I was speaking to someone early this morning. Their exact words were “no big headlines on my phone this morning…that’s unusual”. Of course, they were referring more too political headlines, but the point was taken. Then the Amazon/Whole Foods deal hit the tape.
By in large it was a surprise to see and exciting.

Amazon made by far largest acquisition ever, spending over 13 billion dollars on this deal, making a bold move into the grocery space with a bet they’re technology and supply chain is better. Their ability to implement and leverage efficiencies is really what this is about, and means even more on a larger scale.

Investors, at some point in recent years, have doubted Amazon, Facebook, Google and Apple. Their ability to innovate and execute have erased that doubt and put them in control of their market segments and allowed them to capture adjacent markets as well. They have north of $350Bn in cash and cash equivalents. With free cash flow expected to be near $100bn, that cash number stands to grow. This dynamic should support the innovation and market-changing dynamics further.

On a broader level, these companies are adapting to and facilitating changes in consumer behavior and shaping the landscape of the economy. And it isn’t just them. Other companies are doing similar things in their market segments, just not the same notoriety.
The best quote I heard today was from Jim Cramer – “Amazon figured out retail faster than retail figured out technology”. Sums it up well. So while this is about Amazon, it’s as much about where we are in the economy and what is coming down the road. We’ve watched retail and consumer buying habits be disrupted in recent years. Technology is certainly creating change in the financial space.

While the economy has grown below trend in recent years, there are visible signs of innovation changing economic and market dynamics. For the investment world, understanding how the economy is being impacted on the macro and sector level will be very relevant in asset allocation.
For those positioned to adapt, there is a lot to be excited about.

Today’s news was a reminder of that.


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