The Cost of Living, the Cost of Aging: Headlines That Speak to Our Portfolio
This week we're reading about retirement worries, food prices, how AI continues to bleed over into other themes, creating powerful tailwinds, and more.
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As the holidays fast approach, we're not yet opening presents but instead opening up more and more news stories and reports that speak to our Pro Portfolio investing themes. Here's our gift of the news highlights to you:
Aging of the Population
“The level of apprehension that workers are feeling as they save for retirement has been increasing, although it is lower among those who have already retired, according to the 2024 Global Retirement Survey by MFS. The firm surveyed 725 defined-contribution plan participants and 310 retirees in the U.S. It found that 52% of plan participants said they were so worried about the economy that they made their investments more conservative.” Read more here
“Few slow-moving developments are more astonishing, or consequential, than the surge in lifespans over the past century. In 1900, the typical American could expect to live only until their mid-40s. Now, that figure stretches well into the 70s. Today, an American who reaches age 65 can expect to live, on average, nearly 20 more years. Contrast that to 1900, when just 4 percent of Americans even made it to 65.” Read more here
Position: Labcorp LH
Bullpen: Welltower WELL
Artificial Intelligence
“In August 2024, 39 percent of the U.S. population age 18-64 used generative AI. More than 24 percent of workers used it at least once in the week prior to being surveyed, and nearly one in nine used it every workday. Historical data on usage and mass-market product launches suggest that U.S. adoption of generative AI has been faster than adoption of the personal computer and the internet.” Read more here
“Meta is pushing forward with plans to develop its artificial intelligence offering to businesses, as the social media platform rolls out a new AI tool internally that aims to boost productivity. The AI software, called Metamate after the internal name for the group’s employees, is built on the tech giant’s large language model, Llama, and is used for coding, conducting research, as well as drafting communications internally and externally." Read more here
Position: Alphabet GOOGL, Elastic ESTC, Meta META, Microsoft MSFT, ServiceNow NOW
Artificial Intelligence, Cybersecurity & Data Privacy
“The fifth annual Deloitte “Connected Consumer” survey reveals that consumers have a positive perception of their technology experiences and are increasingly embracing GenAI. However, they are determined to seek balance in their digital lives and expect trust, accountability, and transparency from technology providers.” Read more here
“Cognizant and Zscaler are expanding their partnership with the goal of helping enterprises across industries simplify and transform their security posture with an advanced, AI-enabled zero trust cloud security platform to address evolving cyber threats.“ Read more here
Position: Elastic, First Trust Nasdaq Cybersecurity ETF CIBR
Bullpen: Broadcom AVGO, Cisco CSCO
Artificial Intelligence, Digital Infrastructure
“Amazon, Google, Meta and Microsoft expanded such investments by 81 percent year over year during the third quarter of 2024, according to an analysis by business consultancy Dell'Oro Group, and are on track to have spent $180 billion on data centers and related costs by the end of the year. The push to expand and develop infrastructure among major technology companies is believed to have been prompted by the goal to enhance AI model training…” Read more here
Position: Marvell MRVL, Nvidia NVDA
Bullpen: Cisco CSCO
Cash-Strapped Consumers
“The United Nations’ world food price index rose in November to its highest level since April 2023, recording its biggest gain in 19 months on the back of surging vegetable oil prices, data showed on Friday. The price index, compiled by the U.N. Food and Agriculture Organization (FAO) to track the most globally traded food commodities, increased to 127.5 points last month from a revised 126.9 points in October, the highest level in 19 months and up 5.7% from a year ago.” Read more here
“According to the report, 76% of consumers choose to use BNPL options before making a purchase, emphasizing the importance of presenting these options upfront. Specifically, 27.1% of consumers said they would be more likely to purchase higher-priced items if pay later options were available early in the shopping process.” Read more here
Position: Amazon AMZN, Costco COST
Cybersecurity
“Chinese government hackers have compromised telecommunications infrastructure across the globe as part of a massive espionage campaign that has affected dozens of countries, a top U.S. security official said Wednesday.” Read more here
“The black-and-white message flickering across computer screens sparked panic at Knights of Old, a 158-year-old UK delivery company: “If you’re reading this, it means the internal infrastructure of your company is fully or partially dead.” Knights’ network for managing trucks was down. So was the system for booking payments. From 2,000 miles away, a criminal, Russia-linked hacking gang known as Akira had sabotaged the computers at Knights of Old and two related trucking companies.” Read more here
“Ransomware hackers have continued an assault on National Health Service trusts across the United Kingdom by compromising multiple hospitals, exposing sensitive patient data, and disrupting emergency services. Inc Ransom, a prolific Russia-linked ransomware group that claimed responsibility for an attack on NHS Scotland earlier this year, now claims to have breached the Alder Hey Children’s Hospital Trust, one of Europe’s largest children’s hospitals.” Read more here
