While the Market Focused on the Fed, We Collected the Latest Signals

The need for older folks to live longer; smaller social security cost-of-living adjustments; investments in AI and related infrastructure; streaming revenue topping Pay TV; and Fannie Mae sees mortgage rates falling into the 5% range in 2025.

These are some of the ripped-from-the-headlines signals we’ve collected for the Portfolio while the market was focused on the Fed’s policy decision. You can read them and several more below:

Aging of the Population

“Among currently retired people, 71% say they’re not working in any capacity, according to CNBC’s August 2024 Your Money retirement survey conducted with SurveyMonkey. Among those who are working, 17% say they’re doing so by choice, with just 11% reporting working because they have to. The next generation of retirement savers seems less eager to relax once they leave their 9-to-5. Just 11% of would-be retirees surveyed by CNBC say they don’t plan to work in any capacity after they retire. More than a third of respondents — 36% — say they’re not sure, while the majority, 53%, anticipate working, either because they’ll want to or to supplement their income.” Read more here

“Social Security recipients are on track for a smaller cost-of-living adjustment next year. The cost-of-living adjustment, or COLA, that retirees receive each year is tied to the average inflation data for July, August, and September, so the actual increase won’t be clear until October… As of now, the Senior Citizens League, which advocates to protect Social Security and Medicare, is forecasting a 2.5% COLA in 2025 for the nation’s 68 million Social Security recipients.” Read more here

Artificial Intelligence

“Venture capital giant Sequoia Capital believes the bulk of billion-dollar companies created in artificial intelligence will come from making applications rather than building models, although it is investing in both, partner Pat Grady said at a conference Wednesday… 'We have an order of magnitude more dollars invested at the application layer, even though the revenue being generated at the application layer is a lot less,' he said, referring to AI companies that build products that use the models in novel ways. But in AI, 'it seems to us that the application layer is where the largest number of billion-dollar-plus companies is going to come.'" Read more here

“NVIDIA is collaborating with Salesforce to develop predictive and generative artificial intelligence (AI) workflows that provide autonomous agent and interactive avatar experiences to the latter’s Agentforce platform. Under the partnership, which was announced during Salesforce’s Dreamforce event on September 17 in San Francisco, the two companies will bring NVIDIA’s AI platform’s computing and AI software to the Salesforce and Agentforce platforms. This will enable Salesforce agents to get new insights and improve productivity.” Read more here

Artificial Intelligence, Digital Infrastructure

“BlackRock is preparing to launch a more than $30bn artificial intelligence investment fund with technology giant Microsoft to build data centres and energy projects to meet growing demands stemming from AI… The investment vehicle is aimed at addressing the staggering power and digital infrastructure demands of building AI products that are expected to face severe capacity bottlenecks in coming years.” Read more here

Cash-Strapped Consumer, Digital Lifestyle

“Holiday retail sales are likely to increase between 2.3% and 3.3% in 2024, according to Deloitte’s annual holiday retail forecast… Following a sharp rise in spending post-pandemic, this season’s retail sales are expected to moderately increase in line with trends over the past decade,” said Michael Jeschke, principal, Deloitte Consulting LLP, and Retail & Consumer Products leader. “Our forecast indicates that e-commerce sales will remain strong as consumers continue to take advantage of online deals to maximize their spending.” Read more here

“Many consumers have been waiting for rates to come down before undertaking some of these expensive purchases, and the Fed’s action today may bring some of those shoppers off the sidelines, said John San Marco, portfolio manager at Neuberger Berman. That said, one cut will not bring about an immediate shift in the broader consumer environment.” Read more here

Cybersecurity, Data Privacy and Digital Identity

"In January 2024, an employee at a Hong Kong-based firm sent US$25 million to fraudsters after being instructed to do so by her chief financial officer on a video call that also included other colleagues. It turned out, however, that she wasn't on a call with any of these people: Fraudsters created a deepfake that replicated their likenesses to trick her into sending the money. Incidents like this will likely proliferate in the years ahead as bad actors find and deploy increasingly sophisticated, yet affordable, generative AI to defraud banks and their customers.” Read more here

“Cybersecurity giant Fortinet has confirmed it suffered a data breach after a threat actor claimed to steal 440GB of files from the company's Microsoft Sharepoint server.” Read more here

Digital Infrastructure

“Virginia’s story is just one thread of the messy, delayed rollout of a $42 billion national program championed by Democrats in particular, but with big potential payoffs in Republican districts as well... The federal grant program has now green-lighted applications from 34 states, which will let them start accessing the first share of federal aid. But given the lengthy negotiations over the terms of their plans, the administration doesn’t expect broadband projects funded by the marquee program to launch in earnest until 2025.” Read more here

Digital Lifestyle

“Streaming revenue is going to hit $17.3 billion in 2024, earning more than Pay TV for the first time. But what exactly is 'streaming revenue' today? According to the report, about half, $9 billion, will come from advertising, while the rest will come from subscription and pay-on-demand revenue.” Read more here

Digital Payments

“Generation Z — the age group between 18 and 26 — has an overwhelming preference for digital wallets, per PYMNTS. So much so that, in a separate study, 78% of Gen Zers said they’d stop shopping at a merchant that didn’t accept digital wallets. Gen Z prefers digital wallets like Apple Pay and Google Wallet because they provide a convenient and secure way to make in-store and online purchases without exposing sensitive debit or credit card data to risk.” Read more here

“84% of U.S. consumers now prefer self-service kiosks, with 66% of them choosing these options over traditional staffed checkouts. While Generation Z (84%) and millennials (76%) lead in embracing these technologies, a significant number of Gen Xers and nearly half of baby boomers also favor self-service for its convenience and efficiency. As these statistics reveal, unattended payments have become a crucial component of modern retail strategies, driven by consumer demand for speed and ease.” Read more here

Homebuilding and Materials

“Construction of new homes rose 9.6% in August as builders ramped up new projects. Housing starts rose to a 1.36 million annual pace from 1.24 million in July, the government said Wednesday… The data exceeded what Wall Street was expecting, which was a 1.31 million pace. All numbers are seasonally adjusted.” Read more here

“Fannie Mae this month predicted mortgage rates would fall to 5.7% by the end of next year. Freddie Mac has forecast mortgage rates would 'gradually decline' over the next few quarters. The mortgage market has already priced in expectations for the Fed to cut rates this year and next, so 'any further decline in mortgage rates will be minimal.'" Read more here

Safety and Security

“Intel Corp. has officially qualified for as much as $3.5 billion in federal grants to make semiconductors for the Pentagon, according to people familiar with the matter, after the chipmaker reached a binding agreement with US officials. The secretive program, called Secure Enclave, seeks to establish production for advanced chips with military and intelligence applications.” Read more here

“The Pentagon is undertaking a multi-decade project to modernize the U.S. nuclear arsenal — put plainly, to ensure that the U.S. has nuclear weapons and delivery systems that really work. But all three aspects of that modernization — the bomber force, land-based missiles and ballistic-missile submarines — are behind schedule and over budget. The U.S. is struggling to update missile silos and other vital infrastructure.” Read more here