The Update Issue: Goodbye to an Old Friend, Another Big Music Catalog Sale, Good News for HBO Max, People Still Quitting Their Jobs, Cleaner Textiles

It's important to remember that first movers in technology don't always end up the permanent winners... I write about tech giants Apple (AAPL) and Alphabet (GOOGL) so often here at Empire Financial Daily that it's hard to remember a time when iOS and Android didn't dominate the smartphone space. But those of us with long […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] The Update Issue: Goodbye to an Old Friend, Another Big Music Catalog Sale, Good News for HBO Max, People Still Quitting Their Jobs, Cleaner Textiles By Berna Barshay It's important to remember that first movers in technology don't always end up the permanent winners... I write about tech giants Apple (AAPL) and Alphabet (GOOGL) so often here at Empire Financial Daily that it's hard to remember a time when iOS and Android didn't dominate the smartphone space. But those of us with long memories will recall a time when the biggest kid on the smartphone block was BlackBerry (BB). Tuesday was truly the end of an era, as BlackBerry ended its support of its handsets with the little keyboards and one-time legion of power users. These phones are now defunct, and BlackBerry is attempting to reposition itself as a security software company. It's an incredible fall from grace when you consider how dominant the phones once were, as you can see in this graphic from Chartr...  Source: Chartr While it seems obvious in retrospect that touchscreen iPhones and Androids brought on the demise of the BlackBerry phone, it's important to remember that the iPhone wasn't an overnight success when it came to dominating share at the high end of the market. The first iPhone was introduced in 2007, but it wouldn't be until 2011 that Apple would overtake BlackBerry in market share. As it turns out, 2011 was coincidentally the same year that I ditched my last BlackBerry. After carrying two phones for the better part of several years – an iPhone for personal use and a BlackBerry for work use – that summer, I very unceremoniously dropped my BlackBerry into a rest stop toilet on the way to the Hamptons. That twist of fate is what got me to finally break up with my "CrackBerry," and my waterlogged phone got tossed in a drawer, probably sitting next to a scrap of paper with my MySpace password scribbled on it. It wasn't just me who ditched their BlackBerry phone... By 2012, BlackBerry's market share had dipped to just 5% from 20% only three years prior. Saying RIP to BlackBerry is a bit of an indulgence in nostalgia, but the company is also a cautionary tale for tech investors. It's a good reminder that being a first mover doesn't always equate with long-term market dominance, and also that things that seem so dominant and impossible to dislodge may not prove as persistent as they seem. After a year in which we saw tech valuations at times climb into the stratosphere, and several weeks where those same valuations have proven vulnerable, BlackBerry is a good reminder to keep an open mind about what is permanent and what is vulnerable to change in the fast-moving world of technology. Speaking of nostalgia, the music catalog of my all-time favorite recording artist, David Bowie, just got bought by a division of Warner Music (WMG)... Warner Chappell is paying Bowie's estate $250 million for the publishing (lyrics and music) rights to songs from 26 studio albums, as well as a posthumous studio album compiled from early material, Toy, which will be released tomorrow. Warner already owned the rights to the original recordings of most of the Bowie canon. What's interesting about this deal is that unlike similar blockbuster deals with contemporaries [Bob Dylan]( and [Paul Simon]( Bowie passed away in January 2016 and obviously isn't here to tour and otherwise support the music that Warner is forking over so much cash for. But Warner isn't concerned about the potential to continue to monetize Bowie's body of work... As Warner Chappell co-chair and COO Carianne Marshall explained to Variety... This fantastic pact with the David Bowie estate opens up a universe of opportunities to take his extraordinary music into dynamic new places. This isn't merely a catalog, but a living, breathing collection of timeless songs that are as powerful and resonant today as they were when they were first written. We were pleased that the estate felt that Warner Chappell has the knowledge, experience, and resources to take the reins and continue to promote a collection of this stature. All of our global leaders and departments are incredibly excited and primed to get to work with these brilliant songs across multiple avenues and platforms. I know I'll never tire of listening to Bowie's songs, but Warner clearly has high confidence that I'm in good company and that there are ample ways to keep these songs relevant – and generating cash, even five years after their creator's death and well beyond that. With music, there really is life after death... Music rights have the longest duration of all media assets, and are why the future remains bright for big players like Warner and Universal Music Group (UMG.AS). --------------------------------------------------------------- Recommended Links: Update from Whitney]( In his first message of the new year, former hedge fund manager Whitney Tilson weighs in on resolutions, the next big stock market crash, and the one step you should take with your money [TODAY to get ready](. --------------------------------------------------------------- [Breaking news out of Belgium]( On January 1, a major announcement came from the EU that could soon impact the business practices of almost every company on the planet. What's more, Wall Street titans like Goldman Sachs, JPMorgan, and BlackRock could invest trillions into this global shift, pushing a specific group of stocks higher over the coming months. [Get ahead of the rest right here](. --------------------------------------------------------------- Yesterday we learned that streamer HBO Max ended 2021 with 73.8 million subscribers, topping its own ambitious target of 73 million... I had been [initially critical of WarnerMedia being slow to launch HBO Max]( after several false starts with the HBO Go and HBO Now digital products, as well as its decision to price HBO Max so high at $14.99 per month. And many industry players had been downright livid with WarnerMedia chief (and my old friend) Jason Kilar when he decided to debut all 17 of studio Warner Bros.' 2021 new releases on HBO Max on the same day they hit theaters. This industry-shaking move seems to have paid off, as HBO Max has solidified its positioning as the third-largest standalone streaming service, after Netflix (NFLX) with 222 million subscribers and Disney+ (DIS) with 118 million. HBO Max was of course late to the party versus Netflix's digital service, which was launched well more than a decade ago in 2007, and was about six months behind Disney+, which launched in November 2019. The controversial decision to release movies to HBO Max the same day as theaters hasn't been without costs... Sequel The Matrix Resurrections has only done $32 million domestically at the box office since its December 22 release. Compare that to Spider-Man: No Way Home, which isn't available on streaming and had a [jaw-dropping $260 million opening weekend]( the week prior. The Matrix sequel was never going to pull like the Spider-Man one, but there's no doubt that there's a little bit of "robbing Peter to pay Paul" with Warner's 2021 film release strategy. Only time will tell if this release strategy pays off long-term... but right now it looks smart, especially as HBO Max seems to be leaving rivals Peacock, Paramount+, and Hulu in the dust, at least in terms of paying subs. Going forward, Warner Bros. will go back to giving some films an exclusive theatrical window of 45 days, while sending select titles straight to HBO Max the same day they hit theaters. It's clear that this isn't great news for the movie theaters... The once inviolable 90-day exclusivity window has been smashed, and we aren't going back. I continue to recommend avoiding the shares of movie exhibitors AMC Entertainment (AMC), Cinemark (CNK), and Cineworld (CINE.L). Things are clearly looking up at HBO Max, but the streamer isn't fully out of the woods. HBO Max is due to change hands from current parent AT&T (T) and merge with Discovery (DISCA), whose DNA is rooted in running cable networks. Not only is there the potential for culture clash and merger integration issues, but Kilar is expected to leave Warner when the deal closes. I may be biased, but his bold decision-making is a big part of why HBO Max has outrun streaming entrants Peacock and Paramount+ from legacy media peers Comcast (CMCSA) and ViacomCBS (VIAC), so I wonder if HBO Max will be able to keep up its hot streak with potentially less visionary and bold leadership going forward. We learned this week that people are still quitting their jobs in record numbers... The number of workers voluntarily leaving their jobs spiked to a record seasonally adjusted 4.53 million in November. This number was overwhelmingly dominated by people quitting private sector jobs. The private sector saw a record 4.31 million people quit, up 31% from November 2019, pre-pandemic. A picture tells a thousand words...  Source: Bureau of Labor Statistics ("BLS"), Wolfstreet.com The high quit rate is the result of a confluence of factors – employer poaching... worker confidence in being able to find jobs... a strong economy... big gains in stocks, cryptos, real estate, and other asset classes... and early retirements... to name just a few. ► Yesterday I wrote about ESG investing and financial efforts to incentivize decarbonization... Another big goal of the ESG movement is sustainability, which is integrally interrelated with reducing carbon emissions. Sustainability centers on depleting fewer natural resources, extending the life cycle of products, and reducing overall waste. One huge source of waste in the world is clothing, and ironically one of the things that makes clothing waste so bad is that efforts to increase the durability of clothing as well as its functionality have greatly increased the use of synthetic fabrics, which are ultimately based on plastic. It's a conundrum, because to reduce clothing waste, you want clothes to last longer. But to make them more carbon-neutral, you