Welcome to your October issue of the Global Intelligence Wire.
This is the monthly digest exclusively for Global Intelligence Lifetime Circle members in which I cut through the media chatter and highlight five underreported news stories from recent weeks.
First up this month…the future of education.
Universities Launch Metaverse Campuses
For a year, I’ve been writing about the metaverse future.
This is the all-encompassing, three-dimensional, holographic internet that we will access through virtual reality and augmented reality glasses or, more likely, a new generation of digitally enabled contact lenses that will display the internet all around us.
To some…that’s a scary world. To me, it sounds exciting and, at the very least, a fortune-making opportunity larger than the growth of the modern internet over the last 30 years. One of those opportunities is going to happen in the educational system with “immersive learning.”
Already, 10 universities have launched early “metaversities” (a portmanteau of metaverse and university) including Morehouse College and New Mexico State University. More schools and universities are certain to follow suit and open campuses in the metaverse, thereby unlocking educational opportunities globally, since theoretically anyone with internet access, anywhere in the world could attend one of these metaversities.
This is also going to create a whole new take on learning. Imagine being in med school and learning intricate surgeries in a 3D, VR environment, in which you are using a digital scalpel to perform extremely complex tasks. You’d exit school with a deeper skill set.
Apply that to an uncountable number of professions and you can begin to see the opportunity as an investor in the metaverse. And that’s just education.
When you realize that metaverse opportunities span everything from entertainment to finance to gaming to shopping, and you consider just how much money is spent in those arenas globally on an annual basis…well, this is precisely why I want to be an early investor in this space. Damn the volatility because I see the wealth ahead.
As I say over and over and over, crypto is our future, and the metaverse is going to be our daily existence. Now is the time to jump aboard that train by investing in crypto and non-fungible tokens (NFTs).
Next up…I hate being right sometimes.
This Crucial, Lesser-Known Inflation Figure Is “Exceptionally High”
Most mainstream media stories about inflation look at and comment on CPI, the Consumer Price Index, the most visible measure of inflation.
But there’s another measure that is arguably more important: the Producer Price Index, or PPI.
This index measures inflation at the wholesale level…meaning the costs that manufacturers are paying for the raw ingredients and raw commodities that go into their finished products. And, well, PPI is running hot.
The most recent reading saw PPI rise 0.4% month-over-month, putting wholesale inflation at 8.5% on an annual basis. A recent UPI story called the reading “exceptionally high.”
I’ve been a myna bird now for about 18 months, repeating the same message: Inflation in entrenched and it’s here for an extended visit.
It was always going to be this way. Central banks have been dumping egregious amounts of money into the global economy for decades, but it ramped up post-Great Recession…and then it REALLY ramped up during COVID as governments spent vast sums on economic stimulus and support payments.
Money printing is a whole lot like a torrential rainstorm on a parched desert. It creates a vast, powerful and dangerous flood, and it takes a while for the ground to soak it all in. That’s where we are economically.
The world is flooded with currency that’s collapsing in value. Global citizens know this. They know the values of their currencies are declining relative to real assets like a bushel of corn or even a new TV. Better to part with that money now—to spend it—than wait for the value to sink even further.
And, so, commodity inflation—producer price inflation—is hot. Meaning CPI at the consumer level is also hot. And it’s not going away for a while.
Sticking with inflation a beat longer…
American Cities Are Getting Ready for a Major Downturn
Fortune ran a recent story headlined: American cities are preparing for the worst and bracing for ‘stagflation and a possible economic downturn.’
I have been warning of stagflation for a while now. The ingredients for this cake were clearly mixed into the batter that is the U.S. economy. They were visible. Now, the cake is rising and those who are peeking into the oven are like, “Uh oh….”
Cities are now planning on lower tax revenue as they prepare for widespread job losses and a reduction in spending. This has knock-on effects that spiral through the system.
The federal government doesn’t care about the size of its debt. However, state and local municipalities by law must balance their books. So, they will have to curtail spending and hiring. And they will delay or cancel much-needed infrastructure improvement projects…which means local contractors will not be hiring and might very well be firing instead.
