November 2: This Week's Thematic Reads
November 2: This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Aging Population
“Societies worldwide are navigating the challenges and opportunities presented by a growing aging population. As birth rates decline and life expectancy rises, communities are adapting to meet the needs of older adults. The shift toward an older demographic is evident, driven by declining birth rates and improved healthcare. This trend has led to a larger proportion of older adults, prompting changes in how societies plan for the future.” Read more here
Artificial Intelligence
“The startup ecosystem is shifting due to the rise of artificial intelligence. AI favors larger companies, necessitating a change in mindset for startups from disruption to transformation. While startups will face challenges in accessing sufficient data and computing power, they still have opportunities to innovate by providing AI-driven services directly to consumers.” Read more here
“Tech behemoth OpenAI has touted its artificial intelligence-powered transcription tool Whisper as having near “human level robustness and accuracy.” But Whisper has a major flaw: It is prone to making up chunks of text or even entire sentences, according to interviews with more than a dozen software engineers, developers and academic researchers. Those experts said some of the invented text — known in the industry as hallucinations — can include racial commentary, violent rhetoric and even imagined medical treatments.” Read more here
“Apple's artificial intelligence features are finally rolling out today, but you might find yourself saying, “Is that it?”… The features that may indeed take the iPhone to new “heights” are only available in iOS 18.2. These include Image Playground, which lets you call on AI to generate images from text; Genmoji, to create new emojis from text; and Visual Intelligence, which can identify what's in front of you and provide context (like the name of an actor on a poster). I fully expect Genmoji to be the next hot thing because who doesn't want to create custom emojis?” Read more here
Artificial Intelligence, Digital Infrastructure
“For competitive reasons, wireless carriers typically don’t reveal too many specifics about their network expansion and upgrade plans. So when T-Mobile executives were asked during Wednesday’s Q3 earnings call to elaborate on their plans for mid-band 5G upgrades, they steered the conversation to the tools they use to determine how they’re going to expand coverage – as opposed to detailing exactly where and when they will deploy. Their approach – and brace yourself, this is going to be a real shocker – is based on artificial intelligence (AI).” Read more here
“Italian police have placed four people under house arrest as part of a probe into alleged illegal access to state databases, and are investigating dozens, including Leonardo Maria Del Vecchio, son of the late billionaire founder of Luxottica, a source said on Saturday… The illegal access to confidential data, which was allegedly sold to customers or used to blackmail businessmen and politicians, went back to at least 2019 and continued up to March 2024, a court document seen by Reuters showed.” Read more here
“LinkedIn earned itself a €310 million ($335 million) fine by European Union regulators on Oct. 24 for its violations of the General Data Protection Regulation (GDPR) data privacy rules. Ireland's Data Protection Commission (DPC) cited concerns regarding the lawfulness, fairness, and transparency of personal data processing for the professional networking site's advertising purposes.” Read more here
Artificial Intelligence, Safety & Security
“President Biden issued a first-of-its kind memorandum Thursday meant to provide guidance for national security and intelligence agencies on how to effectively and responsibly use AI to further American interests… Alex Miller, chief technology officer for the Army’s chief of staff, said he appreciates the White House’s leadership on the issue, but he’s concerned a lack of access to and funding for core, enabling technologies like cloud storage and computing power is slowing down the Defense Department’s integration of AI tools. “We haven’t done all the infrastructure work to set up the core technologies to do AI at scale,” Miller said at the Military Reporters and Editors conference. “If we’re really serious about it, there is a lot more investment we should be making at a national level.” Read more here
CHIPs Act
“The semiconductor industry is currently grappling with insufficient capacity due to a recent surge in global demand. This has prompted major players to explore alternatives, consequently drawing related industries towards the high-margin semiconductor...” Read more here
Cybersecurity
“Russian, Chinese, and Iranian state-backed hackers have been active throughout the 2024 United States campaign season, compromising digital accounts associated with political campaigns, spreading disinformation, and probing election systems. But in a report from early October, the threat-sharing and coordination group known as the Election Infrastructure ISAC warned that cybercriminals like ransomware attackers pose a far greater risk of launching disruptive attacks than foreign espionage actors.” Read more here
