Click here for the PDF: The Weekly Beacon March 1 2024 US

We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.

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This weeks issue: FTC blocks trade, Biden administration blocks mergers, Kroger acquisition, Kroger financials, Albertsons acquisition, Artificial intelligence, AI in fast food, Nvidia’s growth, S&P 500 concentration, Meta platforms stock, P/E ratios, BTC price, BTC melt-up, Elon Musk vs. Apple, Apple car pursuit, Apple valuation, Electric vehicle market, Self driving cars, NFL versus the rest, Mark Cuban, NFL growth, NBA struggles, Salary caps in sports, Government shutdown, Congress disagrees.


Deal blocker

Last week, we mentioned the deal that will see Capital One purchase Discovery Financial to create the sixth-largest financial institution in the U.S. (in terms of assets). We mentioned the regulatory hurdles that the deal would have to go through to be completed. We also mentioned that the Biden administration has been very critical of deals such as these, especially in the financial services sector.

Not even a week later the administration is fighting another merger, albeit in another sector.

The Federal Trade Commission and nine Attorney General’s announced they were suing to block a proposed $25 billion merger between Kroger and Albertsons. The FTC cited concerns about reduced competition in the grocery industry and potentially higher prices for consumers. The FTC also cited lower wages for workers as a reason for their move. However, the two companies have said costs would be lower due to synergies and would result in lower consumer costs.

The potential deal would create one of the largest grocers in the country. The combined organization would have about 5,000 stores across the U.S. and $228 billion in annual sales. Kroger owns and operates approximately 2,700 stores, across two dozen supermarket banners, including its namesake stores, Fred Meyer and Ralphs and Albertsons operates 2,300 supermarkets across numerous grocery chains, including Safeway, Acme and Tom Thumb. The combined Kroger-Albertsons would become a much larger company with 5,000 stores.

Kroger’s acquisition of Albertsons has been in a holding period since October 2022, when the deal was announced. Since then, regulators, along with numerous advocacy groups including union organizations have stalled the deal’s completion. Kroger and Albertsons have already tried to help address FTC concerns announcing that they would be selling hundreds of stores in Washington, Colorado, and other states to C&S Wholesale Grocers. However, the FTC says that the move will not solve the problem.

Click here for the PDF: The Weekly Beacon March 1 2024 US