Dear Reader,
1994.
That was the last time the Federal Reserve raised the Fed Funds rate 75 basis points. And what did it end up doing after that? Seven months later, it ended up cutting rates again.
Put simply, the Fed is crashing the markets and all asset prices, and its policies are simply not going to address inflation.
The reality is that the “real” inflation is much higher than what is represented by the consumer price index (CPI) of 8.6%. By way of example, if we look at an alternate CPI, calculated the way that it was back in 1980, we’ll see a very different picture – 17%:
The interesting thing is that the alternate CPI actually feels far more accurate. Have the prices of chicken, eggs, gasoline, electricity, bacon, and just about everything else risen more than 8.6%? Absolutely they have… and in most cases, those prices are up by more than 17% year-over-year.
Raising the Fed Funds rate 75 basis points to 1.5% won’t do anything to tame the kind of real inflation that we are seeing right now. The Fed missed its chance to address this problem last year. Now inflation is out of control.
If it was serious about addressing inflation, the Fed would raise the Fed Funds rate to 9% in one fell swoop… But it can’t do that. It would collapse the entire economy. It simply isn’t an option.
What the Fed is doing now is its own version of virtue signaling. It just wants to appear to be making an effort.
The pain that we’re all feeling is reaching the point of becoming unbearable… exhausting. And I believe that it will be “pushed” by the powers behind the curtain to pivot to a different set of tools in the form of stimulus, easing, and eventually yield curve control (YCC) in an effort to soften the blow that we’re all feeling.
We’re in for a bumpy ride. I wish I had better news.
Some days I wake up and wonder if “they” are intentionally trying to collapse the economy and the markets. Maybe there is a more devious plan at play here?
Either way, my team and I are leaning towards less volatile investments, those that have some safety built-in, and even those that aren’t buffeted by the market volatility that we are suffering through seemingly every day.
Along those lines, there’s one more item I want to draw readers’ attention to… As we know, many of the elites in our country and around the world keep many of the best deals for themselves. If they can’t prevent us from taking part, they try to scare us away with bad news headlines and even legislation.
I mention this because there’s one particular kind of special investment vehicle that’s receiving this kind of treatment right now.
One billionaire money manager called these deals “reprehensible.” What he won’t tell us is that he used one of them to turn $12.5 million into $275 million.
And he’s not the only one taking part… hedge funds, elected officials in Congress, billionaires, and even a president of the United States have gotten involved with these deals. Many have billion-dollar stakes.
Yet Congress is actively looking to make it harder – if not impossible – for regular investors to take part. It’s introducing legislation and regulations that could restrict these deals to just accredited investors.
That’s why on June 22 – next Wednesday – at 8 p.m. ET, I’ll be sharing all the details on what these deals are… and how we can invest in them.
The most powerful part is that right now, we are “mandated” to make money with a number of these deals. We can lock in gains like $400, $500, $1,500, and even $2,300 upfront. That’s why I’m calling this event “Washington D.C.’s Mandated Money.”
Then, over the long term, we can ramp these earnings up as high as six figures.
So please, don’t miss this briefing. You can sign up to attend for free right here.
Big news in the wireless space… Nokia just announced that it is partnering with Japan’s largest wireless carrier, NTT Docomo. The two plan to test out sixth-generation (6G) wireless technology in Japan.
I know that may come as a surprise to many. We are still waiting for 5G to roll out nationwide and around the world, and they are already talking about 6G? What’s going on here?
Well, this is how it all begins. We have talked before about how these wireless generations tend to come about once each decade. However, the technological standards take years to develop.
They require intellectual property (IP) contributions from hundreds of companies. The industry has to build a licensing model around that. And then it takes years’ worth of testing and analysis to formalize the new standards for a wireless technology. It’s a huge, complex undertaking.
Perhaps ironically, we still have two or three more years of major infrastructure build-out for 5G. Believe it or not, we still haven’t seen the highest levels of investment in the wireless industry yet.
Plus, the industry is just in the very early stages of rolling out software to take advantage of 5G’s capabilities. We have so much to look forward to.
Yet key players are already testing out 6G.
6G will employ a small-cell architecture just like 5G. It will be deployed at even higher frequencies, which means we’ll need small cell transmitters on every street corner and even inside buildings. In other words, the density of 6G transmitters will be even higher than that of 5G.
And the biggest difference is that 6G will have artificial intelligence (AI) written into the technological standards. 6G networks will employ AI in all receivers and transmitters. This is the next evolution of wireless.
This need for AI came as 5G pioneered complex spectrum slicing. This enables all sorts of new applications that weren’t possible before. But this makes managing data and traffic very difficult.
That’s where AI comes in. AI will help optimize the flow of data and traffic to maximize the performance of 6G networks.