want to use less plastic and more natural renewable fibers in them. An article in tech magazine Wired caught my eye last week... It describes a company called Natural Fiber Welding ("NFW") that has come up with ways to make cotton, a natural plant-based fiber, behave more like a synthetic material. By treating the cotton and breaking down aspects of its organic material, then welding it back together, the cotton is rendered stronger and denser – more like the synthetic fibers typically used to make yoga pants and other athletic attire. NFW's new proprietary textile is called "Clarus." NFW also has a plant-based alternative to leather called "Mirum," which is made from coconuts, rubber, and cork. The technology derives from work the company's founder did while at the U.S. Air Force's Office of Scientific Research, and NFW is operating under license from the Air Force currently. Investors in NFW include corporates like fashion giant Ralph Lauren (RL), the venture arm of automaker BMW (BMW.DE), and recently public shoe company Allbirds (BIRD). NFW also has a deal with the relentlessly eco-conscious retailer Patagonia to use Clarus in products. Allbirds plans to start using Mirum in its products soon. This kind of textile innovation with the goal of sustainability is interesting... It shows that even the most low-tech of industries – apparel – can be transformed by technology. The involvement of so many corporates in such an early-stage company also demonstrates how seriously many big companies are taking the need to improve sustainability quickly. If you can't tell by now, I'm extremely bullish on how ESG will change the way we invest and how companies conduct business... And I believe the gains are about to come sooner rather than later due to the massive influx of money pouring into this space. CNBC reports that "a tsunami of money" is rushing into ESG... But by the time it's on the cover of Forbes or the Wall Street Journal, it will be too late. I've found three tiny stocks whose shares are set to soar as consumers, companies, and investors suddenly pour into the space. I believe this story is so important that I just recorded a brand-new presentation on this megatrend. For the next couple of days, you can watch it by [clicking here](. In today's mailbag, reactions to yesterday's essay on the place for both ESG and traditional energy investment, plus letters that came in while I was away that are very on point for today's updates... Do you miss your BlackBerry, Palm, MySpace, Vine, AOL Messenger, pager, portable DVD player, Walkman, or film camera? Did we throw any babies out with the bathwater? Have you tried HBO Max and if so, are you keeping it? Why do you think so many people are quitting their jobs? Share your thoughts in an e-mail by clicking [here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Berna). "I think it is wise to invest in both alternative energy and Oil and Gas. "A massive price shock could be coming to gasoline prices due to our policies over the Biden Administration and collapsing prices during the Trump Administration. Inflation has also tended to be associated with higher oil prices. There are many paths that could lead to much higher Oil & Gas stock prices and investors should have exposure. "On the other hand, multiple Empire and Stansberry publications are bullish on alternative energy names. The future appears like it will be in these names. I think a position here is valuable. "If one position goes down 50%, but another goes up 100% you still get a pretty good return, but it is possible that both win." – Kenneth L. Berna comment: Kenneth, I agree – they could both win, especially if you have different time frames for the investments. Energy stocks may prove timelier in the short term... but over the longer term, there will be bigger winners in alternatives. "As a participant in TIAA retirement systems, I have had the opportunity for ESG investing (on their terms) for more than 30 years. I have rejected it because they classified nuclear energy as environmentally unfriendly. They were wrong. But because of opposition like theirs, nuclear power is mostly stuck in the 1960's for a while longer. We should not let ESG investing be guided by 'mis-guided' ideas." – Bruce B. Berna comment: You're totally right, Bruce. I'm not sure how we have a near-term clean energy future without nuclear. "Went to Spider-Man on Friday after I was offered a $4 ticket on T-Mobile's Tuesday special. "Music rights deal fiasco. The buyers are paying way too much. In 20 years, they will be worth less than 10 cents on the dollar." – Peter H. "While visiting Dallas, Texas, I was told by a friend that a not that old AMC multi-screen theater was going to be torn down and replaced with apartments. It sits in a low-slung boutique and restaurant filled shopping center in a reasonably high-income zip code." – Brent F. Berna comment: This doesn't surprise me, Brent. The pandemic hastened the shrinking of the market for movie theaters. The decline went from a slow march to a quick jog. We will still have theaters, but we will need fewer of them. Regards, Berna Barshay January 6, 2022 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. 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