Wondering about Amazon's World Retail Domination strategy? Buying Whole Foods good for consumers? What is the significance of zero or negative rates for ALL OF US EVERY DAY?
I've been dealing with this for over 10 years now and have rarely found a guy who has the ability to break complex things down as clearly as Max Keiser:
Yeah well typically when a company acquires another company you would have some earnings dilution because of the cost of acquiring a company like whole foods, is a USD13bn company. In this case Amazon's stock price went up and the analysts on Wall Street are talking about earnings accretive, meaning that earnings instantaneously are improved because the cost of acquiring this 13bn dollar food retailer is zero.
In terms of its cost of funds / cost of capital, they have the money on their balance sheet but they could just as easily borrow 13bn dollars from Wall Street at virtually no cost what so ever.
This is part of what I call 'the interest apartheid wall' where if you're Bezos you can borrow money at zero or negative to make an acquisition like whole foods and immediately accrue earnings bumps but if you're an employee at Whole Foods, if you're a cashier, and you go to a payday lender because you don't have any savings and you're in a medical emergency you're gonna pay 3000% on that money that you need.
So thats 3000% for the cashier in an emergency and 0% for bezos THAT is the 'Apartheid Interest Rate Wall.
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