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Today in the Market (8/9/2023)

Good Evening! On Wednesday, the stock market experienced a decline in performance, primarily due to concerns surrounding the US banking industry and a shift in focus towards a significant US inflation report following disappointing Chinese price data.

All three indexes fell by sizable amounts with the Dow Jones falling by 0.54%, the S&P 500 decreasing by 0.70%, and the Nasdaq Composite sliding by 1.17%.  

DISNEY ENTERS THE SPORT BETTING SCENE

Disney (DIS) released its fiscal Q3 earnings, surpassing expectations for earnings. The company also announced a significant development regarding its popular sports network, ESPN. ESPN has entered into an exciting $2 billion agreement with Penn Entertainment (PENN) to introduce ESPN Bet.

  • Revenue: $22.33 Billion vs, $22.51 Billion Expected
  • Total Disney+ subscribers: 146.1 Million vs. 154.8 Million Expected
  • Earnings Per Share: $1.03 vs. $0.99 Expected

So what is this deal? PENN will make a payment of $1.5 billion to ESPN over the course of the next decade. Additionally, ESPN will be granted warrants to acquire approximately 32 million shares of PENN, valued at $500 million, which will become eligible for exercise within the same timeframe. On top of that, ESPN has made the decision to license its brand to Penn rather than starting on the development of its own sportsbook.

Other important information going forward! Disney has announced its intention to reinstate dividend payments by the end of 2023. Also, The CEO has consistently reiterated the company’s objective of achieving profitability in streaming services by the conclusion of fiscal year 2024. But we shall see…

INTERSTING BUT NOT SURPISING

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The Federal Reserve Bank of New York has recently released a report indicating that individuals in the U.S. have incurred record-high credit card charges during the previous quarter, resulting in a total credit card debt surpassing $1 trillion for the first time.

What caused this even though you probably know the answer? The surge in credit card debt can be related to several factors, including inflation-induced price increases, escalating interest rates, robust consumer confidence, and the issuance of approximately 24 million new credit cards during the most recent quarter.

It doesn’t stop there. The increase in debt levels has correspondingly led to a rise in occurrences of late payments. According to the report, during Q2, there was an increase in the number of credit card accounts that were 30 days overdue, reaching a level of 7.2%. This represents the highest rate observed in the past 11 years.

However… despite the seemingly concerning amount of $1 trillion in credit card debt, economists remain relatively unconcerned. According to Axios, the proportion of consumer debt compared to the total deposits held by Americans in their bank accounts is currently at 6%, which represents the lowest percentage observed in the past two decades. Even though it seems shocking, everything is still in line with expectations. 

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