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Penny stock Supreme Cannabis Company soars 60% on Canopy Growth merger

marijuana cannabis

Canadian penny stock Supreme Cannabis surged as much as 60% Thursday and trading volume spiked after news that weed giant Canopy Growth will acquire the company in a transaction valued at approximately $435 million.

More than $100 million worth of shares of Supreme Cannabis changed hands as of 3:20 p.m. ET, far surpassing the stock's average trading volume of $12 million, according to Yahoo Finance data.

Shares of the penny stock spiked to $0.4250 before paring back some gains. Meanwhile Canopy Growth fell 5%.

The transaction will give Canopy a 13.6% total share of the Canadian recreational weed market. It will also strengthen Canopy's brand portfolio. Supreme owns a number of cannabis companies including 7ACRES, Canada's number one premium flower brand, according to a company statement.

"Brand growth is anticipated with distribution supported by Canopy's robust sales and distribution network as well as superior consumer insights and R&D capabilities," said a company statement. "In addition to receiving a market premium, Supreme Cannabis shareholders will also benefit from Canopy's US CBD business and conditional positioning for continued exposure to the US market expansion."

According to the statement, Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis Share held. The merger provides Supreme shareholders with a premium per share of approximately 66%.

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Biden’s tax hike could drag S&P 500 profit growth to a near-standstill next year, says Goldman’s chief US stock strategist

Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) from Getty Images

Corporate tax hikes out of Washington could put a dent in the S&P 500's earnings growth in 2022, Goldman Sach's David Kostin told CNBC on Thursday.

The chief US equity strategist said that if the entirety of President Biden's plan is passed, which includes raising the corporate tax rate to 28% from 21% and cracking down on companies that move profits offshore, the S&P 500 would see earnings growth of about 2% in 2022.

That's lower than the 22% quarterly profit growth in the first quarter of 2021, and the 6% profit growth in 2020, according to Bloomberg data.

However, Kostin's team is pricing in that only parts of the plan will pass and taxes may only be increased to about 25%. In that scenario, the S&P 500 could see 9% earnings growth next year.

He added that if the current tax law was applied for 2022, earnings growth would be around 12% in 2022.

"2%, 9%, 12%. Somewhere in that range is likely to be where the earnings growth ends up being for the market in 2022," Kostin said. "And make no mistake about it, all of the conversations with clients right now are about the prospect for profits in 2022."

The chief strategist added that it may be too early to trade based on the tax proposals, as specifics around the plan haven't been sorted out by the legislature.

Goldman has a year end price target of 4,300 for the S&P 500, a roughly 5% gain from current levels.

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9% of US teens say they have traded cryptocurrencies – and 81% of those are male, a Piper Sandler survey finds

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A growing number of institutions are warming to bitcoin.

A small fraction of US teens have traded cryptocurrencies, according to a new survey from Piper Sandler.

In a recent study of 7,000 US teens, 9% claimed they had traded cryptocurrencies, while 81% of those surveyed were males. There was no further detail on which cryptocurrencies the teens have invested in, or whether teens were actively buying and selling crypto or simply holding.

Although the bitcoin's massive rally has spurred more retail interest into cryptocurrencies, teens are still putting their money to work elsewhere. According to the survey, teens' top spending priority is food, while the top payment method for teens was cash, followed by Apple Pay.

While there are no official age requirements to buy cryptocurrencies, most popular crypto exchanges including Coinbase, Binance, Gemini, and Kraken require investors to be 18 or older to open an account, which could be a barrier to further participation.

The survey results were from the latest Piper Sandler "Taking Stock With Teens" study, a semi-annual project that surveys teens with an average age of 16.1, with representation from 47 states. It was conducted from February 19 to March 24.

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US stocks decline as investors digest volatility from Archegos meltdown

NYSE Trader
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020.

US stocks ended lower on Tuesday, with the the Dow Jones Industrial Average and S&P 500 retreating from record highs reached the previous day.

New trades linked to Archegos added unease to markets after US data highlighted an economic rebound.

