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Weekly Wrap-Up - March 29th, 2025

Weekly Wrap-Up - March 29th, 2025

Inflation data and tariffs drag markets lower again

CMG Venture & Mark Roussin
March 29, 2025

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Market Talk

After a strong start to the week inflation data and tariff concerns dragged down the overall indexes, especially tech and MAG7 stocks.

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.

Core inflation in February hits 2.8%, higher than expected

The Federal Reserve's preferred inflation gauge, the core PCE index, rose 0.4% in February—higher than expected—and pushed the annual rate to 2.8%, above forecasts.

Headline PCE rose 0.3% month-over-month and 2.5% year-over-year, in line with estimates.

Consumer spending rose just 0.4%, missing expectations, while personal income jumped 0.8%, doubling forecasts. The personal saving rate also climbed to 4.6%, the highest since June 2024.

The hotter-than-expected inflation reading, especially in core services and shelter costs, likely delays any Fed rate cuts, as officials remain cautious amid uncertainty around potential Trump tariffs, which could add inflationary pressure.

👉 EDGE TAKEAWAY: Inflation and tariff concerns continue to weigh on markets as back-to-back data releases signal stubborn price pressures and…upgrade to Edge+ to read the Full Edge Takeaway.

Consumer sentiment worsens as inflation fears grow, University of Michigan survey shows

Consumer sentiment plunged in March, with the University of Michigan's index falling to 57.0—a steeper drop than expected and the lowest in three months—due to growing inflation fears and economic uncertainty.

The sentiment index is down 11.9% from February and 28.2% from a year ago, while the expectations subindex fell 17.8% month-over-month to 52.6.

Inflation expectations jumped, with the one-year outlook rising to 5% and the five-year outlook hitting 4.1%—the highest since 1993.

Concerns over President Trump’s proposed tariffs and their inflationary impact are intensifying, potentially limiting the Fed’s ability to cut rates further. Consumers are also increasingly pessimistic about the labor market, with unemployment fears reaching levels not seen since 2009.

📚 EDGE-UCATION: What is the PCE report?

The Personal Consumption Expenditures (PCE) Price Index is a measure of inflation that tracks the changes in prices of goods and services purchased by consumers in the U.S. It is considered the Federal Reserve's preferred inflation gauge because it provides a broad and comprehensive view of consumer spending patterns and adjusts for changes in consumer behavior.

Key Features:

Broader Scope: The PCE covers a wider range of goods and services compared to the Consumer Price Index (CPI), including spending on healthcare paid by employers and the government.
Behavioral Adjustment: It accounts for changes in consumer behavior, such as substituting cheaper goods when prices rise, which makes it a more flexible measure.
Core PCE: This version excludes volatile food and energy prices, providing a clearer picture of underlying inflation trends.
Importance to the Fed: The Federal Reserve closely monitors the Core PCE for its 2% inflation target, as it reflects long-term price stability better than other measures.

In summary, the PCE is a crucial economic indicator for understanding consumer spending and inflation, influencing Fed decisions on interest rates and monetary policy.

Trump announces 25% tariffs on all cars ‘not made in the United States’

President Trump announced a new 25% tariff on all foreign-made cars and light trucks, effective April 2, with collections beginning April 3.

U.S.-built vehicles will be exempt, and the administration estimates the move could generate over $100 billion in annual revenue. While specific enforcement details remain unclear—especially given global supply chains—Trump promised strict oversight on car parts as well.

Trump granted a one-month exemption to vehicles from Mexico and Canada under the USMCA but warned more tariffs are coming as part of his broader "reciprocal tariff" plan.

Though Trump has hyped April 2 as a major turning point, he and other officials have recently hinted there may be flexibility for trading partners who negotiate in advance.

The announcement rattled auto stocks, with GM, Ford, and Stellantis each falling around 5% in after-hours trading.

Earnings Recap

With only two names reporting this week, we thought we would just include the breakdowns and our takeaways in the wrap-up as opposed to a separate email.

Lululemom (LULU)

Lululemon $LULU ( ▼ 1.21% ) reported strong fourth-quarter earnings, beating revenue and EPS estimates as international growth and product innovation drove momentum despite higher operating costs.

The company posted net income of $748.4 million, or $6.14 per share, up 12% from a year ago. Revenue rose 13% year-over-year to $3.61 billion, exceeding the $3.58 billion analyst consensus.

Key highlights included 38% growth in China revenue, a 14% increase in operating income to $1.0 billion, and 4% same-store sales growth globally. Gross margin expanded 100 basis points to 60.4%, while operating expenses rose 15% year-over-year.

The company generated $2.3 billion in operating cash flow and $1.5 billion in free cash flow for the year, despite the latter declining 10% due to increased capital spending. Lululemon ended Q4 with 767 stores after opening 18 net new locations in the quarter, and repurchased $332.2 million in stock.

For fiscal 2025, the company expects full-year revenue between $11.15 billion and $11.30 billion (up 5% to 7%) and diluted EPS between $14.95 and $15.15. Q1 revenue is projected at $2.34 billion to $2.36 billion with EPS between $2.53 and $2.58.

👉 EDGE TAKEAWAY: Lululemon’s Q4 results were undeniably strong—revenue grew 13%, EPS climbed 16%, and China surged 38% as international momentum remained a key growth driver. But despite the beat, shares dropped 11%, and the reason was clear—.…upgrade to Edge+ to read the full Edge Alert.

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 upcoming inflation report, the effects of tariffs, and the MAG7. See the latest full report here:

The Edge Report - March 24th, 2025

This week: All eyes on a key inflation report

theinvestorsedge.beehiiv.com/p/the-edge-report-march-24th-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 discussed a trade to capitalize on the recent Lockheed Martin sell-off. See the latest report here:

The Options Edge Report - March 27th, 2025

Lockheed Sell-Off Overdone?

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

The Week Ahead

The labor market will be in focus next as we get several key jobs reports, while on the earnings side we get a break before the start of the next earnings season.

Earnings Reports

Earnings season is officially over for us as we get a brief reprieve next week before the next round of earnings reports begin. There are still some names left to report, but none of which are really are on our radar.

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 nonfarm payrolls, the ADP employment report, JOLTs and initial jobless claims.

We also get PMI data and several Fed speeches.

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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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