📈 Costco's Tariff Playbook

Good morning.

⚡ The Fast Five → Nvidia Powers Energy Supercomputer, Meta Militarizes AI Strategy, Gap Bleeds on Tariff Reality, Wells Fargo Sheds Rail Assets, GameStop Pivots to Bitcoin Play

🔎 Market Trends → Wall Street stocks end higher after Nvidia results; US Futures Rise on Nvidia, Trade Court Block

🚨 Start Your Day with Market Movers: Opening Bell LIVE on FinTech.tv from 9-10AM EST

And now…

⏱️ Your 5-minute briefing for Friday, May 30, 2025:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Nvidia Powers Market Lift as Court Tangles Trump Tariffs

Wall Street ended higher Thursday, driven by Nvidia’s rally and cautious optimism around judicial rulings on tariffs. The S&P 500 and Nasdaq rose 0.4%, while the Dow added 0.3%.

The Big Picture:

Markets regained their footing as investors balanced legal volatility over Trump-era tariffs with Fed assurance and strong tech leadership. A ruling from the U.S. Court of International Trade challenged the legality of Trump’s tariff authority—only to be temporarily paused by a federal appeals court.

Fed Chair Jerome Powell, after meeting with Trump, emphasized the Fed’s independence, calming fears of political interference in policy-making.

Meanwhile, oil slipped, and bond yields dipped, hinting that investors are reassessing recession risks more than pricing in runaway inflation.

Market Movers:

• Nvidia (NVDA) jumped 3.3% after strong earnings and steady demand expectations—even as new export rules add friction. Still, it remains a pillar of the AI-driven bull narrative.

• Best Buy (BBY) slid 7.3% on weak guidance and tariff headwinds. Consumers are feeling the squeeze, and electronics are an early casualty.

• Pending home sales missed expectations—mortgage rates remain the bottleneck—but inventory is rising, hinting at future opportunity for buyers.

What They’re Saying:

"Lower mortgage rates are essential to bring home buyers back into the housing market." — Lawrence Yun, NAR Chief Economist

WHAT WE’RE WATCHING
Events

• Today: Bureau of Economic Analysis - Core Personal Consumption Expenditures (PCE) Price Index m/m - 8:30am

  Why You Should Care: It's the Federal Reserve's primary inflation measure. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate

Earnings Reports

• Today: Coca-Cola, Shoe Carnival, Toro Corp., Canopy Growth Corporation

• Monday: The Campbell’s Company

MARKET BRIEF
Leading News

Costco's Tariff Playbook: When Bulk Buying Becomes a Moat

Why it matters:

While other retailers scramble under tariff pressure, Costco's warehouse model is transforming trade headwinds into competitive tailwinds—a classic example of how business structure trumps market sentiment.

Zoom Out:

The market's 3.75% post-earnings dip in Costco shares (COST) represents a textbook case of investors missing the forest for the trees. Despite beating estimates with $4.28 EPS versus $4.24 expected and 8% comparable sales growth, traders focused on tariff concerns rather than the company's defensive positioning.

Here's the behavioral finance insight: When uncertainty rises, consumers gravitate toward perceived value—exactly what Costco's bulk model delivers. With one-third of U.S. sales coming from imports and only 8% from China, the company has geographic diversification that many peers lack.

The warehouse giant's limited SKU strategy—fewer peanut butter brands means bigger orders—creates negotiating leverage that transforms supplier relationships from transactional to strategic partnerships.

Key Insights:

• Margin Management Mastery: Costco absorbed tariff costs on staples (pineapples, bananas) while raising prices on discretionary items (flowers)—a nuanced approach that preserves member loyalty while protecting profitability

• Supply Chain Chess: The company rerouted goods from high-tariff countries to non-U.S. markets and accelerated shipments ahead of tariff implementations—operational agility that smaller retailers can't match

• Membership Moat Deepening: 16% e-commerce growth plus extended gas station hours create stickier customer relationships during inflationary periods

Market Pulse:

"We felt it was important to eliminate the impact for the member by working with suppliers" —CFO Gary Millerchip, signaling customer-first strategy over short-term margins

Bull’s Take:

Costco's 10% year-to-date outperformance versus the S&P 500's flat returns reflects a company built for turbulent times. When trade wars create winners and losers, bet on the business model that turns bulk buying into a sustainable competitive advantage.

Headlines

• Nvidia, Dell to supply next US Department of Energy supercomputer (link)

• Meta teams up with Anduril to make AI-powered military products (link)

• Gap shares plummet as retailer says tariffs could cost between $100 million and $150 million (link)

• Wells Fargo signs deal to sell $4.4 billion rail assets portfolio (link)

• GameStop stock slides 10% as company announces $500 million bitcoin purchase (link)

• Microsoft drives up Copilot AI adoption, lands big deal with Barclays (link)

CRYPTO
Fear & Greed

Headlines

• Bitcoin Slides Below $106K; Analyst Sees Ether Breakout Looming (link)

• Wall Street Giant Cantor Fitzgerald to Launch Gold-Backed Bitcoin Fund (link)

• SEC moves to dismiss Binance litigation as agency looks to forge new regulatory path for crypto (link)

DAILY SHARE
On the Socials