This article is based on TheStreet’s Stock & Markets Podcast. Hosted by Chris Versace, the veteran Wall Street investor and lead portfolio manager for TheStreet Pro, the weekly podcasts are available early to members of TheStreetPro investing club.
Flying blind is no way to travel.
In light of the federal government shutdown, which recently hit the two-week mark, investors might feel as if they’re in a fog since a major source of economic data has suddenly dried up.
The shutdown was one of the topics that Chris Versace, lead portfolio manager at TheStreet Pro, discussed with Noah Weidner, TheStreet’s chief markets reporter, during the Oct. 15 edition of the Stocks & Markets podcast.
Chris Versace (l) and Noah Weidner on TheStreet’s Stocks & Markets Podcast TheStreet
View the 1 images of this gallery on the
original article
“There are a lot of folks that are kind of operating in the dark,” Weidner said. “The lack of economic data … is the highest concern among a lot of people I’ve been talking to over the last few weeks.”
Weidner, who said some investors have been working with “alternative data points,” noted that soft indicators, like consumer sentiment, continue to sag.
“Not by an amount [that ‘s] really dramatic, but it’s enough that people are thinking, ‘okay, so, where are we at?’” he said. “And I think the answer is we don’t we don’t really know.”
TheStreet’s Weidner: Fed on Track for Rate Cuts
“But at the end of the day, I don’t think anything has materially changed with the [Federal Reserve’s] trajectory,” Weidner added. “It looks like we’re still on track for one, probably two cuts by year end.”
“To me, it’s kind of an evolving landscape,” Versace said, “but that’s always the case with the Fed. You mentioned that we’re not getting a lot of data. I would counter that folks who [rely only] on federal government data are not really doing their job because there is another world of data out there.”
More Economic Analysis:
- Soaring student loans are weighing on the economy
- US Government Shut Down: What It Means for the Economy and Stocks
- Fed official pours cold water on interest-rate cuts
Versace cited the Cass Freight Index, which measures monthly freight activity. The benchmark showed a “hiccup” compared with August. “That’s kind of counterintuitive with a slowing economy,” he said. “But then again, that was September before the government shutdown.”
Versace said that data from both ADP and Carlyle Group revealed “very weak economic numbers in terms of job growth for September.”
Weidner and Versace on AI and Outlays
Weidner pointed to the market’s recent surge after chipmaker Broadcom AVGO unveiled a partnership with artificial intelligence research and deployment company OpenAI, which recently launched its social media video app, Sora.
“I think the question is ‘are we building consumer apps here?’” he said. “Are we’re making an enterprise case or are we building a product that’s going to solve big problems? Is the spending even going to happen?”
Related: R&D spending now can have big payoffs later for companies
“I’ve seen more companies completing programs and reauthorizing their programs,” Versace said.
“And I think when we look at even just some recent numbers in like the PC market, the smartphone market, … we’re seeing more AI-enabled devices ship. I think that bodes well for AI adoption on the consumer side.”
Weidner said that enterprises are spending a great deal to build AI into products, but the reception has been “a little lukewarm from consumers.”
Trump-Xi and the US-China Trade War
The conversation turned to President Donald Trump’s planned meeting with Chinese President Xi Jinping in South Korea later this month.
The two countries had appeared ready to return to an all-out trade war, after China announced a major expansion of its rare earths export controls. Trump threatened to raise tariffs on Chinese goods to triple-digit levels.
“I think all the all we’re seeing now, with the latest back and forth on them is just kind of saber rattling,” Versace said, “which we’ve seen before setting the stage for the conversation they’re going to have.”
Related: Stocks and Markets Podcast: TheStreet Pro’s Lang picks stocks in PE, retail, financials
“If you look back at since Trump second term started, this is just kind of on brand, right?” Weidner said. “Every single economic negotiation is like a WWE match.”
“And it’s almost not so much about the actual negotiation than it is about, this country is taking from us and they’re not giving anything back,” he continued. “And we need a better deal.”
The Supreme Court set arguments for Nov. 5 over whether Trump has the authority to impose tariffs under the 1977 International Emergency Economic Powers Act. Lower courts have ruled that he overstepped his authority.
“If the two prior courts decisions are upheld in the Supreme Court and the tariffs are struck down, we’re talking about there’s going to be new ways of implementing tariffs,” Weidner said. “There’s no basis for emergency power use here. And how does Trump react to that?”
“I think he’s a man with an agenda,” Versace said. “He’s going find however he can to get what he wants. And good, bad or indifferent, he’s dragging us along with him.”
Related: Cocoa-price changes could be sweet for Hershey ahead of Halloween
#Stocks #Markets #Podcast #Weighing #Trump #tariffs