Axios Markets: The case for more stimulus

And how Disney+ got to 95 million subscribers... | Friday, February 12, 2021

Open in app View in browser   Presented By BlackRock   Axios Markets By Dion Rabouin ·Feb 12, 2021 Happy Friday! Was this email forwarded to you? Sign up here. (Today's Smart Brevity count: 1,216 words, 4.6 minutes.) Markets is off on Presidents Day and back in your inbox on Tuesday. 🎒 Trivia: The alma mater of new U.S. Democratic Senator Raphael Warnock and former Kansas City Fed president and Republican presidential candidate Herman Cain, this university was founded in February 1867 by William Jefferson White and has since grown to become the largest men's liberal arts college in the U.S.     1 big thing: The case for more stimulus Illustration: Aïda Amer/Axios   New data on Americans' finances suggests the extension of enhanced unemployment benefits and direct payment checks would provide a significant boost to the economy. Driving the news: A new report from the JPMorgan Chase & Co. Institute finds that the increased payments for unemployment "played an important role in maintaining household spending and wider macroeconomic stability." What they're saying: "With a March 15, 2021 deadline on supplemental and extended jobless benefits approaching, policymakers should consider the important role these benefits play in supporting the spending and saving of jobless workers, given the limited impact they appear to have had on job search." How it works: The report analyzed the impact of supplemental unemployment benefits on job finding, spending, and saving of jobless workers between April and July 2020. It found that the $600 supplement "likely played little role in discouraging people from finding work." "Rather, expanded UI boosted the spending and saving among jobless workers, many of whom are facing extended or repeated unemployment spells." Where it stands: Using the bank's data, the JPMorgan Chase Institute found a strong correlation between the spending and saving of jobless workers and the availability of supplemental unemployment insurance benefits during the pandemic. "We estimate that for every dollar of supplemental unemployment insurance, the median unemployed family has spent between 29 and 43 cents more than they otherwise would have." There's more: A new report from data firm Morning Consult argues that sending $1,400 stimulus checks targeted to low-income adults and parents combined with enhancements to the unemployment benefit system "would prevent unnecessary financial hardship and mitigate future economic risks." By the numbers: Morning Consult's data show that in January, 16% of U.S. adults said their expenses exceeded their incomes for the month, largely concentrated among low-income households.  Americans with annual household incomes under $50,000 already spent roughly 67% of the money they received in the second stimulus.  Among the 30.2 million adults who couldn't pay their bills, 75% fell short by less than $300, "an improvement from December that shows stimulus checks are bringing people closer to covering their expenses." Yes, but: Both studies suggest that targeted benefits would be most effective, but neither directly states who should or should not receive benefits, a prime subject of debate given that some Americans who previously made high salaries remain unemployed because of the pandemic. Other workers remain employed but have seen reduced wages and/or hours. What's next: If $1,400 stimulus checks are sent on March 1, Morning Consult's data show the payments would allow 22.6 million Americans to pay their bills in full through the middle of July.     2. Catch up quick The U.S. has finalized deals to acquire an additional 100 million doses of COVID-19 vaccines from Pfizer and another 100 million from Moderna. (Bloomberg) The national debt is on pace to hit a record 107% of GDP by 2031, the CBO says. (WSJ) Bumble's stock closed 63% above its IPO price, gaining as much as 80% on its first day of trading. (CNBC) Cannabis stocks plunged on Thursday, with top names Tilray and Aphria falling by 50% and 36%, respectively, after a breakneck rally early in 2021. (MarketWatch) Amsterdam surpassed London as Europe's largest share trading center last month as financial institutions have moved traders out of Britain as a result of Brexit. (FT)     3. Millions returned to pandemic unemployment programs Data: U.S. Department of Labor; Chart: Axios Visuals The number of Americans receiving unemployment assistance jumped by 2.6 million, rising to more than 20.3 million, the latest report from the Labor Department showed. Why it matters: The data suggest that the U.S. made essentially no progress on reducing unemployment during December and January, especially for those affected by the coronavirus pandemic. What happened: The number of Americans receiving unemployment benefits looked to be declining meaningfully in December and for the week of Jan. 2 fell to less than 16 million, the lowest since March. But that was largely because some states shut down benefits for PUA and PEUC recipients, economists say. What we're hearing: "The decline wasn't people getting