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MARKETS

  • U.S. markets: We get it, a three-day losing streak for the Dow isn’t the best look. But it’s important to remember that stocks head into this new month with an 11% gain so far this year.

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CANNABIS

Not Your Parents’ Homemaker

Martha Stewart will take on an advisory role at Canopy Growth, the world’s biggest cannabis company. We would make a pot joke, but when you’re talking about someone as incomparable as Martha, it’s better to be blunt.

Stewart and Canopy (+3.79%) will together develop a “broad new line” of hemp-derived CBD products for humans and animals. The cannabis firm’s conducting a handful of clinical trials exploring how cannabis compounds can be used to improve health across species.

The first order of business? “Sensible products for people’s beloved pets,” Stewart said.

  • You know how Shadow gets antsy during a loud storm? Canopy wants him to turn to a CBD-infused edible instead of a ThunderShirt.

The same could *possibly* go for humans. The U.S. farm bill passed in December legalized CBD under certain circumstances. Still, the FDA said any CBD products claiming therapeutic benefits need to be approved for those uses before hitting interstate markets.

But when they do hit markets...

Look out. Major cannabis players are scrambling to win market share in a global legal industry expected to reach $146.4 billion by the end of 2025. And this week, Cowen said the U.S. CBD market alone could reach $16 billion by 2025.

That’s good news for weed stocks, which have “quietly been having a very strong 2019,” writes Axios, “and could push even higher.”

  • The ETFMG Alternative Harvest ETF has climbed about 49% year-to-date.
  • The Horizons Marijuana Life Sciences ETF is up 52% in the same time.

Bottom line: Growth means nothing if the public still thinks your product is a bad word. Partnerships like this one offer cannabis companies much-needed legitimacy. And no household name knows how to take taboo and make it homey like Martha Stewart.

+ Related...kinda: If you’ve never seen Martha Stewart’s next-level tongue-in-cheek 2017 T-Mobile Super Bowl commercial with good friend Snoop Dogg, now’s the time.

ECONOMY

GDP’s Like Shrimp Cocktail Without Cocktail Sauce

Still good, but definitely could be better. U.S. gross domestic product grew at a 2.6% annual rate in the fourth quarter of last year. While that’s better than economists predicted, it’s not quite the 3.4% GDP growth we saw in Q3.

But all in all, not too shabby for a quarter synonymous with uncertainty. Stocks slipped into bear market territory, the government partially shut down, and Pete & Ariana split up.

Let’s keep things in perspective:

  • Comparing Q4 to the rest of 2018 doesn’t feel right—tax cuts and government spending increases juiced Q2 GDP growth above 4%, the fastest rate since 2014.
  • And even with this cooling (which wasn’t as severe as expected), 2018 on the whole was one of the best years for the economy since the Great Recession.

Looking ahead: Many economists expect growth to drop under the 2% threshold in Q1 (in part because of the tail end of that government shutdown).

+ Slept through the lesson on GDP in Econ 101? Here’s a look at why it’s important.

PHARMA

Starboard Value Has 'The Talk' With Bristol-Myers Squibb

But instead of the birds and the bees, it’s about the M's and the A's. The activist investor came out against BMS's (+1.37%) $74 billion acquisition of biotech firm Celgene (-8.65%).

State your case, Starboard CEO Jeffrey Smith:

  • "Bristol-Myers is deeply undervalued" and the acquisition "is poorly conceived and ill-advised."
  • "The actions we are taking...are not taken lightly." However, "this view has been solidified by the numerous other large, long-term shareholders" who oppose the deal.

Those shareholders include Wellington Management, which said it was against the acquisition on Wednesday (Wellington controls roughly 8% of BMS as its largest shareholder). And the company’s fifth-largest shareholder, Dodge & Cox, isn’t ecstatic either, per Reuters.

One cause for concern is that Celgene’s too dependent on Revlimid, a cancer drug that will face generic competition in coming years. That drug alone generated 60% of Celgene’s 2017 revenue.

What’s at stake: It would be the largest pharma deal in the history of pharma deals. A West Side Story-style rumble is coming at the April 12 shareholder meeting.

AUTO

Elon Musk Changed His Twitter Avatar

And we’re not saying it’s good looking, but...it’s good looking. The Tesla (-3.57% after hours) chief picked a photo of the new lower-cost Model 3 the company unveiled yesterday.

The specs: The new Model 3 will run you $35,000. If you’re thinking “Haven’t I heard that before?” you have. Tesla previously promised an entry level $35k Model 3, but it’s instead pushed premium, long-range Model 3 iterations that could top $50,000.

Tesla also said it will shift global sales to online only (and give drivers up to a week to return their new cars if they're not satisfied). Driving the change? The aim to cut operating expenses.

  • Speaking of which...Musk said he does not expect Tesla to be profitable this quarter. Q2 should be better, though.

It’s been a big week for Musk

Heavy on the déjà vu, though. On Monday, the SEC asked a federal court to hold Musk in contempt for violating a settlement reached last year following the “funding secured” saga.

The SEC alleged Musk violated that agreement when he tweeted about Tesla’s production expectations last week. Musk...doesn’t agree.

QUIZ

My Country Quiz of Thee

Shorter than February. Generates more buzz than the new Jonas Brothers single. Vegetarian friendly. It’s the Brew’s weekly news quiz.

1. Which French car brand said it’s looking to make a comeback in the U.S. after decades of exile? You only get credit if you can spell it accurately on your first try.

2. Fed Chair Jerome Powell testified before the Senate Banking Committee this week. Which of the following did he not say?
l>

  • “Wages have moved up. We welcome that.”
  • “I will not comment on whether or not I own any bitcoin.”
  • “The predominant risks to our economy are slowing global growth.”
  • “Financial markets became more volatile toward year-end.”
  • 3. The following chart shows trade between which two countries?
    4. Fill in the blank: Bank of America is dropping the name __________ from some of its businesses more than a decade after it bought the firm.

    5. Rank the following social media platforms by new app downloads in 2018: Instagram, Facebook, and TikTok.

    Answers: 1) Peugeot 2) Powell wasn't asked about his bitcoin ownership 3) The U.S. and Vietnam 4) Merrill Lynch 5) Facebook (711 million), TikTok (663), then Instagram (444)

    WHAT ELSE IS BREWING

    • Gap Inc. (+17.5% after hours) is splitting into two separate publicly traded companies: One will be Old Navy, and the other the rest of Gap’s brands.
    • Richard Plepler, the CEO of HBO, is stepping down as the company gets used to its new digs under parent AT&T. He'd been at HBO for 27 years.
    • PG&E (-4.33%), the large California utility, booked a $10.5 billion charge related to last year’s Camp Fire and said it is “probable” its equipment sparked the fire.
    • Bryce Harper and the Philadelphia Phillies agreed to a record-setting $330 million, 13-year contract. It’s the most consequential document signed in Philadelphia since the Declaration of Independence.
    • L Brands (-4.60%) is closing the doors at 53 Victoria’s Secret stores. “Everything is on the table” for the struggling lingerie retailer

    BREAKROOM

    Friday Puzzle
    The same two letters can be placed before each of these words to make different words. What are these two letters?

    • one
    • edge
    • own
    • ought
    • awl
    • aught

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    Friday Puzzle
    "Dr"

     

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