• Before you board that plane, please present your immunity passport
  • Facebook quietly plans the launch of its cryptocurrency
  • Want 5G investment exposure? Look elsewhere…

Dear Reader,

I would be remiss not to mention the oil markets yesterday. The May futures contract collapsed over $50 in a day.

Oil was trading at $18.27 when the oil markets closed on Friday. But the May contract dropped to negative $37.63 by late Monday afternoon. That’s right… negative. Effectively, that means that sellers had to pay buyers to take crude oil off their hands.

How is this possible?

Two things. Demand for crude oil fell off a cliff due to the world staying put for the last five to six weeks. The economy hardly needs jet fuel or gas for our cars. The second thing that happened is that the world ran out of places to store crude oil.

Massive ships are sitting offshore around the world, filled to the brim with crude but with nowhere to go. The average daily rate to use these ships to store crude is around $100,000 right now. It costs a lot of money to sit on crude oil, which is why sellers are willing to pay buyers to take it.

As we look out to the near future, the June futures contract is down, trading around $15. And way out to the September futures contract, oil is still trading at only $27 – which factors in a massive reduction in oil production.

This is also the market telling us that it has a positive outlook toward economic recovery in that time frame.

This is an amazing chance for governments around the world to fill up their strategic oil reserves… assuming they can store it.

Sadly, this doesn’t mean that we will be paid to fill up our gas tanks. Crude still needs to be processed, refined, and distributed to gas stations for consumption. But yes, the price to fill up our cars will drop.

Not that there are many places to go. I haven’t filled up my tank in almost a month.

The stock market hasn’t yet factored in how terrible the second quarter will be for both the U.S. economy and companies. This is a remarkable level of cognitive dissonance.

I love the market optimism right now, but we can expect a second “bloodletting” before the recovery begins in earnest…

And we’ll be ready to step in and invest at fantastic valuations.

Now let’s turn to our insights…

Get ready for immunity passports…

Last Friday, Dr. Anthony Fauci said the federal government is considering immunity passports for people who have recovered from COVID-19.

These are certificates that confirm an individual has tested positive for the COVID-19 antibodies, making that person immune and offering “proof” that they cannot contract and spread the virus. In other words, those who are immune are safe to go about their business as normal.

And as it turns out, the U.S. government has been in talks with early stage artificial intelligence (AI) company Onfido to make immunity passports a reality. Here’s how it will work if this moves forward…

Onfido will maintain a database for immunity records. Through a smartphone app, Onfido will use AI to scan and analyze identification documents – drivers’ licenses, passports, and national ID cards. The AI will confirm that the documents are not counterfeit.

Then, using the smartphone’s camera, Onfido will use facial recognition to verify that the individual submitting the documents is the same person. That’s how the COVID-19 test results will be tied to the person’s identity.

At that point, Onfido will provide a digital certificate that will serve as the immunity passport. That way people can prove they are immune to COVID-19 just by pulling up the Onfido app on their smartphones.

No doubt this is going to be a polarizing issue.

On the one hand, being able to prove immunity will be important for health care workers. Patients will want to know that their doctors and nurses aren’t infected with the virus.

And health care workers would like to know if the patient is immune as well. Plus, health care workers who are immune will not need to use full personal protective gear.

And when we get back to having large gatherings again, venues will want to be sure that their event is not going to cause a COVID-19 outbreak. The only way to do that is to verify attendees’ immunity passports. Many attendees will want this also.

On the other hand, this raises serious privacy concerns. Medical records are among our most sensitive data. We normally keep these issues to ourselves.

And while we’re just talking about COVID-19 right now, there’s no question this would eventually lead to storing the records of all our vaccines and immunizations in our immunity passport app.

Imagine if we go to board our plane for an important business trip or vacation but are turned away at the gate. Your immunity passport raised a red flag.

Or perhaps we’re suddenly turned down for our next job after receiving a verbal offer. “Sorry, your immunity passport wasn’t up to the company’s expectations. You are ‘at risk.’”

It makes tremendous sense to test health care professionals, but this is a slippery slope when applied to an entire population.

Facebook is adjusting its Libra strategy…

Last year, Facebook announced its digital currency project Libra. It planned to make Libra a digital currency backed by a basket of the world’s top fiat currencies like the dollar, the euro, and the yen.

And since Facebook has about 2.5 billion users around the world, Libra would instantly become a global reserve currency. In pretty short order, nearly half of the world’s teenage and adult population could use Libra to transact with each other.

Of course, that idea didn’t sit well with central governments and banking regulators around the world.

Less than a month after Facebook announced Libra, Treasury Secretary Steven Mnuchin said it was a national security issue. A competing reserve currency would greatly reduce the effectiveness of U.S. monetary policy. The European Union took an equally hostile stance on Libra for the same reason.

