December 21: This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Aging of the Population
“Retirement industry insiders say they expect Congress to work next year toward a third installment of the SECURE Act focused on expanding retirement security. The legislation would be the third installment of the historically bipartisan SECURE Acts, which Congress passed in 2019 and 2022 respectively, creating significant changes to Americans’ retirement and estate plans… DOL officials, lawmakers and industry executives “want to try to make it easier for the assets to automatically follow people around as they go from employer to employer or employer to IRA.” Read more here
“This Lunar year, the year of the dragon, is seen as an auspicious one for marriage and births in Chinese culture. Nonetheless, 2024 births are expected to drop below 8 million, less than half the number in 2015, the last year of China’s one-child policy. China’s fertility rate is hovering just above one birth per woman, well below the 2.1 needed to maintain a stable population.” Read more here
Artificial Intelligence
“Only eight percent of U.S. government employees are utilizing generative artificial intelligence (AI) on a daily basis for their jobs, while 61 percent say they never use this technology tool… In terms of government interest and adoption, a Bloomberg Philanthropies survey found 96 percent of mayors are interested in using AI, while the Government Accountability Office found many federal agencies already are implementing AI management and talent requirements.” Read more here
Artificial Intelligence, Digital Infrastructure
“Canada's federal government has considered making up to $15 billion available as an incentive to encourage major domestic pension funds to invest in AI data centres powered by green energy, the Globe and Mail reported on Thursday.” Read more here
“Amazon ticked up on Monday following Ohio Governor Mike DeWine's disclosure that by 2030 the firm intends to have $23 billion invested in the state. This amount includes extra $10 billion allocatedto enhance data center infrastructure to meet rising artificial intelligence and cloud computing service demand.” Read more hereArtificial Intelligence, Digital Lifestyle
“Since Cyber Monday (Dec. 2), retailers have increased their use of generative AI and agents by 23% week-over-week. Salesforce predicts that AI is on track to influence upward of $200 billion in holiday sales for the full holiday season, a 12% year-over-year increase.” Read more here
Artificial Intelligence, Safety & Security
“Lockheed Martin said on Monday it had formed a subsidiary that will help U.S. defense companies incorporate artificial intelligence into their operations.
Companies across sectors have leaned more on AI over the past few years to help optimize their workflow. However, defense companies have remained cautious given the sensitive data required to train models in the sector.” Read more here
Cash-Strapped Consumer
“Gen X is a “sandwich” generation, facing the financial pressures of simultaneously supporting parents in retirement and kids as they come of age. Most Americans are grappling with the runaway inflation that followed the pandemic, but parents in this age group are uniquely focused on whether their kin will ever be able to make it without monetary aid.” Read more here
Cybersecurity, Data Privacy
“According to a Wall Street Journal report, the U.S. Departments of Justice, Commerce, and Defense are looking into the issue, with at least one Commerce Department office having already subpoenaed the company. In recent years, TP-Link's market share has grown to approximately 65% of the U.S. market for SOHO routers (for homes and small business offices). This potentially artificial growth is powered by selling the devices for less than their manufacturing price, which the DOJ is also investigating.” Read more here
“A phishing campaign targeting automotive, chemical, and industrial manufacturing companies in Germany and the UK is abusing HubSpot to steal Microsoft Azure account credentials. The threat actors use HubSpot Free Form Builder links and DocuSign-mimicking PDFs to redirect victims to credential-harvesting pages. According to Palo Alto Networks' Unit 42 team of researchers, the campaign, which started in June 2024 and remained active until at least September 2024, has compromised approximately 20,000 accounts.” Read more here
“Stoli, a top vodka brand with a presence across the world, filed for bankruptcy last week - with an apparent cybersecurity incident among the reasons. In the bankruptcy filing, the company listed many reasons for its financial failings, including legal disputes with the Russian government, the country’s confiscation of two distilleries worth around $100 million, and a ransomware attack that allegedly happened in August 2024.” Read more here
“Microsoft has announced its intention to eliminate passwords for over a billion users, marking a pivotal step in digital security. Declaring that “the password era is ending,” the company cautioned users about the rise of password-related attacks, stating, “Bad actors know it, which is why they’re desperately accelerating these attacks while they still can.” The move underscores Microsoft's commitment to replacing passwords with more secure, phishing-resistant alternatives like passkeys.” Read more here
