- In which your editor dons a VR headset for the first time…
- Why VR in 2016 is like the internet in 1995: Will you be on board?
- The number that just reached its highest since — gulp — 2007
- The refreshing candor of Australian central bankers
- Gold jumps… a new watch list you might wind up on… a favorite chart revisited… and more!
“Are you scared of heights?” asked colleague Aaron Gentzler, publisher of our technology-related newsletters and trading services. “Do you have good balance? Ever experienced vertigo?”
“Not really,” I replied, “although I don’t like to be high up on ladders.”
“OK, that works,” said Aaron. “You pass the Oculus pretest.”
“Is it problematic,” I asked, “that I’m wearing glasses and not contacts today?”
“No. There are no problems in virtual reality, anyway. Only opportunities.”
And with that, your editor donned an Oculus Rift virtual reality headset one day last month.
As if “headphone hair” weren’t enough to contend with, now there’s this…
Agora Financial pre-ordered a Rift in January, on the first morning pre-orders were available. We knew virtual reality would be one of the big investment themes this year, and we wanted to experience it firsthand.
Delivery was originally scheduled for late March, but the unit didn’t arrive till early June. Demand was high, and Oculus had trouble sourcing parts.
My takeaway — it’s an impressive experience. It really is, as we surmised last April while waiting for the unit, “the next big thing.”
I have to say, the headset was uncomfortable. But I chalk that up to a pair of glasses that’s sort of “wide” and was bumping up against the headset’s internal surfaces. Perhaps if I’d worn contacts that day, I’d have more likely “lost myself” in what I was about to experience.
Aaron manned the controls of the computer and the experiences on this day… so I could just sit back and take it all in. First, I stood on the ledge of a high building overlooking a busy cityscape at dusk. The imagery was very convincing. Fortunately, as noted above, I don’t have issues with heights.
Then I was looking down the hallway of a museum. A dinosaur came into view and started approaching me. Clearly, the thing was going to either step over me — or on me. But I kept my wits about me. When he stopped right in front of me and exhaled some sort of smoke, I confess to flinching just a bit. But I had no fear of being stepped on, and the beast stepped over me.
After that, it was an up-close and personal encounter with an alien — who was saying something I couldn’t quite figure out. Oh, well…
Next, it was a tutorial on the body’s circulatory system, in which I was coursing through an artery along with thousands of red blood cells.
The most realistic experience was also the most placid — sitting in the back of a small boat on a river somewhere in Southeast Asia, a woman rowing at the front of the boat. We passed other boats with people aboard. It really did convey a “you are there” sensation – including, of course, the full 360-degree experience. I could turn my head around and see everything “behind” me.
If your reaction so far is “So what?”… that’s understandable.
We’ve made much in recent months about the world-changing educational possibilities that come with VR — you know, having dinner with Shakespeare, speaking any language you desire and so on. My experiences in the span of 45 minutes on a July afternoon don’t quite live up to that.
And to be sure, most of the advancement in the VR space has been with gaming. But as we’ve said before, that’s how it goes with many of the most profitable advancements in computer technology.
“Games aren’t a joke,” says Technology Profits Confidential editor Ray Blanco. “They are a big reason for why technology has advanced so rapidly. One of the first computer games, called Spacewar, ran on a DEC PDP-1 minicomputer in the early ’60s… by today’s standards, an incredibly crude piece of hardware.
“In the early ’70s, Pong became a hit. It was the first popular consumer computer game. In the ’80s, I grew up on post-Pong Atari, Nintendo and PC games. From my young point of view, the whole point of owning a computer was to play games.”
And if you still have doubts, Ray reminds us that “people raised doubts about the internet in 1994.”
Look hard enough on the web and you’ll find proof. The first headline is from The New York Times, the second from Newsweek.
“There were just 16 million people on the internet in 1995,” says Ray. “Before 1995, the internet was largely the purview of big institutions… academia, the military, etc. Almost no one else used it.
“2016 is VR’s ‘1995.’ Imagine buying a handful of the right internet stocks in 1995.”
And finally, as Ray makes his case, the numbers.
“Virtual reality headsets have been projected to reach $895 million in sales this year. That’s just a leak in a dam about to burst… some analysts have the virtual reality and augmented reality markets hitting a total size of $150 billion by the end of the decade.”
That’s staggering growth potential. And after donning a VR headset myself, getting just the most surface-level experience possible, I can believe it too. Let Ray show you the possibilities, right here.
To the markets, where stocks and crude might be resuming their tandem act of earlier this year.
A barrel of West Texas Intermediate is down another 1.5% today — $39.43 as we check our screens. That’s a drag on energy stocks, and energy stocks are a drag on stocks in general. The S&P 500 is off more than three-quarters of a percent, the 2,150 level in danger.
Bonds are likewise selling off, pushing yields higher. The yield on a 10-year Treasury note is up to 1.54%.
Instead, hot money is flowing into gold — up nearly 1% as we write, to $1,365. Some of that can be attributed to dollar weakness, the dollar index down to 95.1.
Make it three months in a row that Americans have been spending out of an empty pocket.
The Commerce Department is out with its monthly “income and spend” report. Personal incomes for June are up 0.2% — less than expected. But consumer spending is up 0.4% — more than expected.
For most of the last two years, incomes were growing faster than spending. That’s reversed in the last three months. Optimists will say consumers are feeling more confident about borrowing.
Here at The 5, we’re more inclined to say consumers are feeling strapped… and borrowing is their only way of staying afloat. Even the Financial Times is leaning toward that interpretation, invoking this rather ominous parallel: “U.S. banks have ramped up lending to consumers through credit cards and overdrafts at the fastest pace since 2007, triggering concerns that they are taking on too much risk in a slowing economy.”
