In today’s Exponential Investor….

  • McShortage
  • Visa riding the NFT wave
  • Don’t get “Musked”

No OJ for you

Oil, sugar, coffee, gold, bitcoin… these are all commodities (yes, even bitcoin can be a commodity) that can be traded in the futures markets.

Most of the time these are paper traded. That means the people who are buying and selling do so without any intention of seeing the contract delivered.

This was part of the reason why in April 2020 with the shock of Covid-19 reverberating around the world, the price of oil went negative.

It was because those left “bag holding” the oil contracts couldn’t have physical barrels land on their doorstep, so it was actually cheaper to pay someone else to hold the contract rather than to take delivery.

However, if you’re in the business of needing some of these commodities and happy to take actual delivery, then there are moments when physical delivery could be a good idea: of course, buying when prices are low is the way to go.

For most people storage does become an issue. But if you’ve got the space, hey, why not?

And now might be a good time to look at a commodity that seems to be in short supply at the moment…

Orange Juice. OJ…

There’s been a simmering problem in the market that’s starting to finally rear its ugly head. The problem is delivery of goods in the supply chain.

Getting products from A to B used to be pretty straight forward. But with issues remaining around the pandemic, and the aftershocks from the epic delays in the previously blocked Suez Canal are still being felt.

I’m experiencing this firsthand with a shipment that’s on its way to me from Australia. The shipment contains just personal effects. However, at the port in the UK, there was a delay due to “port congestion”.

Furthermore, when we pulled into our local McDonald’s drive-thru the other day, we noticed they weren’t able to offer milkshakes or orange juice due to “supply and delivery issues”.

This was slightly annoying as we’d wanted an OJ with our sausage and egg McMuffin breakfast, and we had to settle for a coffee instead.

But it did get me thinking, what if these supply outages and disruptions continue? What if the real hurt locker here is a global transport and logistics system that is plagued with ongoing delays, disruption and frustrations?

Can we come to expect more shortages in commodities like OJ? And if so, how do we get out OJ fix?

Well since hitting lows in May, orange juice futures are up around 30% to $137. They’re not at all-time highs, but could be on a charge.

The key message though, is this: keep an eye on the world around you.

When McDonald’s has a shortage of OJ, ask: why? What does that mean and how can you play it as an investor?

Most people would have no idea you can trade that as an investment idea. But you can if you know how. And with OJ fast becoming a rare commodity (at least at Maccas) it could be one of the great trades of 2021.

Visa buys an NFT

Speaking of rarity, Visa, the giant financial services corporation with deep roots in the old, traditional money system since the late 1950s, is now (sort of) delving into the world of crypto.

After revealing that it supports crypto transactions settling certain transactions in the USDC stable coin (a crypto pegged to the US dollar) in March 2021, the company has just purchased its first non-fungible token (NFT).

The rise of NFTs is one of the most spectacular digital phenomena in the world at the moment.

To give you an idea, NFT sales volumes hit $2.5 billion in the first six months of this year, up from a total of $13.7 million in all of 2020.

NFTs are immutable crypto tokens, which are often then represented as digital artwork, with value that is perceived by collectors. Of note, this includes clips of famous NBA basketball footage, and pixeled art graphics, such as “CryptoPunks”.

On 23 August 2021, Visa revealed that it purchased a female CryptoPunk (one of the original kinds of NFT) for around $150,000.

A CryptoPunk can only be described as an “8-bit” pixelated headshot that depicts a unique, digital person.

Visa’s head of crypto, Cuy Sheffield, stated that the main purpose behind Visa’s purchase was to “learn more about the growing NFT market.”

The main reason was also to have this as a piece of culturally significant commerce. And $150,000 is pocket change for Visa.

What it does reinforce, however, is that NFTs and crypto are “culturally significant”. That this is not a fad and that if you’ve not taken this space seriously before, perhaps you should now.

Smoke, mirrors and… electric vehicles

While we are on the subject of unusual actions… we’d be remiss to not mention Elon Musk.

Musk has a habit of going “off-piste” with some of his antics.

You only need to look at his decision to sell flamethrowers as an example of this.

Many of his claims have turned out to be more a diversion than real commercial opportunities for his companies.

A standout was when he predicted in 2016 that the first brain-computer chip, created by his company Neuralink, would be implanted into a human brain by the end of 2020.

The best he managed was a nine-year-old, video game-playing macaque (monkey).

Another was when he said he expected full-self-driving cars to be available by 2018.

In the six levels of vehicle autonomy, with Level 6 being completely driverless, we have only managed to reach Level 2.

The latest claim points to an artificial intelligence, humanoid robotic future, led by “Tesla bots”.

Or, in other words, a 5ft 8in robot that is designed for repetitive and “boring” tasks. This includes grocery shopping, or simply, “bending over to pick something up”.

This was introduced at Tesla’s inaugural AI day on 19 August 2021.

But when I say “introduced” I really mean that there was some bloke in what can only be described as a gimp-suit doing a robot dance on a stage… with some nice-looking PowerPoint slides.

According to Musk, the robot will be introduced in 2022.

We’re going to take this one with a pinch of salt.

This is Musk once again using diversion tactics to obscure the fact the Tesla CyberTruck is delayed and the company is as much smoke and mirrors as it is an electric vehicle (EV) company.

Of course, the Teslarati were cooing and ahhing at the idea of a Tesla Bot.

But we should also note that Nikola Motors’ former CEO, Trevor Milton, has been charged by the Securities and Exchange Commission (SEC – the main US financial regulator) for making claims about Nikola that were aimed at misleading and deceiving the market…

We wonder how long it is until the SEC starts looking at Musk?

Sam Volkering
Editor, Exponential Investor