November 9: This Week's Thematic Reads

Our stance has always been that thematic investing reflects the shifting landscapes in the world around us. With that in mind, we are once again sharing several "ripped from the headlines" signals for our targeted exposure, themes, and what they support.

More of these signals that support the themes and strategies at Tematica Research can be found here. I also use insights from these and other signals to manage TheStreet Pro Portfolio.

Aging of the Population

“China is struggling to find money to retrofit hundreds of thousands of lifts in ageing apartment blocks as their residents also grow older, with increasingly parlous local finances making it hard to support a greying population.” Read more here

Artificial Intelligence

“Walt Disney is forming a new group to coordinate the company's use of emerging technologies such as artificial intelligence and mixed reality, as the media giant explores applications across its film, television and theme park divisions. The newly formed Office of Technology Enablement will be led by Jamie Voris, the film studio's chief technology officer who spearheaded development of Disney's app for the Apple Vision Pro mixed reality device…” Read more here

“Revenue from cloud businesses at Amazon, Microsoft, and Google reached a total of $62.9 billion last quarter. That figure is up 22.2% from the same period last year and marked at least the fourth straight quarter in which their combined growth rate has increased. Accelerating growth in cloud computing is the surest sign yet that spending by AI customers is beginning to justify the huge investments tech giants are making in infrastructure to power the technology.” Read more here

“Visa is leaning on staff to quickly drum up generative AI use cases even as the payments giant streamlines its international business and cuts jobs. President of Technology Rajat Taneja said the company already has more than 500 generative artificial intelligence applications in use, the result of a go-fast strategy designed to reap the AI’s benefits sooner and keep pace with bad actors whose fraud methods are becoming more sophisticated.” Read more here

Artificial Intelligence, Digital Infrastructure

“The third quarter of 2024 proved to be a return to form for hyperscale revenue growth, as enterprise interest in artificial intelligence (AI) translated into big buckets of green for the cloud giants. Amazon Web Services (AWS), Google and Microsoft all saw a year on year uptick in revenue growth, with AWS and Google making the biggest gains. AWS’ growth rate increased from 12% in Q3 2023 to 19.1% in the recent quarter, while Google’s jumped from 22% to a whopping 35%… it has now gone to another level with accelerated growth rates pushing the market to $84 billion in Q3. AI is clearly a big factor behind that growth surge.” Read more here

Artificial Intelligence, Digital Lifestyle

“OpenAI on Thursday launched a search feature within ChatGPT, its viral chatbot, that positions the high-powered artificial intelligence startup to better compete with search engines like Google, Microsoft’s Bing and Perplexity.” Read more here?

Artificial Intelligence, Safety & Security

“Meta will allow U.S. government agencies and contractors working on national security to use its artificial intelligence models for military purposes, the company said on Monday, in a shift from its policy that prohibited the use of its technology for such efforts. Meta said that it would make its A.I. models, called Llama, available to federal agencies and that it was working with defense contractors such as Lockheed Martin and Booz Allen as well as defense-focused tech companies including Palantir and Anduril.” Read more here

Cash-Strapped Consumer

“Nationwide child care prices continue to rise: the average weekly cost of a nanny for an infant in 2023 was $766, up 4% from a year earlier. For daycare, the average weekly expense is $321, up 13% from 2022 levels, according to online caregiving platform Care.com. As these costs outpace inflation, there’s increased pressure on working women and the financial state of their families, the Bank of America report found.” Read more here

“Big food companies have increased prices in recent years for everything from cereal to ketchup to potato chips, citing higher costs for ingredients and labor, among other things. Many small manufacturers that have raised their prices have another explanation. They say they also are being squeezed by the distributors who act as gatekeepers to many supermarkets. Distributors are the middlemen of the grocery business. They buy products from food makers—many of them too small to run their own distribution networks—then store, sell and ship them to supermarkets.” Read more here

“Car buyers across America—even those with comfortable incomes —are dropping out of the new-car market. The pandemic supply shortages that drove sticker prices skyward are in the rearview mirror, but the cost of a new set of wheels continues to climb. The average price of a new car this year is $48,205, up 21% from five years ago, according to researcher Cox Automotive Inc.” Read more here

Cybersecurity?

