I’ve only seen it two times – once when George W. Bush spoke after 9/11 and Barack Obama’s speech in the wake of the financial recovery in 2010.

It has a weird, imperial feeling to me. Is it not odd that Congress treats this event like the arrival of Caesar returning from a military campaign? Is it not weird that Congress – as one-third of the co-equal branches of government – treats this event like the welcoming of a king? 

I didn’t watch the event last night. And I’ve already heard 15 different interpretations of the exact same lines from the speech. After reading it and the headlines, I think there’s one thing that will never get solved for a reason that will surprise you… 

I want to talk about the antitrust portion of the speech last night.

The Antitrust Brigade Arrives

It’s been some time since the debate around antitrust laws arrived. 

But here we are, still talking about the market power of companies like Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), and other tech giants. 

Biden seemed to go further. For the last year, his administration has discussed the increasing amount of market power in various industries – food, energy, and more. (Remember all the chatter about chicken-producer consolidation?) 

The Biden administration has talked about price gouging constantly. That was a very serious charge against the energy sector last year during the acceleration of the War in Ukraine. 

That said, companies do respond to incentives. In the case of energy markets, executives have been sidelined by a heap of Yale lawyers who believe they understand the global energy markets better than petroleum engineers who have been at Exxon or Chevron for 35 years.

Meanwhile, remember that highly consolidated businesses that operate as either a monopoly or part of a duopoly have been places where Warren Buffett has invested for years. 

There’s a reason why Buffett owns Mastercard (MA), Visa (V), and American Express (AXP). Those three names represent more than 90% of the entire credit card industry. 

He owns DaVita Healthcare (DVA) as well, as the company stands alone in the kidney dialysis business. 

It’s hard to see what the plan would be at a wide government level to break up these companies. They’re worried about competition, but they don’t realize that the actual challenge in creating competition starts entirely in the capital markets. 

There is a place they could start that would level the playing field.

Follow the Money

“Look, capitalism without competition is not capitalism, it’s extortion,” Biden said in the speech last night.

Well, capitalism without competition is really corporatism. And a system with a government that meddles in everything and tells corporations what to do is not capitalism. That’s called dirigisme (it’s the opposite of a free and fair market). 

I don’t disagree that antitrust should be revisited, but I think there are a few places – particularly as small businesses struggle with rent and paying people – that the government needs to eye.

They can start with Amazon. But not where you think.

I don’t think that “unionization” or breaking away Amazon Web Services from the rest of the company solves any real problem.  

As I’ve written in the past, Amazon’s real exploitation isn’t of its workers in warehouses. It’s the financial exploitation of the people selling products on the platform (especially small businesses in the United States).

For example, imagine I’m Amazon, and you’re a company that sells yoga mats. Amazon controls the sales platform. But Amazon also has a stranglehold on the money you generate and competes against its own sellers by creating private brand yoga mats (among many other items). 

So, if I sell a yoga mat on the same day that you sell a yoga mat on the Amazon platform, I take in all of the money. 

This capital finances my manufacturing – and Amazon doesn’t pay its vendors for 45 days or more. That’s right. You don’t get paid for the product sold for more than six weeks.

Do you see the problem here? That’s three payment cycles for employees. That’s more than a month (and the landlord won’t take “I’m waiting for Amazon to pay me” as an excuse).

So, Amazon treats its sellers like a bank – with interest-free 45-day capital that sits on its accounts payable portion of the balance sheet. 

It’s absolutely insane. 

One would think that someone would look into this. But no one really does except for a handful of invoice-financing companies or entrepreneurs at Harvard who understand the practice. 

Amazon’s accounts payable portion of its balance sheet has increased from $47.18 billion in 2019 to $76.9 billion. That’s just one company with so much of its vendors’ money locked up in the system. 

And companies like Amazon that operate these sales platforms have increased both their accounts payable and, during downtimes, extended the payment terms from 30 days to 60 days – and in one case of the retailer TJ Maxx, upwards of 150 days during the COVID recession. 

So, if companies aren’t getting paid on time by Amazon for the things they sell on the platform – on top of massive storage costs, fees, and more – how are they able to keep the lights on or have enough capital to do another production run?

Meanwhile, Amazon has expanded its own product line that competes directly against its platform sellers. There was a time that Duracell batteries were the top selling battery on Amazon. Today, it’s Amazon’s private label batteries. 

And there are countless examples of this. 

But how bad is it that these large retailers are doing this? 

Last year, I sat down with Lara Hodgson, Founder and CEO of NOW Corp, a financial services company that provides invoice-based capital to small businesses. She is also an Entrepreneur in Residence at Harvard Business School.

I asked her a simple question: What would happen if Congress forced every major corporation to pay their vendors within 15 days (which should be possible given the advancements in payment technology). 

It turns out these companies are so reliant on that short-term cash – the stock market could collapse. 

That’s the real leverage in the economy. 

And Biden should be telling the FTC to scale this reliance back before we have another liquidity problem in the future. This is a small-business killer, and few people are even paying attention.

To your wealth,


Garrett Baldwin

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

Market Momentum is Green

We’ve seen some downward pressure today in this market for the first time in days. I have a small bet against the Russell 2000 (IWM) right now, but I still need to see a lot more capital exit. Energy is down, the dollar is rising, and utilities continue to break down. I feel like we’re getting close to a sizeable selloff that sees gains ripped off the table by hedge funds.