There is no surprise to anyone that sports is a big business in the United States. If you rewind a little bit, March Madness was one of the first sports related events to get cancelled. This was followed by hockey and the NBA. So far, these sports have accounted for a loss of $12 billion in direct employment. Going forward, that $12 billion could possibly double if we lose College Football and the NFL season. The major amount of television exposure and licensing will greatly affect this. One NBA game that you would go to take 1,900 people on average to put on. This consists of parking, vendors and assistants. The largest states that would be affected would be California, Florida, Texas and New York. If you look at the amount of sports related to GDP, shockwaves could affect both the economy and markets.
Earnings Season & Washington
We have 3 big events that could move markets this week. The first is earnings season continuing. We still have 25% of the S&P 500 reporting earnings. Two sectors that we are watching are Technology and Airlines. With Technology we need to see good reports to justify their big run-up in stock prices. We also want to watch Airlines closely to see what they may indicate for future layoffs. Air traffic is still down 70% year-over-year. So far, so good with earnings season. Though expectations were low coming in, companies have beaten earnings forecast by 13%, the best quarter since 2010 from that standpoint. Two big events are going to play out in Washington. The vaccine manufacturers will be testifying to Congress on Tuesday. So far, the U.S. has spent over $2 billion on developing a vaccine. There are 135 in pre-clinical tests and 30 vaccines in clinical trials. Lastly, Congress will be discussing another stimulus bill because the additional unemployment benefits are set to expire at months end.
During this crisis, Congress and the Federal Reserve have really put a floor under the markets and consumer spending. So, this next stimulus bill will be very impactful. Part of this stimulus bill will be liability protection for companies. Another portion, that’s important, is unemployment benefits. Year-over-year, the bottom quartile of consumer spending has not dropped compared to 2019. The top quartile has dropped by nearly a third. Congress is very far apart in terms of where this stimulus needs to be. Like Ashley alluded to earlier, sports will be important to keep an eye on as well as those still getting paid from an unemployment aspect.
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.