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Good morning and happy Friday.
Albert Manifold, ousted as BP chairman earlier this week over reported bullying allegations, went out punching. In a vehement statement released Thursday, Manifold accepted the right of the oil giant’s board to remove him, but slammed “lies” being spread about him by people “allowed to hide behind anonymity.”
Manifold, who said no workplace complaints were brought to him, suggested his dedication to rooting out “excessive expenditure” was “not always shared by everyone” and may have ruffled feathers. He rejected executive perks like private flights, corporate sports tickets and a “dedicated chauffeur-driven limousine,” instead getting to work “like most people” by foot, train or taxi. To set an example, he wrote, “I made my own coffee, bought my lunch in the local café,” and “sat in a small office.” BP, which has not confirmed reports of bullying, stood by its statement that Manifold was let go over “governance standards, oversight and conduct” concerns. Now that he’s not taking taxis to the office, at least Manifold can splurge on some nice beans to make his coffee at home.
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Free samples and $4.99 rotisserie chickens? In this economy?
No one keeps costs down like Costco, and consumers know it. In its third-quarter earnings call on Thursday, the members-only retailer showed that it’s unsurprisingly thriving in the new (or is it rather just everlasting?) era of penny-pinching. The quarterly report also offered a snapshot of the US consumer at a critical moment.
Inflation Strikes Back
The return of inflation is very real. As is the resilience of the US consumer, though cracks are beginning to show. Commerce Department data released Thursday showed that the personal consumption expenditures price index (PCE) rose 3.8% year-over-year in April, the biggest jump since May 2023. Consumer spending ticked up 0.5% from the previous month, while, crucially, the personal savings rate fell to 2.6%. That’s the third-lowest rate in 65 years of economic data, behind only lows in late 2022 and mid-2005.
When money’s a bit tight, the $65 annual Costco membership is a no-brainer. The chain has garnered year-over-year increases in customer visits for six straight months through April, according to data analytics firm Placer.AI. Traffic to its e-commerce website and app climbed 37% in the past quarter, the company said Thursday. Like Walmart, Costco continues to attract the upper leg of consumers in the K-shaped economy, with warehouse locations largely in more affluent areas. Case in point: Home furnishings and gold and jewelry were among its top sales categories in the quarter.
On metrics followed closely by Wall Street, the Issaquah, Wash., based retailer posted:
- Revenue of $70.5 billion in the three months through May 10, up 11% from a year earlier, and net income of nearly $2.2 billion, which beat expectations and rose from $1.9 billion a year ago.
- As usual, membership fees accounted for the majority of profits. Paid memberships in the quarter grew 4% year-over-year, while renewal rates came in a hair under 90%, also topping analysts’ estimates.
The company used its earnings call to highlight the ability to lower prices on many items and has said it can continue to do so if it receives tariff refunds from the US government.
  Pumped-Up Kicks: The real killer category for the company, however, is gas. Drivers poured into its fuel stations, which typically offer lower prices than retail competitors. “The high consumer price sensitivity, which fueled these record volumes, also drove many members to use our gas stations for the very first time in the third quarter,” CEO Ron Vachris said on a call with analysts Thursday. Better yet, gas station visitors tend to spend more time in the store and maybe score a free mini ravioli served in a paper cup.
Written by Brian Boyle
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Photo via JGP Wealth Management
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When tuition comes due, most families just write the check, leaving a fortune in tax savings on the table.
But high-net-worth families? They don’t just “pay” for college; they strategize around it.
JGP Wealth Management’s latest guide breaks down exactly how an education funding plan can help you achieve tax savings and other wealth goals. It explains:
- 529s, trusts and direct gifting: How to deploy all three together to achieve tax-free growth, estate reduction and zero gift tax exposure.
- Unseen variables: Merit aid, account ownership structures and business income cycles all influence your optimal strategy.
- The “Grandparent Factor”: Generous grandparents can be a tremendous asset or an unintentional source of complexity.
Read the guide and make college tuition a part of your wealth plan.
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Because billionaires can afford to gamble, hospitality magnate Tilman Fertitta is buying a rival casino empire and its colossal pile of debt.
In a merger that ought to be presided over by an Elvis impersonator, his holding company announced Thursday that it will acquire Caesars Entertainment, one of the Las Vegas Strip’s defining brands, in a deal worth $17.6 billion.