Meanwhile, the Federal Reserve still can’t get the inflation it desires.
The income-and-spend report also features “core PCE,” the Fed’s preferred measure of inflation. Once again, the number rings in at 1.6% year over year… as it has for nearly all of 2016. That’s well short of the Fed’s 2% target… and one more data point that scotches any notion of a Fed rate increase before December.
Speaking of central banks and interest rates… what’s up in Australia?
The Reserve Bank of Australia just cut its benchmark rate from 1.75% to 1.50%. The RBA said recent strength in the Australian dollar could “complicate” the RBA’s efforts to goose the economy. Compared with the mealy-mouthed language of a typical Fed statement, the candor is refreshing. “By God, we want a weaker currency and we’re gonna get it!”
Which Jim Rickards was anticipating in Currency Wars Alert two months ago: “Most of Australia’s economy revolves around mining exports, services and tourism. A cheap currency helps all three. Australia is not competing with South Asia in textiles or manufacturing, and it’s not competing with Europe or North America in technology or aircraft.
“In short, when Australia fights the currency wars by cheapening its currency, no one fights back… You don’t hear the U.S. calling Australia a ‘currency manipulator’ as we do to China.
“The typical way a central bank cheapens its currency is by lowering interest rates. The lower rates make the currency less attractive to global capital. This is a problem when rates are already at zero or negative, as they are in the U.S., Europe and Japan. But Australia is not out of interest rate ammunition.”
And it’s still not, even after today. “Using 0.25% cuts, the RBA can cut rates six more times before they hit zero.”
At last check, an Australian dollar is worth 76 U.S. cents. Jim figures it’s on the way to 65.
Planning to buy high-end property in a hot region of the country and pay cash? Then you should plan to go on a watch list, too.
Back in January, the Treasury Department ordered title companies to report the names of cash buyers for expensive homes in Manhattan and Miami. Last week, Treasury added the rest of New York City… the two counties north of Miami… the Bay Area, Los Angeles and San Diego… and San Antonio, Texas. (Who knew San Antonio was so hot?)
The government’s stated reason is to track down international money laundering. Ominously, it’s also trolling for data with which to draw up new regulations: “By expanding… to other major cities, we will learn even more about the money-laundering risks in the national real estate markets, helping us determine our future regulatory course,” says Jamal El-Hindi, director of Treasury’s Financial Crimes Enforcement Network.
Almost makes us wonder if in a few years it’ll be possible to buy a home anywhere without a mortgage and not be considered “suspicious”…
“Once upon a time, the House of Representatives approved a budget plan?” a reader snarks after our 2011 retrospective yesterday.
“As best as I can tell, their ‘plan’ is to (a) avoid a budget at all costs and (b) keep financing the federal government’s deficit spending and war machine with pseudo-currency.”
“Way back, The 5 had a really great graphic titled ‘A Rising Tide… Oh, Never Mind.’ Is there an update available? It was most informative.”
The 5: We love that chart. We first ran it on Dec. 16, 2013… and we ran it a couple more times in the following year.
We gave it that title because in the debate over “income inequality,” many conservatives try to argue that everyone’s income is rising, just not at the same rate. A rising tide lifts all boats, as the saying goes.
But as the estimable Marc Faber said, “If I were to look at the average family income, excluding capital gains, adjusted for inflation between 2002–2012, it is clear that 90% of these families experienced a decline in real income and another 5% experienced hardly any gains.”
Faber’s conclusion: “The Fed’s monetary policies have failed to boost the real incomes of most people, but have had an enormously favorable impact on just 0.1%, or the ‘1%,’ as they are commonly referred to.”
Unfortunately, there’s no update to the chart we can readily find. However, a year ago, one of the professors who crunched the numbers issued some updated income figures. “2014 marks the first year of real recovery from the Great Recession losses for the bottom 99%,” wrote UC Berkeley’s Emmanuel Saez. (His colleague Thomas Piketty has gone on to best-sellerdom and advocacy of a “global wealth tax”. Oy.)
“Top 1% families still capture 58% of total real income growth per family from 2009–2014, but the recovery from the Great Recession now looks less lopsided than in previous years.”
But in a profound sense, it’s too little, too late. The damage is done. In retrospect, that chart goes a looong way to explain both the Trump and Sanders phenomena this year.
“I support the reader’s view on naming sports stadiums after the owners,” writes our final correspondent.
“I disdain the wealthy owners who bargain for taxpayer-funded stadiums and hold even greater contempt for their sleazy vainglorious, bought-and-paid-for politicians who approve the deal. That’s right… socialize the cost and privatize the profits — it’s the American way.
“One noted exception: Ford Field… home the Detroit Lions… courtesy of the Ford family.
“Although the Lions have not proven to be great contenders despite the name on the stadium… with exception, it hosts a sellout game every time. Goes to show here in Detroit, fan loyalty trumps a name.
“Keep up the good work.”
The 5: We hate to burst your bubble — and we assure you it’s in the interest of accuracy and not because your editor is a Packers fan, ahem — that about 16% of Ford Field’s cost was covered by the city of Detroit, Wayne County, the Downtown Development Authority and the Michigan Strategic Fund.
But that’s still a darn sight better than many NFL stadiums. Certainly better than the 60% taxpayer funding for that snazzy new hockey arena you’re about to get…
The 5 Min. Forecast
P.S. Jim Rickards just recorded a short, 63-second video about gold that you need to see.
Something very important is happening in the gold market.
And it could be very good news for you — if you know what to do. Please click here to view it now.