So Facebook has been dealing with government scrutiny and regulatory pushback for nearly a year now. In response, the company is shifting gears.

Instead of simply featuring Facebook’s digital currency, Libra, Facebook’s digital wallet Calibra will also support stablecoins backed by top fiat currencies.

Libra itself will still exist. It will still be backed by a basket of fiat currencies. But users will also be able to transact with a digital version of the dollar, the euro, the yen, and likely others.

These are called stablecoins – cryptocurrencies that represent the fiat currencies one for one and therefore are considered “stable.”

Facebook has pushed back its Libra launch date to October. And the company plans to launch first in countries where it can support local or regional stablecoins. It hopes that compromise will be enough to appease regulators.

It’s going to be interesting to watch this play out.

Despite the shift, Libra remains an incredibly ambitious project. Users are going to be able to send Libra and the supported stablecoins to each other using Facebook, Facebook Messenger, and WhatsApp. These are some of the world’s most popular chat applications.

That means Facebook is about to become a social version of Venmo and Square’s Cash application.

Of course, the fact that Facebook is the company behind this should give us pause. By now, we’re all familiar with Facebook’s consistent history of mishandling user data.

Do we want to make Mark Zuckerberg – a man that nobody elected – responsible for the financial transactions of billions of people?

We’ll monitor the launch very closely heading into the fall. Readers can expect more from me on this topic as the story unfolds.

But for us as investors, I would point out that this presents an interesting opportunity…

Digital currencies are coming whether we like it or not. When they do, it will highlight one emerging technology: blockchain. And for investors in key blockchain companies, this could represent a chance to profit as the world rushes to adopt these digital assets.

Which blockchain companies should we be invested in? All the details right here.

Verizon’s blunder…

Verizon just agreed to acquire videoconferencing company BlueJeans for an estimated $400 million. I’ll come right out and say it. It will never get its money back.

Most readers have probably never heard of BlueJeans, even though it has been around since 2009. This is a company that wanted to become what Zoom is now… but never did.

BlueJeans provides videoconferencing services just like Zoom, except it is geared toward businesses. BlueJeans raised more venture capital money than Zoom did as a private company. But it never caught on.

Zoom became successful because it made it easy for consumers to try out the platform. It’s simple to sign up. And Zoom offers free packages so people can see how it works before subscribing to the service for additional features and support.

Simplicity, ease of use, and cost-effectiveness enable tech companies to grow exponentially. That’s why Zoom took off while BlueJeans didn’t.

This had to have been a painful sale for the backers of BlueJeans as well. Embarrassing.

The company was worth $728 million at the time of its Series E venture round in September 2015. But it sold for a mere $400 million. Those who invested at the Series E round took a big haircut.

The reason Verizon wanted BlueJeans is because it sees a massive rise in videoconferencing even after the COVID-19 pandemic has passed. I agree.

We will see a rise in remote work, remote education, remote industry events, and certainly remote recreation. Videoconferencing from our desktops, laptops, or phones has become a perfectly normal thing to do every day.

And 5G wireless networks will power an even better videoconferencing experience.

But the problem is, videoconferencing is not Verizon’s core business. We see large companies make this mistake all the time. They step way outside of their core competency. And it rarely works out for them.

Verizon was forced to take a $4.6 billion write-down back in December 2018 for its Oath media business. This was the business that former executive Tim Armstrong cobbled together through acquisitions of Yahoo and AOL.

This was one of the dumbest corporate blunders I have ever seen. And it appears that Verizon’s executives have a short memory.

By getting into videoconferencing, Verizon now must compete with Microsoft (Microsoft Teams and Skype), Google (Meet and Duo), Cisco (Webex)… and, yes, the giant Zoom. That’s not a battle Verizon is going to win.

My advice to Verizon? Stick to building out the best possible 4G and 5G wireless networks. And serve enterprises with fiber-optic connections to the internet.

Occasionally, readers ask me if I would recommend investing in the wireless carriers – like Verizon – for exposure to the 5G trend. The answer is no. This acquisition is just one of the reasons why.

The other reasons are low to no growth in revenues and billions in debt. There are simply so many other far more exciting investment opportunities than companies like Verizon.

My advice? Sign up for Verizon’s 5G service. But steer clear of the stock.


Jeff Brown
Editor, The Bleeding Edge

P.S. As I said, investing in wireless carriers like Verizon is not a smart move for 5G investment exposure. Instead, I recommend my No. 1 5G stock for 2020. This company is a key 5G supplier to several smartphone manufacturers, including none other than Apple.

Hundreds of millions of 5G phones are going up for sale this year. And the bulk of those devices will have this component in them.

And what do we think will happen to the stock of the company that produces that essential 5G component? This is a stock every true technology investor should have in their portfolio. The full story right here.

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