Above the Fold

Third Stimulus Package Nears Passing; Will It Make Enough of an Impact?

With a near $2 trillion price tag (more than the annual GDP of Brazil), the third stimulus package could be signed into law this week. The latest iteration of the “American Rescue Plan,” though heavily modified from its original form, comes with a plethora of COVID-19-related programs and funds, but also includes a great deal of less-targeted spending. 

The biggest highlight of the bill is the $1,400 payment to Americans making less than $75,000, and married couples making less than $150,000. The payments will phase out much more quickly than previous stimulus packages, completely cutting out individuals earning more than $80,000 and married couples earning more than $160,000 — regardless of the number of kids they have. Ironically, this version will include payments to adult dependents, even those in school — so we could see spending increase with those demographics in areas like tech, gaming and autos. 

Unemployment assistance will also be extended until Sept. 6, and provide a $300 federal payment, of which $10,200 is tax-free (for households making less than $150,000). There are added benefits for low-income housing, mortgage and rent assistance, as well as a bump in food stamp and WIC (Special Supplemental Nutrition Program for Women, Infants and Children) benefits. There will be no change in the federal minimum wage, but states and local municipalities will get additional aid for capital projects and to offset budget deficiencies. 

The sweeping legislation also includes the largest expansion to the child tax credit amount, while also making it fully refundable and allowing parents to take the benefit monthly. Billions are also included for education, childcare, small businesses and, of course, COVID-19 testing and vaccines.

The sheer size of the bill is sure to further stabilize the U.S. economic landscape, and likely continue to foster consumer spending and saving trends in the near term (which have already been improving over the last few quarters). The biggest questions around the bill are focused on its ability to target those most severely impacted by the pandemic, as well as the longer-term fiscal effects. 

Three Things 

1. It’s No Game for Microsoft – In an effort to gain serious traction in the ultra-lucrative gaming space, Microsoft has gained approval from both the Securities and Exchange Commission, as well as the European Union, to proceed with its massive $7.5 billion bid to purchase ZeniMax Media. Creating a new subsidiary called Vault, Microsoft will add ZeniMax’s Doom and Fallout game studio (called Bethesda Softworks) to its portfolio. Once the deal is completed, the Windows maker will own 23 first-party game design studios to create unique games for its Xbox system, xCloud game streaming and other platforms. 
2. Inflation Fears Stimulate Yields, Punish Tech – U.S. Treasury yields leapt to 1.610% on Monday as news of the Senate’s approval of the $1.9 trillion COVID-19 bill hit the wires. Investors not only continued selling bonds, but also reduced holdings in some of the riskier tech names, as their valuations are linked to prevailing rates when projecting long-term cash flow. The Federal Reserve doesn’t appear terribly concerned about near-term inflation, as it’s a sign of improving economic conditions. 
3. I’m Going to Disneyland! – The California Department of Public Health announced it will allow Disneyland and other theme parks to reopen April 1. As one of the more restrictive states when it comes to social distancing, the Golden State surprised many with the announcement. Disneyland, which has been closed since March 14, 2020, is expected to resume operations at 15% capacity with mask restrictions. 

Did You Know?

A Little History on the “I’m Going to Disneyland” Campaign

Back in 1987, former Disney CEO Michael Eisner and his wife Jane were having dinner with famous aviators Dick Rutan and Jeana Yeager (who had just completed the first flight around the world without stopping). Mr. Eisner asked the couple what they could possibly do now after completing such a tremendous feat, to which Rutan jokingly replied, “I’m going to Disneyland!” Jane Eisner loved the slogan and Michael took it a step further by implementing a strategy where Disney would target quarterbacks and eventually MVPs of each Super Bowl team. The initial offer was a $75,000 cash payment to say, “I’m going to Disneyland!” as the winning quarterback walked off the field. Phil Simms of the New York Giants was the first to capitalize on the deal in the 1987 Super Bowl — many have followed over the years.