July 13: Last Week's Thematic Signals
If you missed out on this week's signals, we've got you covered
Aging Population
While 59% of U.S. adults have a retirement savings plan, just 28% of those in households earning under $50,000 a year have a retirement account, compared with 83% of those earning at least $100,000. This same pattern holds based on education: 81% of college graduates versus 39% of adults with no college education have a retirement plan. Read more here
A new policy road map spearheaded by Gov. Kathy Hochul’s administration could pave the way for New York to better support its rapidly aging population. The first-ever Master Plan for Aging, which the state unveiled Monday, is the culmination of years of work by hundreds of government officials, long-term care executives, health experts, and aging-focused advocates to develop strategies to help New Yorkers maintain good health and remain in their communities as they age. Read more here
The U.S. population is older than ever, and that trend is accelerating. As baby boomers age and birth rates decline, the country is heading toward a demographic reality that Japan has been grappling with for decades. In Japan, more than one in 10 people is now over the age of 80, and nearly a third of the population is over 65. This marks a dramatic shift that has reshaped healthcare, the economy, city infrastructure, and cultural norms. By learning from Japan's successes and setbacks, the United States has a critical opportunity to act now. Read more here
Artificial Intelligence
As artificial intelligence becomes increasingly embedded in classrooms and at home, educators across Hawaii say the rise of personalized learning is beginning to reshape how students learn, and in some cases, whether they attend traditional schools at all. Read more here
During a presentation this week, Chief Commercial Officer Judson Althoff said artificial intelligence tools are boosting productivity in everything from sales and customer service to software engineering, according to a person familiar with his remarks. Althoff said AI saved Microsoft more than $500 million last year in its call centers alone and increased both employee and customer satisfaction… Read more here
In a bustling Manhattan branch of a major U.S. bank, a loan officer now spends her mornings reviewing AI-generated insights instead of stacks of paperwork. Around her, clients chat with intelligent virtual assistants and approve transactions using facial recognition. What once sounded futuristic is now the new normal. Artificial Intelligence (AI) isn’t just an upgrade; it’s a transformation reshaping every corner of the banking world. Read more here
The next milestone in the development of generative artificial intelligence (AI) will be the unlocking of business productivity through AI agents that can perform sequences of actions with minimal intervention by the user, according to Goldman Sachs Research. This shift will expand the software market over the next several years. The market for customer service software—incorporating traditional software-as-a-service (SaaS) products and new AI agents—could expand by an additional 20% to 45% by 2030… Read more here
Microsoft has built an artificial intelligence-powered medical tool it claims is four times more successful than human doctors at diagnosing complex ailments, as the tech giant unveils research it believes could speed up treatment. Read more here
Cash-Strapped Consumer
Consumers are less concerned about inflation and are feeling a little better about their finances, according to survey data released Tuesday by the Federal Reserve Bank of New York’s Center for Microeconomic Data … Despite the improved consumer inflation expectations, the New York Fed’s consumer survey showed that median household spending growth expectations over the next 12 months declined by 0.2% in June to 4.8%. Read more here
Early last month, during a conference call with analysts, Dollar Tree CEO Michael Creedon noted that “higher-income customers have been a meaningful growth driver for us” with what he termed a “meaningful traffic increase from customers with household incomes of more than $100,000.” Read more here
Diminutive snack and drink sizes are hitting store shelves as brands try to keep stretched consumers buying with lower-price options. PepsiCo now sells Lay’s potato chips in half a dozen different-sized bags, costing from around 50 cents to roughly $5. Campbell’s now markets teensy packages of Pepperidge Farm cookies and Goldfish crackers. And Mondelez International has six different Milka chocolate bar sizes with prices from under $1 to $6. Read more here
New data from Fiserv shows that small restaurants/independents experienced modest sales growth in June (+0.4%) compared to June 2024. However, their month-over-month declines in transactions (-2.6%) and foot traffic (-2.5%) eroded much reason for optimism. Read more here
A combination of economic challenges is driving the decline. Young grads are having a much tougher time finding jobs. Student-loan payments are restarting for millions of borrowers. Over roughly the past year, credit-card delinquency rates have risen to their highest points since before the pandemic, and are highest for those 18 to 29, according to the New York Federal Reserve. Read more here
Big box pizza is calling on summer deals and value meals to win back customers. In 2024, nearly two-thirds of top pizza chains experienced declining sales, according to Technomic’s Top 500 Restaurants data, and many brands are introducing new ways to entice customers and reverse course on the slipping sales trends. Read more here
