🕟 Price of growth

Good Afternoon. On this day in 1956, the first transatlantic telephone cable opened with a three-way call between New York, Ottawa and London. Its 36 channels were modest by today's standards, but the connection made a costly idea useful.

Today's market is asking what new connections are worth. Costco's value pitch kept shoppers coming, while Akamai committed billions to serve AI demand. Stocks found some relief as oil eased, but expensive borrowing and uneasy consumers still put a price on every growth plan.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

🔢 Big number: $11.6 billion — the seven-year cloud-services commitment Anthropic made to Akamai. It's contracted demand, but Akamai still has to spend to deliver it.

Costco's customers kept filling carts even as higher fuel and borrowing costs squeezed budgets. The appeal isn't mysterious: a membership can look more worthwhile when shoppers believe they can save on frequent purchases. But strong sales alone don't show what it cost the retailer to keep prices compelling.

The news: Fiscal fourth-quarter net sales rose 11.2% to $93.9 billion. Comparable sales grew 9.4%, or 6.7% after excluding gasoline-price and currency effects, and digitally enabled sales rose 19.5%. Quarterly net income reached about $3 billion. That included a one-time benefit from tariff refunds worth 15 cents per diluted share, partly offset by money the company put back into member value. The adjustment matters because it isn't repeatable operating progress.

Big picture: Costco's formula relies on shoppers returning often enough to justify their fees and on management keeping the value promise credible. Watch renewal behavior and the underlying sales trend rather than celebrating a single quarter's gasoline-aided headline. If inflation keeps lifting household bills, the retailer's ability to protect trust without giving away its profit will be the real test.

Source: Costco Wholesale

Anthropic's appetite for computing is turning into a large, specific contract for Akamai. That makes the AI buildout feel more tangible than a general promise of future demand. It also puts a spotlight on the cash a supplier must commit before all that revenue can arrive.

The news: Akamai announced an $11.6 billion cloud-services commitment over seven years to support Anthropic's CPU workloads. The arrangement could expand by another $9 billion, but that extra amount isn't guaranteed. Akamai estimates about $5.5 billion of related capital spending and says its 2026 revenue guidance hasn't changed. Anthropic also received a warrant that could eventually represent up to 5% of Akamai's shares, with vesting tied to the relationship's expansion.

Bottom line: A long contract can improve visibility, but it doesn't erase the timing gap between building capacity and collecting cash. Watch whether Akamai delivers infrastructure on budget, how quickly Anthropic uses it, and whether the potential additional purchases actually happen. The bigger AI economy still needs disciplined project economics, not just a large number in a press release.

Source: Akamai

Starbucks is closing another group of North American cafés while trying to make the remaining stores more inviting. It's a reminder that opening locations and running good ones are different jobs. A chain can grow sales and still have individual shops that don't meet its financial or service standards.

The news: The company said it'll shut roughly 250 coffeehouses this week, about 1% of its more than 18,000 North American locations. Management said those stores lack a path to the experience or financial performance it wants. In a filing, Starbucks estimated roughly $300 million of restructuring charges, including around $200 million in cash costs, primarily for leases and employees. It reduced its expected fiscal-year net new global openings to about 440 from a prior 600–650 range.

What’s next: Fewer weak stores could improve returns, but closures can disrupt workers and customers before a turnaround pays off. Watch comparable-store traffic and service speed in the locations that remain. If the chain can make a visit feel better without letting operating costs climb faster than revenue, the smaller footprint may prove to be a healthier one.

Source: Starbucks

U.S. stocks recovered some ground Friday as oil retreated, but the week's bond sell-off hasn't vanished. That's an important distinction: a calmer afternoon for equities doesn't automatically lower the financing rate faced by homebuyers, utilities or companies building expensive projects.

The news: The ten-year Treasury yield has been near 5.2%, a level last seen around 2007, while longer-maturity yields have also been elevated. Investing.com's market account links the pressure to energy-driven inflation concerns, heavier borrowing for AI infrastructure and expectations that the Federal Reserve may need to tighten further. Oil eased Friday on reports of possible U.S.–Iran talks about reopening the Strait of Hormuz, though the route's future remains uncertain.

