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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 15,000 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 market struggled out of the gate this week but the Fed’s comments, earnings from Apple and a weaker than expected jobs report sent markets higher to end the week in the green.

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.

Cracks in the US Consumer are becoming more and more evident

The past few weeks we have seen various reports regarding a weakening US consumer and potentially, a weakening US economy. Earnings reports from both Starbucks and McDonald’s showed that consumers are pushing back on higher prices and starting to think twice about spending.

In addition, we saw the unemployment rate increase and the number of job openings decrease to go along with weakening average hourly earnings. Things are beginning to line up from not just one source, but from various different angles.

This week we got the University of Michigan Survey of Consumers sentiment index for May, which posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76. The move represented a one-month decline of 12.7%. Consumers are feeling less confident about the state of the US economy and investors need to be on alert.

Don’t look now, but the Dow Jones is in the midst of an 8-day winning streak

Now that we mentioned it, the streak is likely to break, but over the past 8 trading days, the dow jones has seen nothing but green. During the week, the Dow posted a 2.16% gain for the period, its best week since December and its fourth positive week in a row. The S&P 500 and the Nasdaq Composite both posted a third consecutive winning week, rising 1.85% and 1.14%, respectively.

This puts that mini dip we saw in mid-April behind us for the time being. However, if you look at the history of the market and corrections, they tend to happen in tranches and we could be in for more pain ahead and deeper pain if the weaker economic and inflation news continues to pick up steam.

What led the charge of late, some has been earnings, but a large portion has been renewed hopes of rate cuts in 2024. As we mentioned in the first news article, economic and consumer data of late has not been all that great, which is exactly what the Federal Reserve has been hoping for. They want a little weakness in the labor market to help slow inflation and if that keeps up, we could see a fall or late year rate cut still on the table.

📚 EDGE-UCATION: Why is their so much focus on the Fed?

I agree, the focus on the Fed is more today than ever before in my investing experience which spans more than a decade and a half. Nearly every word from a Fed official is dissected by investors and the media.

In a quick summary, the Fed controls monetary policy in which they can alter the pace at which the economy grows based on having tighter or looser conditions. Right now, with high interest rates, the Federal Reserve is trying to slow the economy, which can impact the labor force and hopefully slow the rate of spending, which will ultimately bring down the high inflation we have seen for the past 18+ months.

The investing community mourns the passing of Jim Simons

On Friday May 10th, it was reported that Jim Simons had passed away at age 86. For those of you unaware, Jim Simons was not only a billionaire, but he was a mathematician who founded the most successful quantitative hedge fund of all time, Renaissance Technologies.

Jim Simons created the Medallion Fund which earned more than $100 billion in trading profits between 1988 and 2018, with an annualized return of 39%.

According to Forbes, Mr. Simons had a net worth of $31.4 billion at his time of death.

Follow the live discussion on The Investor’s Edge Discord to stay updated on the meeting's developments.

A Closer Look at the Economy (Edge+)

These are some of the biggest economic reports from the second half of the week that had an influence on market action.

Initial Jobless Claims - 5.9.2024

The number of people claiming unemployment benefits surged by 22,000 to 231,000 on the week ending May 4th, the highest since August 2023, and sharply above market expectations of 210,000. The high reading halted the streak of four consecutive downside surprises.

Continuing claims, seen as a proxy for the number of people receiving unemployment benefits, increased to 1,785,000 in the week ending April 27 from 1,768,000 in the previous week, compared to forecasts of 1,790,000.

Jobless Claims - Chart back to 2022

UMich Consumer Sentiment - 5.10.2024

The University of Michigan consumer sentiment fell to 67.4 in May from 77.2 in April, the lowest in six months and missing market expectations of 76, preliminary estimates showed.

Both current conditions and expectations declined as well, with current conditions falling to 68.8 from 79.0 and expectations declining to 66.5 from 76.0.

Consumer Sentiment - Chart back to 2014

UMich Inflation Expectations - 5.10.2024

The year-ahead and five-year inflation expectations both rose to a six month-highs in May. The year-ahead expectations increased to 3.5% in May, up from 3.2% in April, while the five-year outlook increased to 3.1% compared to 3.0% in April.

Inflation Expectations - Chart back to 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 and expressed the need for patience in the weeks ahead. See the latest full report here:

Portfolio Update - May

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 Recaps

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

Next week is all about inflation, the consumer and retail earnings.

Earnings Reports

Earnings season is winding down but it will still be busy for us here at The Investor’s Edge as several major retail companies we cover are scheduled to report. Here is the list of names we will be covering:

• Monday 5/13: --

• Tuesday 5/14: Home Depot, and Alibaba

• Wednesday 5/15: Cisco

• Thursday 5/16: Walmart, and John Deer

• Friday 5/17: --

Here is the full calendar of scheduled earnings releases:

Economic Reports

Next week is all about the CPI and PPI data as investors look to see if inflation rose in April. There’s also retail sales, a few housing reports and manufacturing data from New York and Philadelphia on the schedule.

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💰 Earnings report room: Stay ahead of the game with real-time updates on earnings as they hit the wire. No more waiting around for the latest financial scoop!

📊 Economic reports room: Dive into detailed breakdowns of all the major economic reports, so you're always in the know about what's shaping the market.

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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.