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Weekly Wrap-Up - November 2nd, 2024

Weekly Wrap-Up - November 2nd, 2024

The biggest week of the year is in the books, what a doozy!

CMG Venture & Mark Roussin
November 02, 2024

Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of nearly 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

The major indexes all ended the week lower after the biggest week of earnings season, a number of jobs reports and key inflation data.

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.

A huge week of earnings as 5 of the MAG7 stocks reported

Here is a brief summary of the quarterly results from these mega cap stocks. For the full breakdown and our takeaways, see this week’s Earnings Recap.

Apple (Q4 2024)

Revenue: $94.93 billion (+6% YoY), slightly above estimates.
EPS: $1.64 (beat by 2.50%).
Key Highlights:
- iPhone revenue increased by 6% YoY to $46.2 billion.
- Services revenue rose 12% YoY to $25 billion.
- Net income dropped 36% YoY to $14.7 billion, despite a 7% YoY increase in operating cash flow.
Guidance: No forward guidance provided.

Microsoft (Q1 2025)

Revenue: $65.60 billion (+16% YoY), beat estimates by 1.60%.
EPS: $3.30 (beat by 6.45%).
Key Highlights:
- Intelligent Cloud revenue up 20% YoY to $24.1 billion.
- Productivity revenue increased 12% YoY to $28.3 billion.
- Operating income rose 14% YoY, but free cash flow was down 7% YoY.
Guidance: Q2 revenue forecast of $68.6B (below $69.7B est.) and Azure Sales Growth expected to be between 31-32%

Alphabet (Q3 2024)

Revenue: $88.27 billion (+15% YoY), exceeded estimates by 2.16%.
EPS: $2.12 (beat by 15.22%).
Key Highlights:
- Google Cloud revenue surged 35% YoY to $11.4 billion.
- Search revenue rose 12% YoY to $49.4 billion.
- Operating income increased 34% YoY, with $15.3 billion in share buybacks and a $0.20/share dividend.
Guidance: None provided; focus on AI-driven growth.

Amazon (Q3 2024)

Revenue: $158.88 billion (+11% YoY), beat estimates by 1.02%.
EPS: $1.43 (beat by 25.44%).
Key Highlights:
- AWS revenue grew 19% YoY to $27.5 billion.
- International revenue increased 12% YoY to $35.9 billion.
- Operating cash flow surged 57% YoY to $112.7 billion.
Guidance: Q4 2024 revenue expected to be between $181.5-$188.5 billion (+9% YoY).

Meta (Q3 2024)

Revenue: $40.59 billion (+19% YoY), slightly above estimates.
EPS: $6.03 (beat by 15.52%).
Key Highlights:
- Advertising revenue rose 19% YoY to $38.9 billion.
- Net income grew 35% YoY to $15.7 billion.
- Continued share buybacks, totaling $8.9 billion.
Guidance: Q4 revenue forecast between $45.0-$48.0 billion, with full-year expenses and capex slightly revised.

👉 EDGE TAKEAWAY: This week’s earnings from tech giants Apple, Microsoft, Alphabet, Amazon, and Meta largely reflected strong performance, with each…upgrade to Edge+ to read the Full Edge Takeaway.

We currently have a Special Offer for earnings season. Since this is the most critical time to stay informed, we want to make it as accessible as possible. For a limited time, the next 50 21 subscribers can join Edge+ at a 30% discount – it’s our way of saying thank you for trusting us to guide your investment journey.

This offer was launched yesterday and we are extremely excited to see so many people taking advantage. We’d love to see you sign up, and we hope this special offer makes the decision even easier.

Inflation data and a key jobs report set the stage for next week’s interest rate decision from the Fed

Recent data on inflation and job growth are crucial for the Fed’s interest rate decision next week.

The PCE price index rose 0.2% in September, pushing annual inflation to 2.1%, close to the Fed’s 2% target. However, core inflation, excluding food and energy, remained elevated at 2.7%, up 0.3% for the month, driven by service prices.

Meanwhile, October job growth slowed significantly, with nonfarm payrolls adding just 12,000 jobs, the weakest since December 2020, impacted by strikes and hurricanes. The unemployment rate stayed at 4.1%, meeting expectations.

This mix of nearing-target inflation and weakened job growth could lead the Fed to pause rate hikes or consider easing to support the economy. However, persistent core inflation may limit aggressive action, requiring a delicate balance in their decision.

📚 EDGE-UCATION: How do interest rates affect people and the economy?

