Finimize - ⛵️ Smooth sailing for Costco

Costco sales are up 15% | The UK’s mini-budget drastically cuts taxes |
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Today's big stories

  1. Costco’s earnings were a breath of fresh air in a market gone stale
  2. Here's how to prepare your portfolio for the rise of nuclear energy – Read Now
  3. The UK’s latest economic plan lowered taxes – and raised eyebrows

Bullet-Proof Costco Takes Inflation In Its Stride

Bullet-Proof Costco Takes Inflation In Its Stride

What’s Going On Here?

Costco’s quarterly numbers, out last week, showed a company in rude health despite tough economic conditions.

What Does This Mean?

Costco, the Goliath members-only retailer, updates investors on key metrics every month, so the quarter’s 15% jump in sales won’t have come as much of a surprise. Expected or otherwise, though, that upturn is impressive in the current climate – as is the fact that profits are up 8% even as operating costs creep skyward. (Costco shelled out 8% more to suppliers than it did at the same time last year.) So far, then, Costco seems to have managed to pass on increased costs without scaring away shoppers: we’ll know whether rivals like Target and Walmart have been able to do the same when they publish their quarterly numbers in November.

Why Should I Care?

Zooming in: Join the club.
In a time of rising prices, one fee hasn’t budged: Costco’s $60 Gold Star annual membership (a steal considering the bargains on offer in the firm’s warehouses). Some shareholders have grumbled that the fee should be hiked to plump up profits, but with membership renewals at an all-time high of 93% in the US and Canada, Costco will be slow to tinker with its winning formula.

The bigger picture: The Costco price index.
Costco famously sells a lot of stuff: the bargains that line the store’s shelves range from everyday groceries to things like car tires and massive 340-pound safes. Stocking such a diverse set of products means the firm keeps an eye on all kinds of markets – and according to its finance chief, there has been some good news: the prices of fresh foods like beef and commodities like steel have come down a tad since last year. And with shipping costs dropping and deliveries to Costco warehouses arriving more promptly, it looks like supply chains might be improving too. Consumers, then, might breathe a tentative sigh of relief.

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Analyst Take

Can Nuclear Energy Light Up Your Portfolio?

Can Nuclear Energy Light Up Your Portfolio?

By Theodora Lee Joseph, Analyst

Not long ago, nuclear energy was something of a global pariah. But that’s changing. 

A global energy crisis and a climate crisis have countries searching for reliable, low-carbon power sources – and giving nuclear a second look.

And that’s opening new opportunities for investors.

That’s today’s Insight: can nuclear energy charge up your portfolio?

Read or listen to the Insight here

The UK’s Not-So-Mini Budget Slashes Tax

The UK’s Not-So-Mini Budget Slashes Tax

What’s Going On Here?

The UK’s mini-budget laid out plans to kick-start the economy on Friday – including some whopper tax cuts.

What Does This Mean?

The UK’s got problems aplenty right now, and it looks like the government’s settled on a solution: cutting taxes left, right, and center. Friday’s mini-budget slashed taxes to the tune of £45 billion ($49.7 billion) in the biggest set of cuts in 50 years (tweet this). The new measures lower the basic tax rate from 20% to 19%, and outright abolish the top rate of 45%. The cap on banker bonuses has also been scrapped – meaning that now might be a good time to invest in vintage champagne. Along with these moves comes the decision to lift the ban on shale fracking: environmentalists are not likely to be pleased – but tough times call for bold plans, and this plan is nothing if not that.

Why Should I Care?

Zooming out: Markets’ vote of no confidence.
After digesting the mini-budget with a nervous gulp, the FTSE 100 – the UK's key stock market index – dropped nearly 2%. But the real drama was in the currency market, where the pound plunged to a 37-year low in the wake of the news. Weakening currencies can suggest a government’s losing credibility, and credibility’s important when you’re planning to borrow money (as the UK is right now). So, although the government is counting on debt-financed tax cuts to nitro-boost growth, a full 2% drop in the pound versus the dollar suggests investors are far from convinced.

The bigger picture: The great British see saw.
The Bank of England (BoE)’s latest statement declared war on inflation – so it's likely to have some strong opinions on the government’s latest plan. See, cutting tax to stimulate growth makes sense when the economy’s sluggish but when inflation’s already running hot, it risks adding fuel to the fire. This looks like a tug of war between the BoE and the government – and it’s anyone’s game right now.

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💬 Quote of the day

“You can be very wild and still be very wise.”

– Yoko Ono (a Japanese multimedia artist and musician)
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📈 Your Guide To Investing During Stagflation: 5pm, September 28th
🇺🇸 What’s Next For The US Economy?: 1pm, September 29th
🌍 How To Profit From A Net Zero Future: 5pm, September 29th
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🎧 How To Invest In Music NFTs: 6pm, October 24th
🏆 How To Spot Investment Opportunities In Gold: 12pm, October 27th
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🎯 On Our Radar

  1. Farewell to the years of plenty. Money’s still flowing but Big Tech’s tightening its belt.
  2. Acclaimed author Hilary Mantel died last week. Her body of work was both diverse and stunning.
  3. Northern Ireland’s demographics have shifted. The once-troubled region could be in for change.
  4. Russians are sure they can beat Ukraine. Here are the key reasons why.
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