The economic power of BTS

Key takeaways

Investors are currently fleeing older bonds due to expectations of rising interest rates, which could lead to a global bond sell-off.
The US and other countries’ large borrowing needs are contributing to higher bond yields, impacting stock markets negatively as bonds become more attractive than stocks.
BTS’s international tour has a profound economic impact, boosting local economies, creating jobs, and influencing stock prices of related companies.
K-pop’s influence extends beyond entertainment, playing a significant role in global economic activity and demonstrating its importance in the broader market landscape.
Fan spending on merchandise and tourism related to BTS concerts illustrates the cultural power of K-pop and its tangible economic benefits.

Summary

The Global Bond Market Sell-off and Interest Rate Expectations

In this section, the podcast explains the recent worldwide decline in bond prices, driven by investors' expectations that interest rates will rise. The anticipation of the Federal Reserve increasing rates, especially following Fed Chair Kevin Worsh’s speech at Jackson Hole promising to tame inflation, prompted investors to sell older bonds which offer lower yields. This bond sell-off is also influenced by the large borrowing needs of governments like the US and Japan, which issue bonds to cover budget deficits, thereby raising yields to attract buyers. The implications of rising bond yields include a potential fall in stocks, as investors perceive bonds as safer and more profitable in the current environment.

Economic Impact of BTS and K-Pop on Local Economies and Stock Markets

This section discusses the significant economic influence of BTS’s US tour, including the loyalty and international nature of their fan base, ARMY. The success of the tour generates substantial economic benefits, exemplified by Las Vegas which earned $340 million from BTS events. The tour’s full scope, with 85 shows in 35 cities, is projected to contribute approximately $5.3 billion globally. The podcast highlights how BTS and K-pop influence stock prices, particularly of their management company Hybee, which saw a 7% jump with BTS’s World Cup announcement. The traveling fans boost local economies—staying for concerts, shopping, dining, and exploring—bringing additional revenue to hotels, restaurants, and retail. The segment also touches on the personal spending habits of fans, which, despite being high, do not necessarily offer high returns but are a testament to the band’s lucrative impact.

The Cultural and Social Influence of BTS and K-Pop Fandoms

This segment explores the loyalty of BTS’s fanbase, ARMY, and their dedication as they travel to multiple concerts, supporting the economy of host cities through merchandise purchases and tourism. The host humorously reflects on her own spending as a fan, recognizing the substantial financial outlay involved. The merchandise economy, both official and second-hand, creates a micro-economy around BTS, fueling consumer activity beyond concert ticket sales. The podcast underscores the broader cultural impact of BTS and K-pop, demonstrating their role as a multi-billion dollar economic engine and their influence extending into the stock market and local economies worldwide.

Show notes

South Korean boy band BTS is currently in the U.S. as part of their first world tour after a four-year hiatus. Their fans, known as ARMY, are extremely loyal, and the concerts are attracting hundreds of thousands of attendees. That includes Susan Schmidt, portfolio manager at Exchange Capital Resources and a regular "Marketplace Morning Report" contributor. Today, Schmidt joins the show to explain the economic impacts of BTS and its fans. Plus, what's with the global bond selloff?

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Understanding the economic impact of BTS — and its ARMY of fans