in the very near term, very carefully with the portfolio.

JD DURKIN: All right, so I already asked you about top line expectations for the Fed. But of course, if I'm not mistaken, Chris, we also get dot plot projections. Talk to me about some of the other pieces of data you'll be looking for out of Wednesday's announcement, or even the press conference from chairman of the Fed, Jay Powell, and his colleagues come Wednesday afternoon.

CHRIS VERSACE: So you are correct. We will see an updated economic dot plot. When we parse through that, we will want to see what the Fed has to say about the Fed funds rate, not only for where it's expected to exit the end of this year but where it sees that at the end of 2024. Digesting and parsing that information will suggest potential rate cuts in 2024 or not. So we will want to get an updated look on that.

At the same time, we'll also want to see what the Fed now thinks about GDP for not only this year, but again, for next year. So far, the economy has held up far stronger than expected. And as of early this morning, the Atlanta Fed GDP now has the GDP for the current quarter hovering around 2.2%. That's up from 1.3% in the March quarter. So things are not unfolding to the downside, to the recession side, if you will, as people were thinking. But we want to understand if the Fed sees that or if there might be some wrinkle that it's thinking about that the market isn't.

JD DURKIN: All right, Chris Versace. Welcome back here, my friend. It's great to have you here, as always. And as we wrap up, a reminder that our next members call kicks off on Wednesday, the 14th of June. Join us live at 12 o'clock Eastern for a complete review of the entire portfolio. Until then, Chris will be back tomorrow with his reaction to the consumer price index. Have a great day. We'll see you then.