Christmas in August? Politics and markets are colliding!
Finally, Amazon completed their acquisition of Whole Foods. SFM which is Sprouts is down nearly 16% in 3 days. Kroger got hit as well. Today Amazon is supposedly running a big sale at Whole Foods in celebration. Two points to note here, first of all Whole Foods traditionally has some of the highest prices of any market in the area. Depending on what they drop and how much the drop is will determine whether we are going to see serious price wars in the supermarket business. Folks are concerned about a trade war with China. I am concerned Amazon will burn down the grocery business.
Amazon’s Will Bezos turn Whole Foods into an ordinary supermarket by bringing in brands they don’t have now and offer them at bargain basement prices? You might think this is a good thing. After all competition is a healthy component of capitalism. Not when one company is so powerful and can get control of so many areas of distribution like Amazon has. My concern is at least in this space it could fire off a deflationary spiral. Lower pricing is good for the consumer, but let’s say you work at Kroger. There comes a point where they must lay off or ask you to take a pay cut.
So many cheered for $15 dollar an hour minimum wage. Those of us who understand economics 101 knew it was a bad thing. Now instead of laying off workers here and there, the next generation in fast food will get rid of most, replacing them with robots.
I know we are exploring the dark side here. But I see storm clouds building and like Dalios and Lord Rothschild I don’t like what I see. So, enjoy Christmas in August while it lasts.