Signals From Our Investing Notebook

* We’re opening our investing notebook to share some of the latest ripped-from-the-headlines signals and confirmation points for our portfolio holdings.

Another week has gone by and we’ve uncovered an ample number of confirming articles and other reports for our thematic framework as well as holdings inside TheStreet Pro Portfolio. While these findings are not hard data, they support our thinking as well as confirm parts of our investment theses.

Let’s review some of them…

Aging of the Population

The below speaks to the heart of our Aging of the Population investing theme and the tailwind behind our positions in Elevance Health ELV and Labcorp LH.

“…a record number of Americans are turning 65 this year — about 11,000 a day, according to the Alliance for Lifetime Income’s Retirement Income Institute, which coined the term “Peak 65.” This demographic trend has sparked conversations about the longevity of work, healthcare, financial planning and housing…” Read more here

Artificial Intelligence

We’ve said several times this week we are in the early innings of AI, but the below offer proof points for its adoption. As that adoption accelerates, we see continued demand for Nvidia NVDA and Marvell MRVL, with the eventual impact on network and carrier infrastructure lifting demand in Marvell’s respective segments.

“OpenAI on Monday launched a new AI model and desktop version of ChatGPT, along with an updated user interface, the company’s latest effort to expand use of its popular chatbot. The update brings GPT-4 to everyone, including OpenAI’s free users, technology chief Mira Murati said in a livestreamed event. She added that the new model, GPT-4o, is “much faster,” with improved capabilities in text, video and audio. OpenAI said it eventually plans to allow users to video chat with ChatGPT.” Read more here

“IBM has introduced a new service that will help enterprises integrate generative artificial intelligence (AI) copilots into their organizations. Offered by IBM Consulting, the new IBM Copilot Runway will assist enterprises with creating, customizing, deploying and managing these copilots, including those powered by Copilot for Microsoft 365…” Read more here

“In the battle for the future of shopping, Sam’s Club is betting on artificial intelligence. Since January, the Walmart-owned retailer has rolled out AI-powered checkout technology at over 120 stores. Using a combination of AI, computer vision and digital tech, Sam’s Club’s system identifies what’s in a shopping cart, confirming customers have paid for their items without requiring an associate to check their purchases before leaving the store. The technology, first unveiled at the Consumer Electronics Show, promises to transform the grocery shopping experience.” Read more here

CHIPS Act

We’ve talked quite a bit our the US CHIPS Act, but the below reminds us that other countries are looking to reshore or expand their chip capacity, a positive for our position in Applied Materials AMAT.

“South Korea is preparing a program to provide more than 10 trillion won ($7.3 billion) to strengthen the country’s pivotal semiconductor industry... Korea, the world’s biggest memory chip producer, is striving for dominance by investing $470 billion in a semiconductor “mega cluster” outside of Seoul as the US-China rivalry complicates supply chains.” Read more here

“Superpowers led by the US and European Union have funneled nearly $81 billion toward cranking out the next generation of semiconductors, escalating a global showdown with China for chip supremacy. It’s the first wave of close to $380 billion earmarked by governments worldwide for companies like Intel Corp. and Taiwan Semiconductor Manufacturing Co. to boost production of more powerful microprocessors.” Read more here

Consumer Inflation Fighters

Comparing this week’s April Retail Sales report with Costco’s COST April sales report confirmed the membership-driven warehouse company continues to win consumer wallet share. The signals below help explain why that’s happening.

“Rising housing costs and stubbornly high inflation are battering many consumers and the hit to their wallets is now hurting America’s low-cost restaurants. Chains including Red Lobster, which is considering a bankruptcy filing, and TGI Friday’s Inc. are becoming even more distressed as their labor expenses increase and more diners opt to eat at home.” Read more here

“Private brands in food and beverage accounted for nearly 26% of the overall market share in the number of units in that category sold last year, up from 24.7% during the previous year, according to market research firm Circana. That compares with 74.5% for national brands last year, down from 75.3% in 2022.” Read more here

