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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 weekend we publish “The Weekly 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.

Grab your coffee and let’s dive in.

Market Talk

Friday’s cooler-than-expected inflation data offered a reprieve, halting the sharp sell-off triggered by the Fed's rate decision and sparking a modest market rebound. All three major indexes still ended the week in the red.

3 Stories Moving the Market

These are some of the biggest stories from the second half of the week that had an influence on market action.

Key Fed inflation measure shows 2.4% rate in November, lower than expected

In November, prices showed minimal movement, with the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rising just 0.1% from October and 2.4% year-over-year. While still above the Fed’s 2% inflation target, the annual figure was lower than the 2.5% forecast.

Core PCE, excluding volatile food and energy prices, also rose 0.1% monthly and 2.8% annually, both slightly below expectations.

The report highlighted modest increases in goods and services prices, while housing inflation showed signs of cooling, rising just 0.2%. On a 12-month basis, goods prices fell 0.4%, services rose 3.8%, food increased 1.4%, and energy declined 4%. Personal income and spending figures came in below expectations, with income rising 0.3% and expenditures up 0.4%. The personal savings rate edged down to 4.4%.

The report came after the Fed cut its benchmark interest rate to 4.25%-4.5%, its lowest in two years, but signaled a slower path for future rate cuts due to uncertainty about inflation trends. Chair Jerome Powell emphasized a cautious approach, noting that inflation remains elevated but is moving closer to the Fed’s target.

FedEx to spin off its freight trucking business

FedEx announced plans to spin off its freight trucking division, focusing on its core delivery business, which led to an initial 8% rise in after-hours trading, though gains were erased on Friday.

Analysts estimate the spinoff could unlock up to $20 billion in shareholder value by allowing FedEx Freight to operate independently and improving its valuation relative to trucking rivals like XPO and Old Dominion.

Despite being one of FedEx’s most profitable units, FedEx Freight saw an 11% revenue decline to $2.17 billion in Q2 due to losing cost-sensitive customers. Management noted the business appears to have stabilized after recent challenges, including the bankruptcy of rival Yellow Corp.

The company continues cost-cutting efforts and improved its Express unit’s results through expense reductions and increased international export volume, despite headwinds from higher wages and the expiration of its USPS contract, which poses a $500 million fiscal year challenge.

Looking ahead, FedEx lowered its FY 2025 profit outlook to $19-$20 per share due to weak demand for premium deliveries. While holiday shipping volumes have exceeded forecasts, lingering excess capacity from the COVID-era shipping boom is expected to ensure on-time delivery for most gifts this season.

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Nike CEO Elliott Hill outlines new strategy after retailer blames promotions for declining revenue and profit

Nike’s new CEO, Elliott Hill, outlined a strategy to revitalize the company, acknowledging that the turnaround will take longer than expected.

Hill attributed declining revenue and profit to excessive discounting and a lack of innovative products, which weakened consumer interest and brand perception.

To recover, Nike plans to clear excess inventory through lower-margin channels before returning its digital business to a full-price model.Gross margins for the holiday quarter are expected to drop by 3-3.5 percentage points, with sales projected to decline in the low double digits.

Hill’s turnaround strategy focuses on reducing promotions, rebuilding trust with wholesale partners like Foot Locker and JD Sports, and refocusing on innovation in sports performance. He plans to move away from an over-reliance on lifestyle shoes like Air Force 1s, Dunks, and Air Jordans, which had oversaturated the market, and instead return to Nike’s core identity of supporting athletes and sport.

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.

• Government shutdown live updates: Congress scrambles to reach spending deal

• Micron shares suffer steepest drop since 2020 after disappointing guidance

• Warren Buffett’s Berkshire Hathaway scoops up Occidental and other stocks during sell-off

• Novo Nordisk shares plunge 20% after disappointing trial results; Lilly jumps

• Amazon workers strike at seven US facilities ahead of Christmas rush

• Biden forgives $4.28 billion in student debt for 54,900 borrowers

• Tesla reverses losses to turn higher in a volatile week for the EV stock

• Starbucks baristas strike in three U.S. cities during pre-Christmas rush

• CFPB sues JPMorgan Chase, Bank of America and Wells Fargo over Zelle payment fraud

• Accenture beats quarterly revenue estimates on strong demand for genAI services

• Bitcoin falls 5% in volatile trade around $96,000 as sell-off intensifies

• Darden Restaurants stock climbs as Olive Garden, LongHorn Steakhouse fuel sales growth

• Carnival Tops Earnings Estimates, Gives Positive Booking Outlook

Edge+ Posts of the Week

We continue to push out more and more content every week to give investors that edge. Here are the posts Investor’s Edge+ subscribers received this week.

Edge Report

Mondays are for the investors. Every Monday morning we share exactly what we’re watching in the week ahead, how we’re positioning, and even share a sneak peek into our systems and models. This week we discussed the upcoming interest rate decision, a key inflation report and how we were preparing for them both. See the latest full report here:

The Options Edge Report

This week, we dropped the second Edge Options Report for our members—packed with actionable insights and options strategies. This week we broke down a play on Nvidia. See the latest report here:

Earnings Recap

Every week during earnings season is extremely busy for us here at the Edge as we dive into over 100 reports and provide our members with top tier breakdowns and insights. This week we saw earnings from Micron, Nike and FedEx. See this week’s recap:

The Week Ahead

Next week is a holiday shortened week with minimal earnings and economic reports on the calendar.

Earnings Reports

There are no major earnings reports scheduled next week.

Economic Reports

Next week is relatively quiet with the holiday, though there will be several housing reports, as well as initial jobless claims.

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Thank you for reading this edition of the Weekly Wrap-Up. Have a great weekend!

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.