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Disney Will Now Focus on Streaming

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Disney Plus on smartphone with popcorn. Dinsey+ is a new streaming subscription service that will feature Marvel, Pixar, Star Wars, and National Geographic content-disney streaming-ss-featured

The Walt Disney Company has read the writing on the wall. Mounting losses in its theme parks and theatrical releases led to the inevitable. The company will now restructure its media and entertainment divisions. As such, Disney will now focus on streaming services. And why not? They most likely saved the company from the pandemic.

RELATED: Disney Splits From Netflix

On Monday, Disney announced it would centralize its media business. This entity will take care of content distribution, ad sales, and Disney+. This move aims to further speed up its direct-to-consumer strategy. 

Investors Applaud the Move

Shares of Disney rose more than 5% during after-hours trading following the move. This came at a time when one of its shareholders demanded change. Last week, activist investor Dan Loeb lobbied Disney for changes. He asked to divert more capital to creating new content. He suggested that Disney CEO Bob Chapek end Disney’s annual $3 billion dividends.  Instead, they use the money to produce new content. Loeb’s Third Point Capital is one of Disney’s largest shareholders. Loeb actually bought more shares earlier this year. He anticipated Disney moving its focus on Disney+, its flagship subscription streaming service.

Loeb is thankful that Disney listened to its shareholders. He told CNBC: “We are pleased to see that Disney is focused on the same opportunity that makes us such enthusiastic shareholders: investing heavily in the DTC business, positioning Disney to thrive in the next era of entertainment.”

More Staff Reduction at Disney 

Chapek said the reorganization can lead to some redundancies. the layoffs won’t be as large as the recent one at its theme parks. Disneyland cut 28,000 jobs recently as its California parks remained closed.

At the same time, movie theaters remain a risky proposition. Since March, very few theaters have attempted to open, leading to low ticket sales. The attempt to reopen last August ended early, as outbreaks were still rampant. Disney held back its planned theatrical releases. This includes potential blockbusters such as Marvel’s “Black Widow” and Pixar’s “Soul.” Instead of theaters, “Soul” will debut in Disney+ this December. It is yet unknown how much the movie “Mulan” earned after its release on Disney+ for $30. Analysts expect more details during Disney’s next earnings report in November.

Analysts are still awaiting word from Disney about how “Mulan” fared. Set for theatrical release, Disney instead showed it through Disney+ for $30. Details about Mulan’s receipts are due during the next earnings report in November.

New Sheriff in Town

Disney promoted the president of consumer products, games, and publishing Kareem Daniel. He will take charge of the new media and entertainment distribution group. Among his first tasks is to ensure the profitability of streaming. Daniel will manage the entire Disney’s streaming services and domestic television networks. This includes content distribution, sales, and advertising.

Alan Horn and Alan Bergman will continue manning Disney’s studios. Peter Rice remains the head of the general entertainment group. James Pitaro will stay as head of the company’s sports content. All will report directly to CEO Bob Chapek. Meanwhile, Rebecca Campbell will remain chairman of direct-to-consumer and international operations. She will report to Daniel when it comes to Disney+, Hulu, and ESPN+.

Kareem Daniel is a 14-year Disney veteran. He helped create the successful Wars: Galaxy’s Edge lands in Disney World and Disneyland. He also helped bring Toy Story Land, Pixar Pier, and Avengers Campus to the parks.

Chapek said: “Kareem is an exceptionally talented, innovative, and forward-looking leader, with a strong track record for developing and implementing successful global content distribution and commercialization strategies.”

Coronavirus accelerated the move

The pandemic hastened the process where Disney pivoted to streaming. Chapek explained that he “would not characterize it as a response to Covid. I would say Covid accelerated the rate at which we made this transition, but this transition was going to happen anyway.”

“It’s about streamlining the decision making, looking at it from a 50,000-foot view,” Chief Executive Officer Bob Chapek said in an interview, “as opposed to a movie that’s made in the studio, therefore it goes to the studio, or a television show that’s made at ABC studios, therefore goes on ABC.”

Watch this as Bloomberg Quick Take reports on Disney’s plan to shake up its operations and focus on streaming:

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4 Comments

4 Comments

  • My wife and I would still go to a theater if the streaming movies are too expensive. We are senior citizens and we get into theaters where we live for $1.00 each. We were going to watch Mulan on Disney+ but the $30.00 price tag was to much for us since we are retired and on a fixed income.

  • Avatar Steven T. Cano says:

    As a retired person, I can not afford to go to a theater nor can I afford the cost of a provider for streaming all these movies. We used to enjoy going to the movies for a night out, but it is not worth our health nor the risk of catching this Covid 19 or any other illness out there. It’s funny how no company offers a discounted rate for those of us on a limited income that might want to see these new programs. I feel that they are missing the boat, there are more of us old folks out there that don’t get these services, than there are those who have the funds to pay for sites that are so expensive! Enjoy the movie folks, you can tell us all about it.

