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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.
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Market Talk
The major indexes all ended the week lower after Powell’s comments earlier in the week and Friday’s PCE report.
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.
Trump Slaps Tariffs on Drugs, Trucks, and Furniture
President Trump unveiled sweeping new tariffs, imposing 100% duties on branded drugs, 25% on heavy-duty trucks, and up to 50% on imported furniture. The move comes after a period of relative calm in trade tensions, with Trump citing protection of U.S. industries and national security. Markets reacted cautiously, though global businesses fear renewed supply chain disruptions, higher costs, and potential retaliation.
🔑 Key Points
Drugmakers targeted: A 100% tariff applies to firms without U.S. plants, with Ireland most exposed at 24% of U.S. pharma imports.
Furniture levies: Cabinet, vanity, and upholstered furniture imports face 30–50% tariffs, directly hitting Vietnam and China, which supply 60%.
Truck duties: New 25% levy on heavy-duty trucks supports Paccar and Freightliner but risks higher U.S. transport costs.
Global pushback: EU and Japan cited agreements capping tariffs at 15%, fueling disputes over legality.
Investor stance: Equities remained calm as stress is only expected if tariffs weigh on growth.
👀 What You Need to Know
Trump’s tariff escalation highlights a strategic shift toward sector-specific trade actions after earlier broad duties. Pharma faces the biggest risk, as U.S. drug supply chains depend on imports from Ireland and Switzerland. Furniture tariffs are more symbolic but may lift consumer costs, while truck levies raise logistics expenses. Markets remain complacent, but prolonged trade friction could reignite volatility across equities, currencies, and commodities.
🔐 Edge Takeaway: Trump’s new tariffs just created a clean trade in trucks and pharma, and the real winners are..…upgrade to Edge+ to read the Full Edge Takeaway.
Core inflation holds steady in August as consumers keep spending
Core inflation was little changed in August, with the Fed’s preferred PCE measure rising 0.2% month-over-month and 2.9% year-over-year. Headline PCE increased 0.3%, lifting the annual pace to 2.7% from 2.6% in July. Both readings landed in line with expectations, while spending and incomes came in slightly hotter, keeping the Fed on track for more rate cuts this year.
🔑 Key Points
Headline inflation: Rose 0.3% in August, pushing the annual rate to 2.7% from 2.6% in July, while core held at 2.9%.
Spending strength: Consumer spending climbed 0.6% in August, above consensus, while personal incomes advanced 0.4%.
Savings uptick: The savings rate increased to 4.6%, showing households continue balancing spending with cautious cash management.
Tariff impact: Effects remain muted as firms rely on inventories and margin absorption, holding goods inflation to just +0.1%.
Services stickiness: Services prices climbed 0.3%, led by housing at +0.4% and energy at +0.8%, highlighting persistent pressures.
👀 What You Need to Know
The August PCE report shows inflation is still sticky as core remains stuck at 2.9% and services inflation is still firm. Consumer spending strength is offsetting tariff risks, with households continuing to draw on income gains while lifting savings modestly. That resilience buys the Fed room to cut, but sticky services keep policymakers cautious. Markets see an October cut as locked in, while December remains data-dependent on whether disinflation actually resumes.
🔐 Edge Takeaway: August’s PCE data seems to support another rate cut into year end, but the real market mover will be next week’s jobs data as…upgrade to Edge+ to read the Full Edge Takeaway.
📚 Edge-ucation: What is the PCE report (and why it matters)?
The Personal Consumption Expenditures (PCE) Price Index tracks how much Americans spend and how fast those prices are rising. It’s the Federal Reserve’s preferred inflation gauge, viewed as more comprehensive and flexible than CPI.
Core focus: The Fed prioritizes core PCE (excluding food and energy) since it better reflects underlying inflation trends.
Broader scope: PCE covers a wider basket than CPI, including healthcare and services often paid indirectly.
Dynamic weights: It adjusts for shifts in consumer habits (substitutions), making it more reflective of real-world spending patterns.
Market impact: PCE results directly influence Fed rate decisions, bond yields, and equity risk sentiment—especially when inflation deviates from the 2% target.
PCE directly shapes expectations for Fed cuts or hikes, making it one of the most market-moving reports each month.
Costco’s Membership and E-Commerce Strength Lift Q4 Results
Costco $COST ( ▼ 2.9% ) beat Wall Street’s expectations in its fiscal fourth quarter, with revenue rising to $86.16B and EPS hitting $5.87. Membership fee income surged 14%, powered by fee hikes, upgrades, and younger signups, while e-commerce sales climbed 13.5% in the quarter. Despite tariff pressures on imported goods, Costco leaned on Kirkland products, U.S. sourcing, and strong fresh food growth to offset higher costs
🔑 Key Points
Earnings beat: EPS of $5.87 topped $5.80 expected, up from $5.29 last year, with net income growing 11% YoY to $2.61B.
Revenue growth: Quarterly revenue reached $86.16B (+8.1% YoY), supported by broad strength across food and non-food categories.
Membership surge: Fees rose 14%, with higher-tier upgrades, fee increases, and younger demographics driving sustainable growth.
Digital momentum: E-commerce sales rose 13.5% in Q4 and $19.6B for FY25 (+15% YoY), now over 7% of total sales.
Store expansion: Costco opened 27 new warehouses in the quarter and plans 35 more next year, boosting global traffic by 3.7%.
👀 What You Need to Know
Costco continues to prove its resilience, using membership pricing power and digital growth to offset inflation and tariffs. The 14% membership income surge is particularly important, since recurring fees drive stable margins and long-term valuation support. E-commerce is scaling faster than peers, and younger customers are deepening Costco’s moat. Yet slowing same-store sales growth and tariff risks remain headwinds.
🔐 Edge Takeaway: Costco’s Q4 showed why it continues to command a premium multiple, but also why.…upgrade to Edge+ to read the Full Edge Takeaway.
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 PCE report, as well as earnings from Costco. See the latest full report here:
Weekly Options Recap
This report is a breakdown of every options trade we made this week—what we opened, what we closed, and how our open trades are performing. Each edition gives you full transparency on our strategy, including entry points, premiums collected or paid, trade rationale, and risk/reward setups. See this week’s recap:
The Week Ahead
Now that we know inflation was only “in-line” with estimates, focus now shifts to the labor market to see how the other side of the Fed’s dual mandate is holding up. Next week’s jobs data will be key to determining whether we get more rate cuts into year end.
Earnings Reports
Earnings season may be over but there is one name left that we cover left to report, Nike, which reports on Tuesday after the bell.
Here is the full calendar of scheduled earnings releases:
Source: Earnings Whispers
Economic Reports
Next week is all about the labor market with all eyes on Friday’s nonfarm payrolls report.
We also get initial jobless claims, JOLTS job openings, ADP employment, and key PMI data.
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Thank you for reading this edition of the Weekly Wrap-Up. Have a great weekend!
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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.
