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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 25,000 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
The major indexes are grinding higher despite the government getting shut down.
3 Stories Moving the Market
These are some of the biggest stories so far this week that are having an influence on market action.
U.S. government shutdown begins amid fragile economy
The U.S. government shut down at midnight after leaders failed to strike a deal on health insurance subsidies. Hundreds of thousands of federal workers now face furloughs or unpaid shifts, while key services slow or stop. History shows shutdowns have limited lasting effects, but this one comes amid rising inflation and weakening jobs, leaving the economy more vulnerable than usual.
🔑 Key Points
Federal workers hit: Past shutdowns furloughed 40% of civilian staff; each week of closure could cut GDP by ~0.15%.
Escalation risk: The administration has warned of potential permanent job cuts, unlike the temporary measures in prior shutdowns.
Fed blind spot: Friday’s jobs report will be delayed, complicating Powell’s October decision as inflation remains stubborn.
Market precedent: On average, the S&P 500 rises ~12% in the year after shutdowns, though near-term volatility often spikes.
Credit outlook: A downgrade is unlikely immediately, but repeated standoffs undermine U.S. fiscal credibility and heighten long-term risks.
👀 What You Need to Know
This shutdown lands at a fragile moment as inflation has risen five straight months, job revisions are sharply negative, and the Fed is trapped between supporting growth or holding firm on rates. Data blackouts will make policymaking riskier, and markets may struggle with added uncertainty. Equities have historically recovered after shutdowns, but this round’s fiscal strain and timing suggest a higher chance of near-term volatility.
🔐 Edge Takeaway: With the shutdown now in effect, government data is frozen so private releases will have to fill the gap. ADP this morning showed private sector jobs…upgrade to Edge+ to read the full Edge Takeaway.
Amazon’s Fall Event Brings New Alexa+ Devices and Fire TV OS Vega
Amazon $AMZN ( ▲ 0.65% ) used its New York event to showcase new Echo speakers, Fire TVs, and Kindle Scribes built for its upgraded Alexa+ assistant. The lineup includes the debut of Vega, Amazon’s own TV operating system, alongside Ring and Blink camera upgrades. Together, the announcements highlight a strategy to embed Alexa+ deeper into households while nudging users toward its paid tier.
🔑 Key Points
Echo Refresh: New Echo Dot Max, Studio, and Show add AZ3 chip with faster AI processing and Omnisense sensing.
Alexa+ Expansion: Paid $20 tier expands in U.S., free for Prime members, with new integrations from Sonos, BMW, and others.
Kindle Scribe Upgrade: New 11-inch models include the Colorsoft, Amazon’s first color e-ink writing tablet with faster note-taking features.
Fire TV Vega OS: Amazon shifts from Android to Vega, offering faster performance, Dialogue Boost, and always-on Alexa voice control.
Ring & Blink Hardware: Retinal 2K/4K cameras add better low-light video, facial recognition, and new neighborhood Search Party pet-tracking.
👀 What You Need to Know
Amazon is tightening its grip on the connected home, making Alexa+ the central hub across new devices. The push into Vega OS signals a shift away from Android and a bid for greater software control. Hardware serves less as breakthrough innovation and more as a funnel into Alexa+’s subscription ecosystem. For investors, the focus is to expand recurring revenue, boost engagement, and position Alexa as the long-term driver of household stickiness.
🔐 Edge Takeaway: Amazon’s fall event underscored its push to make Alexa+ more than a voice assistant, but the…upgrade to Edge+ to read the full Edge Takeaway, including the Edge score and CMG Strength Ratio.
📚 Edge-ucation: Understanding Valuation Multiples
Valuation multiples are one of the simplest, and most misused, tools in investing. They give a shorthand for how expensive or cheap a stock looks relative to its earnings, sales, or cash flow. But multiples are only as useful as the context: a high multiple can signal growth expectations, while a low one may flag risk, slowing growth, or poor capital efficiency.
P/E (Price-to-Earnings): Compares share price to earnings per share. Widely used, but distorted if earnings are cyclical, depressed, or inflated.
P/S (Price-to-Sales): Useful for unprofitable growth companies. A high P/S only works if margins expand over time — otherwise it’s dead money.
EV/EBITDA: Strips out capital structure and focuses on core operating performance. Often used in M&A because it reflects enterprise value.
P/FCF (Price-to-Free Cash Flow): Favored by long-term investors. High free cash flow yields usually anchor multiples, especially in mature companies.
Multiples only matter when you understand what’s being priced in, and whether a company’s growth, margins, or cash flow can actually deliver against it.
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Nike’s turnaround progress faces new tariff headwinds
Nike $NKE ( ▲ 0.43% ) posted a surprise sales increase in its fiscal first quarter, reporting $11.72B in revenue versus $11.0B expected, though profits fell sharply. Net income dropped 31% to $727M as gross margins declined by 3.2 points to 42.2%, pressured by discounting and higher tariffs. Management reiterated that progress will be uneven, warning of another sales decline in the holiday quarter despite strength in wholesale and North America.
🔑 Key Points
Earnings Beat: EPS came in at $0.49, easily topping $0.27 estimates, though down from $0.70 last year as profit fell 31%.
Tariff Costs Rising: Nike now expects tariffs to hit gross margin by 1.2 points this year, raising estimated costs from $1B to $1.5B.
Segment Divergence: Wholesale revenue rose 7% to $6.8B, and North America sales climbed 4% to $5.02B, but Nike Direct fell 4% to $4.5B.
Weak Spots: China revenue dropped 9% and Converse sales plunged 27%, underscoring structural challenges in key markets and brands.
Restructuring Moves: Nike is reorganizing teams by sport, cutting ~1% of staff, and launching collaborations like NikeSKIMS to reenergize growth.
👀 What You Need to Know
Nike’s Q1 beat highlights progress on its turnaround, but the outlook remains cautious. Tariffs and discounting continue to weigh on margins, and guidance for another sales decline in Q2 signals lingering demand pressures in critical holiday months. Structural issues in China and Converse remain major headwinds, offsetting strength in wholesale and North America.
🔐 Edge Takeaway: Nike’s Q1 beat sparked a big rally, as investors cheered…upgrade to Edge+ to read the full Edge Takeaway, including the Edge score and CMG Strength Ratio.
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.
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The Second Half
With the government shutdown, the second half of the week could be quiet from a news standpoint, but we’ll be watching for increased volatility should any headlines emerge.
Earnings Reports
With Nike’s earnings in the books this week, there are no other stocks that we cover left to report this week. Here is the calendar of earnings releases scheduled for the rest of the week:
Source: Earnings Whisper
Economic Reports
With the government shutdown many economic reports will be delayed, including the all important nonfarm payrolls, on Friday which the market had been hoping to see ahead of the next Fed meeting.
Here is the full calendar of events scheduled for the remainder of the week:
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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.
