This Week's Thematic Reads
If you missed out on this week's signals, we've got you covered
Aging Population
“In the final three months of 2023, over 11,000 senior housing units were absorbed on net, a five-quarter high and far exceeding the trailing three-year average of 8,500 units per quarter. This allowed nationwide occupancy to reach 84.3 percent, according to NIC Map Data Service, just 110 basis points shy of its pre-pandemic baseline… the demographic of Americans aged 75 or more years is expected to increase by almost 11 million over the next 10 years… By contrast, during the past decade, the population of people aged more than 75 years saw an increase of less than 6 million.” Read more here
Artificial Intelligence
“60% of small business owners expect to increase their budget this year, with 50% planning to allocate that budget toward technology and infrastructure… When asked what these new technologies were, small business owners were most likely to have implemented technology for AI (50%), productivity or collaboration (41%), or communication (34%).” Read more here
“J.P. Morgan has been using cashflow management software that runs on artificial intelligence — and it has reportedly slashed manual work for some of its corporate customers by almost 90%. The AI tool, called Cash Flow Intelligence, was launched last year to allow corporate treasuries to analyze and forecast cash flows, according to Bloomberg. It has seen “tremendous” interest from JPMorgan’s clients, Tony Wimmer, the head of data and analytics at JPMorgan’s wholesale payments unit, told Bloomberg. The Wall Street behemoth has roughly 2,500 clients using the AI-backed tool — and its success thus far has JPMorgan closer to charging for the service, Bloomberg reported." Read more here
“Less than four years after that milestone, America’s use of AI in warfare is no longer theoretical. In the past several weeks, computer vision algorithms that form part of the US Department of Defense’s flagship AI effort, Project Maven, have located rocket launchers in Yemen and surface vessels in the Red Sea, and helped narrow targets for strikes in Iraq and Syria, according to Schuyler Moore, the chief technology officer of US Central Command. The US isn’t the only country making this leap: Israel’s military has said it’s using AI to make targeting recommendations in Gaza, and Ukraine is employing AI software in its effort to turn back Russia's invasion.” Read more here
“On Feb. 23, Bloomberg News reported that humanoid robot startup Figure AIraised about $675 million in a funding round, with Jeff Bezos, Nvidia Corp. and other investors valuing it at about $2 billion. The company has said it hopes its product will be able to perform tasks that are dangerous to humans or hard to hire for, including warehouse jobs. The Norwegian robotics startup 1X Technologies AS raised $100 million earlier this year. OpenAI, the maker of ChatGPT, is an investor in both companies.” Read more here
“Global venture capital funding reached $21.5 billion in February 2024 — flat month over month and slightly up from February 2023, Crunchbase data shows... Overall, AI companies captured a larger share of startup investment in February, Crunchbase data shows. More than a fifth of all venture funding in February went to AI companies…” Read more here
“Andreessen Horowitz (a16z), a Silicon Valley-based venture capital firm, is recalibrating its investment strategy. The company is aiming to raise $6.9 billion for new funds with a focus on artificial intelligence (AI). This shift puts the brakes on its crypto fund expansion.” Read more here
“Companies building artificial intelligence models into their software products need a lot of computation power, also known as “compute.” But this can be a costly expense. That’s why the AI2 Incubator in Seattle decided to find a way to provide its portfolio companies with free AI compute. The organization announced Thursday that it has secured $200 million in computing power from unnamed cloud providers and data centers.” Read more here
CHIPs Act
“The US government is poised to invest $3.5 billion in Intel Corp. so the chipmaker can produce advanced semiconductors for military and intelligence programs, according to congressional aides… It comes from a broader $39 billion Chips and Science Act grant pool that’s designed to convince chipmakers to produce semiconductors in the US.” Read more here
Consumer Inflation Fighters
“Risk is the "new normal" for the global ocean shipping industry that handles 80% of global trade as pressure from geopolitical tensions, rising protectionism, and climate change mounts. "There are going to be global tensions ... and I think global dangers, at a level we haven't seen since the end of World War II," former U.S. Defense Secretary Robert Gates said at the opening of S&P Global's TPM24 container shipping conference in Long Beach, California, on Monday.” Read more here
Data Privacy & Digital Identity
“American Express is warning customers that credit cards were exposed in a third-party data breach after one of its service providers was hacked. In a data breach notification filed with the state of Massachusetts, American Express said that the breach occurred at one of its service providers used by their travel services division, American Express Travel Related Services Company.” Read more here