Companies linked to the Archegos Capital Management meltdown last week were struck by a new wave of volatility after Credit Suisse initiated a block trade worth around $2.3 billion in an attempt to limit further losses.

Stocks including ViacomCBS, Discovery, and Tencent all whipsawed, and were down in premarket trading before recovering throughout the day.

The S&P 500 and Dow hit record highs Monday in the wake of a better-than-expected jobs report and record-high expansion in the services sector last month. Optimism around the economic recovery continues to drive markets.

Here's where US indexes stood after the 4:00 p.m. ET close on Tuesday:

High valuations and other factors have been driving comparisons between current US stock market conditions and those during the dot-com era, but fundamentals are healthier now, said Charles Schwab's chief investment strategist Liz Ann Sonders. Meanwhile, Nouriel Roubini, an economist known as "Dr. Doom" for his pessimistic market views, said markets are "extremely frothy" and participants are taking "too much risk" in an interview Tuesday.

Gold rose to 0.8% to $1,742.80 per ounce.

West Texas Intermediate crude rise by 1.24%, to $59.37 per barrel. Brent crude, oil's international benchmark, was down 1% to $62.74 per barrel.

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Stocks could pull back 10% over the next 3 months as macroeconomic growth peaks, Deutsche Bank’s chief strategist says

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Rising bond yields have worried investors and triggered a sell-off in stocks

Deutsche Bank's chief equity strategist is expecting a "significant pullback" of up to 10% in the S&P 500 over the next three months.

In a Monday note a team of strategists led by Binky Chadha said they expect stocks to grind higher in the "very near term," supported by earnings upgrades and a growth acceleration. The S&P 500 and Dow Jones Industrial Average hit record highs on Monday as a strong jobs report propelled economic optimism.

But Chadha sees economic growth peaking soon, and historically that peak has correlated with stock declines. The strategist expects a significant stock consolidation between 6%-10% as economic growth peaks over the next quarter.

Chadha explained that stocks have historically traded closely with indicators of cyclical macro growth like the ISM manufacturing index. Macro growth typically peaks around a year after a recession ends, and the US appears to be at that point now. Historically when the ISM flattens or peaks and then begins to fall, the S&P 500 has sold off.

"With a strong correlation between equity performance and cyclical growth indicators, it follows that a decline in the ISM from its peak should see equities sell off; and the bigger the decline, the larger the equity selloff should be," Chadha added.

Deutsche Bank's economists forecast that ISMs will flatten out beginning in the second quarter and continuing into the third quarter.

Chadha also said that overall equity positioning is already elevated-which is unusual for so early into an economic recovery-and that supports a bigger-than-average historical pullback of up to 10% in the next three months.

equities tied to growth
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Stocks could pull back 10% over the next 3 months as macroeconomic growth peaks, Deutsche Bank’s chief strategist says

GettyImages 1205044060
Rising bond yields have worried investors and triggered a sell-off in stocks

Deutsche Bank's chief equity strategist is expecting a "significant pullback" of up to 10% in the S&P 500 over the next three months.

In a Monday note a team of strategists led by Binky Chadha said they expect stocks to grind higher in the "very near term," supported by earnings upgrades and a growth acceleration. The S&P 500 and Dow Jones Industrial Average hit record highs on Monday as a strong jobs report propelled economic optimism.

But Chadha sees economic growth peaking soon, and historically that peak has correlated with stock declines. The strategist expects a significant stock consolidation between 6%-10% as economic growth peaks over the next quarter.

Chadha explained that stocks have historically traded closely with indicators of cyclical macro growth like the ISM manufacturing index. Macro growth typically peaks around a year after a recession ends, and the US appears to be at that point now. Historically when the ISM flattens or peaks and then begins to fall, the S&P 500 has sold off.

"With a strong correlation between equity performance and cyclical growth indicators, it follows that a decline in the ISM from its peak should see equities sell off; and the bigger the decline, the larger the equity selloff should be," Chadha added.

