- Yes, the system is terminally screwed…
- … but that doesn’t mean innovation will stop…
- … or that you can’t make money from it
- Three depression-proof opportunities for the next five years
- A sure sign gold miners have turned the corner
- The strangest air travel story you’ll read all year
- Signs of manufacturing life… Big Pharma vs. medical marijuana… four dreadful dates in American history (plus the next one)… and more!
“The equity markets are hiding the real decline of the true economy,” said Gerald Celente.
The major U.S. stock indexes touched record closes again yesterday. Happy happy joy joy.
Is the economy growing? Are corporate earnings growing? Hardly. Chalk it up instead to years of easy money, and now bonds that carry negative interest rates in many corners of the globe. “Why would anybody buy these things?” Mr. Celente said in a recent interview with the gonzo financial journalist Max Keiser. “Nobody’s ever heard of this in history!”
As we document periodically in our virtual pages, it’s not as if Corporate America is plowing its cash into growing their businesses. Instead, they’re buying back their shares… and buying other companies. “Look at all the merger-and-acquisition activity,” Celente goes on. “You’re borrowing the money for nothing!”
“It’s not until the equity markets fail that the people will realize how bad it is,” Mr. Celente averred.
The man takes a back seat to no one in calling BS on politicians and central bankers. Longtime readers of The 5 will recall his, umm, unfortunate experience buying gold futures through MF Global, the now-defunct firm run by Goldman Sachs alum Jon Corzine. (Gerald intended to take delivery of physical metal. Instead, like every other MF Global customer, he had to wait nearly two years just to get his money back.)
More importantly, he’s made immensely prescient calls since founding the Trends Research Institute in 1980. He anticipated the 1987 stock market crash. He foresaw gold’s huge bull run in the first decade of the 21st century. In December 2007, he wrote a mock news story about “the Panic of 2008.”
But that’s not why Agora Financial tried — and succeeded — in wooing him to join our team.
It’s that other aspect of spotting trends that sets him apart — not the doom-and-gloom ones, but the human advancement that takes place despite the doom and gloom.
Long ago when cellphones were the size of toasters, he knew their size would shrink and their power would multiply exponentially — changing the world. He saw how “boutique” coffee shops would attract millions at a time Starbucks hadn’t yet put down stakes on every other street corner. And he saw how “the Amazon effect” would send the great American shopping mall into terminal decline.
That’s the kind of heavy-hitter expertise we want at Agora Financial. So we’re delighted to have Gerald join our science-and-wealth team along with editors Ray Blanco and Stephen Petranek and publisher Aaron Gentzler.
“Gerald will reveal for you the big-picture trends that can potentially unlock great new fortunes,” promises our executive publisher Addison Wiggin.
It comes back to a point Addison and I have been making in these virtual pages since 2010. Revolutionary fortune-making technologies like radio and refrigeration came of age in the 1930s — despite the Great Depression and the Roosevelt administration’s ham-fisted policies that prolonged it.
Today, Gerald joins us to identify three of the trends he sees shaping our lives for the rest of the 2010s and into the 2020s…
“Are you ready to chitchat with chatbots?” he asks.
If you’ve ever spoken to a virtual assistant on your smartphone like Apple’s Siri — asking to find the nearest restaurant, for instance — you’ve already taken the first step. “But for chatbot developers, that’s baby talk,” says Gerald.
“Before long, developers predict, when you order a pair of pants online, a smiling avatar will appear on-screen and say, ‘We have a shirt on sale that would go really well with those pants. May I show it to you?’”
The seed capital going into chatbots is enormous: “Ten representative U.S. chatbot developers already have raised more than $100 million in venture capital,” Gerald tells us.
“Computer speeds and artificial intelligence are evolving. Chatbots may eventually take the place of customer service people, store clerks and even psychotherapists.”
But chatbots are child’s play compared with how full-blown robots will change life as we know it.
