Dan Klein Dan, Olympics, Dan Do discussed on MarketFoolery
Dan Klein Dan. How are we doing? I'm doing well given the circumstances going a little crazy but working a lot and you know by all accounts do it. By how are you? I'm good Dan Strange Times. And let's get right to it because we're taping this around noon on Tuesday noon Eastern and at the time of our taping. I want you to to brace yourself at. The stock market is up and it is up big now. We have a lot of optimism. Tan Congress may be closing in on a two trillion dollar stimulus stimulus that would include direct payments as well as loan assistant programs for business. Now we don't know all the specifics. Dan Do right now. The market really seems to like the potential. The Dow up around seven percent investors feeling optimistic. Are you feeling optimistic? Yeah it's not even so much about the details. It's about kind of putting a floor on this. If we know that Boeing and southwest jetblue and other major industries aren't going to be driven out of business by this that that suggests that normalcy could eventually return. Obviously there's a lot of devil in the details but right now. This is just kind of creating some belief for people that eventually there will be a way out of this that there's a government backstop beat loans be a direct payments. That's going to help. People PAY THEIR BILLS. But also keep these companies open because these are all major major employers. I mean a lot of people will frame. This sort of government giveaway. But what are you supposed to do? The goal is to keep people at work and bat is leading to a ton of optimism. It Dan. Let's talk more about that. You just mentioned some of the Big Airlines and I'm wondering when it comes to the bailout piece of this. To what extent do you think the government will essentially be in the business of having to pick winners and losers having to decide? Who gets what how much. Yeah so. We've seen none of the details of exactly how this is GonNa work. But let's assume these are loans and that they're at least somewhat secured against the asset of the company. So the reality is I don't WANNA see failing companies get loans that keep them in business for another year or two when they would have died. Even if corona virus had not been issue. But I don't see so far a lot of mechanisms to stop that from happening. Obviously there has to be some sort of means. Testing looking at balance sheets looking at what company was doing but most of the names we've talked about. I mean obviously Boeing is headed struggles. But it was a fairly solid business before this. All of the the airlines. We've mentioned jetblue. Southwest those were on firm financial footing. So it's GonNa be the company's on in in some of the more struggling industries. We talked about retailers last week. Some of those were going away anyway. That's probably true of some of the hotel brands that have had their struggles Maybe some overbuilt casinos. So yeah we need to see the rest of this and some of this money might go to things that don't deserve when you work this fast. That almost has to happen. Okay Dan now. You're in Florida and I know from our recent conversation that you love a good cruise so I wanna you want to get your thoughts on how this might shake out for the cruise industry and specifically the big pureplays. Now we have carnival which owns Prentice and Holland America among others. We have Royal Caribbean. We have Norwegian are the cruise company is going to get some relief from the stimulus. And if not can they stay in business so I don't think they are because they're largely dot? Us companies some of their subcontractors. Might maybe some of their workers will be covered in different aspects of this. Obviously a lot of their workers are not American though. Of course their office personnel largely our citizens so but I can only speak to royal and Carnival I. I haven't looked into Norwegians finances but both royal and Carnival do have significant Barak Capability They do have a lot of money on hand. They have capital projects. They could push off in a time where it's GonNa take a while for demand to recover. They probably don't need to build as many new ships so assuming this ends in four to eight weeks or and people can get back out on the Ocean. They will probably make it through. I looked at all the numbers yesterday and it looks encouraging the challenge for them is will people come back. And as I've mentioned to you I have cruises book I fully intend to cruise this summer Unless the situation remains this dire of but this is an industry that's very very vulnerable to public perception and people. It's hard to know if they will think this is safe. Even when the rest of the world has returned to normal and Dan I wanna hit it from the public sector and the potential bail out here to the private sector were really starting to see some interesting partnerships in the private sector. We had an announcement today. That Ford will be partnering with Three M. and GE healthcare to begin producing facemask and ventilators. What do you make of news like that that answer some questions for me because when Ford and other automakers were talking about making ventilators and as someone who used to run a factory I thought wait a minute like how do you of the Tulane? How'd you have it on even like the blueprint for how to bake a ventilator? Is it that easy and clearly? It's not that hard. But they're going to get assistance from three M on how to make it. Some of the supply chain repurpose things like fans they use in certain ventilated seats To work in ventilator so this is industry sort of the best of the best coming together to make something that needs to happen happen and it's very encouraging okay. Dan and speaking of the best of the best. Let's Talk Olympics. It is now official now. We expected this. But it's official. The two thousand twenty summer Olympics have been postponed has been the Olympics is a collective thing so I gotta use the right verb. There Dan has been postponed now on Tuesday. The IOC and Japanese government agreed to postpone the twenty twenty seven Olympics quote to a date beyond two thousand twenty but not later than summer twenty twenty one end quote now. Dan. This is not just a sporting event. This is big business at comcast which owes NB NBC universal expecting more than a billion dollars ad revenue for the Olympics. Yeah about one point. Two billion in on the last Olympics. They made two hundred fifty million in profit. They might not make as much on this one because the last one was in Rio so you had a more favourable time zone as opposed to being in Japan but this was the only decision possible. Athletes can't be sticking to their training