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- Weekly Wrap-Up - August 17th, 2024
Weekly Wrap-Up - August 17th, 2024
Market rebound continues, S&P jumps nearly 4% this week
CMG Venture & Mark Roussin
August 17, 2024
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Good morning investors!
If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 16,000 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
It was another huge week for the major indexes as markets continue to recover from the recent correction.
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🗨️ 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.
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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.
Walmart says prices are coming down — except in one key area
Walmart CEO Doug McMillon reported that while prices for many groceries and items have decreased, inflation remains stubbornly high for dry groceries and processed foods like soft drinks.
Walmart has been pressuring suppliers to cut prices but acknowledges ongoing challenges. The company’s overall inflation was flat for the quarter, with revenue growth driven by selling more units rather than raising prices. Prices increased for some items like dairy and meat, but dropped for others like pet food and produce.
Walmart’s strong quarterly results, including beating earnings expectations and raising its forecast, boosted confidence in the retail sector, leading to a rally in other retail stocks.
Despite economic concerns, Walmart's leaders noted that consumers remain value-focused but are not showing signs of financial strain.
👉 EDGE TAKEAWAY: Walmart has been under scrutiny for price management, especially…upgrade to Edge+ to read the Full Edge Takeaway.
Consumer spending jumped in July as retail sales were up 1%, much better than expected
In July, consumer spending exceeded expectations, with advanced retail sales rising 1% for the month, far surpassing the 0.3% forecast by economists.
June's sales were revised to a 0.2% decline from being initially reported as flat. When excluding auto-related items, sales grew by 0.4%, also beating the 0.1% forecast.
The increase was driven by gains at motor vehicle and parts dealers (3.6%), electronics and appliance stores (1.6%), and food and beverage outlets (0.9%).
However, there were declines in sales for miscellaneous retailers (down 2.5%), clothing stores (down 0.1%), while gas station receipts rose slightly by 0.1%.
📚 EDGE-UCATION: What does retail sales data tell us about the economy?
Retail sales data is a key economic indicator that provides insights into the health of the economy by reflecting consumer spending, which is a major driver of economic activity. Here's what retail sales data can tell us:
Consumer Confidence: Rising retail sales suggest that consumers are confident about their financial situation and future prospects, leading them to spend more. Conversely, declining retail sales may indicate that consumers are cautious, possibly due to economic uncertainty or concerns about their personal finances.
Economic Growth: Since consumer spending accounts for a significant portion of Gross Domestic Product (GDP), strong retail sales can signal robust economic growth. Conversely, weak retail sales might point to a slowdown in economic activity.
Inflationary Trends: Retail sales data can help gauge inflation. If sales are increasing rapidly, it could indicate higher demand, which might lead to price increases. However, if sales are strong but inflation is low or declining, it suggests that consumer demand is healthy without excessive inflationary pressure.
Sector Performance: Retail sales data can reveal which sectors of the economy are performing well and which are struggling. For example, rising sales in sectors like electronics or automotive can indicate strong consumer interest or economic incentives, while declines in sectors like clothing might suggest shifts in consumer behavior or economic challenges.
Monetary Policy Impact: Central banks, like the Federal Reserve, monitor retail sales data to inform their decisions on interest rates and monetary policy. Strong sales might lead to tightening policy to prevent overheating, while weak sales could prompt more accommodative measures to stimulate spending.
Business and Investment Decisions: Businesses use retail sales data to make decisions about inventory, hiring, and expansion. Investors also look at this data to assess the health of companies and the broader market.
Overall, retail sales data is a vital indicator that helps economists, policymakers, businesses, and investors assess the current state and future direction of the economy.
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Cisco cuts thousands of jobs, 7% of workforce, as it shifts focus to AI, cybersecurity
Cisco Systems is planning to lay off 7% of its workforce, marking its second round of job cuts this year.
This reduction, affecting around 5,900 employees out of its 84,900 total, aligns with the company's shift toward faster-growing areas like artificial intelligence (AI) and cybersecurity. Earlier in the year, Cisco cut about 4,000 jobs.
The company is investing $1 billion in tech startups to develop AI products and has partnered with Nvidia to create AI infrastructure.
These layoffs follow Intel Corp.'s recent announcement of cutting 15,000 jobs to remain competitive in the tech industry.
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.
Home Depot expects sales to weaken as consumers grow more cautious
Harris economic plan features new tax cuts, housing incentives and price caps
Alibaba earnings miss expectations despite cloud acceleration
John Deere’s stock climbs after earnings beat past lowered estimates
Bayer shares soar 11% after key U.S. legal win against Roundup cancer claims
Texas Instruments Wins $4.6 Billion in Chips Act Grants, Loans
US Consumer Sentiment Increases for First Time in Five Months
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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, pending inflation data and the expected volatility ahead. See the latest full report here:
Portfolio Update
Every month we share a full access look into our portfolios, including holdings, performance, activity and our watchlists for the upcoming month. You can see both of our portfolios here:
Earnings Recap
Every week during earnings season we share a recap of the quarterly reports from stocks that we cover. You can see this week’s earnings recaps here:
The Week Ahead
The week ahead is all about the Fed and its Jackson Hole Symposium. And although the bulk of earnings season is behind us, we still have several major companies left to report.
Earnings Reports
Earnings season may be winding down but the work never stops. Here is the list of names we will be covering next week:
Monday 8/19: Palo Alto
Tuesday 8/20: Lowe’s
Wednesday 8/21: Target
Thursday 8/22: --
Friday 8/23: --
Here is the full calendar of scheduled earnings releases:
Source: Earnings Whispers
Economic Reports
Next week is all about the Fed. There will be several speeches from Fed members, including Jerome Powell, as central bankers, economists, and journalists meet in Jackson Hole to discuss world events, financial trends and economic policy.
We also get PMI data, several key housing reports and initial jobless claims.
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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