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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of over 20,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

Markets are mixed to start the week, though treasury yields are much lower following the nomination of Scott Bessent as Treasury Secretary as well as some key economic data.

2 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

What Trump’s New Tariff Threats Mean for the U.S. Economy

President-elect Donald Trump has pledged to impose significant tariffs on Mexico, Canada, and China, signaling his intention to follow through on campaign promises to adopt a more aggressive trade stance. 

Trump announced plans for a 25% tariff on imports from Mexico and Canada, alongside a 10% tariff on Chinese goods, citing concerns over drug trafficking, particularly fentanyl, and illegal migration as driving factors.

These proposed tariffs could disrupt the USMCA, a trade agreement Trump previously negotiated, which facilitated $1.8 trillion in trade in 2022.

Economists have warned that such sweeping measures may increase costs for American consumers and strain relationships with key trade partners. Notably, Mexico, Canada, and China collectively account for 42% of U.S. imports, and the economic fallout could impact their economies significantly.

Fed’s preferred inflation gauge rises to 2.3% annually, meeting expectations

Inflation ticked higher in October, with the Fed's preferred gauge, the personal consumption expenditures (PCE) price index, rising 0.2% for the month and 2.3% year-over-year, up from 2.1% in September.

Core inflation, excluding food and energy, showed stronger increases of 0.3% monthly and 2.8% annually. Housing and services costs drove much of the inflation, while goods and energy prices declined.

Despite the rise, markets priced in a 66% chance of another Fed rate cut in December, as the Fed continues its gradual easing strategy.

Inflation remains above the Fed's 2% target but has eased significantly from its June 2022 peak of 7.2%, with policymakers acknowledging ongoing challenges and uncertainties about the path forward.

Consumer spending remained solid in October, rising 0.4% as personal income exceeded expectations with a 0.6% increase. However, the personal saving rate fell to 4.4%, its lowest level since January 2023, indicating potential pressure on households.

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Earnings Recap (Edge+)

With the holiday shortened week, we figured we would combine the Earnings Recap with today’s Mid-Week Wrap-Up so you can enjoy Thanksgiving and not have to think about the market over the next few days.

CrowdStrike (CRWD)

CrowdStrike delivered strong quarterly results, surpassing expectations for both revenue and earnings, driven by robust subscription revenue growth and disciplined execution.

The company reported a net loss of $16.8 million, a reversal from a net income of $26.7 million in the prior year, while total revenue grew 29% year-over-year to $1.01 billion, beating estimates of $982.8 million. Subscription revenue, comprising the majority of its business, rose 31% to $962.7 million.

Key highlights include reaching $4.02 billion in Annual Recurring Revenue (ARR), a 27% year-over-year increase, and achieving 97% gross retention rates, reflecting strong customer loyalty. Operating expenses increased 38% to $810.8 million, partially attributed to investments in growth and the acquisition of Adaptive Shield, which enhances CrowdStrike’s SaaS security capabilities. Operating cash flow grew 19% year-over-year to $326.1 million, showcasing its ability to generate significant cash.

Looking ahead, CrowdStrike projects Q4 FY2025 revenue between $1.03 billion and $1.04 billion and non-GAAP EPS of $0.84 to $0.86. For the full fiscal year, revenue is expected to range between $3.92 billion and $3.93 billion, with EPS guidance of $3.74 to $3.76, reflecting its confidence in continued momentum and market leadership.

CRWD shares are -7.3% so far this week.

Dick’s Sporting Goods (DKS)

Dick’s Sporting Goods reported solid Q3 earnings, beating revenue and EPS estimates due to strong comparable sales growth and disciplined operational management.

The company posted net income of $227.8 million, up 13% YoY, on revenue of $3.06 billion, a 1% increase YoY and slightly above analyst expectations.

Key highlights included a 4.2% YoY growth in comparable sales, driven by strength across key categories such as footwear and apparel, and a market share gain of 50 basis points to 8.5%. Operating income rose 5% YoY to $286.6 million, supported by a controlled 3% increase in operating expenses. However, operating cash flow declined 11% YoY to $680.3 million, and free cash flow dropped sharply by 57% YoY to $169.2 million, reflecting higher investments. The company also allocated $170.3 million toward share buybacks during the quarter.

For FY 2024, Dick’s raised its revenue guidance to $13.2-$13.3 billion and EPS guidance to $13.65-$13.90, signaling confidence in continued momentum. Comparable sales are expected to grow between 3.6% and 4.2%, up from prior expectations of 2.5% to 3.5%.

DKS shares are +2.0% so far this week.

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

• Google and the DOJ make their final arguments in the ad tech monopoly case

• Macy’s delays earnings release as it says employee hid up to $154 million in delivery expenses

• SoftBank Seeks to Buy $1.5 Billion OpenAI Shares From Employees

• Dell shares fall on light forecast despite growing AI sales

• US GDP Grows at Solid 2.8% Pace, Helped by Consumer Spending

• ‘Wicked’ soars with $114 million domestic opening, ‘Gladiator’ snares $55.5 million

• HP forecasts first-quarter profit below estimates on sluggish demand in PC market

• Coffee Gets Even Pricier as Arabica Jumps to Highest Since 1977

• Best Buy cuts full-year sales forecast due to softer demand for consumer electronics

• Abercrombie expects a strong holiday quarter as growth run continues

• Airline stocks soar as demand for premium travel booms

• US pending home sales rise for third straight month, NAR says

• Autodesk beats third-quarter revenue estimates, announces new CFO

A Closer Look at the Economy (Edge+)

These are some of the biggest economic reports from the first half of the week that are having an influence on market action.

