July 21: 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.

One tailwind can be powerful but the intersection of two or more, well that is even more powerful.

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

“A growing number of undocumented immigrants are hitting retirement age without savings or the cushion of Social Security or Medicare, making up a contingent of baby boomers who are financially insecure and poised to strain community services.” Read more here

Aging of the Population, Artificial Intelligence

“Cambridge scientists have developed an artificially intelligent tool capable of predicting in four cases out of five whether people with early signs of dementia will remain stable or develop Alzheimer's disease. Dementia poses a significant global health care challenge, affecting over 55 million people worldwide at an estimated annual cost of $820 billion. The number of cases is expected to almost triple over the next 50 years.” Read more here

Artificial Intelligence

“CFOs and other C-suite executives are scrambling to keep pace with rapid advancements in the area of AI that are expected to boost the U.S. economy in coming years. Generative AI in particular could enable automation of up to 70% of business activities across almost all occupations by 2030, adding trillions of dollars in value to the global economy, according to McKinsey. The results of a Gartner survey announced Tuesday revealed that 62% of CFOs and 58% of CEOs believe that AI will have the most significant impact on their industries in the next three years.” Read more here

Artificial Intelligence, Safety & Security

“Growing conflicts around the world have acted as both accelerant and testing ground for AI warfare, experts say, while making it even more evident how unregulated the nascent field is. The expansion of AI in conflict has shown that national militaries have an immense appetite for the technology, despite how unpredictable and ethically fraught it can be. The result is a multibillion-dollar AI arms race that is drawing in Silicon Valley giants and states around the world.” Read more here

Cash-strapped Consumer

“In second-quarter results on Friday, JPMorgan Chase, Citigroup, Wells Fargo and BNY cautioned about consumers grappling with lower savings and higher prices… Profits at Citi’s US consumer lending business, which includes credit cards, plunged 74 per cent from a year ago. The bank’s chief financial officer, Mark Mason, said consumer spending was slowing overall, with account balances now lower than they were before Covid. US consumers were more cautious than they had been in a while, he added. “We are not seeing the same growth in consumer spending that we had in prior quarters,” said Mason. “There was less traffic in the retail venues that we partner with.” Read more here

“…among consumers who had purchased groceries in the previous month, 23% said that facing higher prices than other merchants was the top issue or challenge faced in the process. This share is greater than those who said the same in any other industry and greater than those who said the same of any other difficulty purchasing groceries.” Read more here

Cloud Computing

“Service providers, a group that includes cloud service providers, digital service providers, communications service providers, hyperscalers, and managed service providers, spent $32.2 billion on compute and storage infrastructure in Q1 2024, accounting for 68.7 percent of the total market. By comparison, non-service providers, such as enterprises and governments, spent $14.7 billion during the same period… As a result of this growth, IDC is forecasting that total cloud infrastructure spending will reach $138.3bn in 2024, up 26.1 percent from 2023, of which $108.3bn is expected to come from spending on public cloud infrastructure.” Read more here

Cloud Computing, Cybersecurity

“Cloud computing has quickly become the bedrock of modern business operations, offering teams scalable, flexible and cost-effective data solutions. Yet, according to a recent Cloud Security Alliance survey, only 23% of organizations reported “full visibility” into their cloud environment. A full 77% of respondents also “feel unprepared to deal with (related) security threats.” Read more here

Cybersecurity

“Hacktivist group NullBulge claims to have breached Disney, leaking 1.1 TiB of internal Slack data. The leak allegedly includes messages, files, code, and more. This comes amidst breaches affecting AT&T and Ticketmaster.” Read more here

“AT&T on Friday disclosed that hackers had accessed records of calls and texts of "nearly all" its cellular customers for a six-month period between May 1, 2022 to Oct. 31, 2022… The company said hackers downloaded the data "from our workspace on a third-party cloud platform… This data breach is separate from one disclosed earlier this year by AT&T…” Read more here

“Months after the so-called “mother of all breaches” was uncovered in January, another record-breaking leak has been posted online. According to the Cybernews research team, a password compilation containing nearly 10 billion unique plaintext passwords (9,948,575,739 to be exact) was published on a hacker forum on July 4th.” Read more here

“The nation's car dealerships experienced total losses of more than $1 billion as the result of a nationwide hacking and ransomware attack on their software and systems last month, according to a new estimate from East Lansing-based consulting firm Anderson Economic Group.” Read more here

