Amazon Effect vs. Trump Effect: Where Companies’ Concerns Lie

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Study Shows that Businesses More Focused on Amazon Effect than Trump Effect

In a recent survey, Amazon.com, Inc. (NASDAQ:AMZN) was cited more than President Donald Trump as a source of anxiety for businesses. The study, carried out by financial research platform Sentieo Inc. for MarketWatch, shows that the “Amazon effect” is more of a concern to businesses than the “Trump effect.”

While companies are aware of—and concerned about—the political turmoil gripping the United States, they are more concerned about the economic disruption and innovation that e-commerce giant Amazon is sowing across numerous industries.

According to Michael Purves, the chief global strategist and head of equity derivatives strategy for Weeden & Co. L.P.,Trump represents “essentially, for the market, political risk. Amazon is not political risk — it’s a long-term structural trend, the powerful disintermediation of centuries-old business models, and that’s something a CEO really has to get their arms around and figure out how to navigate.”

Purves continued, “The Amazon issue, we’ll be talking about that in three years, five years. The Trump stuff — who knows?”

The Weeden study illustrates where companies view their biggest challenges, in relation to their bottom lines. While President Trump and his administration do wield immense power, their inability to pass healthcare reform—as well as their struggles with immigration issues and other legislative hurdles—has perhaps downplayed just how much of an impact the White House will have on businesses.

Furthermore, the recent battle in Congress over the Trump tax plan is likely to have a major affect on businesses, but, once more, there is still uncertainty as to whether Trump will be able to push this legislation through. The president’s party only holds a slim majority in the Senate; if three Republican senators defect on the tax issue, that would be enough to kill the bill.

While there has yet to be any Republican senator who has promised to not vote for the Trump tax bill, the president has made several enemies in the legislative branch, who may seize this opportunity to derail one his campaign promises.

If the Trump tax plan does not pass, that would mark a year without a significant legislative victory for the White House.

At the same time, the Amazon effect continues to grow and expand, with the creation of brick-and-mortar locations and the investment in everything from grocery stores to drones—both of which have eaten up more of the market share of traditional retailers.

All of this has led to the CEO of Amazon, Jeff Bezos, recently being named as the richest person in the world.

 

Source

Companies are more worried about Amazon than Trump,” MarketWatch, November 9, 2017.

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