Daily Rundown: June 29

CHRIS VERSACE: Good morning, Action Alerts Plus members. All eyes remain on the Central Banking community as Jerome Powell finishes his second day of discussions in Europe. And as we expected, Powell reiterated the Fed is looking at two more rate hikes, potentially back to back, at its July and September policy meetings. However, as we've seen for most of this year, the market still has a skeptical eye. And so far, it is assuming only one more rate hike following the Fed's upcoming July meeting.

Now, tomorrow brings the core PCE Price Index data for May. And next week, we have the final June PMI data, as well as the June employment report. All of what is contained in those reports, that data will solidify the view for the Fed's July meeting. But it could alter expectations for the September one. We will be breaking it all down for you.

But let's remember, too, we have a quite bit of data to chew through between now and September, when we have the Fed's second meeting. And again, that's the one that the market so far doesn't think we're going to have a rate hike at. We'll also, in the coming weeks, get the next iteration of the SLOOS report. And that will tell us the degree to which credit continues to tighten.

Now, let's look outside the portfolio. Last night, we saw earnings from chipmaker Micron. And, boy, they were better than expected. While we're not involved with Micron shares, as you know, we do peruse that report because what it says about a number of different chip end markets.

With that in mind, Micron shared PC and smart phone inventory levels are back at normalized levels, which is a positive for our shares of Microsoft, Apple, and recent portfolio additon Universal Display. Micron also shared that it saw sequential revenue growth in data center and still sees industry inventory for that market normalizing by the end of the year. That shores up our view on Marvell shares.

Now, as we look to add some additonal OLED shares today, please be sure to watch your inboxes later this morning for that alert. The next catalyst for those shares, as well as our positions in Marvell and Apple, will be the June revenue data from Taiwan Semiconductor. That report should be in our hands a few days after the July 4th holiday.

Now, over to some of our more recent and latest actions with the portfolio. This morning, we added to our position in Bank of America following the conclusion of the Fed's latest round of stress tests and continued data that points to a stronger than previously expected economy. Now, later this week, per the Fed, banks, including Bank of America, can update their capital return plans. Typically, this means dividend increases and potentially upsizing buyback plans as well.

Now, let's stick with the banking sector, and you may have seen that we added former club holding Morgan Stanley back to the bullpen yesterday. When we exited the shares a few quarters ago, we were concerned about the negative operating leverage to be had, given the weakening IPO market. Now, that thought played out pretty much as we expected.

But now we are seeing signs the IPO window could be reopening. That led us to add MS shares back to the bullpen yesterday. As we shared in that alert, if we see signs upcoming IPOs are supporting that reopening and the overall IPO market, we will look to bring Morgan Stanley shares back into the active portfolio.

And yesterday, we also added to our position an American Water Works. There were two aspects that led to that decision. First, the shares have been pulling back of late, improving the upside to our price target that we've already previously established on the shares. And two, as we showed in the alert, we are entering what has historically been a very seasonally strong time of year for the shares.

We would also add that given the heat warnings we are seeing, which as we know are expanding across the US, that seasonal strength could be even greater than usual. Now, for more on market seasonality and how it impacts the stock market, please tune into our latest podcast with AAP team member Carley Garner, which is available in your alerts now and on the AAP website. That's today's Rundown. Thanks for watching.