Deutsche Bank's economists forecast that ISMs will flatten out beginning in the second quarter and continuing into the third quarter.

Chadha also said that overall equity positioning is already elevated-which is unusual for so early into an economic recovery-and that supports a bigger-than-average historical pullback of up to 10% in the next three months.

equities tied to growth
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US stocks slip from record highs amid new sell-off in Archegos-linked stocks

Barclays Traders NYSE
Traders work on the floor of the New York Stock Exchange moments before the closing bell on April 5, 2010 in New York, New York

US stocks dipped slightly at the open Tuesday as the rally that drove the S&P 500 and Dow to record highs stalled amid new block trades related to the fallout of Archegos Capital Management.

ViacomCBS fell 2% in premarket trading and Credit Suisse warned it expects to suffer a $4.6 billion charge to its first-quarter profits partially related to the forced liquidation of its holdings last month triggered by Archegos.

The S&P 500 and Dow hit record highs Monday in the wake of a better-than-expected jobs report and record-high expansion in the services sector last month. Optimism around the economic recovery continues to drive markets.

"The fundamental backdrop continues to improve as the U.S. economy reopens with unprecedented fiscal and monetary policy support," said Craig Johnson, Piper Sandler chief market technician. "The pace of coronavirus inoculation has also provided building hope for a return to normalcy and also offset concerns over new outbreaks emerging around the globe. Rates are rising as investors reprice the prospect for future growth and inflation. However, we do not believe they have transitioned into material headwinds for stocks at this juncture."

Here's where US indexes stood at the 9:30 a.m. ET open on Tuesday:

Oil prices rose after falling sharply on Monday over fears of rising supply from the OPEC group of producers and higher Iranian output, as well as uncertain demand due to rising COVID-19 cases around the world.

West Texas Intermediate crude climbed 2%, to $59.75 per barrel. Brent crude, oil's international benchmark, rose 1.6% to $63.13 a barrel.

Gold rose 0.5%, to $1,737.60 per ounce.

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Grayscale confirms it will convert its popular bitcoin trust into a ETF

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Bitcoin's meteoric rise has boosted crypto hedge funds
  • Grayscale confirmed its intent to convert its flagship bitcoin trust into an ETF.
  • In a blog post Grayscale said it always intended for the trust to become an ETF when permissible.
  • The announcement should relieve recent selling pressure GBTC shares, Fundstrat said.
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Grayscale Investments said in a blog post Monday it's "100% committed" to converting its flagship Grayscale Bitcoin Trust into an exchange traded fund.

The world's largest digital asset manager confirmed its intent to re-apply with the US SEC to offer an ETF after previous failed attempts to win approval.

"First and foremost we wish to make clear: we are 100% committed to converting GBTC into an ETF," Grayscale said.

The Grayscale Bitcoin Trust was launched in 2013 and has been the go-to option for investors who want to add bitcoin exposure to their portfolio without directly buying the digital asset.

In the blog post, the investment company said that it always intended for its fund to become an exchange-traded fund when permissible. Grayscale first submitted an application for a bitcoin ETF in 2016 but ultimately withdrew iy because it determined the regulatory environment wouldn't allow for a bitcoin ETF.

Now, several firms including Fidelity, NYDIG, and VanEck have applied for bitcoin ETFs in the US in the hopes that 2021 will finally be the year the SEC approves one.

"While several firms have submitted Bitcoin ETF applications in the form of an S-1 or 19b-4 to the SEC, we are confident in our current positioning and engagement with the SEC," Grayscale said. "Today, we remain committed to converting GBTC into an ETF although the timing will be driven by the regulatory environment."

Grayscale also said that the management fee of the GBTC fund will be "reduced accordingly" when the trust is converted to an ETF.

According to Fundstrat's lead digital asset strategist David Grider, the plan to convert the fund should relieve recent selling pressure on GBTC shares and will re-energize demand from bitcoin investors who are willing to contribute to the GBTC trust again.

"We think this is a very positive move for Grayscale to maintain its position as a leader as the largest listed Bitcoin product and this announcement should help close the negative premium gap," Grider said in an email.

