• Stocks: Indexes climbed after Iran offered the US a deal to open the Strait of Hormuz within the next seven days, though there are doubts about the US accepting the terms. Still, all three major indexes ended the week higher than where they started.
• Bonds: The Treasury Department is trying to calm markets with its buyback program, acquiring about $4.1 billion in long-dated government bonds yesterday. Traders aren’t buying it.

M&A

Illustration: Shannon May, Photo: Lester Cohen/Getty Images

You know that couple that breaks up, swears it’s over, and somehow ends up back together the very next day? Meet MGM Resorts and People Inc.

Yesterday, Barry Diller’s People withdrew its proposal to buy MGM Resorts and take the casino operator private. “We didn’t feel the mix was coming together in the way we had hoped and have decided not to pursue taking the company private at this time,” Diller said in a press release. The deal also would have required People to take on a sizable amount of new debt.

But MGM wasn’t ready to move on. Not even a day later, the casino giant is considering a potential bid to buy People instead, according to the Wall Street Journal.

No price or formal offer has been announced yet, so this reconciliation could still fizzle out. Still, it pays to be in demand: People shares rose 11.33% this afternoon, while MGM slid 3.31%.

A strange match

It’s an odd turn of events, but one that actually makes sense if you dive in.

MGM is worth roughly three times People’s market value, and had about $2.55 billion in cash as of June, giving it a much easier path to financing a deal. More importantly, People is already MGM’s largest shareholder, with a roughly 27% stake. Buying People would therefore let MGM effectively bring a massive block of its own stock back under its roof, while also acquiring the rest of People’s media business.

Diller started buying MGM in 2020 because he thought it was undervalued, and later called the pairing of digital media with MGM’s physical assets “a perfect hedge in a world that is changing so unpredictively fast.” Publishing can be disrupted by AI and changes to online search, but who wants to play blackjack with ChatGPT when you can lose money on a fluorescent Vegas casino floor?

Wall Street weighs in

Analysts struck a cautious tone today as Wall Street reassessed MGM without a takeover premium:

• Mizuho: kept its Outperform rating but cut its target from $60 to $55. Analysts called the withdrawal “not terribly surprising,” saying People’s $48.30 offer didn’t appear high enough for MGM’s board.
• BofA: resumed coverage at Neutral with a $40 target, pointing to near-term pressure across Las Vegas, Macau, and digital operations.
• Susquehanna: kept its Positive rating but cut its target from $55 to $46.

For now, things are still complicated between the toxic pair. Then again, sometimes the messiest courtships make for fairytale endings.—SY

      

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Stocks

🟢 What’s up

• Microsoft gained 3.66% after rolling out new capabilities for its Copilot AI assistant.
• Akamai surged 3.2% on a $11.6 billion deal to provide computing power to Anthropic.
• Atlas Energy jumped 13.47% after striking agreements with an unnamed AI company to support data center development.
• Humana climbed 4.63% on a Barclays upgrade that pointed to the potential for improved Medicare Advantage ratings.
• Genius Sports rallied 11.03% following a JPMorgan Overweight rating that highlighted strong growth and improving profitability.

🔴 What’s down

• Meta fell 3.33% as investors took profits following a rally fueled by the popularity of its Muse AI assistant.
• Comcast fell 0.99% on a KeyBanc downgrade that cited subscriber losses and slowing growth at its theme parks.
• Zscaler slipped 10.06% after announcing a leadership change in its sales organization.
• Twilio dropped 7.96% following an HSBC downgrade that argued the stock looks expensive after its recent rally.
• Scholastic sank 7.12% after reporting a fiscal first-quarter loss.
• Nike dropped 0.67% on a Bank of America downgrade that cited weak innovation, declining North American wholesale sales, and softer demand in China.

Stocks of the day

Cats claw back the crown

Illustration: Shannon May, Photo: Adobe Stock

If a dog is man’s best friend, the cat is looking like his pampered daughter. Recent check-ins from major pet suppliers indicate a growing trend: Cat people are outspending dog lovers when it comes to treating their fur family.

“Cat seems to be strengthening,” said Chewy CEO Sumit Singh on the company’s earnings call earlier this month. Cat owners were responsible for “nice gains across consumables, supplements, bedding and furniture” at Petco last quarter, said CEO Joel D. Anderson. And popular food brand Tiki Cat “continues to be a growth engine” at General Mills, added chairman and CEO Jeff Harmening on Wednesday. As for dogs? Sales were soft at all three companies.

“I feel really good about the progress we’re making with cat,” Petco’s Anderson said, ignoring howls of disapproval in the distance.

