Axios Markets

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April 20, 2021

Good morning! Was this email forwarded to you? Sign up here. (Today's Smart Brevity count: 1,165 words, 4.4 minutes.)

Situational Awareness: Dogecoin rose above 42 cents a coin in overnight trading, pushing its market value well above $50 billion because... it's 4/20.

🎙 “Life's but a walking shadow, a poor player that struts and frets his hour upon the stage and is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing.” - See who said it and why it matters at the bottom.

1 big thing: Playboy and the corporate future of NFTs

A screenshot of a video of Dion Rabouin interviewing Ben Kohn.

Playboy — yes, that Playboy — has become the stock market's hottest play for NFTs with its shares jumping more than 150% since returning to public markets via SPAC on Feb. 11, even after a 20% correction over the last two days.

What's happening: Having shed its roots as a magazine dads kept hidden under their beds and rebranded as a sexual health and lifestyle brand, Playboy, now PLBY Group, is catching fire as investors look to cash in on the company's brand recognition and its future on the blockchain.

The intrigue: Playboy is working with companies like Nifty Gateway to offer fractional ownership in the company's original artwork — think the original Marilyn Monroe Playboy cover or the Kim Kardashian centerfold — as well as artwork the company has accumulated over the years and sell their digital rights as NFTs.

  • The company also is shifting what it means to own an NFT — after dividing digital ownership rights into fractional shares, Playboy will retain an ownership piece that will pay the company long after the original sale.

What we're hearing: "NFTs for us are a really interesting opportunity to monetize not only new work that we would commission but really those 10 million pieces that we have in our archives plus our 5,000-piece art collection," PLBY Group CEO Ben Kohn tells me on the latest episode of "Voices of Wall Street."

  • "We have a Matisse in our board conference room that John Lennon actually put a cigarette out in one night when he was in the Playboy mansion on a bender."

Don't sleep: Kohn's pitch is not about Playboy's ability to capitalize on the moment but on the company's ability to deploy NFTs as a long-term revenue stream that can create a brand new collector base and keep earning money from those collectors literally forever.

  • "We can dictate what terms we want moving forward. ...Not only can you receive 80% of the initial sale, every subsequent sale thereafter you receive 10% of."
  • "So the same thing works whether we do it with Nifty, SuperRare [digital market on Ethereum] or even on our own platform, we can create a down-market revenue stream that lasts in perpetuity."

The bottom line: Playboy's model of divvying up and selling digital rights while also retaining a partial ownership stake and holding onto physical copies and copyrights could open up new revenue streams for dozens of other companies with similarly recognizable brands.

  • "The ability to monetize that over time, both through original pieces, creating new pieces, creating collages off of it, it becomes really, really interesting," Kohn says.
  • "We believe for us, long term, there's a big business there."

2. Catch up quick

The CDC is reviewing reports of additional cases of severe side effects among people who received Johnson & Johnson's vaccine, in addition to those who developed blood clots. (Reuters)

The Biden administration is considering forcing tobacco companies to reduce the nicotine content in all cigarettes sold in the U.S. to levels at which they are no longer addictive. (WSJ)

The supply crunch in semiconductors and some other products has no end in sight and could be extended into next year. (WSJ)

Los Angeles Mayor Eric Garcetti is proposing a guaranteed basic income pilot program in his upcoming budget that would pay 2,000 families $1,000 a month. (LAist)

The House of Representatives passed the SAFE Banking Act, a bill that would give marijuana businesses easier access to banking services. (Bloomberg)

3. U.S. manufacturing has reached an inflection point

Illustration of a robotic arm holding an American flag.

Illustration: Aïda Amer/Axios

Axios' Hope King writes: The U.S. manufacturing sector is at a crossroads — proponents of President Biden's Build Back Better initiative argue that if the focus was to be retrained on it the sector could provide improved and sustainable economic growth after decades of shedding jobs and scale to other countries.

