March 16: This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Artificial Intelligence
“Meta’s development of a new AI model, designed to enhance video and user Feed recommendations, marks what could be a significant shift in the online commerce landscape. The new AI model could benefit advertisers by directing viewers to more relevant results, experts say. Meta’s progress unfolds amid a widespread industry effort to improve online search outcomes through the application of AI.” Read more here
“Chip maker SK Hynix is planning to make further investments in South Korea to expand and improve its advanced chip packaging technology. According to a report in Bloomberg, the investment will be used to further advances such as lowering power consumption and improving performance to meet the growing demands of AI applications.” Read more here
Consumer Inflation Fighters
“As ongoing economic pressures shrink the middle class, retailers are being challenged to either cut prices and step up their deals and discounts or make a play for high-income consumers. Indeed, years of financial challenges are eating away at the middle class’s spending power. A PYMNTS Intelligence study from October found that middle-income consumers had seen their readily available savings in real terms plummet by 18% in the last year. Against this backdrop, middle-tier retailers are taking a hit.” Read more here
“These pricing trends likely explain why nearly 58% of today’s consumers across nearly every income level say they are cutting back on nonessential spending because of rising grocery costs. Nearly half of U.S. consumers earning north of $100,000 each year say they decrease nonessential spending whenever possible. Sixty-one percent of consumers earning less than $50,000 annually and nearly two-thirds of those earning between $50,000 and $100,000 each year do the same.” Read more here
CHIPs Act
“The US plans to award more than $6 billion to Samsung Electronics Co., helping the chipmaker expand beyond a project in Texas it has already announced, according to people familiar with the matter. The money from the 2022 Chips and Science Act would be one of several major awards that the Commerce Department is expected to announce in coming weeks, including a grant of more than $5 billion to Samsung’s Asian rival, Taiwan Semiconductor Manufacturing Co…” Read more here
Data Privacy & Digital Identity
“Worldcoin, a digital ID cryptocurrency venture led by Sam Altman, CEO of OpenAI, has faced regulatory hurdles in Spain as the country’s data protection authority, AEPD, issues a temporary ban on its operations. The ban, effective for up to three months, follows complaints about alleged privacy violations related to the collection and processing of personal data.” Read more here
“This year might be a boon for biometric privacy legislation. The topic is heating up and lies at the intersection of four trends: increasing artificial intelligence (AI)-based threats, growing biometric usage by businesses, anticipated new state-level privacy legislation, and a new executive order issued by President Biden this week that includes biometric privacy protections.” Read more here
“Cybersecurity professionals are finding it more attractive to take their talents to the Dark Web and earn money working on the offensive side of cybercrime. This puts enterprises in a tough spot: cut into profit growth to keep cybersecurity skills from flowing to the highest bidder, or figure out how to defend their networks against those who know their weaknesses most intimately.” Read more here
“A French government department - responsible for registering and assisting unemployed people - is the latest victim of a mega data breach that compromised the information of up to 43 million citizens.” Read more here
“The ransomware attack on EquiLend in Jan. 2024 has resulted in customer data theft, the financial giant has confirmed in a data breach notification letter to its customers earlier this week. "We are writing to inform you of a recent data security incident that involved your EquiLend payroll and other human resources information, including your name, date of birth and Social Security number," the New York City-based company said.” Read more here
Digital Infrastructure & Connectivity
“5G is expected to account for 51% of mobile connections in 2029, before hitting 56% the following year, according to the latest figures from GSMA Intelligence. 5G, which began commercialization in 2019, is the fastest-growing mobile technology, exceeding one billion connections in 2022 and climbing to 1.6 billion connections last year. It is projected to reach 5.5 billion by 2030. It took 4G nine years to hit 1.5 billion users. However, the adoption of 5G has encountered some bumps and the technology has failed to gain significant traction among enterprises. Industry players believe this situation will change with 5.5G or 5G-Advanced networks, which are expected to see commercial rollouts this year.” Read more here