Digital Infrastructure & Connectivity
“Telecom operators haven’t yet finished rolling out 5G wireless mobile networks. And yet bosses of major carriers are already talking about building something called “5.5G,” or “5G Advanced… “Main priorities for developing 5G Advanced standards are to increase commercial relevance of 5G by expanding vertical markets, resolve deployment issues, and continue technology evolution to build a bridge towards 6G… ” Read more here
Vast swaths of the United States are at risk of running short of power as electricity-hungry data centers and clean-technology factories proliferate around the country, leaving utilities and regulators grasping for credible plans to expand the nation’s creaking power grid… A major factor behind the skyrocketing demand is the rapid innovation in artificial intelligence, which is driving the construction of large warehouses of computing infrastructure that require exponentially more power than traditional data centers. AI is also part of a huge scale-up of cloud computing. Tech firms like Amazon, Apple, Google, Meta and Microsoft are scouring the nation for sites for new data centers, and many lesser-known firms are also on the hunt.” Read more here
EV Transition
“The '24 Charger Daytona lineup will only be offered with a two-door body style; a four-door version is coming next year (more on that later). The familiar R/T and Scat Pack trim levels carry over from the outgoing generation. Both will have dual electric motors that provide standard all-wheel drive. The R/T will debut with up to 496 horsepower and 404 pound-feet of torque, and the Scat Pack will arrive with up to 670 horses and 627 pound-feet.” Read more here
Guilty Pleasure
“Cocoa prices have climbed to record highs, and market participants don’t expect any near-term relief. Prices have skyrocketed as the world’s biggest producers in West Africa grapple with drought and disease as well as structural problems that could linger for years to come. Futures traded in New York averaged well below $3,500 a metric ton every year from the 1980s until 2023. On Feb. 22 cocoa futures surpassed $6,000 a ton for the first time, and the market worries they could still have further to run… Consumers are most likely to cut spending on chocolate and candy if inflation continues, behind only alcohol and makeup, according to a survey from September by consumer intelligence company NIQ.” Read more here
Luxury Buying Boom
“Luxury goods giant LVMH is launching an entertainment venture to boost the marketing of its labels, overseen by a committee of executives led by LVMH heir Antoine Arnault and Anish Melwani, CEO of the group's North America operations. The move comes as the fashion industry becomes increasingly linked to the entertainment industry, with the presence of stars like Beyonce, Zendaya and Rihanna adding buzz to fashion shows and LVMH label Louis Vuitton bringing in Pharrell Williams to head menswear designs.” Read more here
Nuclear Energy & Uranium
“Across the US and allied countries, owners of left-for-dead uranium mines are restarting operations to capitalize on rising demand for the nuclear fuel. At least five US producers are reviving mines in states including Wyoming, Texas, Arizona and Utah, where production flourished until governments soured on the radioactive element following the 2011 Fukushima nuclear disaster in Japan.” Read more here
“The US uranium enrichment industry would get a $2.7 billion infusion in a government funding bill unveiled Sunday, reflecting efforts to wean the nation off nuclear fuel imported from Russia. The funding, which was requested by the White House, is part of a broader plan by President Joe Biden’s administration to buy enriched uranium directly from domestic producers. The goal is to spur the return of nearly dormant US capabilities by creating a guaranteed buyer of American-made nuclear reactor fuel.” Read more here
Precision Ag & Agriscience
“Our system is capturing two million pixels per second, so it is seeing and processing a lot,’ says Ms Kovar, who is vice president of Production and Precision Agriculture Production Systems at John Deere. To help the software identify the weeds, there are more than 300,000 images on a John Deere database. The system currently works with three crops - corn, soybean, and cotton - and is so far only available in the US.” Read more here
Rebuilding America
“$9.9 billion in federal formula funding, part of the largest investment in public transit in U.S. history, is available to support public transportation in communities throughout the country… The funding will help communities maintain and operate trains, buses, and ferries; upgrade stations and tracks; plan and design new transit corridors; and provide access for seniors and riders with disabilities.” Read more here
Space Economy
“Varda aims to become a major player in the nascent in-space manufacturing industry, which takes advantage of the unique microgravity environment of low Earth orbit to make high-value products like pharmaceuticals. Such work has been done on the International Space Station already with the help of astronauts. But Varda offers customers an all-in-one autonomous option — a capsule that serves as both a minifactory and a return vehicle, taking pricey humans out of the orbital loop.” 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.