Cybersecurity, Data Privacy & Digital Identity
The state of Idaho is taking a comprehensive, statewide approach to cybersecurity, with an interactive training exercise that features cross-sector participation and a grant program to improve security at the local level. The state has been consolidating IT in recent years to support evolving technology needs under the leadership of CIO and Information Technology Services (ITS) Administrator Alberto Gonzalez, and with an array of technology advances. Read more here
Nevada is taking new steps to address cybersecurity strategy by creating an office dedicated to digital security — mirroring a broader national shift of state governments taking more control over digital security amid evolving responsibilities. Read more here
Australian airline Qantas has confirmed that 5.7 million people have been impacted by a recent data breach, in which threat actors stole customers' data. On July 1st, Qantas disclosed that it had detected a cyberattack the previous day on a third-party platform used by a Qantas airline contact centre. Read more here
The State Department is warning U.S. diplomats of attempts to impersonate Secretary of State Marco Rubio and possibly other officials using technology driven by artificial intelligence, according to two senior officials and a cable sent last week to all embassies and consulates. Read more here
Ingram Micro, one of the world's largest IT distributors, has confirmed it suffered a ransomware attack that sparked a worldwide outage of its services over the holiday weekend. Signs of trouble first emerged on Thursday when solution provider, reseller, and managed service provider (MSP) customers found the IT distributor's websites were down, leaving them unable to place online orders. Read more here
Position: Alphabet Elastic, First Trust Nasdaq Cybersecurity ETF, Microsoft
Energy Pain Point
No wonder Google is desperate for more power: The company’s data centers more than doubled their electricity use in just four years. The eye-popping stat comes from Google’s most recent sustainability report, which it released late last week. In 2024, Google data centers used 30.8 million megawatt-hours of electricity. That’s up from 14.4 million megawatt-hours in 2020, the earliest year Google broke out data center consumption. Read more here
The EIA expects average retail electricity prices to increase 13% from 2022 through 2025. That means the average household’s annual electricity bill could rise about $219 in 2025 relative to 2022, to about $1,902 from $1,683, according to a CNBC analysis of federal data. That assumes their usage is unchanged… Data center electricity use tripled to 176 Terawatt-hours in the decade through 2023, according to the U.S. Energy Department. Use is projected to double or triple by 2028, the agency said. Read more here
Guilty Pleasure
Drinking has become more prevalent among Gen Z as baby boomers cut back their alcohol consumption, according to an extensive new study that challenges the narrative that abstinence among young people is driving the industry’s decline. An IWSR survey of more than 26,000 people across the 15 largest alcoholic drinks markets found 73 per cent of Gen Z respondents — people of legal drinking age to 27 — had consumed alcohol in the previous six months, compared with 66 per cent two years ago. That was the biggest increase of any generation, according to IWSR, a market researcher for the global beverage industry. Read more here
Safety & Security
Finance Minister Lars Klingbeil justified Germany’s massive ramp-up in military spending by arguing it’s essential to face down the threat from Vladimir Putin’s Russia and prevent German children ever having to experience war. Read more here
Grant-Funded Purchase of Two Drones to be Used as First Responders Approved by Rochester City Council. Elected leaders approved the police department’s request to purchase a pair of new drones, docks, equipment and software that will be used as first responders. A news release issued by the police department says the drones will provide emergency responders with a visual at the scene and can be the first public safety resource to arrive at an emergency scene. Read more here
The city of Charlotte is moving forward with the Charlotte-Mecklenburg Police Department’s plan to incorporate drones into local policing… By adding drones to CMPD’s technology arsenal, the listing reads, the department would “enhance public safety, improve response times… Read more here
Citing successes other police departments across the country have seen using drones, the Los Angeles Police Commission said it would allow the LAPD to deploy unmanned aircraft on routine emergency calls. 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 Consumers - 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 - Companies that are integral to the development and the buildout of the infrastructure that supports our increasingly connected world.
Digital Lifestyle - The companies behind our increasingly connected lives.
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.
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.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.
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 indicates – 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.