$1 Trillion Transportation Revolution

  • Father of self-driving accused of poaching trade secrets
  • Boots on the ground: Detroit’s AV19
  • Ray Blanco on an industry with $1 trillion potential…
  • … and a front seat for autonomous vehicle innovation
  • Tough times for realtors and mortgage brokers
  • The ultra-rich close their wallets
  • LinkedIn espionage warning (suspicious timing)
  • A longtime reader calls BS on China’s currency manipulation.

A former Google engineer — considered by many the father of self-driving technology — was indicted yesterday on federal charges in a San Jose court.

The allegation? That engineer and entrepreneur Anthony Levandowski, in 2015 and 2016, poached 14,000 files related to self-driving when he worked for Google spinoff Waymo.

Gollum Meme

The criminal complaint further alleges: “[Levandowski] then used those trade secrets to create his own self-driving truck company called Otto… Months later that startup was acquired by Uber for roughly $680 million,” says an article at NPR.

After that, Uber tapped Levandowski to be chief of its self-driving department. (Uber “consciously uncoupled” from Levandowski in 2017, however, after Google’s Waymo sued Uber for using trade secrets. Levandowski refused to testify in the civil trial, by the way.)

Levandowski has pleaded not guilty to all 33 charges; if convicted, he faces up to 10 years in Club Fed with a fine of $250,000 per charge, or $8.25 million.

Reuters says: “Levandowski’s prosecution is one of Silicon Valley’s highest-profile trade secret theft cases, as engineers race to develop technology for self-driving vehicles, which industry experts view as a $1 trillion market opportunity within three decades.” (emphasis added)

So yes, there’s a lot on the line but, remember what Mom always said: Cheaters never prosper.

With that PSA out of the way…

We pivot to our technology maven Ray Blanco, who spent time last week in the Motor City attending Automotive iQ’s convention AV19. (For the uninitiated, that’s Autonomous Vehicles 2019.)

“Autonomous Vehicles is a one-of-a-kind experience,” Ray says. “This is all about industry insiders talking shop with other insiders. It’s exactly where you’d want to be if you’re looking to find great, under-the-radar opportunities in this fast-growing auto sector.”

And when you think self-driving technology, Tesla’s definitely not the only game in town. “Major car manufacturers are testing new tech — and in some cases working together — to bring about our automotive future,” says Ray.

This year’s attendees included Ford, Mercedes, GM and BMW along with these guys…

Gollum Meme

Awkward (see above)…

You get the idea — and the list goes on…

Ray provides a rundown of some of the cutting-edge tech that’s coming to a showroom floor — or highway — near you.

  • “Cadillac’s Super Cruise system, for example, uses a combination of lasers, radar and cameras to make highway driving relaxing and essentially hands-free. It’s even equipped with head-tracking technology to ensure the driver isn’t falling asleep or distracted.” Consumers can add Super Cruise now to the Cadillac CT6 sedan for an additional $6,000. Ain’t cheap… but if safety’s the name of the game, Super Cruise-enabled cars have navigated over 3 million miles without a hitch
  • As for the “new Mercedes-Benz S-Class sedan, pay close attention to the grille. That blacked-out portion in the middle houses lasers, radar and cameras for the car’s on-board semiautonomous features. Sure, the car costs over $100,000 with all the features equipped, but using advanced AI and all those sensors, it’s able to slow down, speed up, stop and steer away from danger
  • “Daimler, the owner of Mercedes, is using an S-Class equipped with lidar to test urban driving in San Jose. Together with Bosch, Daimler is testing the feasibility of both future ride-hailing services and urban automated driving. Through testing like this, manufacturers could help build a future when citywide traffic congestion is a thing of the past.

“The potential benefits of this technology are groundbreaking,” says Ray, and “tech companies and auto manufacturers are constantly innovating to find out what does and doesn’t work for autonomous driving.”

To that end, a keynote speaker at AV19 — Patrick Wilson — director of the Office of Business Liaison for U.S. Department of Commerce — addressed the “800-pound gorilla in the autonomous driving space,” Ray says.

And that would be… China.

“Honestly speaking,” says Ray, “China is making a lot of strides in the AV space… they’re doing good work, making advances and innovations.

“But one of the biggest needs to push driverless cars from proof-of-concept to actual production models is platform standardization. And the type of platform Chinese software engineers develop could impact the path of AV development significantly.”

In other words, innovators need to be on the same page, particularly when it comes to safety.

“The concern is vulnerabilities in AV software could result in accidents and death.

“According to Mr. Wilson it is imperative the Trump administration continue to work with China to develop proper safety protocols and ensure potential vulnerabilities are accounted for and eliminated well before mass-production begins,” Ray says.

W. Patrick Wilson Tweet Autonomous Vehicle

Ray says: “The good news, straight from U.S. Department of Commerce itself, is that Trump and his administration have made AVs one of their highest priorities in terms of new trade initiatives.”

We guess as long as that whole trade war thing doesn’t gum things up…

“The autonomous-vehicles trend isn’t just about cars and trucks (or global trade),” Ray says. “It’s about smart cities, infrastructure, 5G, cybersecurity and more.

