🎙️ Apple + Disney?

Forget high mortgage payments, buying a car this year (and filling up the tank) is expensive, too 🚙

The average interest rate on 48-month new car loans: 7.59%, the highest level since 2007. Thus, the average monthly payment hit a record $736 last month, a 28% jump over the past three years.

💭 Now excuse me as I take my 10-year-old sedan to the mechanic for repairs.

— Matthew

Here’s the rundown:

Today, we'll discuss the three biggest stories in markets:

• The dark side of the booming sports betting market

• The Magic Kingdom reports earnings

• How AI is already shaping medicine

All this, and more, in just 5 minutes to read.

CHART(S) OF THE DAY

IN THE NEWS

⛈️ The Dark Side of the U.S. Sports Betting Boom (FT)

Yesterday, we covered how ESPN is the latest big name to pour money into sports betting, and how the booming space is minting millionaires. Today, we cover the dark side of the space.

• Americans have bet $245 billion on sporting events since restrictions were loosened in 2018, but many now fear a surge in gambling addiction. In a few clicks from an app, just like stock trading, sports fans can wager thousands of dollars on a game’s outcome.
  

• People of all ages have flocked to sports betting, looking for fun and entertainment but also a quick buck. But “the house always wins” hits home for many bettors who have been wiped out.

The Financial Times reports that a growing cohort of sports bettors are grappling with taming addiction, causing a surge in sports-betting-related rehab facilities.

Big business: Sports betting has become a high-growth tech industry with over $12 billion in revenue last year. Ads are popping up all over websites, TV networks, and billboards.

• A study funded by the New Jersey attorney-general shows that 6% of people in the state – the first to approve sports betting – are “problem gamblers,” and up to 20% of citizens exhibit signs of problematic play. Pennsylvania was worse: 36.7% of online bettors said they had at least one problematic element to their gambling habit in 2022.
  

• Noted a Washington lobbyist hoping to increase regulation: “This is not your grandmother’s gambling. This is about betting on every play of every game anytime…the industry is forcing (accumulator bets) down your throat.”

Why it matters:

This is yet another issue where big business meets ethics: Many states are conflicted, and well aware of the addiction and subsequent problems around gambling, which can take a toll on their citizens’ financial and emotional health.

Death and taxes: But state leaders also know sports betting generates enormous tax revenue, about $3.4 billion since 2018. That number is growing rapidly each year.

• BetGM’s CEO, Adam Greenblatt, told The Financial Times that “addiction as a disease is real…the answer is not to shut down every bar. Our job is to help those who are vulnerable and need help.”
  

• New Jersey’s attorney general said stiffer regulation is coming because sports betting is a “product that is causing addiction and dangers to the health of our residents without proper safeguards.”

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🎬 Hollywood Strike Boosts Disney Earnings, Apple & Disney Rumors Swirl (Bloomberg)

The magic is back at Disney, at least for investors. Disney’s stock surged almost 5% today, following better-than-expected second-quarter earnings from the world’s largest entertainment company.

• Thanks to the writer and actor strikes in Hollywood, spending on movies & TV shows is way down, saving Disney about $3 billion.

For the last five years, Disney’s stock has been in a funk, down over 22%. But now-CEO Bob Iger’s return to the Magic Kingdom last November spurred a new bout of optimism for investors who hoped he could guide its streaming business, Disney+, to profitability.

And he’s making progress: Disney’s online video operations trimmed its losses to $512 million, down from over $1 billion a year ago. However, Disney+ subscribers fell 7.4% to 146.1 million.

• Most of that dropoff came from India, where Disney lost streaming rights for popular cricket games in the Indian Premier League.

Iger’s strategy so far is simple: Raise prices and cut jobs. After returning to the company, he oversaw some 7,000 job cuts.

• Like Netflix, Iger told investors that Disney would crack down on password sharing to boost subscriber numbers while raising the price of its ad-free Disney+ subscriptions by $3 per month to $13.99.
  

• Hulu, which Disney owns a majority stake in, will also raise its ad-free monthly subscription by $3.

