7 Weekend Reads
These Are the Five Potential Trouble Spots That Could Knock the Global Economy Off Course. “The International Monetary Fund forecasts global growth of 2.9% in 2024, a whisker below last year. With two wars raging and some 40 national elections on the calendar, political developments will shape the year, especially as Donald Trump makes a go at winning back the presidency. But crucial economic stress points could upend the benign outlook.”
Get Ready for a ‘Tsunami’ of AI at CES. “CES, the consumer electronics industry’s largest annual gathering in the US, is returning to Las Vegas on January 9. It is a massive, four-day-long bustling bazaar of tech, with expo halls filled to the brim with new gadgets, hopeful startups, and prototypes that reach for the stars. CES is a trade show where sales and distribution deals are inked, where concept cars roll through crowded streets, and where tech journalists and showgoers alike wander the floors looking for the standout new products. And this year, many of the products debuting are going to be garnished with heaping globs of AI.”
Data ownership is leading the next tech megacycle. “There’s a brewing “cog in the wheel” for Big Tech companies and others — from biotech and healthcare innovators to large banks, big brands and their marketing agencies, and even governments — as the mostly free access to our collective personal data will likely dry up by the late 2020s: The same data that powers our AI systems that we collectively produce in droves needs to be monetized, monitored, and curated.”
The Power Grid Is Changing. What It Means for Utility Stocks—and Your Electricity Bill. “The grid” refers to everything that goes into the production, storage, transmission, distribution, and consumption of electricity, and it’s set to go through big changes. Production of electricity will have to increase as power-hungry data centers proliferate along with EVs, and as home heating and cooling go electric. The sources of all that electricity will shift to more-renewable sources like solar and wind, which will also necessitate more energy storage assets—think batteries—as well as more-robust transmission lines. Behind the curtain will be more software and artificial-intelligence tools coordinating it all.”
Washington Heats Up Nuclear Energy Competition With Russia, China. “To compete with its biggest geopolitical rivals, the U.S. government is looking toward small nuclear reactors. Not a single so-called small modular reactor has been sold or even built in the U.S., but American officials are trying to persuade partner countries to acquire the cutting-edge nuclear reactors still under development by U.S. firms. The goal: to wrest nuclear market share from Russia—the global industry giant—and defend against China’s fast-growing nuclear-technology industry.”
Focus on the AI Ecosystem, Not the Hype Machine. “The artificial intelligence hype machine was at full speed in 2023, and market performance reflected the technology’s early promise. AI may be a transformative technology that allows companies to improve margins and find new revenue-generating opportunities, though wide adoption will likely take time as companies test different strategies. While a few high-profile stocks continue to capture most of the attention, that is only part of the story. The broader AI ecosystem could be full of companies with compelling growth potential.”
Amazon and Walmart Both Turn to Games for Revenue Sources. “In anticipation of incorporating advertisements on Prime Video, Amazon is also delving into the development of movies and TV series inspired by the Warhammer 40,000 games. On the flip side, Walmart, not aiming to take over the movie world, recently shared news about teaming up with Unity, a platform for 3D experiences. This partnership allows game and app creators to directly link Walmart’s shopping features into their creations, making it possible to sell real items in 3D experiences on over 20 platforms.”
The strategies behind our Thematic Models:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.