“The latest estimates of overall pandemic excess savings remaining in the U.S. economy have turned negative, suggesting that American households fully spent their pandemic-era savings as of March 2024. However, consumer spending has remained strong in recent months, which raises an important question: What’s next?” Read more here

“The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the April 2024 Survey of Consumer Expectations, which shows that inflation expectations increased at the short-term and longer-term horizons, while decreasing at the medium-term horizon." Read more here

More Pro Portfolio:

Cybersecurity

We tend to say that you can’t go a week without a few reminders of why cybersecurity remains a growth vector. This week we have more than a few signals explaining why that’s the case and why we continue to own shares of the First Trust Nasdaq Cybersecurity ETF CIBR.

“In response to a recent cyberattack that exposed the data of 100 million Americans, the Biden administration reportedly intends to require hospitals to meet minimum cybersecurity standards. Deputy National Security Advisor for Cyber and Emerging Technology Anne Neuberger said Thursday (May 9) at the Bloomberg Tech Summit that the administration plans to issue a notice of proposed rulemaking in the coming weeks… “

“The City of Helsinki is investigating a data breach in its education division, which it discovered in late April 2024, impacting tens of thousands of students, guardians, and personnel… The accessed drive contained tens of millions of files, most devoid of personally identifiable information (PII). Still, some included usernames, email addresses, personal IDs, and physical addresses. Additionally, the exposed drive contained information about fees, childhood education and care, children's status, welfare requests, medical certificates, and other highly sensitive information.” Read more here

“On the eve of a marquee week of modern and contemporary art auctions that begin Monday night, Guillaume Cerutti, the chief executive of Christie’s, confirmed that all the company’s live auctions would proceed as scheduled, with bidding in person and by phone, despite a hack that has sidelined its official website since last Thursday. The hack is testing the loyalty of its ultrawealthy clients amid its spring auctions, with sales that account for nearly half of Christie’s annual revenue.” Read more here

“The Ascension breach is the latest example of hackers disrupting the US health-care system. Last week, Andrew Witty, chief executive officer of UnitedHealth Group Inc., faced punishing congressional hearings over a February breach at a subsidiary, Change Healthcare, that delayed billions of dollars of payments to doctors and hospitals and saw hackers make off with data on as many as one in three Americans.” Read more here

“The data theft incident, which Dell described as a sophisticated cyberattack, potentially exposed customers’ personal information, including names, email addresses and hashed passwords. The breach not only highlights the vulnerabilities that exist within even the most technologically advanced companies, but also serves as a reminder of the consequences of inadequate cybersecurity measures.” Read more here

“Vermont’s legislature on Friday passed one of the country’s strongest comprehensive data privacy laws, with language allowing individuals to sue companies for violating their privacy rights — an unprecedented provision among similar existing state laws. The bill includes data minimization requirements, which significantly constrain what personal data companies can gather and use and bans companies from selling consumers’ sensitive data, allowing individuals to sue if they believe businesses have done so.” Read more here

“Maryland Governor Wes Moore signed the Maryland Online Data Privacy Act of 2024 (MODPA) into law on May 9, 2024. This new law establishes transparency, assessment, and consumer rights requirements for organizations that fall within its scope, and much like the state laws that have come before it, the MODPA includes its own unique provisions that will add additional complexities to an organization's compliance efforts and data use strategy.” Read more here

Energy Demand

With Eaton ETN in the Bullpen as well as the Energy Select Sector SPDR Fund XLE shares in the Portfolio, we’re adding this theme and we’ll be flagging articles that speak to the demand for energy and electricity be it from fossil fuels, electricity, nuclear, solar of some other variety.

“Some 440 reactors around the world supply about 10% of the planet’s electricity, a share that will have to triple by 2030 to head off the most extreme effects of climate change, according to the International Energy Agency, an intergovernmental research organization. An increasing number of Americans seem to agree: In 2023, 57% supported the use of more nuclear power in the US, up from 43% in 2020, according to a poll from the Pew Research Center.” Read more here

At the time of publication, TheStreet Pro Portfolio was long ELV, LH, NVDA, MRVL, AMAT, COST, CIBR and XLF.