- Marijuana legislation doesn’t “getterdun”…
- … in states expected to pass recreational pot
- Ray Blanco: Walmart embraces weed?
- Red-hot cannabis M&A
- Retail apocalypse redux
- Millennials beat boomers at their own game
- The sneaker set’s trade war epistle (with bonus pun)… Trump’s human shield… and China says: Come at me, bro!
Of the 10 states where recreational pot is legal, only tiny, quirky Vermont passed it through the legislature.
“All of the others were passed through ballot referendums,” says an article at Politico, “a much cleaner process because voters can only approve or reject the proposals as written.”
And now it’s almost time’s up on the legislative process for what was expected to be a watershed year for recreational marijuana legalization — particularly in New Jersey and New York.
But Illinois is one heavily populated state that just might squeak through recreational marijuana legislation before lawmakers adjourn in less than two weeks.
“We think we’re getting close,” says Illinois state Sen. Heather Steans. “We’ve been working on this two years. It’s been a collaborative process with many stakeholders at the table.”
Umm… as to that whole “stakeholders” thing? “Freshman Gov. J.B. Pritzker’s budget plan is counting on pot to generate an estimated $500 million for the cash-strapped state,” Politico says (emphasis added).
But Chicago’s outgoing mayor Rahm Emanuel warns: “Don’t go headfirst into this just because we’re thirsty and hungry for revenue.”
A cannabis schism within the Democratic party isn’t relegated to Illinois…
Disagreements centering around racial, economic and criminal justice issues, homegrown marijuana plants and the allocation of revenue from legalized marijuana have jettisoned legislative efforts this year in neighboring states New Jersey and New York.
In New Jersey, recreational marijuana’s three-bill legislation has failed to rally support among moderate Dems from South Jersey. A real bone of contention? A provision that would expunge “third-degree distribution convictions, which covers up to 5 pounds of marijuana.”
In the case of New York, certain Latino and African American state politicians haven’t thrown their support behind recreational marijuana because they believe bills don’t go far enough to reform the criminal justice system and guarantee minorities have equal opportunity to participate in a newly legalized cannabis marketplace.
“Even if this year didn’t live up to their hopes,” Politico says, “marijuana advocates point out that they are making progress.”
So is the failure to legalize recreational marijuana in high-population, high-tax states such as Illinois, New Jersey and New York fatal for the U.S. marijuana industry?
Short answer? Not by a long shot. Now we’re even seeing marijuana-related products coming to market at the largest retailer in the world…
“Investors should be paying attention to a totally different Walmart story,” says pot-stock pioneer Ray Blanco.
And by “different” Ray means other than the typical earnings report fare or — more disturbing — the comings and goings at website People of Walmart, featuring “Wally World” regulars like this supportive grandma…
Sure hope “Shitney” is a typo…
Source: People of Walmart
Early last week, the rumor mill churned with news that Walmart had been in secret meetings with cannabis companies to establish a supply chain for CBD-infused products.
By Thursday? Shares of the Dow Jones retail giant were up 3%… hmm. And that’s a lot of movement for “boring, old Walmart,” says Ray. (Oh, anything but boring… see above.)
“For its part,” he continues, “Walmart is keeping mum on… plans to introduce CBD or CBD-infused products to stores.
“But folks in the industry report that major retailers are keeping CBD in mind as they allocate shelf space for new products in 2019 and 2020.”
“As cannabis continues to make the push to the mainstream,” Ray says, “it’s creating major opportunities for the small pioneering companies that are building this industry.”
That includes red-hot M&A activity: In the last five years alone, there’s been a total of $17 trillion worth of transactions in this space. (Not quite equal to the national debt — $22 trillion and counting.)
“The M&A trend is significant right now,” Ray says, “but perhaps nowhere more significant than in the cannabis industry.
“Over the past year we’ve seen a number of M&A deals in the pot space.”
And you can see from the chart — that includes just the first 17 weeks of 2019 — the number of deals hammered out in 2019 outstrips all of 2018.
Ray continues: “This includes major deals struck between Constellation Brands (NYSE: STZ) and Canopy Growth Corp. (NYSE: CGC) as well as between Molson Coors (NYSE: TAP) and Hexo Corp. (NYSE: HEXO).”