Cities and states are also going to see reduced income from real estate transactions, since prices have dropped sharply and would-be sellers are now pulling homes off the market. That, in turn, has led to mortgage companies filing for bankruptcy or laying off lots of staff.
And yet inflation will continue to rage for a good long while…thus leading to the stagflation scenario: high inflation paired with tepid economic growth or, most likely, a recession. Like I said, I hate being right sometimes.
Next up, let’s ease our worries with a dram or three of whisky!
This Collectible Asset Class Has a Lot of Promise
If you’ve read this month’s issue of the Global Intelligence Letter, you know that I write about why you want to own a certain class of collectibles during inflationary eras. Rare wines, rare coins, art, watches, rare books, etc. tend to do very well when inflation is destroying the purchasing power of fiat currencies like the dollar.
So, too, do rare and collectible whiskies from Ireland, Scotland, the U.S., and Japan.
Whisky has a far shorter history as a collectible asset than the items I highlighted in our October cover story: wine, coins, and watches. But it has a growing following. In fact, according to the Knight Frank wealth report, the Knight Frank index of rare Scottish single malts increased by 586% from 2012 to 2022.
I’m a relatively recent convert to whisky, and I’m starting to build a collection of fine, rare varieties. As part of my research, I recently spent the better part of a week touring half a dozen distilleries in Scotland’s famous Speyside region, home to some of the country’s most famous whisky brands including Glenfiddich, Glenlivet, and Macallan (truly an astounding distillery that is basically the Disneyland of whisky).
Well, one of the distilleries I visited on my trip made the recently released Best Scotch Whiskies for 2022 list from Worth magazine. Among Worth’s list of winners is the Benromach 40 Year Old. Benromach is a tiny little distillery from the 1800s set in a fairly industrial area. I didn’t taste the 40 Year Old—it’s around £2,000 per bottle!—but I did have several of their other offerings and it’s not hard to understand why Benromach makes the list. That said, there were many others that I thought were even better. I will be soon writing in International Living magazine about whisky investing, but I will tell you here first that the star of the tour was the GlenDronach 21 Year Old. It wasn’t part of any official tasting…I convinced the tour guide to give me a tiny little sample. It was so good I bought a bottle for $200. If you like good whisky, and you don’t mind the cost—and you can find it!—grab a bottle for yourself. You won’t be disappointed…no matter whether you decide to drink it or keep it as an investment.
Finally, this week, Latin Americans turn to crypto loans as inflation bites.
Crypto Lending Is Booming in Latin America
With inflation rates soaring and interest rates rising, it can be challenging to get access to credit. This is particularly true in Latin America, where rates are extremely elevated compared to major Western economies.
In August, Mexico’s central bank pushed rates to an all-time high of 8.5%. In Brazil, rates are even higher at 13.75%. That’s the second highest rate in the world behind Argentina, where rates are 75% (that’s not a typo…they’re really 75%!) as the country battles its latest bout of hyperinflation.
In this environment, getting a loan from a traditional bank can be impossible or riotously expensive. (Interest rates on personal loans at Itau, Brazil’s largest private bank, run as high as 173%.) So, consumers are turning to crypto-lending platforms, which offer better rates, easier access to credit, and lower administrative fees.
Canadian crypto-lending platform Ledn said Latin America now accounts for half of all the loans it issues…even though the company only began operating in the region in 2019. Ledn offers credit in U.S. dollars and the US Dollar Coin (USDC) stablecoin, with an annual interest rate of 7.9%. Applicants must post collateral in bitcoin equal to double the value of the loan.
Similarly, Latin America crypto exchange Buenbit has seen the amount borrowed through its lending feature rise by 70% since July, when it started offering credit in Argentina. Loans must be collateralized in a U.S. dollar-pegged stablecoin called DAI.
As this story shows, the traditional banking sector is struggling and decentralized finance is picking up the slack…even amid the crypto downturn.
And that brings us to the end of this month’s Wire. If you have any feedback or any topics you’d like me to address in a future issue, you can reach me through the contact form on the Global Intelligence website. Thanks for reading and for being a Global Intelligence subscriber.
