Hello Capitalists,

President Trump just reignited the US-China Trade war that has been simmering on the back burner. Despite that inflation is falling across multiple measurements, Hedge Funds are getting nervous about the elite college crackdown, there is a resurgence of Hybrid cars coming and Costco just delivered a fantastic lesson that Walmart and Target could do well to learn from.

Let’s break it down for you:

Trump call outs China, demands faster action on trade talks

President Donald Trump accused China of “totally violating” a preliminary trade agreement with the United States in a Truth Social Post.

• Trade Deal Drama: Back in mid-May, the U.S. and China agreed to a 90-day pause on most tariffs, with the U.S. dropping its tariffs on Chinese goods from 145% to 30% and China lowering theirs to 10%.

• Trump’s Accusation: On May 30, Trump claimed China violated this agreement, saying they’re “slow rolling” their commitments, and hinted at taking action, which sent stock futures tumbling.

• U.S. Official Backing: U.S. Trade Representative Jamieson Greer supported Trump’s claims, expressing concern over China’s alleged non-compliance with the deal.

• Market Jitters: Trump’s statement caused a dip in stock futures, reflecting investor worries about a potential escalation in the U.S.-China trade war.

• Context of Talks: The deal came after high-stakes talks in Geneva, where both sides aimed to de-escalate tensions, but Trump’s remarks suggest trust is shaky.

Inflation growth falls across multiple measurements, are interest rate cuts coming?

A Commerce Department report on Friday shows inflation cooling down a bit, which could influence everything from your grocery bills to the Federal Reserve’s next moves on interest rates.

• Inflation Eases Up: The Personal Consumption Expenditures (PCE) price index, the Fed’s go-to inflation measure, rose just 0.1% in April, bringing the annual rate to 2.1%—lower than the expected 2.2%.

• Core Inflation Steady: Excluding volatile food and energy prices, core PCE also increased by 0.1% monthly, with an annual rate of 2.5%, slightly below the forecasted 2.6%.

• Consumer Spending Slows: Spending grew by only 0.2% in April, down from 0.7% in March, suggesting people are getting more cautious with their money.

• Savings Rate Jumps: The personal savings rate hit 4.9%, the highest in nearly a year, showing folks are socking away more cash amid economic uncertainty.

• Tariffs Not Yet Felt: Despite new tariffs from President Trump, their impact hasn’t shown up in consumer prices yet, but economists warn they could spark inflation later.

• Fed’s Next Steps Uncertain: With inflation nearing the Fed’s 2% target, Trump’s pushing for lower interest rates, but the Fed’s waiting to see how tariffs play out before making moves.

Trump’s anti-woke crusade against colleges has Wall Street worried about their bonuses

You know how Wall Street usually seems unflappable? Well, they’re starting to sweat bullets over President Trump’s latest move to take on “woke” colleges, and it’s a big deal because it could shake up the cozy relationship between elite universities and big finance, potentially impacting markets, endowments, and even how colleges operate.

• Trump’s Targeting “Woke” Colleges: President Donald Trump is pushing to strip federal funding and accreditation from universities he says push “woke” agendas, like diversity initiatives or progressive curricula, which he claims undermine traditional education.

• Wall Street’s Endowment Worries: Many hedge funds and asset managers rely on university endowments for hefty investments, and Trump’s policies could disrupt these funds, making financial bigwigs nervous about market stability.

• Potential for Lower Returns: If colleges lose funding or face restrictions, their endowments might shrink or they might shift to safer, lower-yield investments, which could mean less profit for Wall Street firms managing these portfolios.

• Hedge Fund Manager Anxiety: Hedge fund managers fear their funds could be doomed if university chief investment officers pull back from riskier investments to weather the uncertainty.

• Political and Cultural Clash: Trump’s move is part of a larger cultural battle, pitting conservative critiques of academia against liberal-leaning institutions, with Wall Street caught in the crossfire.

