Welcome to the Friday mailbag edition of The Daily Cut.
Coming up, you’ll hear about how robots will affect the future of work.
But first, conjured central bank money is here to stay…
And it’ll impact the price of every investment in your portfolio.
That’s a message from the newest member of the Legacy Research team, Nomi Prins.
She’s talking about the roughly $31 trillion in stimulus central banks have done since end of the 2008 financial crisis.
And she’s joined the Legacy team to show you what all that money sloshing around the financial system means for you.
Nomi is a former investment banker who quit a seven-figure job at Goldman Sachs (GS) to expose how Wall Street tilts the playing field in its favor… and tries to shortchange regular investors.
Since then, she’s become a leading authority on the distortions central bank stimulus causes… and how they affect our lives.
She’s spoken at the Fed, the International Monetary Fund (IMF), and the World Bank on how to get banks to better serve the economy.
And she’s written two books on the influence central bankers have over our lives – All the President’s Bankers and Collusion: How Central Bankers Rigged the World.
As she’s been showing her readers, central banks won’t reverse course anytime soon.
That’s because stimulus is a global phenomenon. So even if one central bank turns off its money spigots, others around the world will keep theirs pumping.
Today, one reader has a question about one of the main ways central banks stimulate markets – quantitative easing (QE).
Reader question: I believe financial markets are rigged. It’s almost impossible to deduce true values of any asset anymore.
I often hear that the Fed juices stock prices with its money-printing and QE policies. This is obvious. Look at any chart tracking a stock index (pick anyone) and the Fed balance sheet.
My question is in the mechanics of this – specifically how does QE inflate stocks now?
– Andy L.
Nomi’s response: Hi Andy. That’s an astute observation.
The amount of money the world’s largest central banks have fabricated is epic. Just the largest four – the U.S. Fed, European Central Bank, Bank of Japan, and People’s Bank of China – manufactured the equivalent of $31 trillion since the 2008 financial crisis.
More than $11 trillion of that has been created since the pandemic.
When you have that kind of epic inflow of money… and major Wall Street players leverage it… it completely distorts the markets from the real economy.
This deluge of money, not intrinsic value, bolsters stock prices. Throw in all the corporate buybacks this cheap money funds, and this distortion – the inflation of share prices – is even greater.
The good news is we can take advantage of this new reality now. You just have to know which sectors will benefit.
Nomi will show her readers how to profit from this new reality in her new e-letter, Inside Wall Street With Nomi Prins. So make sure to check that out here.
But as I showed you in yesterday’s dispatch, her strategy focuses on five sectors set to thrive as all this stimulus flows through financial markets.
This approach is already popular with readers…
It is great to have Nomi Prins on board. I am looking forward to what she has to offer and for my own response to where the “new” paradigm shift is headed. I’ve had subscriptions to several financial and investment newsletters in the past years but have yet to find one that has not cost me more in time and money than the value I got from the advice and recommendations.
We need real-world, sane ways to invest our money in moderate short-term and long-term prospects. I eagerly await what Nomi and her team at Rogue Economics will suggest to enhance my economic and financial health for 2022. Thank you.
– Nick B.
Hello, Nomi. I enjoyed your introduction. Really excited to read more…
There are so many pulls in different directions of investment theory and offered new opportunities… Right now, I feel like I’m in a grocery store having missed lunch, without a shopping list, and grabbing random groceries that look good. I’ll be watching and reading.
– Reiner B.
Thank you, Nomi. Your intro helped me understand and trust you.
– Matthew G.
Nomi, we’re very much enjoying reading you. Your advice is stellar. Though we are the tiniest of investors, we know that, for example, silver and gold are “must-haves,” and we know the ludicrousness of the markets, so much of your analysis rings true to us. Thank you so much. Keep it coming…
– Jamie L.
Next, we turn to Legacy’s tech expert, Jeff Brown.
If you don’t already know him, Jeff worked as an executive at high-tech companies in the U.S. and Japan.
He’s also been a private investor in early-stage tech companies for more than two decades.
Since joining the Legacy team, he’s been on a mission to use his tech, finance, and investing expertise to help everyday investors pinpoint companies on the verge of exponential growth.
One of the tech megatrends he’s been tracking is robotics. Which puts him in the perfect position to answer this question about robots in the workforce…
Reader question: I’m hoping you’ll address something that seems a certainty to me – a great increase in the use of robotic labor in the near future.
With increased difficulty in finding workers and increased costs of labor, an increase in the use of robots seems guaranteed to happen. Do you have any companies you’d recommend in this space?
– Al R.
Jeff’s response: Hello, Al. You’re spot on.
Companies are turning to automation to fill roles people are reluctant or unwilling to do. The labor shortage has accelerated this shift immensely. I estimate we’re five years ahead in development than where we’d be otherwise.
We saw record sales of industrial robotics in North America last year. By the end of the third quarter, these sales had already reached $1.5 billion. Total 2021 sales should exceed $2 billion.
Take Fabric. It’s a startup supplying automation technology to fulfillment centers. Its robots can pick, sort, and scan goods to prepare them for delivery. This can cut the need for human laborers to fulfill online orders. That’s why companies such as Instacart and Walmart (WMT) are flocking to Fabric right now.
Or look at Rapid Robotics. It designs robotic arms that can be preprogrammed with industrial skillsets. This allows the arms to grab small items on an assembly line and do repetitive tasks like injection molding and assembly.
The Rapid Machine Operator, a robotic arm that performs repetitive tasks. Source: Rapid Robotics
The rise of robotics and automation technology is influencing even the agricultural industry…
Iron Ox develops robotic farms. It uses hydroponic growing environments – a method of growing plants without soil – with robots that plant and care for the vegetables. When the plants are mature, the growing beds are automatically delivered to a robotic arm for harvesting. No humans are involved.
These are just some of many examples we see of robotics changing our world. More use cases will appear in 2022.
As for companies we can invest in… the ones I mentioned are still in the early stages of growth. And they aren’t publicly traded yet. I’ll keep an eye on them as they progress to see if any become excellent candidates.
You could look at Teledyne (TDY). It has a large robotics division from acquiring Universal Robotics a few years back.
This isn’t a formal recommendation. I haven’t analyzed Teledyne’s valuation to decide if it’s a good buy or not. I’m mentioning it because it’s a publicly traded company that has a robotics division I’ve been tracking.
That’s all for this week.
If you’d like to ask a question to the Legacy experts, be sure to get in touch at [email protected].
Have a great weekend.
Regards,
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Chris Lowe
January 7, 2022
Dublin, Ireland