Are Kroger and Albertson’s about to become one?

We are so close to that answer as an antitrust trial wraps up today, and a decision on whether the supermarket giants are allowed to merge is expected to come down in the following weeks. If the Federal Trade Commission ultimately blocks the $25B merger, it could be a major victory for the little guys — you know, Amazon, Costco and the like.

The antitrust trial has focused on what is considered a supermarket, and the FTC is pushing to define them as places for one-stop shopping for a vast array of groceries. 

That is a lot more narrow than it seems at first scan, the Wall Street Journal reports. Retailers like Sam’s Club don’t count because they require membership and have a more limited selection. Discount grocers don’t count, nor do “premium natural and organic” stores. Only brick-and-mortar businesses are included.

A whole suite of Amazon grocery offerings thus are not considered supermarkets — Whole Foods is premium/organic, Amazon Fresh isn’t big enough yet and much of Amazon’s food items are sold online.

So basically, the same companies that Kroger and Albertson’s said it needs to fend off with a merger are the ones the FTC is saying aren’t really competitors and won’t be limited by any potential new guidance. 

So while Albertson’s has said it will likely need to close stores if it can’t team up with Kroger, Amazon and Aldi, freed up from monopoly concerns, could start expanding aggressively.

— Catie Dixon, Mark F. Bonner, Kayla Carmicheal and Jay Rickey

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On Our Radar

• August retail sales exceeded Wall Street estimates. Despite inflation, cash-strapped shoppers in August continued to shell out — albeit conservatively — according to Census Bureau data. Retail sales rose 0.1%, beating expectations of a 0.3% decline but slowing from July's revised 1.1% gain. Year-over-year, sales grew 2.1%. Core retail sales, excluding autos, matched the modest 0.1% increase. Nonstore retail sales jumped 7.8% YOY. Consumers spent less on electronics, clothes, furniture and gas, but more on personal care, sporting goods and building materials.

• What is the reaction to the latest U.S. retail sales data? Here’s Robert Frick, economist for Navy Federal Credit Union: the “data probably slams the door on a half-point cut in the federal funds rate, virtually locking in a quarter-point cut.” The S&P 500 rose 0.3% on the positive economic news, now just 0.6% shy of a record high. The Nasdaq added 0.7%, while the Dow gained 44 points, or 0.1%, setting a new all-time high for the 30-stock index.

• Data center boom welcomes back an old friend: fossil fuels. U.S. energy companies are rapidly expanding gas-fired power generation to meet growing demand from AI data centers, manufacturing and EVs. Despite expectations that solar and wind would suffice, gas may account for up to 60% of new power generation. Over 200 gas units, potentially providing 100 GW of power, are set to come online by 2032. While advocates argue gas helps reduce emissions by replacing coal, critics warn these plants could lock in long-term greenhouse gas emissions, challenging Biden's 2035 zero-emission goal.

• The C5 + CCIM Global Summit kicks off today in Hollywood, Florida. Today's opening keynote speaker is growth strategist and author Tiffani Bova. Pro football Hall of Famer Dan Marino will deliver the closing address on Thursday.

• One day until interest rate D-Day. CME’s FedWatch tool today shows a 35% chance of a 25-basis-point drop and a 65% chance of a 50-bps drop based on interest rate trader activity. It seems the markets don’t agree with NFCU’s economist. 

• Are you going to bark at the supermoon tonight? Otherwise known as a Harvest Moon, tonight’s rare celestial event will also feature a partial lunar eclipse. The best time to see it will depend on your location, but the peak viewing time is 10:44 p.m. ET. All of North America and Europe will have an opportunity to glimpse what is surely a great cosmic omen just hours before the Fed meets.

Today’s Deep Dive: Interest Rate Drop Helping UK Investment Market Turn The Corner. Will It Do The Same Across The Pond?

A private equity firm dropping more than half a billion pounds on a portfolio amid fierce competition. Hedge funds buying Mayfair offices. A flurry of M&A deals in the listed sector. 

Several large deals have kicked off in the six weeks since the Bank of England dropped interest rates on Aug. 1, lowering the cost of borrowing.

As the U.S. waits with bated breath to see if the Federal Reserve will deliver a rate cut for the first time in two years on Wednesday, a postcard from across the Atlantic gives insight into what the market might have in store.

The message: While a drop in interest rates isn’t a cure-all, it does start getting things moving in a stagnant market. 

“It is still quiet, but we’re turning the corner,” Avison Young European Capital Markets principal Penny Hacking said. “We’re starting to see some of those larger deals coming through. In most sectors in the UK, we’re at or near the bottom.”

The Bank of England is predicted to hold its rates steady at its next meeting despite a previous cut. Markets are closely watching the divergent strategies of the U.S. and UK as central banks balance inflation risks with economic stability.

Read the full story here.