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Palantir jumps 6% after securing 5-year contract with National Nuclear Security Administration

Palantir
Palantir logo on New York Stock Exchange.
  • Palantir rose 5.9% Monday after securing a five-year contract with the National Nuclear Security Administration.
  • Palantir will configure an operating system that will integrate data for the NNSA's safety analytics project.
  • The data-mining company is down 2.04% year-to-date after a lockup expiration weighed on shares.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Shares of Palantir jumped 5.9% to as high as $24.45 a share Monday after securing a five-year contract with the National Nuclear Security Administration (NNSA).

The data surveillance company announced it was selected by the NNSA to provide its Office of Safety, Infrastructure, and Operations with a platform for data-driven decision-making in an agreement worth up to $89.9 million for up to five years.

Palantir will configure an operating system that will integrate data for the NNSA's safety analytics project. This is Palantir's first contract with the NNSA, a semi-autonomous agency within the US Department of Energy.

Shares of Palantir are down 2.04% year-to-date. After hitting new record highs in February, the data company has pared back gains amid a lockup expiration that's prompted profit-taking from company insiders.

The NNSA is one of many government agencies that utilize Palantir's software. In December, Palantir won a three-year contract with the FDA to help the agency approve drugs and monitor the safety of items like hand sanitizer. The data company also works with the US Health and Human Services Department, along with other agencies.

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Investors should buy real assets – from wine to art – as inflation reaches a ‘secular turning point,’ Bank of America says

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    • Bank of America forecasts an uptick in inflation and that rates will weigh on stock returns for the next decade.
    • The bank's chief investment strategist says investors should buy real assets to hedge against inflation.
    • Real assets are at their lowest point relative to financial assets in almost 100 years, he writes.
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Since the election of President Joe Biden, inflation and its potential comeback have been hot economic topics. Pumping trillions of dollars into the economy could overheat it, critics say, while others see few signs of runaway inflation, either now or in the near future.

Freak events in early 2021 like the Texas freeze and the giant ship stuck in the Suez Canal haven't clarified the issue, as they contributed to inflationary shocks that may be "transitory" or may not be.

Bank of America's chief investment strategist, Michael Hartnett, has seen enough to declare a "secular turning point" on inflation and anticipates that stock market returns will be lackluster over the next decade. Stock investors who've seen a roughly 10% annual return from recent decades should expect that gain to go down to 3% to 5% over the course of the 2020s, he added.

But he has a recommendation: Real assets are a more overlooked part of the market that may offer investors protection against inflation while diversifying their portfolios.

In a recent note Hartnett said that real estate, commodities, and even collectibles like wine, art, diamonds, and cars could outperform in the next decade. Investors don't need to own the physical assets, Hartnett added, but instead can own REITs, and specialized funds that focus on these assets.

Real assets are positively correlated with inflation and interest rates, unlike financial assets like stocks and bonds, Hartnett said. During "the Great Inflation" of the 1970s, real estate and commodities outperformed large cap stocks and government bonds. He added that in eras where bonds and stocks struggle, real assets have provided superior risk-adjusted returns.

Over the past 5 and 10 years as inflation fell to the lowest average levels since the 1960s, real assets have seen lower returns and lower volatility, according to BofA data. Now, the price of real assets relative to financial assets are at the lowest point since 1925, making them attractive investments according to Hartnett.

Real assets are also underowned, with only 5.5% of the total market cap of all ETFs exposed to real assets.

Additionally, since 1926, collectibles (8.1%) and commodities (6.3%) have offered higher returns than government bonds (6.0%) and cash (3.4%), albeit with higher volatility.

Bank of America suggested investors seek out funds like the Fine Art Group, Classic Car Fund, and the London International Vintners Exchange Fine Wine Fund Index (FWIFFWID), in addition to REITs and commodity funds if they're looking for real asset exposure.

Read more: Goldman Sachs says buy these 33 stocks now as profits rebound for companies that suffered the most during the pandemic

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