Here are Jim Cramer's top thoughts on some of the biggest stories of the week.
Jim Cramer: The Consumer Loves the 'Death Star,' Better Known as Amazon
Consider that many insiders think the motivation for either Comcast's (CMCSA) or Disney's (DIS) interest in Fox (FOXA) is that Amazon could have more scale than the suitors have unless they bulk up and make acquisitions. I can't say they're wrong; Amazon has enough money to make anything happen.
Consider that Google (GOOGL) , Microsoft (MSFT) and IBM (IBM) are all desperately trying to take customers from Amazon Web Services because it is the acknowledged leader in the business and can take on all comers. (Comcast and Google are part of TheStreet's Action Alerts PLUS portfolio.)
Consider that some retailers have been decimated by Amazon and all retail stocks have been sold down because of the power Amazon has to destroy any bricks-and-mortar store it trains its guns on.
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As the legendary cable operator John Malone told David Faber Thursday: Amazon is a "death star" moving in "striking range of every industry on the planet."
What makes Amazon so powerful? Is it the unlimited capital it seems to play with? Is it the vision of Jeff Bezos, its founder? Is it that it's not hobbled with bricks-and-mortar stores and all of their accoutrements, including expensive mall rents and massive labor costs?
I think it's all of those, but what's really at stake here is that the consumer loves Amazon. The consumer pays for Prime and Prime allows for the most convenient, quickest, best way to get pretty much anything.
Consider the incredible price-to-earnings multiple shrinkage, or what we will pay for the drugstores because Amazon has periodically expressed interest in being in that business. CVS (CVS) and Walgreens (WBA) , two good operators, have seen their stocks shredded because of these rumors.
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I say it makes sense. The front of the store is already covered by Amazon. I have a drugstore literally about 400 yards away and I would never get anything from the front of the store anymore, especially bulky things like toilet paper and paper towels. I order online. If I had the ability to get my prescription drugs sent same day to me after my doctor emails the Amazon pharmacy, I would transfer in a heartbeat.
Have we gotten to the point where we live in too much fear of Amazon? I don't think so, even as Friday's retail rally is as much of a momentary relief from Amazon's tyranny as it is a huge short-covering story.
I, for one, just want to remind you, though, that as long as Amazon continues to provide better goods at a better service, everyone's right to be afraid. Be very afraid.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long CMCSA and GOOGL.
Originally published Nov. 17 at 11:26 a.m. EST.
Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
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- How a lot of people should not be in the stock market