The auto industry is bringing back a fan favorite as EV demand sags

The auto industry is shaking things up with a comeback that could change how you think about hybrids. Extended-range electric vehicles (EREVs), a type of plug-in hybrid, combined with a gas engine are making a return to meet your demand for longer ranges and greener rides. It’s a practical middle ground between gas-guzzling cars and fully electric vehicles, offering flexibility for those not ready to go all-in on EVs.

• EREVs Are Back: Automakers are reviving extended-range electric vehicles (EREVs), like the Chevy Volt and BMW i3, which were phased out but are now poised for a comeback due to shifting consumer preferences.

• How EREVs Work: These plug-in hybrids use battery-powered motors for driving, like EVs, but have a small gas engine that acts as a generator to charge the battery, extending range without directly powering the wheels.

• Bigger Batteries, Smaller Engines: Unlike traditional hybrids (e.g., Toyota Prius), EREVs have larger batteries for more electric driving and smaller gas engines, making them a bridge between hybrids and full EVs.

• Why Now?: EV sales are slowing, with vehicles lingering on lots despite price cuts, so automakers are turning to EREVs and plug-in hybrids to meet demand for fuel-efficient options that don’t require full EV commitment.

• Consumer Appeal: EREVs cater to drivers wanting electric driving for daily commutes but with the backup of a gas engine for longer trips, easing range anxiety.

Costco boasts strong earnings report despite tariffs after smart move pays off

Costco’s latest earnings report shows they’re not just surviving but thriving despite economic curveballs like tariffs and inflation. It highlights how a retail giant can flex its muscle to keep prices low and customers happy, even when trade policies are shaking things up.

• Strong Earnings Performance: Costco reported third-quarter earnings of $4.28 per share, beating Wall Street’s expectations of $4.24, showing they’re holding strong amid economic turbulence.

• Revenue Slightly Below Expectations: Their revenue hit $63.21 billion, just shy of the $63.31 billion analysts predicted, but still solid for a quarter ending May 11.

• Navigating Tariffs Smartly: Costco mitigated tariff impacts by pulling forward shipments of goods planned for summer and sourcing more locally to avoid high-tariff countries.

• Keeping Prices Low: Unlike competitors like Walmart, Costco’s sticking to a “last resort” stance on price hikes, monitoring commodity prices closely to cut costs where possible.

• Kirkland Signature Strength: Their private brand, Kirkland Signature, saw faster sales growth than overall sales, thanks to sourcing from regions less affected by tariffs.

• Membership Fees Boost Profits: A recent membership fee increase is expected to pad profits in the second half of fiscal 2025, giving Costco more wiggle room to absorb tariff costs without raising prices.

Massive Food Stamps fraud ring busted in NYC

You know those programs meant to help folks afford food? Well, a massive alleged fraud scheme in New York that’s been fleecing taxpayers and undermining the system just got busted. This matters because it’s not just about money—it’s about trust in programs designed to support vulnerable people and what happens when that trust gets broken.

• Massive Fraud Uncovered: A USDA employee, Arlasa Davis, and five others were arrested for a $66 million scheme involving food stamp fraud, one of the largest in U.S. history.

• How It Went Down: The group allegedly used fake USDA applications, doctored documents, and stolen license numbers to process unauthorized food stamp transactions.

• Inside Job: Davis, a USDA worker, is accused of selling confidential info to criminals, betraying her role to catch fraudsters and enabling the scam.

• Charges Filed: The six defendants face serious charges like conspiracy to steal government funds, theft, and bribery, with potential prison sentences up to 20 years.

• USDA’s Response: Agriculture Secretary Brooke Rollins called this a “new day” for the agency, emphasizing a crackdown on waste, fraud, and abuse under Trump’s leadership.

• Why It Hurts: U.S. Attorney Perry Carbone noted the fraud undermined a program New Yorkers rely on for basic nutrition, hitting vulnerable communities the hardest.