New Home Sales - 11.26.2024

New home sales plummeted by 17.3% from the previous month to a seasonally adjusted annualized rate of 610,000 in October, marking the sharpest decline since 2013, and firmly below market expectations of 730,000.

New Home Sales - Chart back to 2015

S&P/CS Home Price Index - 10.29.2024

The S&P CoreLogic Case-Shiller home price index increased by 3.9% year-on-year in September, below the 4.3% increase in August and lower than market expectations.

The 20-city home price index increased 4.6% year-on-year in September, the least in a year, compared to 5.2% in August and forecasts of 4.8%.

Month-over-month, the Case Shiller Home Price Index declined 0.3%, the same as in August.

Home Price Index - Chart back to 2005

GDP Report - 10.30.2024

The US economy expanded an annualized 2.8% in Q3 2024, sightly lower than 3.0% in the second quarter of the year.

GDP - Chart back to 2014

Initial Jobless Claims - 11.27.2024

The number of people claiming unemployment benefits fell by 12,000 from the previous week to 216,000 on the period ending October 26th, reaching the same level of mid-May of this year, and well below market expectations of 230,000.

Continuing claims, seen as a proxy for the number of people receiving unemployment benefits, fell to 1,862,000 in the week ending October 19, compared to a downwardly revised 1,888,000 in the previous week and quite below forecasts of 1,890,000.

Jobless Claims - Chart back to 2022

PCE Report YoY - 11.27.2024

The annual PCE inflation rate rose by 2.3% year-on-year in October, up from a three-year low of 2.1% in September, aligning with expectations.

The core PCE inflation gauge increased 2.8% year-on-year, the most in six months, in line with market estimates.

PCE Index YoY - Chart back to 1990

PCE Report MoM - 11.27.2024

The personal consumption expenditure price index increased 0.2% month-over-month in October, the same as in September and in line with expectations.

The core PCE price index, the Federal Reserve’s preferred gauge to measure inflation, rose by 0.3% from the previous month, the same pace as in September and matching market forecasts.

PCE Index MoM - Chart back to 2021

Pending Home Sales - 10.30.2024

Pending Home Sales increased 5.4% year-on-year in October, the biggest gain since May 2021, following a 2.6% rise in September.

Month-over-month, pending sales increased 2%, following an upwardly revised 7.5% surge in September, and beating forecasts of a 2% drop.

Pending Home Sales - Chart back to 2015

The Second Half

The rest of the week is very quiet as tomorrow is Thanksgiving and Friday is only a half day, with the market closing at 1pm EST.

Earnings Reports

There are no major reports remaining this week. Here is the full calendar of earnings releases scheduled for the rest of the week:

Economic Reports

There are no economic reports remaining this week.

What Caught Our Eye Today (Edge+)

Will sticky inflation derail a Santa Rally?

The latest PCE data underscores a troubling reality for the Federal Reserve: inflation remains persistently sticky, particularly in core categories like services and housing.

While the headline PCE rose to 2.3% annually, up from 2.1% in September, core inflation ticked up to 2.8%. These figures indicate that inflationary pressures, especially in services and housing-related costs, are proving more resilient than anticipated. This stickiness complicates the Fed’s ability to confidently lower rates without risking a reversal of recent progress in controlling inflation.

Trump’s recent tariff threats only add fuel to the fire. Proposed 25% tariffs on Canadian and Mexican goods and an additional 10% on Chinese imports would likely exacerbate inflation by driving up the costs of goods. Economists estimate these measures could increase U.S. consumer prices by 0.75% in 2025, further eroding purchasing power and potentially pushing inflation well above the Fed’s 2% target. This creates a precarious situation for monetary policy as higher consumer prices could force the Fed to recalibrate its plans for easing rates.

Yesterday’s FOMC meeting minutes highlighted this uncertainty. While most members are in favor of gradually reducing interest rates, they acknowledged that persistently elevated inflation could warrant a pause in cuts. Adding to the complexity, participants noted difficulties in gauging the neutral rate, making it harder to determine how restrictive monetary policy currently is. This cautious stance signals the Fed’s intention to proceed carefully, balancing the risks of easing too quickly against the risk of allowing inflation to persist unchecked.

Meanwhile, expectations of a Santa rally—a seasonal year-end boost in the markets fueled by holiday optimism and institutional positioning—are starting to clash with these macroeconomic concerns. Elevated inflation and tariff risks could temper bullish sentiment, particularly if they cause the Fed to adopt a more hawkish tone or delay rate cuts.

While a strong consumer spending environment in December could drive short-term market gains, sticky inflation and uncertainty about the Fed’s path forward could cap any rally.

Investors should tread carefully, as the interplay between these dynamics could lead to increased market volatility in the weeks ahead.

Happy Thanksgiving from us here at The Stock Investor’s Edge, hope you all have a great holiday with family and friends.

Mark & Chris

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.