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- Weekly Wrap-Up - November 9th, 2024
Weekly Wrap-Up - November 9th, 2024
Election results send markets higher while the Fed cuts rates again
CMG Venture & Mark Roussin
November 09, 2024
In partnership with
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
Following the election and the Fed’s rate cut, all three major indexes closed the week at record highs. Bitcoin also ended the week at all-time highs.
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.
Fed Cuts Rates Again, This Time by a Quarter Point
The Federal Reserve approved a quarter-point interest rate cut, bringing the federal-funds rate to a range between 4.5% and 4.75%, following a prior half-point cut in September.
This decision, supported unanimously by all 12 voting members, reflects the Fed's confidence that inflation will return to target and that rates remain high enough to moderate economic activity.
During a press conference, Fed Chair Jerome Powell stated that the upcoming election would not impact the Fed's policy and reaffirmed his commitment to serve his term until May 2026, adding that he would not step down if asked to resign, as such actions are "not permitted under the law."
Despite speculation, advisers to President-elect Donald Trump indicated there were no plans to replace Powell.
The markets reacted positively, with the S&P 500 and Nasdaq Composite maintaining gains and closing at record highs after the announcement.
👉 EDGE TAKEAWAY: The Federal Reserve's path on rate cuts has grown more uncertain with the upcoming administration change. While…upgrade to Edge+ to read the Full Edge Takeaway.
Trump Tariffs Could Raise Trillions, Increase Tax Burden on Americans
An analysis by the Tax Policy Center estimates that Donald Trump’s proposed tariffs—20% on all imports and 60% on Chinese goods—could generate $4.5 trillion in revenue over the next decade.
This revenue would be enough to extend Trump’s 2017 tax cuts but insufficient to fund his other tax promises or eliminate income taxes.
Economists anticipate these tariffs would reduce imports and increase costs for U.S. consumers, with households bearing an average annual cost of $2,940 in 2025, equivalent to a 2.9% decline in after-tax income.
Lower- and middle-income households would feel a larger impact relative to income than the top 1%.
📚 EDGE-UCATION: What are tariffs, how do they work, and how do they affect the American consumer?
Tariffs are taxes or duties placed by a government on imported goods and services. They’re intended to make foreign products more expensive, giving domestic industries a price advantage and encouraging consumers to buy locally produced items. Tariffs can be imposed as a percentage of the item’s value (ad valorem tariff) or as a fixed fee based on the item’s quantity or weight (specific tariff).
How Tariffs Work
When a tariff is imposed, the importer must pay the tax at the point of entry to bring the goods into the country. This cost often gets passed along to wholesalers, retailers, and eventually to consumers. For example, if a 20% tariff is placed on imported steel, a U.S. company buying that steel to make cars would pay the higher price and likely pass it on in the form of higher car prices.
Effects on the American Consumer
Tariffs typically raise the price of imported goods, leading to a few key effects on consumers:
Higher Prices for Goods: Since imported goods become more expensive, consumers may face higher prices on items with substantial imported components (like electronics, vehicles, and appliances). Domestically produced alternatives may also rise in price as reduced competition lowers the incentive to keep prices low.
Reduced Consumer Choice: Higher import prices or outright import reductions mean fewer choices for consumers, potentially limiting access to affordable or preferred products.
Impact on After-Tax Income: As prices rise, consumers have less disposable income to spend on other goods and services, which can slow economic growth. Lower- and middle-income households tend to feel this impact more sharply since a larger share of their income goes toward goods that could become more expensive due to tariffs.
In summary, while tariffs can support domestic industries by making imports more costly, they often result in higher prices and fewer choices for American consumers, impacting their purchasing power and overall economic welfare.
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Airbnb misses on earnings but squeaks in a revenue beat
Airbnb reported mixed Q3 results, with revenue beating estimates but EPS falling slightly short.
The company achieved a revenue of $3.73 billion, up 10% year-over-year, surpassing the estimate of $3.72 billion, while net income was $1.4 billion, reflecting a 68% decline year-over-year.
Key highlights from the quarter include a gross booking value of $20.1 billion, representing a 10% increase YoY, and nights/experiences booked rose by 8% to 122.8 million. Operating income was $1.5 billion, down 2% YoY, while operating expenses grew by 16% to $2.2 billion, impacting profitability. Adjusted EBITDA reached $2.0 billion, up 7% YoY, and the operating cash flow stood at $1.1 billion, down 15% YoY.
For Q4 and FY 2025, Airbnb expects revenue between $2.39 billion and $2.44 billion, indicating 8% to 10% YoY growth. However, adjusted EBITDA is projected to decline due to increased marketing and product development spending.
For our Takeaways and Edge Score from the Airbnb report and all of the stocks we cover that reported this week, check out the latest 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.
Qualcomm beats Q4 estimates, announces $15B in share buybacks
Palantir shares close up 23% to record on uplifting guidance
Lyft Stock Surges More Than 20% On Strong Outlook, Sales Beat
China announces $1.4 trillion package over five years to tackle local governments’ ‘hidden’ debt
MercadoLibre Stock Tumbles 16% As Q3 Earnings Miss Expectations
Realty Income Releases Earnings Results, Misses FFO Estimates
Hershey Shares Dip as Q3 Earnings Miss, Full-Year Outlook Revised Downward
DraftKings Reverses After Major Q3 Miss, Cut 2024 Revenue Outlook
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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 election, earnings reports, and the Fed interest rate decision. See the latest full report here:
Edge Quick Picks
This week we rolled our latest addition to the Stock Investor’s Edge newsletter - Edge Quick Picks. In this exclusive article we will break down 5 stocks that we believe are attractive from a valuation perspective right now. See the 5 stocks we are buying right now:
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 Qualcomm, Palantir, Airbnb, and so many more. See this week’s recap:
The Week Ahead
Inflation will be the main catalyst next week as we get the latest data from two key reports. There will also be a number of earnings reports to keep an eye on.
Earnings Reports
Earnings season carries on and we will once again be busy. Here is the list of names we will be covering next week:
Monday 11/11: --
Tuesday 11/12: Home Depot and Shopify
Wednesday 11/13: Cisco
Thursday 11/14: Walt Disney
Friday 11/15: Alibaba
Here is the full calendar of scheduled earnings releases:
Source: Earnings Whispers
Economic Reports
Next week will be all about inflation as two key reports, the CPI and PPI, will be released.
There will also be initial jobless claims, retail sales, and a number of Fed speeches now that the blackout period is over following last week’s rate decision.
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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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