“Rite Aid, the third-largest drugstore chain in the United States, says that 2.2 million customers' personal information was stolen last month in what it described as a "data security incident." Read more here

Data Privacy & Digital Identity

“Open Rights Group (ORG), a UK-based membership organization that campaigns to protect privacy and free speech online, pointed out that Meta emailed Facebook and Instagram users in the UK at the end of May to warn it would introduce changes to its privacy policy on June 26. According to the ORG, Meta would “rely on the legal basis called legitimate interests” to use individuals’ information for its AI development.” Read more here

Digital Infrastructure

“The Romanian government this week announced Prime Minister Marcel Ciolacu had a meeting with Google and participated in the signing of an MoU between the Government of Romania and the company for ‘projects in digital infrastructure, innovation, and research.” Read more here

“As of 2023, the hyperscalers operated nearly 992 data centers worldwide, with capacity doubling over the past four years. The big four, Amazon, Meta Platforms, Microsoft, and Alphabet, are expected to spend $200 billion on capital expenditures in 2024, an increase of more than 35% YoY… Existing mobile connectivity infrastructure is insufficient to handle the massive amounts of data AI systems generate. Seamless connectivity and data transmission to end users requires an extensive expansion and enhancement of cell towers, particularly in dense urban areas.” Read more here

“A cloud data center building boom will help boost global IT spending to $5.26 trillion in 2024, increasing 7.5% year over year… AI consumption will also contribute to significant software market growth, driving spending to $1.1 trillion this year, up from $974 billion in 2023…” Read more here

Digital Lifestyle

“The month of June ushered in another blazing summer of streaming. According to Nielsen’s June 2024 report of The Gauge™, time spent streaming soared to 40.3% of total TV usage, topping the previous single category record set by cable in June 2021 (40.1%) and notching the highest share of TV ever reported in The Gauge. Across streaming platforms, four notched double-digit usage growth including Disney+ (+14.8%), Tubi (+14.7%), Netflix(+11.8%) and Max (+11.0%)… “ Read more here

“A Meta plan to use personal data to train its artificial intelligence (AI) models without seeking consent came under fire from advocacy group NOYB on Thursday, which called on privacy enforcers across Europe to stop such use.” Read more here

“Consumer spend in the U.S. for the first day of Amazon Prime Day recorded 11.7% year-on-year growth according to data by Adobe Analytics… Adobe’s report noted that consumers spent $7.2 billion on the first day as compared to $6.4 billion on the first day in 2023… Adobe said that its Buy Now Pay Later (BNPL) option clocked 17.1% growth year-on-year driving $540 million in sales.” Read more here

EV Transition

“In the trade war between the West and China, a battle over electric vehicles(EVs) has begun. In May, as part of a broader volley against Chinese tech, America slapped a 100% duty on Chinese EVs. On July 2nd Canada launched a consultation on what it called “unfair Chinese trade practices” in the EV industry. Three days later a provisional tariff of up to 37.6% on Chinese EVs took effect in the EU. On July 10th, days after the symbolic swipe of opening an anti-dumping probe into European brandy, China’s Ministry of Commerce signaled it will not take the assault lying down. It says it will study whether the EU’s tariffs create barriers to free trade.” Read more here

Homebuilding & Materials

“Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it." Across the country in 2022, there were roughly 8.09 million "missing households" — individuals or families living with nonrelatives. Compare that to 3.55 million housing units that were available for rent or for sale, and there is a housing shortage of more than 4.5 million.” Read more here

Safety & Security

"Stunned and alarmed by the Russian invasion of Ukraine, European members of NATO have been making significant increases to their defense budgets. In 2024, an estimated 23 NATO members will spend at least 2% of gross domestic product (GDP) on defense. Poland, on the front line with Belarus and Ukraine, is estimated to spend 4% of GDP this year and has called for NATO to raise its defense-spending minimum target to 3%." Read more here

Space Economy

"The global Earth Observation (EO) satellite market is forecast undergo substantial growth over the coming decade, with the number of EO satellites in orbit expected to almost triple as the manufacturing market grows by 40 per cent and the value of the launch market increases by 55 per cent. The latest Earth Observation Satellite Systems report from Novaspace predicts 5,401 EO satellites will be launched between 2024 and 2033. This is up from 1,864 launched over the previous decade and marking a 190 per cent increase." Read more here