“Court systems across Washington state have been down since Sunday when officials said "unauthorized activity" was detected on their networks. This ongoing data system outage affects all state courts' judicial information systems, websites, and associated services.” Read more here

“Nokia is investigating whether a third-party vendor was breached after a hacker claimed to be selling the company's stolen source code… This statement comes after a threat actor known as IntelBroker claimed to be selling Nokia source code that was stolen after they breached a third-party vendor's server.” Read more here

“Schneider Electric has confirmed a developer platform was breached after a threat actor claimed to steal 40GB of data from the company's JIRA server… Schneider Electric is a French multinational company that manufactures energy and automation products ranging from household electrical components found in big box stores to enterprise-level industrial control and building automation products… This breach has compromised critical data, including projects, issues, and plugins, along with over 400,000 rows of user data, totally more than 40GB Compressed Data…” Read more here

Digital Infrastructure

“Telecom companies are sitting on thousands of old central office (CO) facilities sprinkled across the U.S. that could be just right for serving latency-sensitive artificial intelligence (AI) applications. And it seems they’re waking up to this fact as they continue efforts to retire the old copper network gear previously housed in these structures… AT&T, Lumen Technologies, Frontier Communications and Ziply Fiber are among the operators which have started using their old COs for colocation and other cloud deployments.” Read more here

“The next big round of investments will be triggered by one of two things. The first will associated with spectrum for 6G and densification to support the 6G build. The second will be driven – interestingly enough – by a paucity of spectrum… Currently, the FCC has no auction authority and there’s no spectrum being queued up for auction. There was speculation that Dish Network, now under parent EchoStar, might be in the market to sell some of its spectrum, but given recent announcements about its financing and the buildout extensionit received from the FCC, it doesn’t look like that spectrum is going to be on the market anytime soon.” Read more here

“Fiber M&A is on fire – even with the unknown of the U.S. election tomorrow. This morning, Bell Canada announced it was acquiring Ziply Fiber for $3.65 billion in cash plus the assumption of debt, resulting in a transaction value of about $7 billion. This deal follows Verizon’s recent announcement that it’s acquiring Frontier for $20 billion. Today’s announcement between Bell Canada and Ziply would make Bell the third largest fiber internet services provider in North America, after AT&T and Verizon.” Read more here?

Digital Infrastructure, Nuclear Energy & Uranium

“Taiwan’s laboured energy transition is straining its industry, with sudden electricity price jumps and growing outage risks affecting companies including Asia’s biggest — the semiconductor giant TSMC… While Taiwan is investing heavily in offshore wind power and aims to generate 27 to 30 per cent of its electricity from renewables by 2030, it started very late. Meanwhile, the country has begun to phase out nuclear power, which accounted for half of supplies in the 1980s but is down to 6 per cent and will disappear when the last reactor is switched off next May as planned.” Read more here

“The U.S. needs to at least triple its nuclear fleet to keep pace with demand, slash carbon dioxide emissions and ensure the nation’s energy security, said Mike Goff, acting assistant secretary for the Office of Nuclear Energy at the Department of Energy… Goff said the advent of large data centers that consume up to a gigawatt of electricity only reinforces the need for new reactors.” Read more here

Guilty Pleasure, Cash-Strapped Consumer

“Soda’s growth comes as consumers are closely watching their purchases and passing up anything they don’t perceive as a good deal. Companies have hiked prices by as much as 40% since the pandemic began in 2020, and consumers are walking away from brands whose prices they feel have gotten out of control. They’re also eating out less, making quicker trips to the store — rather than loading up their carts with expensive grocery hauls — and buying stores’ cheaper private-label brands.” Read more here

Homebuilding & Materials?

“US mortgage rates continued to climb, putting a further damper on refinancing and homebuying activity. The contract rate on a 30-year mortgage increased 8 basis points to 6.81% in the week ended Nov. 1, the highest since July, according to Mortgage Bankers Association data released Wednesday. In the last five weeks, the rate has risen 67 basis points, the most in two years.” Read more here

Luxury Buying Boom

“Women’s leather goods are a highly segmented market, with major brands covering virtually every price point that could conceivably be characterized as luxurious, from “accessible” brands that can be sold at any suburban mall for a few hundred bucks to five-figure trophy purchases from Hermès and Chanel. These bags have status-signaling power in different contexts: Those priced at the low end of the continuum are particularly useful for demonstrating middle-class consumer comfort or working-class upward mobility, and they serve as a crucial (for the industry, at least) introductory vehicle to fashion for young people eager to impress their peers.” Read more here