The Nasdaq Hits a New High, However...
Feb Manufacturing PMI Data and more Fed heads kick off March
As we close the books on February and enter the final month of the current quarter, the Nasdaq Composite ended the month by hitting a closing record, its first since November 2021. That market barometer closed February with a gain of 6.1%, outpacing the S&P 500 and its 5.2% increase during the month.
Impressive gains for sure, but as you can see below so too were the ones for several of our targeted exposure models, which handily beat both benchmarks. Matching the volume of signals and musings for those models we’ve shared so far this year, and those returns speaks to the power that comes with our thematic and targeted exposure framework.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice.
Manufacturing PMI Data and More Fed Heads
Equity futures point to a mixed start for March, but our thinking is that this morning’s February Manufacturing PMI reports from ISM and S&P Global will reveal new insights about the strength of the manufacturing economy, inflation, and job creation and will influence how the market begins this new trading month.
Because the market will be interested in whether yesterday’s January core PCE Price Index and inflation as well as the manufacturing data in today’s manufacturing reports sway the Fed’s message that rate cuts could happen “later this year”, comments from six Fed speakers today will be another influence on how the market closes out the week.
Be sure to read our Daily Markets column published by Nasdaq for more.
Model Musings
Artificial Intelligence
“Dell Technologies posted better-than-expected earnings for its latest quarter, as the company continues to see robust demand for AI servers… Dell Vice Chairman and COO Jeff Clarke said in an interview with Barron’s that “demand is well in excess of supply” for AI servers… Dell plans to launch new AI-powered PCs in the second half of the year, but expects adoptions to roll out over multiple quarters.” Read more here
Digital Infrastructure & Connectivity
“Social media firm Meta could spend up to $37 billion on new digital infrastructure this year, $2bn more than previously anticipated. The company’s CFO Susan Li said in a statement to shareholders that continued investment in the hardware needed to train and run artificial intelligence systems would necessitate an increase in spending.” Read more here
“Microsoft is proposing to develop a new UK data center campus on the site of a decommissioned power station in Eggborough, North Yorkshire. Microsoft said it is aiming to submit the proposals for planning permission to North Yorkshire Council in Mid-2024 and start construction in early 2027.” Read more here
Nuclear Energy & Uranium
“The House on Wednesday evening approved bipartisan legislation that aims to bolster nuclear energy… The legislation aims to bolster the U.S.’s nuclear energy production by speeding up environmental reviews for new nuclear reactors and reducing fees that applicants for advanced nuclear reactor licenses must pay.” 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 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.
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.