Grocermageddon Goes Global

Well that escalated quickly.

This morning's Amazon acquisition of Whole Foods Market has collapsed share prices of many grocers (in US and around the world), pharmacies and drug distributors, and even REITs.

First things first, 11 of the top 12 biggest losers in the S&P 500 are related to AMZN's move.

It's a bloodbath in US Retailers.

But it's not just US Retailers... European grocers are crashing too.

And away from Grocers, supermarket-anchored REITs Kimco and Regency Centers lead  the S&P 500 real estate index lower, with KIM down as much as 4.6% and REG down as much as 4.2%, the largest decline for both since November...

And Pharmacies and Drug Distributors are also tumbling...CVS -4.7%, WBA -4.5%, ABC -1.9%, DPLO, CAH, MCK all down 1.7%, ESRX -1.4%

“The deal put everyone’s business models at risk,” Bloomberg Intelligence analyst Jonathon Palmer says in email, “large drugstores are trading down in sympathy but the declines are less steep than those seen in supermarkets,” as pharmacy is seen as more complicated with more regulation; would be more difficult to enter.

Amazon’s foray into the retail sector doesn’t change much for PBM pure-play Express Scripts but he sees “higher risk” for distributors from their end customers.

Finally, we note that the divergence between the S&P 500 and Retailers has never been this large as the correlation collapses.

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