Why it matters: Biden's ambitious plan makes it clear that infrastructure and manufacturing investments are top priorities, but history is not on his side and Congress is already asking for plenty of compromises.

Where it stands: The pandemic-induced PPE crisis and recent chip supply shortages have highlighted the negative economic costs of globalization and the U.S. dependence on foreign nations to provide a multitude of necessary goods and supplies.

What we're hearing: The pandemic can serve as a key moment to “revitalize growth and competitiveness” in 16 process sectors of manufacturing, which could help the U.S. grow annual GDP by more than 15% above baseline forecasts and add up to 1.5 million jobs by 2030, a new independent report from McKinsey Global Institute suggests.

  • This isn't about toys and clothing: Among the 16 recommended focus sectors, semiconductors, medical devices, communications equipment and electronics are seeing 6% to 11% global GDP growth annually.

Between the lines: McKinsey does not make policy recommendations, senior partner Katy George tells Axios, but "we have been beating this drum for a long time."

  • "If you look at past efforts to revitalize manufacturing, it doesn't add up to a cohesive strategy," she adds. Federal, state and local governments have spent more than $85 billion on 15,000 initiatives over 10 years, while GM alone spends $80 billion a year across 15,000 global suppliers.

But, but, but: While edicts like Biden's "Buy American" executive order demonstrate the president's penchant for investment, critics say such laws raise costs and lower quality and are too easily circumvented by savvy multinational companies.

To wit, Adam Posen, president of the Peterson Institute for International Economics, writes in Foreign Affairs (paywall) that the U.S. needs to stop fixating on manufacturing jobs as a driver for growth, and should focus more on universal benefits and embrace international expansion and competition.

  • U.S. politicians' "sentimental obsession" with manufacturing is "not a good look for a progressive agenda," Posen argues — and it enables manufacturing companies to feel they are "too big to fail," potentially leading to production monopolies that drive up consumer prices and drive down wages.
  • Further, manufacturing employment has been falling around the world in high-income economies, irrespective of their trade balances, he notes.

The last word: There is clear White House and bipartisan Congressional support for increased investment in manufacturing, but what that support ultimately looks like will determine the shape and scale of the industry.

4. House votes to condemn China for Hong Kong rights violations

Axios' Rebecca Falconer writes: The House of Representatives passed a resolution Monday to condemn China's government and Hong Kong's regional legislature for "the continued violation of rights and freedoms" in a near-unanimous vote.

Driving the news: The resolution calling on the governments to free Hong Kong's pro-democracy leaders, imprisoned under China's national security law, passed 418-1 — with Rep. Thomas Massie (R-Ky.) the only Congress member voting against the measure.

  • Media tycoon Jimmy Lai, 73, an open critic of the ruling Chinese Communist Party, was among a group of activists sentenced under the law last Friday.

What they're saying: House Foreign Affairs Committee Chairman Gregory Meeks (D-N.Y.) said the passing of the resolution sent "a strong bipartisan message demanding that the Chinese and Hong Kong governments respect the will" of Hong Kongers, per The Hill.

  • "We will continue to push for democracy and respect for human rights in Hong Kong," he added.
  • "We will continue to demonstrate that we stand in solidarity with the pro-democracy figures and activists who have made tremendous sacrifices for their city and for their core human rights."

The big picture: Former President Trump last July signed a bill sanctioning Chinese officials in response to Beijing's security law for Hong Kong.

  • The Biden administration has since stepped up sanctions for further curtailing democracy in the Asian financial hub.

The other side: China did not immediately respond to the House vote, but President Xi Jinping made a series of thinly-veiled swipes at the U.S. on Tuesday, warning against "bossing others around or meddling in others' internal affairs."

Thanks for reading!

Quote: “Life's but a walking shadow, a poor player that struts and frets his hour upon the stage and is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing.”

Why it matters: On April 20, 1611, the Globe theater in London held the first known performance of Shakespeare's tragedy "Macbeth."

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