Will Disney Bring Sports Gambling to a "Whole New World"?
Michael Collins, CFA
Financial Advisor | Portfolio Manager | Professor | Fiduciary | 5 Star Uber Passenger Rating Holder
Week in Review
US headline inflation for July rose slightly but came in lower than expected. This indicates that it's likely the Federal Reserve will keep interest rates steady at its next meeting in September. According to the Bureau of Labor Statistics, the consumer price index (CPI) increased by 0.2 percentage points from the month prior, bringing the annual rate to 3.2%. This is the slowest pace since March 2021.?
Shelter costs, which includes housing, accounted for the majority of the monthly headline figure. However, the recent cooling of house prices and rents may eventually show up in the data and push inflation lower.?
We believe inflation will continue to head lower as a result of the cooling housing market, and this could lead to lower interest rates for some time to come. Used car prices also continue to push inflation lower as prices come down.
Disney Enters the Sports book Business
I’m a bit skeptical of the recent deal between ESPN and US gambling company Penn Entertainment. It's being hailed as a huge win for Penn, allowing ESPN, and parent company Disney, to enter the sports betting market for the first time, but the company is cutting ties with its former partner Barstool Sports. Founder Dave Portnoy will receive effectively $0 for the handoff. In exchange he can’t advertise other gambling offers and if he sells the company again Penn is entitled to 50% of the proceeds.
While Portnoy may have scored a sweetheart deal, the bigger question is – what impact will this tie-up have for ESPN and Penn? For Penn, it's a matter of expanding its user base. ESPN’s reach is 370 million people across social media and 100 million monthly unique digital views on its sites. However, Barstool only provided 1.5 million sign-ups in its three years of co-branding with Penn.?
Why is Disney entering the Sports Book business? We believe that Disney is putting window dressing on ESPN for a potential spinoff or sale. Disney has a pretty ugly balance sheet at the moment and is fairly desperate for cash with a current ratio of only 1.07x, meaning they have just enough in short term assets to cover near term debt.
It remains to be seen if this partnership will be beneficial for both sides, but I'm skeptical. For now, it only appears to have benefited Dave Portnoy and Barstool Sports.
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Earnings & Economic Calendar
Next week, the financial calendar may slow down, but retail earnings reports and economic data will still keep traders busy.?
On Tuesday, Home Depot will kick off the reports, followed by Target and TJX on Wednesday and Ross Stores, Tapestry, and Walmart on Thursday.
Other notable reports include Agilent Technologies, Cardinal Health, and Jack Henry & Associates on Tuesday, Cisco Systems and Synposys on Wednesday, Applied Materials and Keysight Technologies on Thursday, and Deere, Estee Lauder, and Palo Alto Networks on Friday.
Our clients have exposure to both Palo Alto Networks, reflecting our positive view on the cyber security business. Close to 50% of their revenue is now reoccurring subscription-based revenue and we believe this trend is secular. Along with a PEG Ratio of 1.4x it still looks reasonably attractive.
We also purchased John Deere for our clients due to its attractive valuation and strong business model. It currently trades at an attractive PEG Ratio of only 0.8x and it has top quartile earnings quality and valuation compared to peers. Risks to our call include extended favorable weather conditions for crops, China soft commodity inventory builds, and supply chain constraints.
Tuesday marks the release of the U.S. Census Bureau's July Retail Sales data and the National Association of Home Builders' (NAHB) Housing Market Index (HMI) for August. Analysts anticipate a 0.4% month-over-month rise in consumer spending, following a 0.2% increase in June. This reflects the resiliency of consumers amid a contracting manufacturing sector.
Wednesday will see the release of the Federal Open Market Committee's (FOMC) Minutes from its late-July monetary-policy meeting, when the headline interest rate was raised by 25 basis points. The FOMC is expected to keep interest rates steady for the September meeting. Also being reported on Wednesday are the Census Bureau's new residential construction statistics for July.
On Thursday, the Conference Board will release its Leading Economic Index (LEI) for July. The consensus is for a 0.3% month-over-month decline. The LEI has fallen for 15 straight months, and the Conference Board anticipates an economic recession in the future.
Chart of the Week: S&P average return after a positive 5 month stretch. This chart points positive momentum for stocks once a rally begins.
Bonus Chart of the Week: Q4 in pre-election years (this year), is historically positive for stocks. The rally could continue based on seasonality.
Disclaimer: The author of this blog is a financial advisor but may not be the right advisor for you. In fact, the author may not even be the right advisor for themselves. Please consult a qualified professional before making any financial decisions based on the content of this blog. And remember, just because the author has a fancy title and a briefcase full of spreadsheets, doesn't mean they know what they're doing.
Autista – Cooperativa Brodolini
1 年jeetcity casino, I registered with them, submitted all the documents for verification and they didn’t check for 3 months, I played, deposited and withdrew money until one day I won a large amount of almost 37,000 Canadian dollars! when I won, I started to withdraw money, but my withdrawal requests were rejected and asked to go through verification, I passed and they checked for a long time, and every time I wrote to them how long to wait, they didn’t give me any deadlines or information (they just told me to come back and enjoy the game) I returned and started playing, time passed and in 2 days I lost almost the entire amount, only 3600 dollars remained and they transferred me only 3000 and left 600 and still don’t give it back! I want to note that when I wrote to them about my displeasure that they were stalling for time and for this I lost, they blocked me with the pretext that I was an addict! How come ? they themselves offered to play! and it’s my right to play! My complaints were as follows (why didn’t they check my data right away?) Why did they allow me to withdraw money and top up my account before the big win? Why didn’t they let me know how long it would take for verification? and why did they block me? and this provoked me! I want justice, they don’t have the right to use people like that! They do everything very thoughtfully, I won this money honestly and wanted to withdraw, and if they had not rejected my transfer and advised me to continue playing, I would not have lost or lost! Is it possible to somehow regulate human rights? In any country, according to the constitution, human rights must be protected, I ask you to help resolve this matter, thank you for your remote time, regards Giorgi
Sole inventor of world’s only virtual card counting machine for #SportsBetting Sole creator of #gamification #economics
1 年Read This https://www.thewolfline.com/content/files/thewolfline_disney.pdf
Realtor Associate @ Next Trend Realty LLC | HAR REALTOR, IRS Tax Preparer
1 年Thanks for Posting.
Financial Analyst at Korn Ferry
1 年Good read. PENN took a massive hit on that Portnoy mess. I could see something similar for DIS. Especially when you factor in all those mentally stable Disney adults who would most likely frown upon the idea.