jobs, it was people getting kicked off the system," Ernie Tedeschi, managing director and policy economist for Evercore ISI, tells Axios. "Now, it's not that people are losing new jobs, they're just getting back on the rolls." Be smart: The decline in the number of unemployment recipients was the result of the delay by Congress in passing legislation to extend special programs like Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation. That was exacerbated by President Trump's decision to wait for days to sign the bill once it was passed. Watch this space: Of the 1.5 million people added to the PUA program for the week ending Jan. 26 (the most recent week for reporting) 972,286 came from one state — Pennsylvania. Of the 1.2 million people added to the PEUC program that week, 1.08 million came from New York. Not-so-fun stat: The latest downturn in jobs has largely been pinned on the resurgence of the pandemic, however, the January job cuts report from Challenger, Gray & Christmas found that the three industries with the most layoffs last month were aerospace/defense, telecommunications and warehousing — three industries not highly correlated to pandemic shutdowns. Demand downturn, restructuring and market conditions all were cited ahead of COVID-19 as reasons for the layoffs.     A message from BlackRock The net-zero economy is arriving     Governments and companies alike are driving momentum toward a net-zero economy. So, what is net-zero, and why will it impact the markets? Hear more from Jessica Tan, BlackRock's Head of Corporate Strategy, on this episode of BlackRock Bottom Line.     4. Soaring home prices push wealth-to-income ratio to record high The median price of a single-family home climbed 14.9% to $315,000 in the fourth quarter, according to the National Association of Realtors' latest quarterly report. Why it matters: That was the biggest surge in the history of the data series, which dates back to 1990. Every metro area tracked by the group saw home prices rise from a year ago and 88% of the metros followed (161 areas) saw double-digit price increases. The big picture: The increase in housing prices along with the fact that the stock market is now 15% above its pre-pandemic level "has pushed the household wealth-to-income ratio to an all-time high, providing further support for the 2021 consumer recovery," Goldman Sachs' economic research team said in a note to clients. "But signs of bubbles in some corners of the market have also raised questions about the potential economic fallout if the broad rally in risk assets reverses."     5. Disney's pandemic woes offset by big streaming numbers Data: FactSet; Chart: Axios Visuals Axios' Sara Fischer writes: Disney said on Thursday that it now has nearly 95 million subscribers for its streaming service Disney+, blowing past Wall Street expectations for growth for the company's Q1 earnings. Why it matters: Disney's streaming success has helped the company offset losses from pandemic-related headwinds to its parks & resorts and studios businesses. By the numbers: Total paid streaming subscribers: 146 million Disney+ subscribers: 94.9 million ESPN+ subscribers: 12.1 million Hulu SVOD subscribers: 35.4 million Hulu SVOD+Live subscribers: 4 million Details: In total, Disney says its direct-to-consumer revenues were up 73% to $3.5 billion. Its losses were also lower last quarter, thanks to improved results at Hulu, and to a lesser extent, at Disney+ and ESPN+. Yes, but: The average revenue per streaming subscriber fell significantly last quarter, due to the fact the company is now including subscribers to its Indian subscription streaming service, Hotstar, in its calculus. "The average monthly revenue per paid subscriber for Disney+ Hotstar is significantly lower than the average monthly revenue per paid subscriber for Disney+ in other markets," the company noted in a statement. Catch up quick: Disney has been forced to close most of its parks or operate them at limited capacity due to the pandemic. The company laid off 28,000 people last year at its theme parks and experiences and consumer products divisions. The company said on Thursday that it expects Disneyland and Disneyland Paris to remain closed through Q2 2021.     A message from BlackRock BlackRock's commitments to a net-zero transition     The global focus on sustainability has accelerated – and investors need to prepare their investment portfolios accordingly. Learn what steps BlackRock is taking to help clients capture the market opportunities created by a net-zero world.   Thanks for reading! Trivia: The alma mater of new U.S. Democratic Senator Raphael Warnock and former Kansas City Fed president and Republican presidential candidate Herman Cain, this college was founded in February 1867 by William Jefferson White and has since grown to become the largest men's liberal arts college in the U.S. Answer: Morehouse College. The college's most famous graduate is obviously Rev. Dr. Martin Luther King Jr.   Axios thanks our partners for supporting our newsletters. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Suite 1300, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: