12 BARRON’S April 6, 2020
REVIEW
21,052.
Dow Industrials:-584.Dow Global Index:-9.0.59%
10-year treasury note:-0.MARIJUANA SALES BOOM
The Oil Factor
Stocks rallied on Monday as oil fell to
an 18-year low. The quarter ended on
Tuesday with the Dow off 23%, and
stocks sold off on Wednesday. Jobless
claims hit 6.6 million on Thursday,
twice the week-earlier record high, but
stocks firmed on presidential talk of an
oil output deal, then fell on a grim Fri-
day jobs report. On the week, the Dow
lost 2.7% to 21,052.53; the S&P 500
shed 2.1% to 2488.65; and the Nasdaq
Composite fell 1.7% to 7373.08.
Pandemic Math
New York remained the epicenter of theCovid-19 crisis, with cases and deaths
mounting as it neared its apex. Mean-
while, new clusters erupted across the
U.S.—Louisiana, Florida, Georgia,
Michigan, Texas—as more states moved
to shelter-at-home policies and gover-
nors pleaded for medical equipment
from the federal government, which, as
stockpiles fell, competed with states for
personal protective equipment and
ventilators. The U.S. has the most
Covid-19 cases globally, but Europe, led
by Italy, has two-thirds of the deaths.
Global cases passed a million.
Mitigating Circumstances
President Trump abandoned his no-
tion of opening the U.S. by Easter, in-
stead urging nationwide social distanc-
ing until the end of April, saying there
would be 100,000 to 240,000 deaths
with “full mitigation.” CVS Health ,
Humana , and Cigna said they would
drop cost-sharing charges on infected
patients. Medical-device maker
Medtronic made its ventilator specs
available, Abbott Laboratories raced
to distribute a fast Covid-19 test, and
Johnson & Johnson said its vaccine
might be ready in early 2021. Congress
and the administration talked about a
fourth stimulus package. Meanwhile,
retailers such as Macy’s , Gap , and
Kohl’s furloughed thousands of work-
ers. Macy’s was replaced in the S&P
500 by Carrier Global , spun off from
merging United Technologies.
The Shale Game
With oil prices falling, two shale pro-
ducers, Pioneer Natural Resources
and Parsley Energy asked Texas oil
U.S.PotIsHot
InaPandemic
As Covid-19 hit the U.S., sales of medical marijuana
jumped at Florida-based Trulieve Cannabis , surging
50% in February’s third week over those in the corre-
sponding week in January, then another 50% in March.
“We are very accustomed to hurricanes,” says CEO Kim
Rivers. “There was a rush of activity prior to any potential
stay-in-place order.”
The pandemic highlights an overlooked reality: U.S.
pot is hot. “Contrary to popular belief,” wrote Stifel/GMP
analyst Rob Fagan, 2019 was a great year for U.S. sales.
Legal sales in Canada have plateaued at $1.3 billion a year,
says Green Thumb Industries CEO Ben Kovler, while
U.S. sales are running at $13 billion in 33 states.
With low share prices and ample cash flows, top U.S.
players are bargains. Leading the pack: Curaleaf Hold-
ings , with 54 dispensaries in 17 states and annualized
sales of $325 million in the December quarter, 134% above
the year-earlier total. Excluding noncash and one-time
charges, its annualized cash flow ran at $55 million. It had
$42 million in cash at year end, and secured a $300 mil-
lion term loan. At C$5.55 ($3.94), it’s worth $1.9 billion.
Green Thumb has 41 stores in eight states, and its De-
cember-quarter sales more than tripled, year over year, to
an annualized $300 million, while its cash flow hit a yearly
$57 million. At C$8.20 a share, it’s valued at $1.2 billion.
Trulieve has 47 stores, 45 in Florida. A FactSet survey
expects December-quarter sales more than doubled, year
over year, to $315 million annualized. Analysts estimate
annualized cash flow neared $130 million. At C$12.90 a
share, Trulieve is worth $1 billion.—Bill Alpert
$20 B
Estimated amount of retail
real estate loans due the
first week of April.
$6 T
Size of the Federal Reserve
balance sheet, up from $4.
trillion in late February.
$6.7 T
Nonfinancial U.S. corporate
debt, up 76% since mid-2009.
7%
Peak New York City traffic con-
gestion at 5 p.m. Thursday,
based on TomTom data, versus
75% average in 2019. Percentage
is how much longer a trip takes
than in free-flowing conditions.
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THE NUMBERSHE SAID“In the next several days
toaweekorso,we’re
going to continue to see
things go up. We cannot
be discouraged by that.
Because the mitigation
is actually working,
and will work.”
National Institute of Allergy and Infectious
Disease director Dr. Anthony Fauciregulators to consider production curbs.
Whiting Petroleum became the first
shale operator to declare bankruptcy.
And, the oil-exporting powers scheduled
a Monday virtual meeting to talk output.
Burr’s Stock Sale
The FBI contacted North Carolina Sen.
Richard Burr, who sold $1.7 million in
stocks ahead of the pandemic. Burr had
received briefings on the outbreak in two
Senate committees, and privately warned
a group of supporters, but claims he sold
only after reading publicly available infor-
mation. He has asked for an ethics review.
Easy on the Tailpipe
The Trump administration is completing
new rules reducing tailpipe emissions
over the next five years that would re-
quire car makers to increase fuel effi-
ciency by 1.5% a year, rather than the
Obama administration’s desired 5%.
Xerox Exits
Xerox pulled its $30 billion offer for HP
Inc. , blaming the Covid-19 crisis. Illustration by Elias Stein; Photograph by Win McNamee/Getty Images