“Today’s robots build our cars and sort our mail,” Gerald explains. “But tomorrow’s robots are already beginning to prepare our meals, keep company with our elders and replace us in thousands of mundane — and not so mundane — jobs.
“From 2015–19, the global market for automation and related services will almost double, from $71 billion to more than $135 billion.”
Fast-food places are leading the way, like a San Francisco startup called Eatsa: “You order by pressing buttons at an automated kiosk. Key in your name, swipe your plastic card (no cash accepted) and within four minutes your order is delivered through the restaurant’s rear wall into a cubby resembling an oversized post office box with your name projected on the door.”
Burger chains are picking up on it too. Hardee’s and Carl’s Jr. “will invest steadily in automating customer interactions,” Mr. Celente says, “in part to defend against the push for a $15-an-hour minimum wage and fast food’s high rate of employee turnover.”
For the moment, anyway, real people still prepare the food. But another San Francisco startup called Momentum Machines is working on that, too…
But if it’s something immediately investable you’re looking for, Gerald tells us reality as we’ve known it is “so 20th century.” Now it’s all about virtual reality.
“Venture capitalists invested an estimated $3.5 billion in virtual reality concepts in 2014 and 2015; Magic Leap’s ‘cinematic reality’ device alone drew $793 million in new financing last February, thought to be the largest such round in history.
“Even the giants have signed on. Microsoft has its HoloLens, another hologram device, and Sony is rolling one out too. Google Cardboard and Samsung Gear VR both are, in essence, holders for smartphones that run VR apps while you hold the gadgets up to your eyes like a pair of binoculars.”
Yes, game developers are leading the way. But as we’ve said before, that’s how it goes with many computer-technology breakthroughs. “For a growing number of industries, VR isn’t a game but their future,” says Gerald.
“Yihaodian, a Chinese grocery company, is opening a chain of e-markets in places such as parks and bus stations. Passersby will see empty walls; those wearing VR goggles will see shelves stocked with goods. Shoppers will buy items by scanning their VR images with their smartphones and their completed orders will be delivered to their homes.
“Ten years from now, when VR technologies are vastly more realistic than today, millions of us may spend part of our workdays in enhanced realities and come home to while away our leisure hours in virtual worlds.”
We’ve spotlighted the growth trajectory before — 81,000% between 2015–20. Even if the economy and the markets tank and that figure is lower, that’s still enormous underlying profit potential. And we’ve identified the best ways to unlock that potential. Click here to get started.
To the markets… where the major U.S. indexes are down slightly from yesterday’s record closes. The S&P 500 has shed a little over a third of percent as we write, resting at 2,182.
Bond yields continue to climb, the 10-year Treasury now 1.58%. Gold has recovered its late-day losses from yesterday, at $1,345. Crude is up another 1%, at $46.28.
The economic numbers of the day are plentiful, and mixed…
- Inflation: Flat last month, according to the consumer price index. The year-over-year increase works out to 0.8%. (As always, any resemblance to your own cost of living is purely coincidental.) To the extent inflation is apparent in the official figures, it’s in health care (surprise, surprise) and housing. Speaking of which…
- Housing starts: Up a respectable 2.1% in July, says the Commerce Department. But permits, a better indicator of future activity, are looking a little soft
- Industrial production: Up 0.7% last month, way more than expected. Manufacturing is leading the way, but utilities and mining don’t look too shabby, either
- Capacity utilization: 75.9% of the nation’s industrial capacity was in use during July. The number’s been climbing from depressed levels for two straight months.
Another sign the worst is over for gold miners: Some of them are thinking about raising or resuming dividends.
“In recent days,” says the Financial Times, “large gold miners including Newmont Mining and Randgold Resources have talked up the prospect of higher shareholder payouts because of their improving balance sheets.” Yesterday, the Australian giant Newcrest announced it’s resuming a dividend after 3½ years.
A gold price up 27% in the last eight months works wonders, no?
