Weekly Digest: Robotaxis Hit the Streets in China…and They’re Coming to the U.S.

Welcome to your Sunday digest…my breakdown of the things we’re thinking about and talking about in the Global Intelligence world. 

First up this week, the future of driving.  

Since Google’s self-driving car was first spotted on the streets of California what seems like a lifetime ago, analysts have been telling us to prepare for a future in which we’ll be traveling around in robocars without steering wheels.  

Now, it appears that future is nearly upon us. 

Over in China, companies are engaged in a robotaxi race.  

From December 2021 to March this year, SAIC Motor, China’s largest automaker, and an artificial intelligence company called Momenta jointly deployed 60 robotaxis in two megacities as part of a large-scale, real-world test. 

Residents of the two cities could use their smartphones to call the robotaxis, which were staffed with human drivers who could take control in case of an emergency.  

After this successful test, Momenta is now working to scale its AI, auto-driving technology for General Motors, Toyota, Mercedes, and dozens of other automakers. 

But Momenta is far from the only company rushing forward in this space. 

At its annual flagship conference held earlier this week, Chinese tech giant Baidu, the country’s version of Google, revealed the Apollo RT6, its sixth-generation autonomous vehicle. The company plans to roll out the vehicles, which feature detachable steering wheels, sometime next year. 

Meanwhile, back in the U.S., federal regulators ruled in March that fully autonomous vehicles no longer need to come equipped with steering wheels, brake pedals, or certain other driving controls. This will allow automakers to begin testing their robotaxis on public roads. And Tesla CEO Elon Musk said in April that the company plans to launch a robotaxi by 2024. 

It seems that driverless future we’ve long been promised is getting very close indeed. 

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Next up, I hate to say I told you so, but… 

Early this year, the European Central Bank was insisting that it had no intention of raising interest rates.  

Inflation was just “transitionary,” it claimed…sticking to the faulty playbook that the Federal Reserve had drawn up in 2021 but already abandoned by the time 2022 rolled around. 

I had a different viewpoint.  

When inflation strikes, central banks have basically one tool to call upon…hiking interest rates.  

So, no matter what it insisted, I knew that sooner or later the ECB would have to act and raise rates, as I wrote to you here in Field Notes. 

Well, a few months back, the ECB relented, foreshadowing a 0.25 percentage point hike. But that wasn’t actually what it did… 

With eurozone inflation hitting 8.6% in June, the ECB decided to go even bigger…this week raising rates by 0.5 percentage points. 

This larger-than-expected hike caught the markets off-guard, though honestly it shouldn’t have.  

Across the world, central banks are in full-on panic mode.  

Canada’s central banks recently surprised analysts by raising rates by a full percentage point, much higher than expected. And Wall Street now believes it is possible the Fed will do the same later this month, going with a 1 percentage point rise rather than the 0.75 percentage point hike it had foreshadowed. 

Of course, these efforts will have little meaningful impact on inflation.  

Take the example of the ECB. 

Before the hike, rates stood at -0.5%. That’s right—a negative rate, meaning it was costing banks money to hold deposits. 

So, this hike merely moves rates back to 0%. And what good is 0% versus 8.6% inflation? 

The world’s central banks are too far behind the curve. This new era of high inflation will continue for months or even years to come.  

That’s why it’s so important that we take steps to protect our wealth from inflation…such as the three low-risk investments I recommended in the July issue of the Global Intelligence Letter. 

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Finally, Britain embraces the crypto revolution. 

This week we learned that the U.K. government is moving forward with plans to recognize the use of stablecoins. (Stablecoins are cryptocurrencies that are designed to track an underlying asset, such as a fiat currency like the U.S. dollar or British pound, on a one-to-one basis.) 

Under the proposed rules in the new Financial Services and Markets Bill, stablecoins that are backed by fiat currency can be used to process payments.  

The U.K. moving ahead with this legislation is significant.  

Crypto payments are significantly cheaper and easier to process than traditional wire transfers. As such, stablecoin payment systems could unleash a wave of financial innovation. 

This is just the latest move by the U.K. to promote crypto adoption. 

In April, the U.K. Treasury unveiled a series of initiatives aimed at transforming the nation into a global cryptocurrency center, including measures to nurture crypto entrepreneurs and to recognize the legal status of DAOs, or decentralized autonomous organizations (online communities governed without central leadership using crypto technology). 

This move by Britain will put further pressure on the U.S. to adopt similar standards, or risk falling behind in the global race to incorporate crypto solutions into mainstream finance. 

That brings us to the end of this week’s digest. Many thanks for being a subscriber. And if you have any feedback or questions, reach out through the contact form on the Global Intelligence website. 

Enjoy the rest of your Sunday.