This time it’s different, and not in a good way. There’s something uniquely unsettling about the mess that the Federal Reserve has gotten America into this time – you can see the fear in their eyes because they know the fractures in the foundation are getting bigger.
It’s hard to describe in words how fragile the monetary system has become, but a few numbers ought to convey the desperation: last week, the futures market had a complete freak-out as the cash available to American banks for overnight loans dried up, sending the interest rates for these loans up to 10% higher and forcing the Fed to inject $125 billion in two days into the short-term bank-funding market.
There are clearly faults in the $2.2 trillion repo (repurchase agreement) market, and the “repo apocalypse” event is a symptom of a frail and fundamentally unsound economy – one that can’t handle stress in a time when there’s no shortage of black-swan events on the horizon.
But what else should investors expect when the government continues printing money endlessly, rewarding spending instead of producing, decoupling stock prices from economic conditions, and reversing course from fiscal discipline/tightening to full-on easing and a whole new round of QE?
The result of this bizarre experiment, besides an increase in freakish incidents like the “repo-calypse,” is an economy that’s desperately in need of growth. The stock market already presumed and priced this growth into asset prices, and now there’s got to be something, somewhere, to kick-start the American economy and justify the already extended stock valuations.
That said, there’s a trend that I will closely follow and be invested in going forward.
One of the sectors of the economy we’ve been watching very carefully here at Crush The Street is 5G, the next-generation wireless connectivity network that represents a massive upgrade in speed and reliability. Some experts have even called the advent of 5G “the fourth Industrial Revolution,” as it has the potential to profoundly impact not only the economy, but our quality of life.
But don’t misunderstand: the fiscal implications cannot be overestimated. As Ronan Dunne of Verizon Consumer Group explains, 5G will enable $12.3 trillion of global economic output and support 22 million jobs worldwide by the year 2035, with much of that growth coming from the manufacturing, transportation, healthcare, and agriculture sectors as they become more digitized and less restricted by geographical distance.
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President Trump has made his support of 5G deregulation crystal clear on Twitter, declaring, “I want 5G, and even 6G, technology in the United States as soon as possible. It is far more powerful, faster, and smarter than the current standard. American companies must step up their efforts, or get left behind. There is no reason that we should be lagging behind on something that is so obviously the future.”
America still needs to expand and implement 5G before we start thinking about 6G, but I do happen to concur with the President’s sentiment on the transformative potential of this exciting technology. Whether Federal Reserve Chairman Jerome Powell understands 5G technology or its importance is another matter entirely, but somebody needs to explain to Powell that 5G is key to the economic expansion he’s sworn to sustain by any means necessary.
I seriously doubt that Jay Powell appreciates what’s at stake here. 5G will enable safer and more reliable self-driving vehicles, including autonomous trucks that will deliver the goods we consume every day; it will connect patients and doctors to medical devices, potentially saving lives; and it will upgrade the energy and utility sectors through smart meters and smart grids.
Trump has consistently been an advocate of job growth, and the 5G network expansion will create job opportunities in cities across the nation, along with millions of dollars in GDP growth in smaller cities while the bigger cities’ economies will grow by billions of dollars.
In other words, you won’t just have smart cities – you’ll have prosperous cities across America with 5G. It’s an early-stage and high-growth market that Crush The Street has been reporting on for a while, even while most investors and mainstream analysts still don’t see the explosive potential yet.
It’s one of those rare opportunities in life, not unlike the Internet or smartphones when they were still emerging technologies. Although, not the end all be all, there is no question that this will be a lifeline for the US economy. Billions of dollars will be made and played accordingly, investors will be rewarded handsomely.
Chief Editor, CrushTheStreet.com
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