Weekly Wrap-Up - February 1st, 2025

Trump tariffs weigh on the market

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CMG Venture & Mark Roussin
February 01, 2025

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Market Talk

The market was moving towards all-time highs on Friday when Trump’s tariff announcement sent equities lower to end the week.

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 measure shows core inflation at 2.8%, in line with expectations

Inflation ended 2024 stronger than expected, with the Fed’s preferred gauge remaining above its 2% target.

The personal consumption expenditures (PCE) price index rose 2.6% YoY in December, up from 2.4% in November, matching Dow Jones estimates. Core PCE, which excludes food and energy, remained at 2.8% YoY, aligning with expectations.

On a monthly basis, headline PCE increased 0.3%, while core PCE rose 0.2%, both in line with forecasts.

Despite some progress, inflation remains above the Fed’s 2% target, a level not seen since February 2021.

👉 EDGE TAKEAWAY: Inflation remains stubbornly above the Fed’s 2% target, and the latest PCE…upgrade to Edge+ to read the Full Edge Takeaway.

Trump tariffs on Canada, Mexico and China begin Saturday, White House says

President Trump will impose aggressive new tariffs this weekend, the White House confirmed Friday, ending weeks of speculation.

Press Secretary Karoline Leavitt announced 25% tariffs on Mexico and Canada and a 10% duty on China, citing retaliation for illegal fentanyl distribution. Specific details on the levies will be released Saturday.

Markets reacted negatively, with stocks reversing gains and the S&P 500 falling over -0.5% on the news.

📚 EDGE-UCATION: What will these tariffs affect and what does it mean for consumers?

These tariffs will have wide-ranging economic implications, particularly for U.S. businesses and consumers. Here's what to expect:

Impact on Goods and Industries Affected

  1. Mexico & Canada (25% Tariffs)

    • Likely to hit autos, industrial goods, and agriculture hardest.

    • Expect higher car prices, as many automakers source parts from Mexico and Canada.

    • Food prices could rise further, especially for products like beef, dairy, and produce imported from Mexico.

  2. China (10% Tariff)

    • Likely targets electronics, machinery, and consumer goods.

    • Expect price increases on smartphones, appliances, and tech gadgets.

What It Means for Consumers

  • Higher Prices: Tariffs function as a tax on imports, meaning businesses pass the cost on to consumers. Everyday goods like cars, electronics, and groceries could become more expensive.

  • Inflation Pressure: These tariffs could add to inflation, making the Fed’s job harder if price pressures persist.

  • Market Volatility: Uncertainty around trade policy can lead to market sell-offs, impacting retirement accounts and investments.

  • Retaliation Risks: Mexico, Canada, and China may respond with their own tariffs, potentially hurting U.S. exports and industries like agriculture and manufacturing.

If these tariffs remain in place, expect higher costs in key consumer sectors, along with potential ripple effects on jobs, wages, and corporate earnings.

Smart Investors Are Betting On A.I. Stocks—Are You?

Experts say Trump’s $500B A.I. investment plan could transform the industry.

Meanwhile, a small but ambitious A.I. healthcare company just went public after eight years of innovation, securing $18M in funding and partnering with industry giants.

With a $120M market cap and shares still under $2, this stock may not stay cheap for long.

Earnings: Apple, Microsoft, Meta, Tesla and more report results

Earnings season is off to a strong start. Here’s how some of the major companies that reported this week have performed:

Apple shares rose after beating earnings and revenue expectations and offering better than expected iPhone sales guidance. Here are the key numbers from the report:

  • Earnings per share: $2.40 vs. $2.35 expected

  • Revenue: $124.30 billion vs. $124.26 billion expected

Microsoft shares fell despite beating earnings and revenue expectations as the company’s cloud revenue came in lighter than estimates. Here are the key numbers from the report:

  • Earnings per share: $3.23 vs. $3.11 expected

  • Revenue: $69.63 billion vs. $68.87 billion expected

Meta shares rose after topping earnings and revenue estimates and providing better than expected guidance. Here are the key numbers from the report:

  • Earnings per share: $8.02 vs. $6.76 expected

  • Revenue: $48.39 billion vs. $46.99 billion expected

Tesla shares rose despite missing estimates as Elon Musk once again made lofty promises that investors continue to believe. Here are the key numbers from the report:

  • Earnings per share: $0.73 vs. $0.77 expected

  • Revenue: $25.71 billion vs. $27.26 billion expected

*Note - our full breakdown of these reports, as well as several others, was sent out in Friday’s Earnings Recap.

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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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.

The 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 huge week of earnings ahead, the Fed’s rate decision and inflation. See the latest full report here:

The Edge Report - January 27th, 2025

Earnings, inflation, and the Fed... oh my

theinvestorsedge.beehiiv.com/p/the-edge-report-january-27th-2025

The Options Edge Report

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

The Options Edge Report - January 29th, 2025

SBUX, too far too fast

theinvestorsedge.beehiiv.com/p/the-options-edge-report-january-29th-2025

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 Apple, Microsoft, Meta, Tesla, and many more. See this week’s recap:

Earnings Recap - Week ending January 31st, 2025

Apple, Microsoft, Meta, and more

theinvestorsedge.beehiiv.com/p/earnings-recap-week-ending-january-31st-2025

The Week Ahead

Earnings season carries on with several major companies reporting, while the labor market is in focus on the economy side.

Earnings Reports

It’s another jam packed week of earnings reports. Here is the list of names we will be covering next week:

  • Monday 2/3: Palantir

  • Tuesday 2/4: Alphabet, Pepsico, AMD, PayPal, Chipotle, and Simon Property

  • Wednesday 2/5: Disney, Qualcomm, and Uber

  • Thursday 2/6: Amazon, Eli Lilly, and Hershey

  • Friday 2/7: --

Here is the full calendar of scheduled earnings releases:

Source: Earnings Whispers

Economic Reports

Next week is all about the labor market as we get several jobs reports including nonfarm payrolls, JOLTs job openings, ADP employment, the unemployment rate, and initial jobless claims.

We also get PMI data, consumer sentiment, and a number of speeches from Fed members.

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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.

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