“Over the past year, electric utilities have nearly doubled their forecasts of how much additional power they’ll need by 2028 as they confront an unexpected explosion in the number of data centers, an abrupt resurgence in manufacturing driven by new federal laws, and millions of electric vehicles being plugged in… Many power companies were already struggling to keep the lights on, especially during extreme weather, and say the strain on grids will only increase. Peak demand in the summer is projected to grow by 38,000 megawatts nationwide in the next five years, according to an analysis by the consulting firm Grid Strategies, which is like adding another California to the grid.” Read more here
Digital Infrastructure & Connectivity, Precision Ag & Agri Science
“ZTE and China Mobile are using 5G connectivity to fully automate rice production on 12,000 acres (almost 19 square miles) of marginal land near Da’an City, Jilin Province. A smart irrigation system is helping to make the depleted soil fertile again, while remote controlled machinery and drones have made the farm operations more efficient, productive and sustainable.” Read more here
EV Transition
“A GOP bill that would bring Wisconsin one step closer to building a network of fast-charging stations for electric vehicles has cleared the state Legislature… Currently, only utilities can sell electricity by the amount of power used, also known as charging by the kilowatt-hour. But the state needs to allow retail sale of electricity by charging station operators in order to access more than $78 million in federal money to build out electric vehicle infrastructure.” Read more here
Homebuilding & Materials
“The company also forecast a 2% to 3% drop in sales for the years ahead, as consumers step back from do-it-yourself (DIY) home repairs and remodeling projects amid higher inflation and a slowing real estate market… That meant a decrease in demand for big-ticket items for kitchen and bathroom projects, along with appliances and flooring.” Read more here
“As the spring home-buying season approaches, there are signs that buying and selling activity in the market may not fully bloom. A combination of still-high mortgage rates and home prices amid historically low housing stock continues to put homeownership out of reach for many—most notably first-time buyers. Many may have to surrender to the reality of elevated home prices and mortgage rates if they want to buy a home in the foreseeable future.” Read more here
“Since 2021, Opendoor has conducted quarterly surveys of over 4,000 prospective home sellers. Year-over-year quarterly tracking (beginning in March 2022) shows relatively little change in the number of sellers who were planning to sell within the year. We even saw a slight decrease in Q2. However, in our December 2023 survey, we saw a substantial 18% increase in the number of homeowners ready to sell in the next 12 months–a higher proportion than we’ve seen in any quarter. We believe this big uptick in sentiment is a byproduct of two factors happening simultaneously: an eagerness to get back into the market and pent-up demand.” Read more here
Luxury Buying Boom
“Is Accessible Luxury the Next Big Opportunity in India? Spurred by rapid growth in the pure luxury market, global brands operating in lower-priced segments like contemporary fashion are entering the country or accelerating expansion plans.” Read more here
“Global beauty companies faced a challenging environment in China last year as Estée Lauder Companies, L'Oréal Group, Shiseido and Procter & Gamble were among those reporting year-over-year sales decreases. But there were some bright spots: brands that persevered against adverse macroeconomic conditions included C-beauty labels such as Proya and international standouts like L'Oréal Paris.” Read more here
Nuclear Energy & Uranium
“In a lab more than two stories underground, a UAlbany professor has taken the first steps toward what he says is a safer form of nuclear energy: One that doesn’t ever explode, melt down or emit harmful radiation for millennia.” Read more here
“Hollywood’s “Oppenheimer” dominated at the Oscars — renewing calls for reducing the threat of nuclear weapons worldwide — but a different kind of nuclear energy is gaining momentum in Washington. Freshly passed legislation and new rules from the Biden administration are putting teeth behind a renewed bipartisan push for nuclear power…” 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.
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.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
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.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EPS Diplomats - Profitable large capitalization companies proven to produce above-average EPS growth and provide investors with the benefit of multiple expansions.
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.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
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.