And Ray zeros in on a particular type of buyout…
“Vertical acquisitions represent smart business by pot companies,” he says. “And they’re the ones you want to target as an investor.”
Cannabis companies are seeking companies that will “facilitate their own processes more efficiently.”
For example: “A large flower (pot) producer wants to buy an edible business. A major dispensary wants to buy a distribution or flower grower, as does a CBD-maker.”
You get the idea…
One thing to note: “Traditional fundamentals matter a lot more today than five years ago in pot,” says Ray. “And in five years they will matter even more.”
That’s why Ray’s on top of the best companies in the marijuana industry that have golden, moneymaking potential.
And for the moment, he’s got his eye on a tiny startup that’s flying under the radar…
But that could change as soon as June 1.
For access to Ray’s watchlist of companies best-positioned for pot’s M&A mania, look here.
“After a 5% fall in the S&P, losses have been nearly cut in half,” says Alan Knuckman — our eyes and ears at the CBOE.
“The broad market barometer is now just 3% from the all-time record top,” he says, “even when considering the ongoing tariff turmoil.” More on that below.
At the time of writing, the Dow’s down 70 points to 25,806.
The S&P 500’s also in the red, down just 7 points to 2,857. The tech-heavy Nasdaq’s shed 28 points to 7,758.
Taking a look at oil, it’s coming down pretty hard; it’s down about $2, to $61.16 for a barrel of WTI. U.S. inventories rose again last week — now 8.8% higher than this time a year ago.
As for gold, it’s added $1.20 to its price of $1,274.40 per ounce.
Last, bitcoin’s down $100 to $7,906.52.
“With Amazon continuing to dominate the industry,” says Agora analyst Greg Guenthner, “the ‘retail apocalypse’ theme that dragged the sector lower for most of 2017 is once again becoming a danger to traditional brick-and-mortar chains.”
Greg notes while traditional retailers tried to get in on “Cyber Monday” action last year, Amazon was still “ground zero” for the daylong shopping bacchanal.
“Cyber Monday sales surged last year,” he says. “Adobe Analytics said the 2018 online shopping festivities generated $7.8 billion in sales. That’s an 18% increase over the previous year’s numbers.”
For Amazon, that translated into its biggest shopping day ever — even beating its own “Prime Day” record.
Though several mall mainstays — like old-school Macy’s — offered “Cyber Week” deals to compete with Amazon… no dice.
“On the other hand,” Greg says, “Macy’s is doing a bit better this quarter. Sales are up a breathtaking 0.7% and the chain profited a full penny per share.” Dripping with sarcasm…
“But don’t get too excited for Macy’s,” he continues. “Shares are down almost 30% year to date.” Yikes.
Joining the ranks of Macy’s: “Kohls Corp. (NYSE: KSS) also failed to impress investors with its first-quarter earnings report,” says Greg, “sending shares into a tailspin yesterday.”
Many analysts touted the discount retailer as “Amazon-proof” just a couple months ago; on second thought… not so much. “Shares [tanked] 12% on Tuesday.”
And KSS is down 25% for the year…
This even after Kohls cozied up to Amazon last winter, hashing out a deal to accept returns from the e-commerce juggernaut. Not to mention stocking more Nike and Under Armour merchandise in an effort to stay relevant with the athleisure crowd.
“But neither of these efforts looks to be paying off,” Greg concludes. “As a result, management slashed its full-year outlook after the slow start to the year.”
Bottom line? Greg recommends investors “lighten… exposure to the [retail] sector before it can inflict any more damage… and concentrate on other opportunities heading into the summer trading months.”
“The millennial generation, consumers in their mid-20s and 30s, is overtaking the baby boomers as the largest generation of shoppers in history,” says best-selling author Robert Kiyosaki.
“By 2020, millennial spending will account for $1.4 trillion in U.S. retail sales, according to the consulting firm Accenture. That will be a quarter of the estimated $5.7 trillion total,” Robert says.
But for millennials — as opposed to their baby boomer counterparts — the mantra isn’t “he who dies with the most toys, wins”; rather, replace the word “toys” with experiences.