This Morning's News

MULTIFAMILY — Waterton Raises $1.7B Fund (CoStar): Waterton said it will invest in 30 to 40 distressed and value-add multifamily properties in urban and suburban markets across the U.S. See what the fund has already gone towards.

DATA CENTERS — White House Launches AI Data Center Task Force (Bisnow): The federal government has established a task force on artificial intelligence data center infrastructure, designed to accelerate construction of those facilities including by facilitating permitting and access to power. Execs from OpenAI and Microsoft are among its members.

INSURANCE — Property Insurance Rates Finally Decline (Bloomberg): Property insurance rates in the U.S. fell for the first time since 2017. Moderation is expected to continue in Q3. Compare the new data to that of previous years.

RETAIL — Red Lobster Exits Bankruptcy (Seeking Alpha): Red Lobster has emerged from bankruptcy as a privately held company with 545 restaurants in 44 U.S. states. Read about Red Lobster's plan to reel in customers in its new era.

OFFICE — Amazon To Require 5 Days In The Office (Bisnow): Amazon office workers will be expected to work in-person every day starting Jan. 2. Employees were previously mandated to come in three days a week. Learn why Amazon changed its in-office policy.

HOTELS — CapitaLand Eyes Stake In Club Med (BNN Bloomberg): CapitaLand is reportedly in talks to acquire a 20% to 30% stake in Fosun's Club Med, a luxury resort company, for $557M. Learn what's in it for Club Med.

TECHNOLOGY — Intel Gets Billions For Chip Production (Reuters): Intel has secured up to $3B from the CHIPS and Science Act to boost chip production for national security purposes. Shares jumped 5.7% after the announcement.

REITs — Starwood Posts NAV Decline (The D Wire): Starwood REIT reported a 1% drop in its month-over-month net asset value. The REIT met 4% of stockholder repurchase requests from August. Get more details about Starwood's performance.

EVs — BP, Laz Partner For High-Speed EV Charging Stations (Seeking Alpha): BP Pulse, BP's EV charging business, is partnering with LAZ Parking, operator of nearly 4,000 garages and parking lots in the U.S., to develop and operate public charging hubs in 20 U.S. cities. Here's what you need to know about the partnership.

CAPITAL MARKETS — Will The Fed Act Differently This Time? (WSJ): The Federal Reserve generally prefers rate adjustments in small, quarter-point increments, but the complexity of the current economic environment may call for a larger-than-usual approach. Get background about the state of the economy ahead of Thursday.

CAPITAL MARKETS — Democratic Senators Push 75-Bps Rate Cut (Bloomberg): A group of Democratic senators wrote a letter to Fed Chair Jerome Powell urging the Fed to implement a 75-basis-point cut tomorrow. Dive into what the senators are saying.

PEOPLE — Blackstone’s Bill Stein Retires (Bloomberg): After nearly 30 years, Blackstone Real Estate Senior Managing Director Bill Stein is retiring. Stein was involved in Blackstone deals including Hilton Worldwide and Invitation Homes, and sat on the boards for companies like Great Wolf Lodge and Extended Stay America. Discover more about his history at the company.

RETAIL — Site Centers Announces CFO, Board Changes (Site): Site Centers has unveiled leadership and board changes as the deal to spin off its "convenience" properties into Curbline Properties nears its end-of-month close. Curbline is expected to be capitalized with $600M of cash and no indebtedness when it launches Oct. 1. Here's who joined the team.

REITs — 9 U.S. REITs Increased Dividends In August (S&P Global): 59 U.S. REITs declared higher dividends in the first eight months of 2024. Dig into the numbers.

HEALTHCARE — C-Suite Shakeup At Healthcare Realty Trust (Healthcare Realty Trust): Rob Hull will become chief operating officer, Ryan Crowley will be promoted to executive vice president and chief investment officer, and Julie Wilson will become chief administrative officer. In addition, Austen Helfrich will become interim chief financial officer. The REIT also reaffirmed its guidance for Q3.

OFFICE — Irish Business Owners More Likely To Pay Premium For Office-Based Workers (Bisnow): More than half of Irish businesses surveyed by JLL said they were very likely to provide additional pay and benefits for employees who come into the office regularly. More than 60% of Irish companies expect to increase their use of office space and more than half plan to expand their footprint over the next five years. Get more stats about Irish workplace culture.

HEALTHCARE — Global Medical REIT Signs New Lease With Christus Health (Global Medical REIT): Global Medical REIT has secured Christus Health as a tenant for a former Steward hospital in Texas. Steward has formally requested that its lease at the facility be rejected by the bankruptcy court. Get more details about the lease.

CAPITAL MARKETS — Donald Trump Launches New Crypto Venture (NYT): Former President Donald Trump appeared on a livestream Monday night to formally unveil his new crypto company, World Liberty Financial. Here's what you need to know.

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com.