And as I was reading the technical plans provided by Nokia and NTT Docomo, I came across a telling quote from NTT’s chief technology officer (CTO). He said that 6G is progressing two or three years ahead of 5G.
This tells us that the industry sees an urgent need to have 6G ready as soon as possible. That’s why they are getting a head start on it now.
So the big takeaway here is that we’ll have some fantastic investment opportunities around 6G a few years down the road. And not surprisingly, many of our 5G investments – learn more here – will evolve into plays on 6G as we get closer to the next evolution in wireless technology.
Meta, formerly known as Facebook, just announced what many would consider an organizational change… but it’s far more than that.
The company announced that it is taking its entire AI research division, and it is embedding key employees from it within product teams across Meta.
In other words, Meta wants its key AI researchers to deploy the AI they developed into its existing products. This is big news.
When we think about research and development (R&D) within large corporations, it’s done in divisions that are sealed off from the rest of the company. There’s a lot of experimentation that takes place before the tech is ready for deployment.
So this move by Meta signals that its AI is now ready for primetime. It’s coming out of R&D and will be deployed across Meta’s suite of products. This includes Facebook, Messenger, Instagram, and WhatsApp, as well as Meta’s XR division, which focuses on augmented reality (AR), virtual reality (VR), and metaverse development.
Now let’s take this in the context of what we already know about how far AI has progressed.
We talked yesterday about how Google’s LaMDA AI is so good that it “feels” human, it even seems self-aware. Anyone chatting with the AI would likely think it was a human unless they knew otherwise.
Well, there’s no reason to think that Meta’s AI isn’t in the same category. Given all the resources the company has poured into AI research over the last decade, it’s likely that Facebook has made a similar amount of progress with its technology.
If we think about that in terms of Meta’s metaverse initiatives, it would be easy to create AI-based avatars that speak and act just like humans. This could help create a rich and unique metaverse environment where people can engage with each other, and AIs, in the virtual world.
What’s more, I fully expect Meta to integrate some kind of AI-based digital assistant product within its social media platforms.
And think about this… thanks to its data surveillance practices, Meta arguably knows its users better than they know themselves. So the digital assistant would have an amazing context for interacting with users and providing services.
As we discussed yesterday, the digital assistant could book appointments, order groceries, pay utility bills, and do many other menial tasks. And the AI saves us a lot of time and effort by doing so.
However, as I noted in yesterday’s story about Google, this level of interaction with the AI would give Meta even more data about us. The company would know even more about what we do, who we associate with, and what we buy than ever before. That’s not a comforting thought.
So the big takeaway here is that we are about to see some radical things happen across Meta’s group of products. Yet we need to be very vigilant about this technology.
Advanced AI has incredible potential… for both good and evil.
Regular readers may remember Taco Bell’s new concept for a kitchen-only “Defy” restaurant. We talked about that last August when Taco Bell’s parent company Border Foods first hatched the idea.
Well, the vision has become a reality. Taco Bell just opened its first “Defy” restaurant in Brooklyn Park, Minnesota. Here it is:
Taco Bell’s Defy Restaurant
Source: Taco Bell
As we can see, this design is unlike anything we have seen in the fast-food industry before.
For starters, it’s just a kitchen. There’s no dining area for customers. In fact, there’s no ground floor at all.
Instead, there are four drive-through lanes directly below the kitchen. Three lanes are dedicated to people who have ordered their food online. And one lane is open to people who want to go through a traditional drive-through process where they order at the monitor.
What’s more, there’s no human contact at all. Once an order is ready, workers in the kitchen place the order into a dumbwaiter type of device to lower the food to the consumer below.
Check it out:
Contactless Fast Food
Source: Taco Bell
Talk about an interesting design.
And here’s the thing… Border Foods said that, across all of its restaurants, 90% of all orders are drive-through orders. Very few people enter its fast-food restaurants anymore. This is a major shift caused by the COVID-19 pandemic.
That being the case, the Defy concept makes a ton of sense. Why bother with a dining area and all of the overhead that comes with it if most customers won’t even use it?
So I see this as a sign of things to come.
We’ll see Taco Bell gradually shift more and more of its locations to this Defy model. And I have no doubt that many other franchises will create similar drive-through-only locations as well.
In fact, this trend is also giving rise to “ghost kitchens.”
These are nondescript kitchens with absolutely no branding on them. They can be for a single food franchise, or for multiple restaurants and menus.
Orders are taken in via online or app-based orders, and when finished, are routed for delivery through common gig-based delivery services like Uber Eats or DoorDash.
This is a trend we need to be tracking very closely. Ghost kitchens are expected to become a $71 billion business by 2024… yet most people don’t even know they exist.
This is a fascinating recalibration of the fast-food and quick-service restaurant industry. I can imagine that many restaurants will be launched without ever having a public storefront, and yet still be very successful. There will inevitably be some great investment opportunities that develop as this trend plays out.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
