November 16: This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Aging of the Population
“As Texas’ population continues to age, there is a growing concern about a shortage of board-certified geriatricians available to provide specialized care. The aging baby boomer generation will double the number of people ages 65 and older between 2000 and 2030. This will result in older Americans making up 21% of the population, according to U.S. census data.” Read more here
Artificial Intelligence
“Salesforce Inc. plans to hire more than 1,000 workers to sell its new generative AI agent product. The hiring surge is aimed at capitalizing on “amazing momentum” for the new artificial intelligence product, Chief Executive Marc Benioff said in a message. “Agentforce became available just two weeks ago and we’re already hearing incredible feedback from our customers.” Read more here
"Budgets will shift to emerging AI-powered channels that embrace creative automation and conversational commerce as marketers begin to feel more optimistic about the coming year. Seventy-five percent of participants in a study from Smartly released today anticipate a budget increase to support change." Read more here
"The telecom industry has been facing pressure as traditional revenue sources from voice calls and text messages decline, with consumers increasingly turning to internet-based platforms. At the same time, infrastructure costs are rising as companies invest in upgrading networks to 5G technology. Gen AI is now presenting telcos with a unique opportunity to develop new products and services while reimagining traditional telecom offerings. McKinsey & Company has said that GenAI adoption could "revitalize profitability for telcos" by enhancing profit margins." Read more here
Artificial Intelligence, Cloud Computing
“… the cloud computing market has been dominated by three main players: Amazon Web Services (AWS), Microsoft Azure and Google Cloud. These companies provide a range of services, from basic data storage to complex AI-powered analytics tools, catering to businesses of all sizes across various industries. Now, as AI technology continues to advance, these cloud providers are investing heavily in enhancing their AI capabilities to meet growing demand and maintain their competitive edge.” Read more here
Artificial Intelligence, Digital Infrastructure
“Server spending in Europe is projected to increase by 25% in 2024, driven by demand for AI-optimised hardware. This growth rate will moderate to 11% in 2025. Technology providers have increased their server spending by 46% in 2024, indicating a substantial build-out of AI infrastructure capacity.” Read more here
Cash-Strapped Consumer
“There is pent-up demand for projects… Our customers tell us that their lives are changing. Their families are growing. They’re upsizing, they’re downsizing. They need to move for a job. There is demand for remodeling, and they are putting it on hold until they see a more favorable financing environment. And so the demand is there, the question is, when it’s unlocked.” Home Depot customers have continued to put off projects, even though they’re in good financial shape, he said. About 90% of the company’s do-it-yourself customers own their homes.” Read more here
“Retail sales made during China’s annual Singles’ Day shopping event reportedly slowed again this year amid the country’s economic challenges and consumer skepticism about retailers’ promotions. While eCommerce platforms used to see growth in the double digits during Singles’ Day, more recent estimates put those figures in the low single digits… “ Read more here
CHIPs Act
“Late Tuesday, a person familiar with Biden administration plans told Barron’s that the Commerce Department will award all of the $39 billion before the end of Biden’s term. The $36 billion in announced Chips Act awards were just letters of intent. Next come long-form term sheets. Finally, both sides negotiate and sign legally binding agreements. Actual disbursement will be pegged to construction milestones over the coming years.” Read more here
Cybersecurity, Data Privacy
“The FBI is alerting companies that cybercriminals are using compromised U.S. and foreign government email addresses to send fraudulent emergency data requests. By sending these fraudulent requests to U.S.-based companies, the hackers are looking to gain access to the companies’ holdings of their customers’ personally identifying information (PII), the FBI said in a Nov. 4 Private Industry Notification.” Read more here
"U.S. and Canadian banks reported a tenfold surge in digital scams this year as criminals flock to techniques that rely on duping customers into sending them money, according to cybersecurity firm BioCatch." Read more here
Homebuilding & Materials
“Homebuyers are confronting borrowing costs that are markedly higher than a month ago, but some shoppers are forging ahead. In the four weeks ended Nov. 10, contracts to buy previously owned homes were up 4.7% from a year earlier, according to Redfin Corp. data. And a measure of mortgage applications rose for the first time in seven weeks, according to the Mortgage Bankers Association.” Read more here
Luxury Buying Boom
"The personal luxury goods market looks set to face its first slowdown since the Global Financial Crisis this year, as macroeconomic uncertainty and a pronounced slowdown in China weigh on consumer spending, according to the Bain & Company’s annual luxury report." Read more here
"Burberry, like other luxury goods companies, has been hit by consumers' fading appetite for luxury in China and elsewhere, but it has lagged in the industry-wide slowdown... Schulman told reporters Burberry would add more lower-priced "entry-level" products to its range as part of a pricing shift. Burberry has the most pricing power in outerwear, while it has less in handbags, he said." Read more here
Nuclear Energy & Uranium
"The Biden-Harris administration on Tuesday laid out a road map to at least triple U.S. nuclear power generation capacity by 2050 by deploying 200 GW of net new capacity from newly constructed reactors, restarts of reactors idled for economic reasons and power uprates of generating equipment at existing nuclear power plants. The detailed plan envisions 35 GW of new nuclear capacity operating or under construction in the U.S. by 2035 as the industry ramps to a sustained deployment pace of 15 GW per year by 2040." Read more here
Safety & Security
“China on Tuesday debuted its latest model of stealth fighter jet and foreshadowed an ambitious pipeline of advanced drones, as Beijing displayed its determination to match American military might by investing heavily in the latest tech and forging ever-closer bonds with partners like Russia.” Read more here
“In September, German Defense Minister Boris Pistorius proposed pushing the amount of spending dedicated to the military from 2% of gross domestic product to between 3 and 3.5%. In a new poll released Monday by the Koerber-Stiftung Institute, 50% of respondents supported Pistorius’ idea, while a further 15% said even more should be spent on German defense.” Read more here
Space Economy
“The space economy is projected to grow to $1.8 trillion by 2035. This growth will reshape industries and create new opportunities beyond Earth.” 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.