January 18: This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Aging Population
A new study shows that the risk of developing dementia anytime after age 55 among Americans is 42%, more than double the risk reported by older studies. That dementia risk translates into an estimated half-million cases this year, rising to 1 million new cases a year by 2060, according to the new work. Read more here
Two-thirds of Japanese companies are experiencing a serious business impact from a shortage of workers, a Reuters survey showed on Thursday, as the country's population continues to shrink and age rapidly. Read more here
Artificial Intelligence
According to a new estimate by Skanda Amarnath, executive director of Employ America, spending on building up AI technologies made up between 16% and 20% of real gross domestic product growth in the third quarter of 2024 alone, and is only expected to grow. As a share of total spending outlays, AI-related investments are on track to surpass the share of GDP attributed to the late '90s dot-com boom and become as large as housing was during the 2000s bubble… Read more here
A survey in the World Economic Forum’s (WEF) latest “Future of Jobs Report,” found that because of the “increasingcapability and prevalence” of AI, 41 percent of employers surveyed said they will shrink their workforce within the next five years if the technology is able to replicate the work. Read more here
Cash-Strapped Consumer
As for some granular insight into the costs of filling the pantry, the BLS noted that “four of the six major grocery store food group indexes increased in December. The index for cereals and bakery products rose 1.2% over the month, after falling 1.1% November. The meats, poultry, fish, and eggs index increased 0.6% in December.” Eggs were the culprit here, as “index” tied to that staple rose 3.2% in the latest reading. Overall food prices are 2.5% higher than they were when measured against December 2023. Read more here
Cybersecurity, Data Privacy
The Justice Department and FBI today announced a multi-month law enforcement operation that, alongside international partners, deleted “PlugX” malware from thousands of infected computers worldwide. Read more here
Ironically, cybercriminals now use Google search advertisements to promote phishing sites that steal advertisers' credentials for the Google Ads platform. The attackers are running ads on Google Search impersonating Google Ads, showing as sponsored results that redirect potential victims to fake login pages hosted on Google Sites but looking like the official Google Ads homepage, where they are asked to log into their accounts. Read more here
Texas has sued insurance provider Allstate, alleging that the firm and its data broker subsidiary used data from apps like GasBuddy, Routely, and Life360 to quietly track drivers and adjust or cancel their policies. Read more here
The U.S. Treasury Department said a state-sponsored Chinese hacking operation was able to access third-party software to tap into desktop computers of Treasury employees in what the department is calling “a major incident." Read more here
Silk Typhoon Chinese state-backed hackers have reportedly breached a Treasury Department office that reviews foreign investments for national security risks. CNN reported on Friday, citing U.S. officials familiar with the matter, that the attackers gained access to the Committee on Foreign Investment in the United States (CFIUS) systems. Read more here
Over 4,000 abandoned but still active web backdoors were hijacked and their communication infrastructure sinkholed after researchers registered expired domains used for commanding them. Some of the live malware (web shells) was deployed on web servers of high-profile targets, including government and university systems, ready to execute commands from anyone who took control of the communication domains. Read more here
A huge data breach involving Gravy Analytics has appeared to expose precise location data for millions of users of popular smartphone apps like Candy Crush, Tinder, MyFitnessPal, and more. Here’s what you should know about the unfolding breach. Read more here
Digital Infrastructure
Macquarie will invest up to $5 billion in data centers being built by artificial-intelligence infrastructure company Applied Digital, adding to the Australian bank’s substantial AI-related investments. Read more here
Global data center demand is expected to surge in 2025, despite supply and power constraints, according to a report from JLL. In 2025, an estimated 10GW is projected to break ground globally, with 7GW reaching completion. The global market will expand at a baseline of 15 percent CAGR through to 2027, potentially even reaching 20 percent. This comes despite the fact that rapid expansion is outstripping supply and that some markets have seen electricity development constraints. Read more here
Digital Infrastructure, Artificial Intelligence
This Executive Order will direct the Department of Defense and the Department of Energy to lease federal sites where the private sector can build frontier AI infrastructure at speed and scale. These efforts are designed to accelerate the clean energy transition in a way that is responsible and respectful to local communities, and in a way that does not impose any new costs on American families. Read more here
EV Transition
Outside of EVs, Toyota is doing not only fine, but great. While it has lagged behind even old-school competitors in transitioning its production lines to all-electric models, the past year made that look smart. Demand for electric cars continued to grow, but not as quickly as the $3 trillion auto industry had wagered while pouring untold billions of dollars into their development. Read more here
Guilty Pleasure
It’s the start of 2025, and that means many people are participating in Dry January. In 2022, 35% of legal-aged Americans skipped alcohol during the month, according to research firm CGA. But alcohol abstinence, or simply drinking less, isn’t a temporary adjustment for many consumers. Most data sources haven’t caught up with the changes in consumer attitudes over the past couple of years, but operators have seen a pretty dramatic decrease in how many of their guests drink and how much their drinking customers consume. Read more here
China produced 2.4tn cigarettes in 2023, with the number having risen in each of the previous five years and gained more than 35 per cent compared with 2003, according to figures from the National Bureau of Statistics. Figures from Euromonitor show that the country’s share of global sales rose to about 47 per cent last year from less than 38 per cent in 2009, echoing the findings of other studies tracking tobacco in China. Read more here
Homebuilding & Materials
For those in Los Angeles, where the wildfires have killed at least 25 people and destroyed more than 12,300 structures, officials are beginning to discuss what may come next… Even without the current level of political infighting, the rebuilding process for communities affected by past wildfires has been years long and could indicate a long road ahead for those in Los Angeles. Read more here
Luxury Buying Boom
The world of luxury is expensive, rare, and highly sought-after, but it’s also undergoing a tumultuous shift. China and Europe will play less of a role in the global expansion of the luxury industry going forward, with the sector forecast to grow a paltry 1-3% between 2024 and 2027, new research suggests. Read more here
Safety and Security
Finland’s conservative-led government has unveiled a broad plan to lift defense spending from $6.8 billion in 2025 to $11.5 billion in 2032. The government’s proposal, which has gained the majority support of the main opposition parties in the Eduskunta, the parliament here, would reposition Finland’s annual spending on defense closer to 3.3% of GDP, placing it well above NATO’s 2% guideline. Read more here
For the U.S. Navy to achieve a proposed plan to expand its fleet of battle force ships, the service would need to spend $40.1 billion on shipbuilding every year through 2054, for a total of more than $1 trillion, according to new analysis from the Congressional Budget Office. Over the next 30 years, the Navy wants to grow its fleet of battle force ships to 381 to face swelling global threats, according to the service’s most recent proposal. There are currently 295 in the fleet… Read more here
Space Economy
Two moon landers, one from Japan's ispace and another from U.S. space firm Firefly, began their journeys into space on Wednesday with SpaceX's unusual double moonshot launch, underscoring the global rush to examine the lunar surface. 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.