In today’s Exponential Investor

  • A new world awaits…
  • Are wages really on the rise?
  • Rates are being hiked – is the UK next?

In 2017 I attended CES, the world’s largest consumer technology expo. It’s a closed event for industry participants, and most definitely not open to the general public.

In short, it gives me a chance to see the latest breakthrough consumer technologies – and sometimes years before they hit the mass market.

In 2017, I rode in a fully autonomous Audi Q7. There was no driver, just me in the back seat. It was mind blowing.

But there was something else from 2017 that I described at the time as a future revolution in sports broadcasting. Here’s what I said:

Aside from self-driving cars and AI another major development is in the virtual reality (VR) and augmented reality (AR) space. I was able to demo AR and VR from a number of different tech companies. One in particular was a demonstration of a Formula E race from a private company, Virtually Live.

Using live telematics from the racing cars, Virtually Live reproduces a race, live, in a VR environment. It’s like actually being at a race, or being in a car as it races — except you’re not. It’s hard to explain or show you through a picture. But it is world changing, and it’s going to change sports broadcasting forever.

At the time I was a little critical of how VR would impact the world. But in the years since, I’ve changed my tune… quite a lot.

The way in which we can interact and blend our physical reality with virtual worlds unlocks something that I think our entire future society will exist in harmony with and benefit from financially and socially.

What I saw in 2017 was a preview of one aspect of how that might be. I was ahead of the game, a little early, but we’re starting to see now how this aspect of virtual worlds is starting to grow.

Last week Unity, one of the world’s most advanced platforms for virtual world creation, announced the release of “Metacast” a real-time 3D platform for sports broadcasts.

This allows Unity to capture biometric data in real time from athletes allowing them to instantaneously broadcast the athletes into a virtual world. In other words, imagine being ringside at a heavyweight UFC title fight in Las Vegas… from the comfort of your home in the UK.

Everything you see is happening in real time, every punch as it lands you see. Every bead of sweat knocked from the brow of the fighters you see land on the person’s leg next to you. It’s as real as it would be if you were there… or… what’s to say that you aren’t really there?

If it’s as real as being ringside in Las Vegas, then is it not real too?

What I saw in 2017 and what Unity has just unveiled is proof that how we interact with virtual worlds is changing fast. I see sports broadcasting as a game changer for the adoption of virtual world technology – connect that with decentralised, distributed networks, and you may very well be able to buy those live ringside seats with bitcoin or any other cryptocurrency.

Not just that but the fight purse might be in crypto too, the advertisers in the virtual world pay for their slots in crypto, and you might even earn a “cash back” reward in crypto for being a regular fight fan. An entire new economy unlocks as we engage with and immerse ourselves with these new virtual worlds.

It’s a theme you simply can’t ignore any more. Convergence of the digital and the physical is here. Whether it be sports broadcasting, gaming or even your money, the way in which we connect and transact with each other and our world is changing fast, which is why from an investment perspective, you need to make sure you’re ahead of the game.

Meanwhile in the “TradiFi” system…

From the excitement of virtual world economies, to the traditional financial (TradFi) economies at home… UK Prime Minister Boris Johnson came under fire last week, after claiming that real wages (wages adjusted for inflation) are on the rise.

The hard numbers suggest that he’s right.

Findings from the Office for National Statistics (ONS) revealed that for June 2021, the annual growth of average weekly earnings in the UK were at a 20-year high.

On the surface, it sounds like a post-pandemic recovery boom, whereby pent-up demand is driving wages up, and life is all pretty rosy – especially for workers in the understaffed haulage and meat industries.

Looking at the bigger picture, it’s a different story.

As the old saying goes, there are lies, damned lies and statistics.

With June 2021’s annual growth of average weekly wages, we are comparing them to this time a year ago.

Of course, this was in the depths of the pandemic, when the furlough scheme was in full swing, and many people were being made redundant.

In addition, many of those workers made redundant were from low-skilled, low-income sectors, such as the hospitality sector. As a result, this pushed average wages higher.

Bear in mind that in June 2020, year-on-year growth of average weekly wages was -1.5%.

With such a low benchmark, the 8.8% annual growth in weekly wages for June 2021 has an artificial look about it.

For July 2021, the annual growth in weekly wages was down to 7.1%.

Judging by this, real wages are actually falling as we speak. The situation is not nearly as positive as the prime minister suggests.

In fact, the Bank of England reckons that all things considered, the true underlying value of current wage growth is 3.3% – less than half of the actual figure.

So, unfortunately, that brings us a lot closer to the current rate of inflation of 3.2%, which looks destined to hit 4% before the year is out – especially with the ongoing energy crisis in the UK.

Maybe time spent in the metaverse might be a good outcome for all…

New Zealand… global leader?

Inflation is clearly a global concern, no matter what the politicians might want to believe.

Something needs to be done about it or it will get out of control.

Surprisingly, New Zealand has become one of the first developed economies to raise interest rates in the wake of the pandemic in an attempt to cut off inflation at the head.

The Reserve Bank of New Zealand raised interest rates for the first time in seven years, from 0.25% to 0.5% on 6 October 2021.

Of course, interest rates across major economies have been extremely low following a dormant period of economic activity.

Low interest rates encourage borrowing and investment due to cheaper rates. It also reduces the incentive to save because the return on cash is so small.

As such, spending is encouraged, injecting cash into the economy, with the hope of boosting economic growth.

And now, as economies start overheating, the brakes are starting to be put back on with higher rates.

The New Zealand bank rate rise is no doubt a sign of things to come.

In the UK for instance, Andrew Bailey, governor of the Bank of England, has already hinted that a rate rise is likely next year.

In our view, rate rises are a near certainty that investors need to brace for. Central banks have little other ammunition in their arsenals to head off inflation. They must move, delicately, but they must move.

While on the subject of certainties and as an investor preparing for what’s coming, there’s something happening on 16 November, exactly 36 days from now that is guaranteed to happen in the most exciting market on Earth right now.

It’s unusual for us to flat out promise something will happen like this.

Most of the time with markets, you can’t promise anything is guaranteed.

Well, this time we can guarantee that on 16 November 2021, there will be something seismic happening that if you care one little bit about your financial future you need to know about.

Mark the date in your calendar, it’s set to light this market on fire! Make sure to keep an eye out next week for more.

Until next time…

Sam Volkering
Editor, Exponential Investor