  • Avatar Kevin G says:

    I agree

  • Avatar Anonymous says:

    Disney and ESPN are garbage.

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Business

US Housing Sales Boom Will Last Until 2021

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Redfin CEO Glenn Kelman told CNBC on Thursday that he sees the US housing sales boom will last until 2021. Total US Home sales increased 9.4% in September, surpassing estimates. Meanwhile, median prices went up 15% year over year. This is according to data provided by the National Association of Realtors.

RELATED: Biden Is Latest Dem to Support Ridiculous Free Housing Proposal

Shares of Redfin, a real estate brokerage firm, were higher by 1% Thursday to $45.60. The stock more than doubled during this year. It now has a market cap of $4.5 billion. 

Why do people buy houses during a recession? 

During this time when the economy is reeling and jobs are tight, people buy homes. Why? There are a couple of reasons.

The bigger acceptance for remote work freed many people from living in the city. The opportunity to leave cramped apartments and expensive city living. The pandemic gave enough reason for workers to pack up and head for greener pastures. Next, interest rates are going down hard. From 3.7%, 30-year mortgage rates are now 2.9%, the lowest rates ever. Despite higher prices, people know this is the best time to buy on the cheap. 

The intent is there. The pandemic allowed you to work anywhere. And interest rates allow you to pay the lowest interest rates. People are taking the plunge and buying. So what’s the problem? We’re running out of houses to buy. 

Demand coming from the rich 

Rich professionals who can work from home are the reason for the uptick in housing demand. Kelman said that many remote workers moved from major cities to distant suburbs. Kelman said these workers began “taking a permanent vacation where they’re working from those homes.”

People are taking advantage of low-interest rates to snap up homes. Kelman noted that “part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free.” The opportunity to buy homes for cheap may be too much to resist. “Of course, they’re going to use that money to buy homes,” he added.  

Meanwhile, there’s another group of people who would like to buy but can’t. Kleman said:  “There’s just another group of Americans who are still struggling, who can’t access the credit because we’ve raised credit standards, and you have high unemployment. I just think those two trends, at some point, have to collide.” 

Kelman foresees demand to continue until 2021 at least. Many undecided buyers will buckle down next year and take the plunge. He said: “There’s no way it can last forever. This level of demand is absolutely insane. I would expect it to last into 2021, at least.” Why 2021? “There are so many people now who have decided they’re not going to be able to buy a home by year-end,” he said. Kelman expects them to buy next year, “as their kids shift school districts. I do think we’re going to see this for some time.”

Shrinking inventory of houses for sale

With homes fast disappearing from the market, higher purchase prices are coming back. Based on data from the National Association of Realtors data, only 2.7 months’ supply of houses is available last month. This represents the lowest level since 1982 when the NAR began tracking data. 

Kleman expects supply to increase after the elections. Uncertainty will decrease after voters elect a new president. Listing and selling a home can take months to process. That’s why sellers have a lower risk tolerance than buyers. “Buyers, when they see a house they love, they pounce,” he said. “I think the sellers are just looking long term in the economy and still feeling some anxiety. Many of them are going to put their homes on the market in January and February.”

Demand won’t last forever  

The Wall Street Journal’s Justin Lahart thinks not everybody can live outside the big cities. A remote job in a vacation spot may pose difficulties for some. Winter conditions may also make some remote workers rethink their strategy. He also believes that the housing boom now made people buy houses sooner than later. He thinks many of the workers who moved to the suburbs would’ve done so in a few years. When the pandemic subsides, a smaller group might follow the exodus out of big cities. 

The number of people who can afford houses will shrink as well. Many workers’ careers derailed during the year. Many millennials got burned during the financial crisis in the early 2000s. Now, a new career-threatening crisis is in full swing. The post-coronavirus landscape may depend on how well the economy rebounds. We’ll have next year to find out.

Watch this as CNBC reports on the US housing sales boom. Redfin CEO Says “people are buying vacation homes, then taking a permanent vacation:

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Biden Plan Could Mean 60% Tax Rates, But Here’s Who Will Get Stuck With Higher Taxes

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Biden Plan Could Mean 60% Tax Rates, But Here’s Who Will Get Stuck With Higher Taxes

New York and California may start losing high-income residents by the droves next year if Democratic nominee Joe Biden wins the election in a few weeks.

That’s because the two left-leaning states would have a combined federal and state rate over 60% under Biden tax plan.

Even New York resident and rapper 50 Cent tweeted earlier this week that despite his apparent dislike for President Trump, he said “Vote Trump” and “62% are you out of ya (expletive) mind,” when he learned about Biden’s tax plan.

