Fed Heads, Samsung Disappoints, GM & Prime Big Deal Days
Hurricane Milton approaches Helene rocked Florida
US equity futures point to a positive start for today’s trading with both oil and the 10-year Treasury yield reversing from yesterday, moving lower. Amid another wave of Fed speakers today, including Boston Federal Reserve President Susan Collins and Atlanta Fed President Raphael Bostic, investors will be keeping their ears open for developments concerning September quarter earnings developments, Israel and Iran, and Hurricane Milton. Setting the stage for Collins and Bostic, the Fed’s Adriana Kugler earlier called for a “balanced approach” to future cuts, while Alberto Musalem said that while he supported the 50-basis-point cut last month, he’d prefer a gradual path from here.
On the earnings front, Samsung Electronics (SSNLF) reported it expects worse-than-expected profit for the September quarter. The company now expects its operating profit to come in around 9.10 trillion won ($6.74 billion), a surge compared to last year’s 2.43 trillion Korean won, but well short of the market consensus for 11.456 trillion Korean won($7.7 billion) for the quarter and down 12.8% QoQ.
Hurricane Milton, currently a category 4 and expected to resume category 5 status and grow larger today, is making its way to Florida where more than a million people were ordered to evacuate from its path. The west coast of Florida, which is still reeling from the devastating Hurricane Helene less than two weeks ago, is bracing for Milton’s landfall on Wednesday.
As folks navigate those items, today is General Motors’s (GM) Capital Markets Day, and Wall Street is eager to hear about plans for EVs and hybrids, what’s next for GM’s embattled Cruise autonomous vehicle unit, the company’s China restructuring and GM’s near-term plans for free cash flow, lowering costs and rewarding investors. It sounds like a jam-packed event and one that could have repercussions across automotive OEMs and the larger food chain of companies. Given our EV Transition model, we’ll be interested not only in CEO Mary Barra’s comments about EVs but also EV charging and federal funding for the buildout of the once-touted national charging network.
And given our Digital Lifestyle model, we would be remiss if we didn’t remind folks that Amazon’s (AMZN) latest shopping bonanza, Prime Big Deal Days, kicks off today and runs through tomorrow. Research firm GlobalData sees the event as the “unofficial start to the holidays, especially because it has nudged many other retailers into offering their own deals and bargains.” Besides Amazon, other retailers scheduled shopping events this week including, Walmart (WMT), Target (TGT), Kohl’s (KSS), Wayfair (W), Big Lots (BIG), Macy’s (M), Best Buy (BBY), and Lowe’s (LOW).
Model Musings
Artificial Intelligence
“Zillennials may be digital natives, but they still frequent physical stores. Four in 10 members of this crossover generation — comprising younger millennial and older Generation Z consumers born between 1991 and 1999 — prefer to buy consumer retail products in person. However, zillennials will not settle for the same old in-store shopping experience. PYMNTS Intelligence finds that more than 8 in 10 zillennials want to include artificial intelligence-assisted features in their in-store experiences. More broadly, this generation embraces Click-and-Mortar™ shopping that mixes online tools and conveniences with the in-real-life appeal of physical stores. This is especially true for consumer retail products.” Read more here
“As artificial intelligence (AI) chatbots enter workplaces, they’re not just boosting productivity — they’re opening digital back doors to corporate secrets, with over a third of employees unwittingly playing the role of gatekeepers. A Sept. 24 survey by the National Cybersecurity Alliance revealed a startling trend: 38% of employees share sensitive work information with AI tools without their employer’s permission. The problem is particularly acute among younger workers, with 46% of Generation Z and 43% of millennials admitting to the practice, compared to 26% of Generation X and 14% of baby boomers.” Read more here
Artificial Intelligence, Digital Lifestyle
Priceline’s recent integration of artificial intelligence (AI)—powered voice technology into its booking system signals how the technology is changing the way travelers plan and purchase trips.
The travel company updated its Penny chatbot with AI-powered voice technology, using OpenAI’s GPT-4 API for real-time conversations. This development comes as the travel industry, worth $766 billion globally, sees most bookings happening online.” Read more here
Artificial Intelligence, Digital Lifestyle, Digital Payments
“Sam’s Club is reportedly preparing to launch its first store without checkout lanes… “Using a combination of AI, computer vision and digital tech, Sam’s Club’s system identifies what’s in a shopping cart, confirming customers have paid for their items without requiring an associate to check their purchases before leaving the store… Sam’s Club’s digital store, along with recently reported cashierless McDonald’s locations, are happening at a time when unattended payments technologies are “increasingly becoming indispensable in today’s fast-paced retail environment,”
Cybersecurity
“Home and small business security company ADT disclosed it suffered a breach after threat actors gained access to its systems using stolen credentials and exfiltrated employee account data… This is the second ADT breach in two months, with the company warning in August that they suffered a data breach after a threat actor leaked 30,800 customer records, including customer emails, complete addresses, user IDs, and the products purchased, on a hacking forum.” Read more here
“MoneyGram has confirmed that hackers stole customers' personal information and transaction data in a September cyberattack that caused a five-day outage… During this time, the threat actors stole a varied amount of sensitive customer information, including transaction information, email addresses, postal addresses, names, phone numbers, utility bills, government IDs, and social security numbers.” Read more here
Digital Payments
According to the report, 71% of merchants believe SoftPOS will replace traditional terminals, highlighting a strong consensus on the technology’s future… SoftPOS technology allows merchants to accept contactless payments using only a smartphone or tablet, eliminating the need for expensive hardware typically associated with traditional POS systems. This is advantageous for small businesses and mobile vendors like food trucks and service providers, who can now operate without being tethered to a fixed location.” 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.