Digesting Trump’s Early Actions, Earnings Season Comments
Gauging management comments and Trump policy reactions in Davos
As investors and other market watchers digest 2025 Inauguration Day and the initial push by the Trump administration equity futures point to a positive start when US equity markets open later this morning. Those futures were pointing to even stronger gains but gave up some ground following Monday night comments from President Trump that he was considering 25% tariffs on Mexico and Canada beginning February 1. Trump invokes emergency powers in a bid to boost domestic energy production and undo Biden-era policies designed to fight climate change.
Among the sea of other executive orders, Trump ordered all department and agency chiefs in the executive department to eliminate work-from-home options and return employees to in-person work “as soon as practicable.” The administration will freeze hiring for federal employees, except for the military or those related to immigration enforcement and national security. Trump also ordered all agencies to pause issuing or publishing any new regulations until after they’re reviewed by the incoming administration.
These and other actions announced last night, and odds those to come, will face resistance and some will be challenged in court. With the start of the World Economic Forum in Davos today, we are likely to get reactions to President Trump’s first 24-hour blitz from other world and business leaders. As we navigate this evolving landscape, we’ll continue to follow the tailwinds for our thematic and targeted exposure models being mindful that President Trump seems to thrive in ambiguity that keeps his opponents, both political and international, unsure of his next move.
As the market drinks all of this in, its attention will turn back to the December quarter earnings season. Today that means hearing from 3M (MMM), DR Horton (DHI), Netflix (NFLX), and United Airlines (UAL). Tomorrow GE Vernova (GEV), Johnson & Johnson (JNJ), Textron (TXT), Alcoa (AA), and Discover (DFS). Among their discussions of quarterly results, business drivers, and guidance, we’ll be listening for initial comments from management teams regarding Trump’s initial actions and the potential tailwinds and headwinds they could bring.
Model Musings
Artificial Intelligence
“Microsoft Corp. is raising the price of its package of Office apps for consumers, a bet that subscribers will be willing to cough up more for access to new artificial intelligence tools. The Microsoft 365 family subscription, which offers access to Word, Excel and other apps for as many as six people, will now cost $130 a year, a 30% increase, the company said in a blog post Thursday. The version for individuals is rising 43% to $100. The price changes take effect immediately for new subscribers and will affect existing ones when they renew.” Read more here
Artificial Intelligence, Digital Infrastructure
Demand for artificial intelligence chips is set to grow in the coming years as health care, education and financial sectors adopt more services from AI agents such as Microsoft Corp.’s Copilot, said Julian Ng, chief executive officer of Singapore-based GVT. That’s a boon for up-and-coming equipment suppliers such as GVT, as chipmakers need to invest in their production systems. “We are riding on the AI wave,” Ng said in an interview. Those saying AI is a bubble are wrong because many industries are yet to adopt the technology, he said. Read more here
Cash-Strapped Consumer, Digital Lifestyle
Free shipping is an online shopping feature that 66% of consumers take into account when selecting an online store…The second-most sought-after online shopping feature, an easy checkout process, was mentioned by half of consumers, the report found. Three features — the ability to track deliveries, the availability of fast delivery, and easy and convenient return and refund procedures — were each mentioned by 46% of consumers. Read more here
CHIPS Act
…Taiwan’s biggest chip company is confident the Trump administration will continue funding its projects in the U.S… During his campaign for the White House, Trump publicly criticized the bill and its price tag, arguing instead that tariffs were a more effective strategy to onshore chip manufacturing. The President-elect also accused Taiwan of “stealing” U.S. chip business. However, industry experts have told CNBC that they expect Trump to leave the policy mostly intact due to its bipartisan support in Washington. Read more here
Cybersecurity
Residents across the United States are being inundated with text messages purporting to come from toll road operators like E-ZPass, warning that recipients face fines if a delinquent toll fee remains unpaid. Researchers say the surge in SMS spam coincides with new features added to a popular commercial phishing kit sold in China that makes it simple to set up convincing lures spoofing toll road operators in multiple U.S. states. Read More Here
Data Privacy
The Federal Trade Commission (FTC) is taking action against General Motors (GM) and its subsidiary, OnStar, for unlawful collection and selling drivers' precise geolocation and driving behavior data from millions of vehicles. The U.S. government organization proposes a settlement in which the automotive giant will be barred from sharing drivers’ sensitive data for five years. Read more here
EV Transition
U.S. President Donald Trump on Monday took aim at electric vehicles, revoking a 2021 executive order signed by his predecessor Joe Biden that sought to ensure half of all new vehicles sold in the United States by 2030 were electric… Trump said in an executive order he was halting distribution of unspent government funds for vehicle charging stations from a $5 billion fund, called for ending a waiver for states to adopt zero emission vehicle rules by 2035 and said his administration would consider ending EV tax credits. Read more here
Luxury Buying Boom
As sales of luxury brands in China crater amid a wider slump in consumer spending, some of the world’s most exclusive labels are turning their gaze on Thailand… Of the 26 luxury international brand-name store openings in Southeast Asia over the past 12 months, Thailand accounted for the most with 11, Luxurynsight data show. Read more here
Safety & Security
European Commission industry chief Stéphane Séjourné said he agreed Europe needs to invest more in its defense capacities, but argued that it would be impossible to do so if Trump launches a trade war with Europe. 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.