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 looking for 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 week started slow, with very low volume 8 of the past 10 days, but we ended with a bang (in a good way).

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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 week that had an influence on market action.

‘The Time has come’ to lower interest rates

Jerome Powell ended the week with his annual speech in Jackson Hole. The Fed Chair gave his strongest signal yet that he and his colleagues believe that the time has come to begin easing monetary policy.

The central bank likes the progress that they have made in combating high inflation and bringing it back down to their 2% goal, and a tight monetary policy, if left too long, could send the economy into a recession. This speech sent stocks soaring higher with the S&P 500 climbing roughly 1% on the week.

As we have discussed frequently, lower rates will positively impact the REIT sector, Utilities, and even small cap stocks.

Rate Cuts may not be all that bullish for stocks in the near-term

As we discussed in our first story, rate cuts are likely beginning next month when the Fed meets mid month. However, in the near-term, as excited as investors seemingly are right now, rate cuts are not necessarily great for stocks. In the long-run it will play at well, but be mindful of these stats before jumping fully into the market right now off the interest rate news.

Looking back over history when rate cuts happen, the S&P 500 has declined after the first rate cut. Over the past nine initial interest rate cuts, more than 50% of the time the S&P 500 fell, seeing declines ranging from -22.6% to -55.5%. The Technology bubble in the early 2000s and the Great Financial Crisis proved to be the worst scenarios, with the Fed cutting interest rates at two different times during the secular bear market of 2000–2009.

Long-term though, the markets are generally moving higher, but combine the weaker stats in addition to the weakest period for stocks in the month of September, and we believe opportunities could present themselves like they did in early August. Do not believe that the market is just going to rocket higher from here just because rate cuts are coming.

Layoffs continue to rise for some large companies

Last wee we covered technology company Cisco Systems who announced plans to lay off 7% of its workforce, marking its second round of job cuts in a matter of 6 months. However, they are no the only technology company laying off workers, nor are they the largest. We have seen a steady uptick in layoffs taking place in 2024 so far.

Dell, although not the largest technology company, they have the largest number of employees laid off or planned to be laid off with around 26,000 people impacted. Intel comes in second with 15,000 employees being impacted for a company that seemingly just can’t get things figured out.

The sheer number is not too concerning yet, but the direction things are headed does have some investors at least watching it closely. After all, we have seen the unemployment rat jump from the low 3% range to 4.5%. In a few weeks we will get another update when the August jobs report is released.

Consumers make up roughly 70% of GDP, so when consumers do not have jobs or they are worried about their jobs, spending slows, when spending slows, the economy slows.

On top of that, a new report from the Federal Reserve Bank of New York shows that employed workers are becoming increasingly concerned about the safety of their current job. Americans are more pessimistic about holding their job for the next 4 months with average expected likelihood of unemployment reaching its highest levels since the Fed started collecting the data back in 2014.

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:

The Week Ahead

The week ahead is all about the impact upcoming interest rates could have, but more importantly, the focus will be all on. Nvidia mid-week.

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 8/26: --

• Tuesday 8/27: --

• Wednesday 8/28: Nvidia, CrowdStrike, Salesforce

• Thursday 8/29: Lululemon, Ulta Beauty

• Friday 8/30: --

Here is the full calendar of scheduled earnings releases:

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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.