Aaaand that explains Instagram… heh.
Spending habits aside, Robert sees an even bigger problem 20- and 30-somethings will face down the road…
“The most significant financial challenge… is how [millennials] will be able to save and invest for retirement.”
(Well, sheesh, stop blowing all your money at gastropubs… in Denmark! *Says one testy Gen Xer.*)
“On the income front,” Robert says, “consider a Yale economist’s study of earnings from college grads, which showed ‘large, negative wage effects to graduating in a worse economy.’
“In some cases, they saw as much as $100,000 less in cumulative earnings over the next two decades versus those who graduated in more favorable times,” says Robert.
And that’s just the cash-saving piece of the retirement puzzle. Analysts “forecast 4.0–6.5% returns annually from the stock market across the coming years – down dramatically from the 7–10% annual gains common over the past 50 years or so.”
“At the end of the day,” Robert says, “as great as experiences are, they are still liabilities that take money out of your pocket.”
So far, we’ve mentioned retailers’ uphill battle this year — along with millennials shopping till they drop… out of ever retiring; now we pivot to a topic retailers and millennials know a little something about: sneakers.
“More than 170 shoe retailers, including Nike and Foot Locker, are asking President Donald Trump not to raise tariffs on footwear,” says CNBC.
In a letter to the president, the Footwear Distributors and Retailers of America says: “These tariffs would mean some working American families could pay a nearly 100% duty on their shoes.”
And in an exceptionally punny turn of phrase, the letter concludes: “Your proposal to add tariffs on all imports from China is asking the American consumer to foot the bill.” (*groan* emphasis added)
“It is time to bring this trade war to an end.”
Which brings to mind something The 5’s founder Addison Wiggin sent along…
Huh… if only there were an arrow through Joe Sixpack’s shoe.
Can you say cringeworthy? The People’s Republic of China is putting the U.S. trade war on blast with a propaganda blitzkrieg.
According to Economic Policy: “An editorial in the People’s Daily warned that depriving 1.4 billion Chinese of their right to economic development and prevent China from becoming a superpower would be like ‘a mantis trying to stop a car with its arms.’”
Something’s gotta be lost in translation…
That’s not all: “A song titled ‘Trade War’… has gone viral on one [of] the largest Chinese social media platforms, WeChat, generating more than 100,000 views…”
A sampling of the song’s lyrics? “Trade war! Trade War! Not afraid of the outrageous challenge! Not afraid of the outrageous challenge! A trade war is happening over the Pacific Ocean!”
And this: “If the perpetrator wants to fight, we will beat him out of his wits.”
Catchy. But can you dance to it?
The 5 Min. Forecast
P.S. 2,382 miles away from Wall Street…
Outside the public spotlight…
Shares of one tiny pot company could explode faster and higher than ever before.
And this may be your only chance to turn a small grubstake into a windfall…
But you must act immediately.
On the eve of the first 2020 presidential debate, The 5 takes on potential changes to the tax code. Read More
By and large, MAGA stocks plus Facebook have been taking a September breather before resuming their epic run-up. Here’s why… Read More
Since the Fed swooped into the corporate bond market six months ago, it’s purchased the debt of about 800 companies. So who are the real beneficiaries? Read More
Being first with a vaccine isn’t the key. It’s being first and being right. Whoever does that stands to make its investors immense fortunes. Read More
If “economic recovery” depends on the development of a vaccine for the coronavirus, the pace of recovery might be slower than expected. Read More
“The dollar has now started its final journey to ZERO,” says Egon von Greyerz of Matterhorn Asset Management. So with inflation knocking on the door: “Gold stands as the guardian.” Read More
Good thing Elon Musk doesn’t follow the dictum of never reading his own press… He reveals clues ahead of Tesla’s Battery Day event. Read More
We’re four days away from “Battery Day” — an event Tesla founder Elon Musk has successfully hyped… So what’s Musk got up his sleeve? Read More
The ugly reality for savers? Rock-bottom interest rates for at least the next three years. That’s where the Wall Street acronym TINA comes into play… Read More
On-again, off-again pandemic lockdown measures are just the beginning: The next phase of the elites’ power grab comes early next year. Read More