Signals From Our Investing Notebook
Another week has passed and we’ve uncovered an ample number of confirming articles and other reports.
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* We’re opening our investing notebook to share some of the latest ripped-from-the-headlines signals and confirmation points for our portfolio holdings.
We thought you might enjoy some reading material for the holiday weekend that has equity markets closed on Monday. Don’t view it as homework but just more signals for our thematic framework and holdings inside TheStreet Pro Portfolio.
Enjoy, and we’ll see you back here on Tuesday.
Aging Population
These two signals underscore a key aspect of this theme – more Americans are turning 65 and they have funds that more companies are looking to tap into.
“More Americans are turning 65 this year than ever before, and that number is set to creep even higher over the next few years. It’s fueling a huge rollout of new retirement products — but they’re not all golden tickets. An average of 11,200 Americans will reach that traditional retirement age each day in 2024, according to a recent report by the Alliance for Lifetime Income.” Read more here
“Media executives say advertisers should take into account a host of social changes when assessing the value of reaching older audiences. Life expectancy is longer, and people are starting households later than they used to, meaning they might not have settled on whether they will favor, say, Dove or Pantene or Suave shampoo. Many older people also have more disposable income… Median household net worth for adults 65 and older rose 7% between 2017 and 2023, according to a September report from Cunningham’s organization. The same report showed that 50% of adults over 65 aren’t cutting back on buying name-brand products because of economic uncertainty and inflation.” Read more here
Artificial Intelligence
More use cases for AI that should spur adoption and fuel an AI-on-device upgrade cycle that we think will spur greater spending on digital infrastructure. We continue to see Nvidia NVDA, Marvell MRVL, and Qualcomm QCOM benefitting, with Applied Materials AMAT as an indirect beneficiary of rising chip industry capacity utilization levels.
“Bank of New York Mellon Corp., the longest operating company in New York, the oldest member of the S&P 500 and the first stock listed on the New York Stock Exchange, is doubling down on AI to help drive its expansion, according to its chief executive officer.
“It’s going to create great opportunities for our client-facing businesses,” Robin Vince said in an interview on Bloomberg TV. “We have the opportunity with our people to really help make their roles more efficient and to be able to focus them on serving our clients.” Read more here
“Dell Technologies Inc. is unveiling a new line of personal computers optimized for artificial intelligence tasks, betting that they will help rejuvenate a long-struggling business. “We’re going to be delivering them in volume” this year, Chief Executive Officer Michael Dell said in an interview. By next year, “it’ll be pretty standard.” Read more here
“Nvidia Corp. Chief Executive Officer Jensen Huang said its partnership with Dell Technologies Inc. will spread artificial intelligence to a wider range of customers, helping businesses and organizations create their own “AI factories.” Read more here
“… many health systems are increasingly prioritizing AI initiatives, with experts predicting that generative AI will continue to make a splash in healthcare. A recent survey commissioned by Wolters Kluwer Health found that physicians are cautiously optimistic about generative AI, while a report from John Snow Labs revealed that healthcare and life sciences organizations are increasingly investing in the tools.” Read more here
“Microsoft Corp. is creating a version of its Copilot assistant that will help groups of workers collaborate, extending a company-wide push to infuse products with artificial intelligence. Team Copilot, announced on Tuesday, will serve as a designated meeting minder, taking notes, summarizing the most important information and tracking deadlines. The AI assistant will roll out to corporate customers later this year, Microsoft said on the first day of Build, its conference for developers.” Read more here
Consumer Inflation Fighters
Signals such as these reinforce the portfolio’s position in Costco COST and Amazon AMZN, and give us reason to take a harder look at Bullpen resident TreeHouse Foods THS.
“Gen Z consumers ages 22 to 24 have higher debt levels and delinquency rates for a number of credit products — from credit cards to mortgages and student loans — than Millennials did at the same age a decade ago, according to a new report from credit bureau TransUnion. In fact, the average credit card balance for early twentysomethings was $2,834 in 2023. That’s 26% higher than the balance Millennials carried at the same age in 2013 after adjusting for inflation.” Read more here
“Roughly one in seven (15.3%) Gen Z credit card borrowers have maxed out their credit cards, according to new research from the Federal Reserve Bank of New York. (The NY Fed defined Gen Z as borrowers born between 1995 and 2011, though others mark the cut off as 1996 or 1997). By comparison, just 4.8% of Baby Boomer borrowers and 9.6% of Gen Xers have maxed out their credit cards, which can be a sign of a severely tight cash-flow problem.” Read more here
“The consumer’s purchasing power is limited,” Sleep Number CEO Shelly Ibach told analysts late last month. “As a result, consumers continue to scrutinize their spending and make near-term decisions based primarily on need, price and perceived value. And they are deferring higher-ticket, durable purchases.” Read more here
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.
“For years security experts have warned that a technology at the heart of global communications is dangerously insecure. Now there is proof that it has been used to snoop on people in America. Kevin Briggs, an official at America’s Cybersecurity and Infrastructure Security Agency, told the Federal Communications Commission (FCC), a regulator, earlier this year that there had been “numerous incidents of successful, unauthorised attempts” not only to steal location data and monitor voice and text messages in America, but also to deliver spyware (software that can take over a phone) and influence American voters from abroad via text messages.” Read more here
“A recent hack of legal services provider Stretto Inc. that compromised Celsius Network LLC customer information was wider than previously known, affecting at least four firms in all…
The breach is the latest in a string of attacks targeting customers of bankrupt crypto platforms and firms like Stretto that have been hired to administer these large Chapter 11 cases.” Read more here
Safety & Security
When it comes to Lockheed Martin LMT, these signals reinforce our thinking that as important as US defense spending is, increased defense spending outside the US is a positive tailwind for the company and our shares.
“Russia’s invasion of Ukraine more than two years ago jolted Europe out of complacency about military spending. After defense budgets were cut in the decades that followed the Soviet Union’s collapse, the war has reignited Europe’s efforts to build up its own military production capacity and near-empty arsenals.” Read more here
At the time of publication, TheStreet Pro Portfolio was long NVDA, MRVL, QCOM, AMAT, COST, AMZN, CIBR, LMT.