Big picture: Lower oil can help inflation expectations, but it doesn't pay off debt that was priced at a higher rate. Watch whether Treasury yields cool for more than a day and whether businesses revise the economics of long-lived projects. A strong stock index can coexist with a tougher cost of capital underneath it.

Source: Investing.com

AI tools can speed up work inside a financial institution, but a faster process isn't automatically a safer one. A New York Fed risk executive argued that the technology is changing how operational risk is created and who owns the problem when a system behaves unexpectedly.

The news: In remarks prepared for a risk conference, Mihaela Nistor said AI has moved operational risk from a back-office concern into a strategic one. Her point wasn't that institutions should avoid new tools. It's that the gap between rapid technology deployment and slower changes to oversight can create exposures the old control framework wasn't built to catch. She stressed that her views were personal, not an official Federal Reserve policy statement.

What’s next: Banks and their customers will benefit only if speed comes with accountability. Watch whether firms can explain how automated decisions are monitored, who can intervene, and how they recover when an AI-driven process fails. A clever model may impress, but resilience is what keeps trust intact.

Source: Federal Reserve Bank of New York

The White House summit between the United States and China produced a little more breathing room for trade, not a permanent settlement. Companies that depend on cross-border supplies can use the pause, but they still can't plan as if the arguments over tariffs, technology and rare earths have gone away.

The news: U.S. Treasury Secretary Scott Bessent said the countries agreed to extend their trade truce by two months beyond its expected November expiration. It's a pause, not a permanent agreement. Reuters reported that major questions remain over Chinese purchases of U.S. agricultural goods, rare-earth supply and technology restrictions. The leaders also differed in how they spoke about AI governance, while neither side announced a broad bargain covering those issues.

Bottom line: A short extension reduces the immediate risk of another tariff shock, but it also pushes hard decisions into the next negotiating round. Watch whether purchase commitments are fulfilled and whether suppliers gain reliable access to critical minerals. Businesses can't make durable investment plans from a cordial meeting alone.

Source: Reuters

Germany's latest consumer survey shows how quickly higher energy costs can change spending plans, even when the broader economy appears to be improving. People may hear better growth forecasts and still feel less able to make a big purchase if their own bills are rising.

The news: The Nuremberg Institute for Market Decisions said its October consumer-climate forecast fell to minus 30.6 from a revised minus 26.8. Income expectations dropped sharply, while the willingness to save climbed to 21.5. Economic expectations improved slightly, so the survey isn't saying every part of the outlook deteriorated. It reflects about 2,000 interviews conducted in early September and measures sentiment, not actual sales.

Big picture: Households can cut discretionary purchases before official consumption data show the damage. Watch whether energy prices settle and whether the reported urge to save turns into weaker retail activity. A recovery that looks sound in aggregate will feel fragile if ordinary families don't see room in their budgets.

Source: Nuremberg Institute for Market Decisions

European shares rose Friday as oil prices backed away from their recent climb. That's relief, not a clean bill of health: energy remains a direct cost for businesses and households, and the Middle East supply picture can change faster than a company can reset its budget.

The news: Reuters reported that European stocks were heading for a weekly gain while crude prices eased, even as investors watched developments around the Strait of Hormuz. The move gave energy-intensive companies some breathing room after a week in which oil and bond yields repeatedly set the tone. A single day's retreat doesn't reverse the earlier price shock or guarantee that tankers will move normally again.

What’s next: Watch actual shipping flows and sustained energy prices rather than treating a market bounce as a supply agreement. If crude keeps easing, transport and industrial costs may become less punishing. If talks falter or routes stay constrained, today's relief could prove brief.

Source: Reuters

Q: What do you call an alligator in a vest?

A: An investigator.

Sinking fund: money set aside regularly for a known future expense, so the bill doesn't have to compete with everything else when it arrives.

In a sentence: If energy bills keep rising, a household's sinking fund for repairs can help absorb the next surprise without forcing expensive borrowing.

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