The way Ray sees it, there’s crying need for “new AI systems and machine-learning protocols, new safety measures and new cybersecurity systems to ensure that these AVs cannot be hacked, and that even if they are, they cannot be attacked in the most crucial systems.”

Even more basic: “Communication needs to happen in real-time and at lightning-fast speeds — 5.96 gigahertz, to be exact,” says Ray. “This means we need more 5G networks to make this all work.”

Ray’s takeaway from his time in Detroit? “AV means a host of actionable opportunities for us looking to invest in this space.”

Because autonomous vehicles represent a fundamental and complete reinvention of the way we look at transportation.

In fact, Ray believes 50 years from now — when driverless cars are the norm — we’ll look back at 2019 as the starting point of what might be the most iconoclastic advance since the personal computer.

All of which means massive paydays for early investors…

And Ray knows a backdoor play into AV… [Hint: It will be fast and everywhere and an untold amount of money will be made as this massive shift takes place.]

Get in on the ground floor of this opportunity BEFORE Oct. 8.

To the markets: The Dow’s ripped up 200 points to a hair below 26,000…

The S&P 500 is up 16 points to 2,885 while the techie Nasdaq’s added 18 points to 7,845.

Oil’s up 65 cents — but a barrel of WTI is suddenly up above $55; gold is down just 30 cents to $1,551.50 per ounce.

And bitcoin’s dropped back below $10,000 today.

Bad news for realtors and mortgage brokers: The Mortgage Bankers Association’s purchase applications index shows mortgage refinancing activity fell 8% in the week of Aug. 23 while mortgages for single-family homes remained tepid with a second-straight 4.0% weekly decline.

And CNBC reports: “Luxury real estate is having its worst year since the financial crisis, with pricey markets like Manhattan seeing six-straight quarters of sales declines.”

We’re talking homes priced at $1.5 million and above…

“Unsold mansions and penthouses are piling up across the country,” CNBC says, “especially in ritzy resort towns, with a nearly three-year supply of luxury listings in Aspen, Colorado, and the Hamptons in New York.”

In more news from the peak boom phase of the boom-bust cycle — phew, that’s a mouthful — a retailer to the rich has filed bankruptcy.

“Barneys New York, an icon of New York retail, filed for bankruptcy early Tuesday morning, with a plan to significantly reduce its footprint, as it looks for a buyer to stave off liquidation,” CNBC says.

Add to that high-end retailer Nordstrom is hanging on by its fingernails as it reports three-straight quarters of declining revenue.

And wonder what’s going on behind closed doors of hoity-toity auction houses Sotheby’s and Christie’s? Not much, apparently, as sales are down from a year ago — 10% and 22% respectively.

When the ultra-rich are snapping their pocketbooks shut… well, you get the picture.

“Foreign agents are exploiting social media to try to recruit assets, with LinkedIn as a prime hunting ground,” says a New York Times article.

According to the article, intelligence agencies in the U.S., U.K., Germany and France have all issued warnings about foreign agents trying to recruit spies online. “Chinese spies are the most active, officials say.”

China Hiring Spies on LinkedIn

“We’ve seen China’s intelligence services doing this on a mass scale,” says William R. Evanina, the director of the National Counterintelligence and Security Center.

“Instead of dispatching spies to the U.S. to recruit a single target, it’s more efficient to sit behind a computer in China and send out friend requests to thousands of targets using fake profiles.”

Foreign agents grooming spies via LinkedIn… and the ensuing hijinks? Fun to imagine but we question the timing of the article. (The Atlantic, Reuters, CNBC and more have jumped on the bandwagon, too.)

This isn’t a “scoop” as they say in the news biz; in fact, by our reckoning, this story broke almost a year ago to the day. Slow news day much?

Not only that but demonizing China is low-hanging fruit considering the trade war shakeup and all that’s going on in Hong Kong, something Dave talked about extensively last week.

For more on China (and something that jibes with our brand of cynicism)…

“The People’s Bank of China sets the yuan midpoint and then limits up or down movement by two points in either direction,” says a longtime friend of The 5.

“So the on-shore yuan closes at 7.14 but the off-shore yuan is free-floating and closes at 7.17. Washington has a hissy fit and claims currency manipulation because Beijing ‘allows’ the on-shore yuan to drop while restricting by how much.

“Now, I could see if Washington were whining that Beijing wasn’t allowing the yuan to freely weaken like the off-shore yuan, but no, that’s not what they are doing.

“It seems Washington wants Beijing to artificially pump up the yuan, which would actually be manipulation.

“At this point I would almost like to see Beijing say ‘frack it’ and let it free-float just so I can grab some popcorn and watch the wonks in Washington lose their collective sh*t.

“I’m calling manure on the whole manipulation wolf crying.”

The 5: So it’s not currency manipulation… until it no longer serves U.S. interests?

Best regards,

Emily Clancy
The 5 Min. Forecast

P.S. A brand-new internet technology promises to be faster than cable yet over seven times cheaper, which could save you an easy $19,494.

But everything shifts Oct. 8… Discover the full story here.

Emily Clancy

Emily Clancy

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