“Photobucket was sued Wednesday after a recent privacy policy update revealed plans to sell users' photos—including biometric identifiers like face and iris scans—to companies training generative AI models. The proposed class action seeks to stop Photobucket from selling users' data without first obtaining written consent, alleging that Photobucket either intentionally or negligently failed to comply with strict privacy laws in states like Illinois, New York, and California by claiming it can't reliably determine users' geolocation.” Read more here
Digital Lifestyle
“The most advanced phones on the market come with the promise of making your life easier with new generative AI features, including composing texts, creating images from prompts and removing unwanted people or things from your photos. Now, the tech industry has set its sights on the next generation of artificial intelligence as companies begin to hype up so-called agentic AI -- in other words, AI agents catering to your needs -- that they say will change how we use devices with novel suggestions, recommendations and other ways to truly become bonus brains.” Read more here
”The global advertising industry will surpass $1tn in revenue for the first time this year, with Google, Meta, ByteDance, Amazon and Alibaba expected to earn more than half the total in a market dominated by the technology sector.” Read more here
Digital Payments
“In an age where relationships with banks are nearly ubiquitous — the Federal Reserve noted last month that just about 96% of households have at least some form of checking or savings account with a bank or credit union — the move toward direct account-to-account (A2A) flows should be an intuitive one. But it hasn’t been, at least not yet, though the rise of open banking promises to change that.” Read more here
“Walmart’s majority-owned fintech, One, will take over the retailer’s dual co-brand and private label portfolio when it relaunches next year… Walmart is becoming a major payments player and introducing a new competitive threat to banks and other fintechs. And being able to market products to its massive customer base gives Walmart a key competitive advantage over more traditional financial institutions.” Read more here
Luxury Buying Boom
“Capri Holdings (NYSE:CPRI) shares rose as much as 7% in premarket trading on Monday after Women’s Wear Daily (WWD) reported that the company is exploring potential buyers for its Versace and Jimmy Choo brands, working with Barclays (LON:BARC) to facilitate the process.” Read more here
“With their sector facing a downturn, luxury brands are reportedly pinning their hopes on outlets… retailers, and landlords and real estate investors are all banking on the idea that shoppers still want higher-end goods, as long as they can pay lower-end prices. So while foot traffic remains at pre-COVID levels, retailers have begun leasing more space at outlet shopping centers, where designers can sell surplus at steep discounts.” Read more here
Nuclear Energy & Uranium
“The resource-intensive nature of AI will create winners and losers. Those with the most resources will have the most advanced AI systems. It’s leading to clashes over increasingly scarce commodities, as well as access to chips. It’s motivating tech companies to seek more efficient means of developing AI. They’re throwing billions of dollars into alternative energy solutions such as nuclear fusion that have spent years if not decades sputtering along without heavy spending and technological breakthroughs.” Read more here
Safety & Security
“Security camera company Verkada Inc. is raising $200 million at a valuation of $4.5 billion, a significant premium over its last funding round, according to people familiar with the matter… The shooting of UnitedHealth Group Inc. executive Brian Thompson earlier this month has driven more interest in physical safety precautions, including services like those sold by Verkada, as corporations look to enhance security measures.” Read more here
Space Economy
“The European Space Agency (ESA) is projecting that the global space economy grew to €121 billion ($127 billion) in the current year, 7% more than the 2023 level. The pace of growth is down slightly from the 11% seen between 2022 and 2023, according to a space economy report that ESA released Dec. 17.” Read more here
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.
Cash Strapped Consumer - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
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.
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.
Cybersecurity - Companies that focus on protecting against the penetration of digital networks and the theft, ransom, corruption or destruction of data.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Digital Lifestyle - The companies behind our increasingly connected lives.
Digital Payments - This model focuses on companies benefitting from the accelerating structural adoption of digital payments and financial technology (FinTech).
EPS Diplomats - Profitable large capitalization companies proven to produce above-average EPS growth and provide investors with the benefit of multiple expansion.
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.
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.
Don’t be a stranger
Thanks for reading and if you have a suggestion for an article or book we should read, or a stream we should catch, email us at info@tematicaresearch.com. The same email works if you want to know more about our thematic and targeted exposure models listed above.