According to calculations from Jared Walczak of the Tax Foundation, California residents earning more than $400,000 per year could face a combined tax rate as high as 62.6% under the Biden plan. New Jersey residents could see taxes reach 58.2% and New York would top out at just over 62%.

But somehow, it could get even worse.

Tax Rates Can Still Go Higher Under Biden

Walczak points out that if you include the contributions to the tax hikes by employers, which are often passed along to employees, the combined rates would jump to over 65% in California, 62.9% in New Jersey and 64.7% in New York City. They could still go even higher if California and New York raise taxes on high earners. This is something some legislators have proposed to try and close multibillion-dollar budget gaps.

“These rates would be the highest in about three and a half decades,” said Walzcak, “and imposed on a broader tax base than was in place previously.”

The Middle Class Will Suffer?

But Home Depot co-founder Ken Langone believes the wealthy won’t pay higher taxes at all – the middle class will.

“The middle class will not be exempt. Tragically, it will punish them. It isn’t going to punish us,” said Langone.

Appearing on Fox Business yesterday, Langone said due to Biden’s tax hikes, “the middle class will be in peril.”

He said that despite Biden saying the wealthy should pay more in taxes, the middle class will feel the effects of Biden’s tax plan. Langone said he is in favor of a tax code that is more progressive and equitable. This includes eliminating loopholes that favor the rich and large corporations.

“I don’t know if there’s any of us that have done well that will have a problem with paying more taxes, but it’s a ruse to think that hitting us and us alone is going to get the job done,” Langone said, adding ““It won’t and the middle class will be in peril and when you take money out of the hands of the middle class, you do a dramatic impact negatively on the economy.”
He said that increasing taxes on the middle class will lead to a recession.

“The problem is, when you go after the middle class, you begin to attack the backbone of the economy and we will have a bad recession. We will have a very bad recession,” Langone said.

“These are very precarious times and not the time to be screwing around,” he added.

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Market Volatility Rises As Election Polls Show Tightening Race

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Market Volatility Rises As Election Polls Show Tightening Race

The relatively calm markets earlier this month are giving way to more volatility as we approach the election. This is according to a team of strategists at JPMorgan.

“While it is perhaps true that during the first two weeks of October risk markets were supported by a widening of US presidential odds, which by itself implied a lower probability of a close or contested US election result, over the past week or so these odds have started narrowing again,” said a team of strategists at JPMorgan Chase, led by Nikolaos Panigirtzoglou.

According to recent polls by RealClearPolitics, in key battleground states, Democratic nominee Joe Biden leads President Trump by 3.9 percentage points, 49.1 vs. 45.2. That lead has shrunk from a 5 percentage point advantage for Biden about a week ago.

A general election nationwide poll by RCP shows a wider 8.6 percentage-point lead for Biden. However, there are many who feel those polls are not correcting for sampling bias.

Polls Inaccurate?

MarketWatch recently interviewed Phil Orlando, the chief equities strategist at Federated Hermes. There, he said he doesn’t believe the polls accurately reflect how close the race is. In relation to this, he pointed to the surprise win by Trump against Democrat Hillary Clinton in 2016.

“Our base case is that the polls are wrong, there’s an oversampling biased error that a lot of polls aren’t correcting for,” Orlando said.

With a tightening race for the White House, volatility has returned to the market. It will also likely increase in the final two weeks leading up to the election.

A report put out yesterday by SentimenTrader showed that the CBOE Volatility Index or VIX, jumped to levels last seen during the Great Financial Crisis, and tends to rise as stocks fall as it is typically used as a hedge against market downturns.

Market analysts use the ratio to measure how speculative traders are getting. A rise in the put/call ratio means that investors are expecting plenty of volatility between now and November 3.

The VIX, which measures investor bullish or bearishness on the S&P 500 for the next 30 days, is currently near 29, well above its historical average between 19 and 20. This week alone the VIX jumped 6.3%.

Source of Volatility

Jeffrey Mills, the chief investment officer at Bryn Mawr Trust, said some of the volatility likely comes from investors trying to position their portfolios based on who they perceive will win the election.  “There could be some front-loaded selling but I do feel like that’s a near-term phenomenon,” he said. But he says no matter who wins, there’s really only one place to invest, and that’s the stock market.

“There is going to be this continued pull toward equity markets — where else are you going to go when you need to earn a certain percentage to fund retirement, fund education?”

If investors are moving money today based on who they think will win the election, Daniel Clifton, head of policy research at Strategas Securities said each candidate will likely benefit different sectors.

A Biden victory will be good for stocks in the infrastructure, renewable energy and technology sectors, said Clifton.

If President Donald Trump is reelected, Clifton said there’s “huge upside” in some sectors. These include defense, financials and even the for-profits like prisons, education and student loan lenders.

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