Marriage Capital Merger
If you’re not familiar with Fertitta’s privately held, Houston-based holding company, you know its assets. There’s restaurant giant Landry’s, which oversees Bubba Gump Shrimp Co., Joe’s Crab Shack, Rainforest Cafe and a portfolio of casino-hotels including the Vegas Strip’s Golden Nugget. There’s also the NBA’s Houston Rockets, which Fertitta acquired for $2.2 billion in 2017 (the team is now worth $5.9 billion, according to Forbes). Earlier this month, he was approved to buy the WNBA’s Connecticut Sun for $300 million and relocate the franchise to Houston; Fertitta plans to revive the defunct Houston Comets next year (the Sun are 1-8 to start the season, so good luck with that corporate turnaround plan).
Caesars, meanwhile, operates 52 properties, eight of them in Vegas, including the most famous place to lose your life savings to a shark in Sin City: Caesars Palace. Odds stacked against the storied brand include slipping Vegas tourism numbers and the emergence of online gambling outfits DraftKings and FanDuel and prediction markets Kalshi and Polymarket. Caesars still collects billions in revenue, $11.5 billion in 2025, but posted a $502 million loss last year, proving the house does not always win. It also carries some hefty arrears that the new owner is set to inherit:
- Fertitta will pay $5.7 billion, financed in part with new debt, as well as take on Caesars’ existing $11.9 billion debt pile. Caesars shareholders will receive $31 in cash per share, a 49% premium over the price in February, when Fertitta’s interest became public.
- The operators own competing properties in markets including Louisiana, Mississippi, Nevada and New Jersey, leading some analysts to predict regulators will require divestitures. JPMorgan Securities estimated those might total $2.3 billion, creating a rare buying opportunity for smaller competitors, private equity firms and Native American tribal gaming groups to snap up new assets.
Playing Dominoes: Analysts at Jefferies wrote Thursday that the closure of the Tillman deal could “act as a catalyst” for more M&A in the gambling sector. They named Boyd Gaming, Churchill Downs, MGM Resorts International, Monarch, and Penn Entertainment as potential medium-term deal candidates.
Written by Sean Craig
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Photo via FinanceBuzz
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As talks to end the Iran War drag on, the Pentagon is planning to make deals with upstart US drone companies, the WSJ reported. The deals would tap into the Pentagon’s pool of $210 billion in lending power and could include equity stakes for the US government. The Pentagon’s reportedly eyeing companies including Performance Drone Works, Neros Technologies and Unusual Machines.
The Defense Department bucketed the news into “pre-decisional matters.” But like any suspected soft launch, people who thought they spied the Pentagon’s hand in the drone industry’s picture jumped to conclusions.
Unusual Machines, which counts Donald Trump Jr. as an advisory board member and shareholder (cue potential scrutiny), saw its stock jump more than 60% from Wednesday to Thursday’s close. Other drone-maker stocks also surged.
The Drone War
Iran’s small and low-cost drones have defined the current war. The US can’t swat down the thousands of kamikaze drones fast enough as Iran rapidly rebuilds its arsenal, and each interceptor missile used in the attempt costs millions.
To close the gap, the US is fast-tracking production of smaller and cheaper drones to rival Iran’s:
- The Pentagon’s new deals with the drone sector are said to focus on upping production and lowering costs, which could speed the US toward its production goals.
- Drones were a noted priority in President Trump’s growing defense budget, and the Pentagon aims to build up an arsenal of 300,000 cheaper attack drones by the end of next year as part of its $1.1 billion Drone Dominance Program. Unusual Machines already has orders on the books for 3,500 drone motors for the US Army in a deal that could see orders rise to 20,000 components this year.
Clipped Wings: The Pentagon has been slow to invest in drones, stifling the sector’s ability to ramp up in the US. Now, it’s playing catch-up. Pentagon sales accounted for 2% of all drone-system sales annually in the US before Trump started his second term — a number that’s likely to jump. The defense department has also requested a budget hike for its drone-developing initiative, the Defense Autonomous Warfare Group, a.k.a. DAWG, from about $225 million this year to more than $54 billion.
Written by Jamie Wilde
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- Stopped in Their Tracks: Shares in railroad giants Union Pacific and Norfolk Southern fell after US regulators paused a review of their proposed $85 billion merger to gather more information.
- Saturday Samba: The lower house of Brazil’s parliament voted to approve a five-day, 40-hour work week on Thursday; Brazilians currently work for four hours on a sixth day.
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Disclaimer
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