regimen so even if everything was all ready to go on the world is operational by mid July. You simply don't have the logistics to make this happen so postponing it's GonNa be challenging. The sports calendar is going to be very difficult. There's I believe thirty one. Maybe thirty two effected sports here and some of them like soccer. Have very busy calendars anyway? So there's a lot of moving pieces but you had to do this at because there was just no way to make it happen and this is largely. Revenue postponed not revenue. That won't happen. Unlike in some of the other major sports you're simply GONNA lose games and because they're in every year thing. There's no way to make that up. This is just going to change the Olympic cycle where they'll be two summer Olympics closer together Which might be good because it'll create some stories with some athletes. That'll be pressured people's memories and I WanNa talk more about that. Because obviously the other professional sports Have had either cancel or suspend their seasons. Baseball would be starting in a few days. Dan and that for me is normally would be very upsetting except an astros fan and that essentially just as the Astros Bernarda get booed everywhere. They play now because they're not going to be playing for the whole cheating scandal. But I'm curious when you look at Major League baseball the NBA NHL Other professional sports. That are not happening. Do you think there will be long-term effects from all this so long term and first of all when he said the Astros? I thought it would boo from here but as a as a red SOx fan of a little afraid of speaking to suit. Oh that's right. 'cause they announced the punishment for the red SOx right. Yeah the shoes yet. To drop the withhold by BOO look. I think sports are such a part of the American fabric that I hope we have on. Nhl Season I hope we have an NBA season even if it's shortened the way the NHL is talked about doing twenty four team playoff which would include every team including my New York Rangers That could have qualified. Had the season played out. I'd like to think we're GONNA get something we may not. We may get emptier. Rita stars competitions or just weird things to fill TV programming but eventually when we get to next season the demand will be a nervous. I think we all realize how much we miss boards and how much sports fuels I mean. I don't know if you watch. Espn BUT OTHER THAN NFL free agency. They are struggling to find things to talk about. So there's all these industries not to mention the fall TV season. That would be promoted around sports all this sort of different reasons. You Buy Watch sports. That's all I'm hold entire advertising businesses kind of on hold Dan. I WanNa talk more about that because I love that point because as we're all quarantined here right now you and I are using zoom video and we're recording the audio of course but more and more people using zoom skype and and all sorts of Whiz Bang Technology and so on one hand I can see that becoming more mainstream even when we out of all this people now know how to use zoom or they they know they have tools that they didn't have on the other hand. I can also see. People really appreciating the person experience whether it be sports whether it'd be live music that I love going to. I mean I feel like when all of this and I'm going to have a renewed appreciation for live events. Yes I think it's. It's a little bit of both I. We talked about cruises before i. I'm GonNa hug the first person I see when I get to go on a vacation to do something for fun And the same with concerts. I've missed out on some concerts on the other hand. Some of my favorite musicians have been using youtube resume or whatever it is to broadcast live from their basement so I've had some really fun somewhat intimate experiences with artists. I really like you know playing to maybe ten people. Maybe a thousand people so. I also think you're gonNA see a better understanding of not making stupid trips the example I will give. Espn has been having all of its correspondence from home and a lot of times they would fly in La correspondent to do a connecticut or New York Bay show for the day. And that just seems silly when you could do it over zoom so I think you're gonNA see acceptance of this works and it could be done better. This isn't the old skype videos being used on the news. You look like you're like a hand held camera from Nineteen eighty-four. This is really good technology. That's that seamless. And more people understand it. I think I've mentioned on a couple of shows we've done. I've done with other people that my mother had no idea. Zoom existed announced pretty big part of her world with with keeping in touch with her friends. And so we're absolutely changing behavior. But am I still GonNa go to in a sporting event? I absolutely can't wait okay. Dan and I think I buried the lead. 'cause I know that you are wrestling fan. So where where does this leave wrestling and specifically WWe WWF faces a pretty big challenge in that a lot of its revenue are? What keeps it? Profitable is television deals. And so far it's been able to fulfil those deals by doing empty arena shows at its training center There are very strong rumors that they've recorded a few shows in advance That wrestlemainia has already been recorded. Which is gonNA take place over? Two nights also would not shock me if they licensed wrestlemainia. Yes Bien because ESPN has been running some old wrestlemanias. I think to reasonably good ratings so for. Wwe The big question is at some point. Will they not be allowed to carefully controlled closed? Arena? Show is if they stopped delivering programming. They stopped getting paid and that does create problems. Maybe less problems. A lot of companies because pro wrestlers are contractors so while most of them have downside guarantees meaning minimums. They'll be paid. They're not getting huge money if they're not performing for the most part But this is a touch and go. Wait and see because you have see. Has it been able to put on scheduled events because they couldn't find a venue that would legally let them do it but because they are real sport there are Athletic Commissions? That regulate them. Wwe Is television so they have a little bit more leeway and so far they've been able to find ways to do it and a do have the ability to enhance some of their live programming with programming from their network with old matches dropping a lot of stuff in shows. So I'm fairly confident that they'll be okay even if they do end up with some sort of temporary disruption. Okay Dan. Let's wrap up with the desert island. Poll you're on a desert island and you have to own one of these stocks for the next five years..