Theme parks: Apparently, people still love $15 jumbo turkey legs. Despite a slowdown at its U.S. parks (thanks, in part, to everyone going to Europe this summer), Disney’s international theme parks did well en

ough to power an 11% increase in profits for the whole theme-park business.

Why it matters:

Rumors swirl: Speculation about Iger’s bigger-picture plan to sell Disney to a large tech company, specifically Apple, has consumed investors’ imaginations.

• Iger played down that possibility on Wednesday’s earnings call, implying that regulators wouldn’t allow such a deal to happen.
  

• It’s a decades-old rumor, but analysts say it could be feasible if Disney is willing to sell off certain assets, enabling Apple to gobble up its streaming business.

Tying the knot? The renewed Disney and Apple marriage hopes come after Iger hinted in an interview last month that he’d be willing to sell Disney’s portfolio of TV networks, such as ABC and Freeform, since “They may not be core to Disney” any longer.

• Disney’s traditional TV business reported a 23% profit decline, hence its subsidiary ESPN’s new focus on sports betting.

As Iger once again looks for a successor to replace him, Disney’s future remains as uncertain as ever. Still, this quarter’s earnings are a reminder that the Mouse House remains a media juggernaut, even though Wall Street hasn’t necessarily rewarded investors over the past few years.

MORE HEADLINES

💰 U.S. inflation rises (slightly) for the first time in a year

🍊Orange juice futures prices are hitting record highs

📦 Chinese e-commerce giant Alibaba beats earnings expectations

 🚚 UPS drivers will earn $170k in pay & benefits on average per year

🌴 Maui tourism hampered by Hawaii fires

🩺 How Artificial Intelligence Shapes Medicine (WaPo)

Could AI shape the future of medicine? New York City’s Mount Sinai, one of the country’s top hospitals, has become a lab for artificial intelligence.

Critical care doctors at the hospital access a program of patient names, with red numbers that depict a score assigning a probability of who might die. AI generates the score. Anything past .65 is when doctors began to worry. The score has sometimes hit .8 or higher, alerting doctors and nurses that there could be an issue.

• Mount Sinai is just one of many elite hospitals investing hundreds of millions of dollars into AI software and education. They trust that AI can bolster human professionals.
  

• Many are encouraged by recent studies, such as one that found that AI readings of mammograms detected 20% more breast cancer cases than radiologists.

It’s profound advancement — the booming AI medical market is already worth billions of dollars.

Much-needed help: AI is already valuable in medicine as algorithms scan troves of data to spot trends and commonalities in patients with certain ailments. The AI saves doctors hours of work, which is especially important since the U.S. faces a shortage of as many as 139,000 physicians by 2033, according to Bloomberg.

• Said one VC partner who’s invested in the space: “There’s a lot of excitement about AI right now. The technology has…gone from being cute and interesting to where actually (people) can see it being deployed.”

Other hospitals use Google chatbots trained on medical licensing exam questions to summarize clerical documents and organize data. And, well, the US health system could use help with paperwork — It ranks last in administrative efficiency among 11 countries, according to a 2020 Commonwealth Fund report.

Why it matters:

The worries: AI advancements haven’t come without tension. Some front-line workers worry about the technology making wrong diagnoses (which humans do, too), revealing sensitive patient data, and becoming an excuse for insurance and hospital administrators to cut staff.

Concerns about rolling out AI too quickly are mounting in all corners of the economy.

• One Virginia senator said: “While artificial intelligence (AI) undoubtedly holds tremendous potential to improve patient care and health outcomes, I worry that premature deployment of unproven technology could lead to the erosion of trust in our medical professionals and institutions.”

Too much hype? Even people within the medical community caution the “hype” about AI. They call for accuracy over speed, especially concerning human life and medicine. They point out that some startups will rush software to the market while it’s still early, looking to get rich quickly.

• The end goal: Get the right doctor to the right patient. Because as many nurses have said, a human can read body language, see how a patient looks, and then use AI-powered biological data points to pinpoint the best treatment.

See you next time!

That's it for today on We Study Markets!

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