“A U.S. government panel plans to investigate how Chinese hackers breached several U.S. telecommunications networks, seeking to spy on prominent Americans, including former President Donald Trump and associates of Vice President Kamala Harris’s campaign, according to people familiar with the matter. The probe by the Cyber Safety Review Board will examine the lapses that allowed the hackers, who are believed to be working for a Chinese intelligence agency, to orchestrate a series of intrusions that some Biden administration officials fear amount to a major espionage coup against the U.S.” Read more here
Digital Infrastructure
“Sunrun Inc. is in discussions with data center developers to supply distributed solar power generation for their facilities, Chief Executive Officer Mary Powell said. The San Francisco company, which specializes in residential solar and battery systems, is looking at “a couple different really cool models,” she said Friday at the Dervos 2024 conference. Those models could include working with electric utilities to provide bespoke solar systems for new data centers or leveraging existing Sunrun systems in nearby communities…” Read more here
“AT&T said on Monday it had struck a $1 billion multi-year deal with Corning to buy fiber, cable, and connectivity solutions, as the U.S. telecom giant looks to expand its high-speed internet services. With the U.S. wireless market facing a slowdown, telecom companies such as AT&T and rival Verizon have doubled down on their high-speed internet businesses, an area that has long been dominated by broadband companies such as Comcast…” Read more here
Digital Infrastructure, Digital Lifestyle
“By the end of 2023, it is estimated that 57 percent of the global population, or about 4.6 billion people, were using the mobile internet. This is based on data drawn from the GSMA Consumer Survey, the GSMA Mobile Connectivity Index (MCI), and a range of other industry reports. This figure is up by 160 million people over the year, indicating a slowdown in growth compared to 2015-2021, when the world was adding more than 200 million people each year to the connected list… The International Telecommunication Union (ITU) and International Monetary Fund (IMF) have estimated that around $430 billion of investment would be needed to put in place the infrastructure required to enable universal access to mobile broadband by 2030, according to the report.” Read more here
Digital Lifestyle
“We're adding to that list by testing new homepage features and design elements on the Amazon Shopping app for iOS and Android for millions of customers in the U.S. These features bring customers a more personalized and easy-to-navigate place to start their shopping and showcase products and services from across Amazon that reflect their interests and shopping habits. We're testing these new experiences with select customers and look forward to sharing with more U.S. customers in the coming months.” Read more here
EV Transition
India's Tata Technologies reported a drop in profit for the third consecutive quarter, hurt by slowing global demand for electric vehicles… Use of electric vehicles has grown rapidly in recent years to account for 2% of India's annual sales of 4.2 million cars, but sales growth is now faltering, which analysts blame on high prices and a lack of charging facilities.” Read more here
“South Korean battery maker LG Energy Solution said on Monday it had a "conservative" view of revenue growth next year and that it will significantly reduce capital expenditure due to slowing electric vehicle demand, after booking a 39% third-quarter profit drop. The company, which supplies Tesla, General Motors, and Hyundai Motor also expects the result of the U.S. presidential election next week to have a significant impact on EV market direction…” Read more here
Homebuilding & Materials
“Currently, there are about 30 renter households for each available home for sale, up from less than 10 in 2006, according to Freddie Mac’s latest market outlook report. The supply shortage dates back to the Great Recession, which dealt a major blow to new home construction. Since then, construction has slowly increased, but failed to keep pace with demand, resulting in a shortage of at least 1.5 million homes.” Read more here
Luxury Buying Boom
“Brunello Cucinelli said it still expects to grow strongly in the coming years after quarterly sales climbed in defiance of a slowdown that is plaguing many of its rivals in the industry… The company—which has exposure to a more affluent clientele than some of its rivals—has been relatively insulated from the slowdown in sales that some of its peers with a more varied customer base have experienced in recent months.” Read more here
Safety & Security
“The US Army is looking to speed up weapons development and procurement to keep up with evolving technology and make sure new equipment isn’t out of date before it gets into the hands of American soldiers, the Army chief of staff said in an interview… One focus is buying cutting-edge weapons, including drones and electronic warfare systems, in smaller tranches instead of waiting on long-term purchase orders. The process has been piloted as part of an army initiative called “transforming in contact,” which looks to flood select brigades with advanced equipment. The Army has worked with about two dozen companies including Anduril Industries Inc., Palantir Technologies Inc. and Elon Musk’s SpaceX as part of “transforming in contact.” 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.