In this week’s video, Tematica’s Chris Versace lays out the quarterly earnings report coming this week the team will be mining for insights and data points relating to their almost two dozen thematic and targeted exposure models. Chris also discusses which models the team will be thinking about as the September reports for Retail Sales, Industrial Production, and Housing starts are published. Finally, Chris gives three reasons why investors should be cautious with the market this week, and how that meshes with Tematica’s Market Hedge model.
Once you’re done with the video, be sure to scroll lower and see the latest batch of ripped-from-the-headlines confirmation points for our models as well as how those models stack up against the S&P 500.
Model Musings
Artificial Intelligence
“Artificial intelligence (AI) is transforming pharmaceutical research, compressing timelines and potentially slashing drug prices in an industry defined by decade-long development cycles and billion-dollar price tags. This technological upheaval is exemplified by projects like the AI-driven RNA Foundry (AIRFoundry), part of a $75 million investment by the U.S. National Science Foundation (NSF) in five biofoundries. The initiative aims to leverage AI to streamline RNA research and drug development, representing a broader trend of integrating advanced technologies into pharmaceutical processes.” Read more here
“As Walmart and Amazon compete to provide the best online shopping experiences, both are increasing their use of generative AI (GenAI) to improve search offerings…“A standard search bar is no longer the fastest path to purchase — rather, we must use technology to adapt to customers’ individual preferences and needs,” Walmart’s global chief technology officer and chief development officer Suresh Kumar said in a statement… Amazon, for its part, shared Wednesday in a blog post that it is expanding its use of generative AI to enhance its eCommerce platform with the launch of AI Shopping Guides on its U.S. apps and mobile site.” Read more here
Cash-strapped Consumer
“Lower inflation and interest rates may give some relief to consumers who need it most, Wells Fargo CEO Charlie Scharf said Friday (Oct. 11)…“We continue to see more pronounced stress in certain customer segments with lower deposit and asset levels where inflation has partially offset strong employment and wage growth,” Scharf said during the call. “The benefits of inflation slowing and interest rates starting to ease should be helpful to all customers, but especially those on the lower end of the income scale.” Read more here
Cybersecurity, Data Privacy
“Fidelity Investments, a Boston-based multinational financial services company, disclosed that the personal information of over 77,000 customers was exposed after its systems were breached in August… Fidelity added that the incident exposed the data of 77,099 customers but has yet to reveal what personal information was stolen in the data breach besides names and other personal identifiers (as shared with Maine's Attorney General).” Read more here
“An APT hacking group known as GoldenJackal has successfully breached air-gapped government systems in Europe using two custom toolsets to steal sensitive data, like emails, encryption keys, images, archives, and documents. According to an ESET report, this happened at least two times, one against the embassy of a South Asian country in Belarus in September 2019 and again in July 2021, and another against a European government organization between May 2022 and March 2024.” Read more here
Cybersecurity, Digital Infrastructure
“Nearly 900,000 miles of commercially owned cables now crisscross the world’s oceans. They, not satellites, provide the globe’s digital backbone, carrying 99% of transoceanic digital communications and enabling trillions of dollars in financial transactions daily. With the explosion in cloud computing and e-commerce, more data — and more sensitive data — now travels along this underwater network; bandwidth nearly doubled from 2020 to 2022. At the same time, vulnerabilities are also rising…” Read more here
Luxury Buying Boom
“The luxury goods market is witnessing a notable trend toward strategic partnerships. Rather than retreating in the face of challenges, industry players are doubling down on collaboration to fortify their positions. This week, Mytheresa announced its acquisition of YNAP from Richemont, with the goal of creating a leading global digital luxury group… Simultaneously, the launch of the Authentic Luxury Group (ALG) by Authentic Brands Group and Saks Global represents another significant collaboration.” Read more here
Nuclear Energy & Uranium
“ Last month, banks from U.S. to Asia signed a joint declaration to increase support for nuclear power construction. Signatories included Abu Dhabi Commercial Bank, Ares Management, Bank of America, Barclays, BNP Paribas, Brookfield, Citi, Credit Agricole CIB, Goldman Sachs, Guggenheim Securities, Morgan Stanley, Rothschild & Co., Segra Capital Management and Societe Generale. The banks' pledge comes a year after twenty-two countries and 120 companies signed a joint statement at the COP28 conference in Dubai to triple global nuclear capacity by 2050 as part of the drive to cut greenhouse gas emissions.” Read more here
“Google will back the construction of seven small nuclear-power reactors in the U.S., a first-of-its-kind deal that aims to help feed the tech company’s growing appetite for electricity to power AI and jump-start a U.S. nuclear revival. Under the deal’s terms, Google committed to buying power generated by seven reactors to be built by nuclear-energy startup Kairos Power. The agreement targets adding 500 megawatts of nuclear power starting at the end of the decade…” Read more here
“The Biden administration is working on plans to bring additional decommissioned nuclear power reactors back online to help meet soaring demand for emissions-free electricity, White House climate adviser Ali Zaidi said on Monday. Two such projects are already underway, including the planned recommissioning of Holtec's Palisades nuclear plant in Michigan and the potential restart of a unit at Constellation Energy's (CEG.O), opens new tab Three Mile Island plant in Pennsylvania, near the site of the worst nuclear accident in U.S. history.” 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 below.
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