Of course, few people buy gold stocks for the dividend. It’s all about capital gains — especially for the “Penny Gold” picks of Jim Rickards and Byron King. But hey, it’s another sign the worst is over after what Byron called the “Mining Zombie Apocalypse.”
And now another 5 business-travel alert: If you’re traveling with a large item you don’t want to check, make sure it has a visa. Or the appropriate visa waiver papers.
Swiss cellist Jane Bevan booked a British Airways flight from Zurich to here in Baltimore, where she had a gig with the Baltimore Symphony Orchestra. She booked a second seat for her cello, as the airline instructed. Even gave it a name, “Chuck Cello.”
As a Swiss national, Ms. Bevan can travel visa-free to the United States as long as she has a valid Electronic System for Travel Authorization (ESTA) visa. Alas, Chuck had no such thing — which proved to be a problem when Ms. Bevan tried to check in.
“Ms. Bevan says she waited for 2½ hours in the airport, after which she was told that the flight had closed, but could rebook the flights,” reports the U.K. Independent. “She says she has not received any form of compensation from British Airways and instead flew out the following day with American-based United Airlines, who offered her flights at half the price quoted by British Airways.”
Can’t be too careful about letting those terrorist string instruments into the country…
“Your guys forgot one factor in analyzing the potential for pot reclassification,” writes one of our regulars.
“Marijuana actually has a number of highly effective medicinal uses. Reclassify and/or legalize pot and you have a cheap herb with great medicinal properties. Such an herb could seriously cut into the obscene profits of Big Pharma.
“Like that’s going to be allowed to happen… yeah, right.”
The 5: Actually, that was one of our long-standing reservations about marijuana-themed investments. Big Pharma, the booze industry and the police unions are a powerful lobbying trio.
In retrospect, we were hasty in abandoning those reservations. (Serves us right for thinking the feds would come to their senses, eh?) Fortunately, as we said yesterday and last Thursday, the investment guidance that followed from our change of heart had solid downside protection. Ray Blanco says both of his “pot-themed” picks remain buys even though the decision didn’t go the way we expected.
“It seems to me if Olympians are generating income,” a reader writes, “it could be considered a business, and hence all ordinary expenses for training, travel., etc. could be deducted against the income.
“I suspect most would be showing a massive loss.”
The 5: Hmmm…
For any Olympians who might happen to be reading this (unlikely, but you never know), we offer the usual disclaimer about consulting a qualified tax professional.
“So it was 45 years ago, on Aug. 15, 1971, that ‘Tricky Dick’ Nixon closed the gold window,” a reader muses after yesterday’s episode. “That was a major milestone in the ongoing assault on our monetary system.
“It’s right up there with April 5, 1933, when FDR signed Executive Order 6102 into law, forbidding the ‘hoarding of gold’ by U.S. citizens.
“And Dec. 23, 1913, when Woodrow Wilson signed the Federal Reserve Act. That was a fine piece of work because it was done on a midnight run during the holidays. And it was just two months after our federal income tax was pork-bellied through the system via the Revenue Act of 1913.
“While we’re at it, we should celebrate the adoption of 16th Amendment to the U.S. Constitution, authorizing an income tax, on Feb. 3, 1913. Up to that point, each constitutional amendment was righteous. But the 16th changed the game: It’s the first one that was truly unconstitutional, paving the way for evil. We’ve been paying for it ever since.
“Sep. 30, 2016 will be another ignominious anniversary — and every bit as big of a deal as those prior events! The recomposition of the SDR won’t just be another body blow to the U.S. economy. This time, the consequences will be global.
“Keep giving ’em hell.”
The 5: We will. And thanks for the affirmation of our thesis.
The 5 Min. Forecast
P.S. Really we couldn’t ask for a stronger reader endorsement of Jim Rickards’ “D-Day for the U.S. dollar” thesis than the above.
We’re now 45 days away.
Will you be ready?