Meow-onomics

A few factors could be at hand (besides the obvious conclusion of feline superiority). For one, cat adoptions are climbing quickly, while dogs aren’t finding their forever homes at quite the same pace: According to data from the ASPCA, cat adoptions topped 63% in 2025, while dog adoptions trotted behind at 57%.

There’s also a volume factor at play: Cat owners are significantly more likely to have multiple pets than their dog-parent peers; thanks to what’s known as “single kitten syndrome,” those seeking young cats are usually encouraged to adopt in pairs.

But cats can’t hold up an entire business—not with their tiny paws. Chewy shares have dropped about 21% since reporting earnings, while since their earnings calls, Petco has sunk roughly 8% and General Mills has lost 5%. The takeaway? To deliver to investors, embrace the whole animal kingdom.

“It’s so important to be diversified,” Anderson said on Petco’s investor call. “We’ve got a lot of diversification to not rely solely on dog.”—GR

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Earnings

Morning Brew Design

When money feels tight, nothing soothes quite like $0.83 toilet paper chased with a $1.49 foot-long churro.

It’s no wonder that Costco’s fourth quarter topped Wall Street estimates, with sales surging 11% year-over-year to $95.7 billion, and profits climbing 15% to $6.75 per share.

Costco CFO Gary Millerchip said members are showing “resilience” in spending not just on necessities, but discretionary goodies that feel like a deal. Kirkland’s new matcha powder is flowing. Jewelry is flying off shelves, too—who can resist a diamond engagement ring for $850?

Comparable-store sales soared 9%, but the real runaway hit was digital sales—up 19.5% as more shoppers skipped those cavernous aisles and let delivery do the heavy lifting. And rather than build out its own extensive delivery infrastructure, Costco simply outsourced that hassle to DoorDash. Meanwhile, members who did trek to the warehouse filled up on gas at record levels, as rising prices tied to the Iran conflict made a Costco pilgrimage to the pump pay off like never before.

The big-box warehouse even doubled down on its budget-friendly image by pouring some of its $184 million tariff refund into price cuts on staples from produce to beverages and beyond. The company opened 28 new warehouses this past year and plans to open 33 more in 2027, part of grand plans to add roughly 30 new stores annually for the foreseeable future.

Investors clearly liked what they saw, adding Costco to their own cart and sending shares up 2.93% today.

How Costco’s winning over inflation

At a time when consumers are panicked over rising prices on everything from gas to a gallon of milk, Costco’s appeal makes total sense. The University of Michigan’s latest consumer confidence index fell to a four-month low of 48.1 in September as Americans’ expectations for their personal finances weakened by about 10%.

“The short-run outlook for business conditions plunged amid renewed worries that elevated fuel prices and re-escalating trade disputes could pass through to the economy as a whole,” survey director Joanne Hsu said in the release. Americans aren’t expecting relief anytime soon, either: Their outlook for inflation over the next year jumped from 4% in August to 4.6% in September, the highest level since June.

But no matter how hard inflation hits our wallets, the purse strings remain loose for one thing: the sweet release of a $1.50 hot dog.—JD

      

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News

• Elon Musk says the Colossus data center complex will need over 1.2 million Nvidia chips.
• Speaking of Musk, Tesla is finally launching its semi trucks.
• The Federal Reserve is reportedly planning to roll out stricter banking regulations by the end of the year.
• Remember when eggs were $1.71? These charts provide a history lesson on inflation over the last five years.
• Kalshi’s not perfect, but it’s quickly becoming a smart way for small businesses to hedge their risks.
• Premium credit cards with juicy rewards also come with hefty annual fees, which is why almost-premium cards are having a big moment.
• Mortgage rates have climbed to 7.5%—here’s why some economists think they could keep rising all the way to 9%.

Calendar

Monday: Earnings remain scarce during the gap between earnings seasons, but we’ll start the week with reports from Jefferies Financial Group and Vail Resorts.

Tuesday: Carnival Corp., CarMax, and Uranium Energy keep the earnings trickling in. And a week of labor market data begins with the JOLTS reading, though we’ve also got the US September Conference Board consumer confidence index to watch.

Wednesday: We’ve got a double whammy of big data drops, featuring the ADP report on the labor market, as well as the PCE reading for August. Micron Technology is the big name worth watching, while we get a showdown between major food suppliers with Conagra and Cal-Maine.

Thursday: If history is any guide, earnings from Nike will likely be a real bummer, though we’ll also hear from Accenture and McCormick & Co. Then weekly initial jobless claims will keep the labor market data rolling in.

Friday: No earnings to speak of, but that’s okay—all eyes will be on the September jobs report anyway.

recs

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⚖️ Want to profit from AI, but still protect yourself from a market downturn? Here’s how you can strike that balance.

🎲 From sports to Pokémon, here’s how trading cards have evolved from a timeless hobby into a problematic substitute for gambling.

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