“Rules for boosting the security of connected devices have entered into force in the European Union… The CRA applies to connected devices broadly — meaning products that connect directly or indirectly to another device or network — with exceptions in the case of products that are covered by other existing E.U. rules, such as medical devices, cars, and some open-source software.” Read more here
Position: Elastic, First Trust Nasdaq Cybersecurity ETF
Bullpen: Broadcom, Cisco
Digital Infrastructure
“Most people in the US who have flagship phones with mainstream carriers are on 5G networks. And while 5G tech is noticeably faster than its predecessors, it’s still weak compared to Wi-Fi and fiber internet. That’s why we’re already looking forward to 6G, the next-gen wireless data standard that just set an incredible speed record. According to NewScientist, a recent test conducted by researchers at University College London showed that 6G wireless can transmit data at speeds up to 938 gigabits per second (Gbps). The theoretical max download speed of 5G wireless is 20 Gbps.” Read more here
Position: Marvell
Bullpen: Broadcom, Cisco
Digital Infrastructure, Safety & Security
“…the National Defense Authorization Act (NDAA) includes $3 billion to cover expenses incurred by operators that need to rip out Chinese equipment and replace it with gear that’s deemed secure…. While the rip and replace program targets smaller operators that installed Chinese equipment, the FCC last week drafted a Declaratory Ruling, triggered by the Salt Typhoon cyberattack, that calls for all U.S. telecom networks to secure their networks from unlawful access or interception of communications. AT&T, T-Mobile and Verizon were identified as victims of Salt Typhoon.” Read more here
Position: Lockheed Martin LMT, Marvell
Bullpen: Cisco
Digital Lifestyle
“Television viewing reached a nine-month high in November, increasing 5% compared to October, according to Nielsen’s Gauge report. Streaming accounted for a record 41.6% of TV viewing, with viewership rising 7.6% during the month… YouTube led streaming platforms with a record 10.8% share, followed by Netflix at 7.7%, which peaked at 8.5% during the Jake Paul vs. Mike Tyson boxing match… Broadcast viewing rose 3%, accounting for 23.7% of total TV time.” Read more here
Position: Alphabet, Amazon, Trade Desk TTD
Bullpen: Netflix NFLX
Digital Payments
“By the end of 2024, Bank of America corporate clients will have made over $1 Trillion in payment approvals on the bank’s CashPro App, the mobile application that companies use to manage their treasury operations. This will represent a more than 25% year-over-year increase in payments approved via the app, illustrating that clients are further utilizing the technology for its enhanced security and convenience.” Read more here
Position: Mastercard MA
Energy Pain Point
Facing the sudden prospect of huge new demand from data centers, utilities around the country are planning to build new fossil-gas power plants and keep coal plants online for longer, actions that experts fear will undermine various emissions targets. A new report from consultancy Grid Strategies suggests that hunger for electricity will only accelerate… Federal data shows that five-year electricity demand forecasts have more than tripled in recent years. In 2022, the projection for five years out was 23 gigawatts of new load. By late 2023, that grew to 39 GW. Now, utilities are forecasting 67 GW of new load over the next five years.” Read more here
“A new partnership between Google, energy firm Intersect Power, and climate solutions organization TPG Rise Climate, will look to to provide clean power for the company's future data centers. As the demand for AI grows rapidly, tech companies are expanding their capabilities - but Google is making a positive step towards a sustainable future with on-site renewable energy sources for its data centers.” Read more here
“Chevron Corp (CVX.N), opens new tab and Exxon Mobil (XOM.N), opens new tab are considering entering the electricity business, with the U.S. oil majors working on deals to use natural gas and carbon capture to power the technology industry's AI data centers, executives with the companies said separately on Wednesday.” Read more here
Position: Eaton ETN
Guilty Pleasure
“It is not just New York: “gaming”, as the industry euphemistically calls itself, is booming across the country. Some 40% of Americans say they wager on sport—a business that was illegal in every state but Nevada until 2018. The amount punters bet on sport on apps such as FanDuel and DraftKings was a mere $7bn that year; this year it should reach almost $150bn. That will generate around $14bn in revenue for the companies concerned. Online casinos, which bring in around half the revenue that sports-betting does, are growing almost as quickly.” Read more here
Position: None
The Strategies Behind the Thematics Mentioned Above
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
Cash Strapped Consumer - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Cybersecurity - Companies that focus on protecting against the penetration of digital networks and the theft, ransom, corruption or destruction of data.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Digital Lifestyle - The companies behind our increasingly connected lives.
Digital Payments - This model focuses on companies benefitting from the accelerating structural adoption of digital payments and financial technology (FinTech).
Energy Pain Point - Companies poised to prosper from rising power demand.
Guilty Pleasure - Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