Interest rates impact individuals and the economy by:

1. Borrowing Costs: Higher rates make loans (e.g., mortgages, car loans) more expensive, discouraging borrowing; lower rates make borrowing cheaper, boosting spending.

2. Consumer Spending and Economic Growth: High rates encourage saving and reduce spending, slowing economic growth. Low rates stimulate spending and investment, promoting growth but risking inflation.

3. Inflation Control: Central banks raise rates to curb inflation by reducing spending. Lowering rates can stimulate growth when inflation is low.

4. Housing Market: High rates can reduce home sales as mortgages become costlier. Low rates make mortgages cheaper, increasing demand.

5. Exchange Rates and Trade: Higher rates attract foreign investment, strengthening the currency and making exports pricier. Lower rates weaken the currency, boosting exports.

6. Investments and Savings: Higher rates benefit savers and make bonds more attractive, often lowering stock prices. Lower rates push investors toward stocks for better returns.

In summary, interest rates shape borrowing, spending, saving, and investment behavior, influencing overall economic growth and inflation.

Man Who Called Nvidia at $1.10 Says Buy This Now...

In 2004, one man called Nvidia before just about anyone knew it existed. Now, he says a new company could become the next to soar like Nvidia. The biggest tech firms are loading up on shares. Nvidia, Apple, Google, AMD, Intel, and Samsung are all invested in this company. It also signed a MAJOR deal with Apple to get its AI tech into the iPhone and iMac. And its tech is also found in products from Samsung and Google.

Click here for the details.

IRS announces 401(k) contribution limits for 2025

This is not necessarily stock market related, but important for investors to know.

The IRS has raised 401(k) contribution limits for 2025, setting the new cap at $23,500, up from $23,000 in 2024. This change affects 401(k)s, 403(b)s, most 457 plans, and the federal Thrift Savings Plan. Catch-up contributions remain at $7,500 for those 50 and older, but individuals aged 60 to 63 can now contribute an extra $11,250 due to Secure 2.0, beyond the standard limit.

Additionally, 2025 will see adjustments in individual retirement account (IRA) contribution limits and higher income thresholds for Roth IRA eligibility.

The IRS's latest update comes after broader 2025 inflation adjustments, including new federal income tax brackets, increased capital gains thresholds, and a larger estate tax exemption.

Vanguard’s report highlighted that only 14% of employees maxed out 401(k) contributions in 2023, with an average deferral rate of 7.4% and a combined savings rate of 11.7% when including employer contributions.

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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IE+ 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 earnings reports and how we were preparing for them, as well as the huge week of economic news. See the latest full report here:

The Edge Report - October 28th, 2024

It's the biggest week of the year!

theinvestorsedge.beehiiv.com/p/the-edge-report-october-28th-2024

The Week Ahead

Next week will most likely be very volatile. Between the election, the Fed’s interest rate decision and earnings, investors will need to have their heads on a swivel.

Earnings Reports

Earnings season rolls on and we will once again be busy. Here is the list of names we will be covering next week:

Monday 11/4: Realty Income
Tuesday 11/5: --
Wednesday 11/6: Qualcomm, MercadoLibre, and Celsius Holdings
Thursday 11/7: AirBnB, The Trade Desk, Block, and Hershey
Friday 11/8: --

*Note - Berkshire Hathaway reports on Saturday morning

Here is the full calendar of scheduled earnings releases:

Source: Earnings Whispers

Economic Reports

Next week will be all about the Presidential Election and the Fed’s interest rate decision.

There will also be initial jobless claims, PMI data, and consumer sentiment.

The Investor’s Edge Discord is a HUGE benefit of being a subscriber - don’t miss out, it’s FREE!

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Our Discord server is tailor-made for investors like you who want to dive deeper into stocks, share insights, and engage directly with us. And it’s completely free!

Here’s what you’re missing in the Discord:

🗨️ Chat rooms: Investors discussed the the huge moves from mega cap tech. Members also dove into the number of jobs reports and shared their views on the overall economy.

📊 Earnings / Economic reports: No more waiting for our newsletters to hit your inboxes - see earnings results and economic data as they are released. And more importantly, get our reactions and insights immediately.

🚨 Trade Alerts: Chris and Mark shared several trades, including additions to the portfolio and trades that set up their portfolios for the week.

Join us on Discord and let's level up our investing game together. The future of trading awaits—and you're invited to be a part of it! 🌟

Want more? Check out our other resources

If you haven’t done so, check out the social media pages of our collaborators and give them a follow:

Mark (Dividend Seeker)

Chris (CMG Venture)

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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