The Great Italian Hack, Population Ripens in California and More Stories to Invest On
Let's look at the headlines that speak to our Pro Portfolio's investing themes.
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Fed Chair Powell's testimony, President Trump’s tariffs, and economic reports dominated the headlines over the week. But they didn't tell all the stories investors need to know. So, we collected excerpts from the news of the week that speaks to our Pro Portfolio strategy: cybersecurity, housing market, higher prices, a big hack and even Disneyland and cocoa prices.
Let’s dig in:
Aging Population
By 2040, 22 percent of Californians will be 65 or older, up from 14 percent in 2020. The older population (aged 65+) will increase by 59 percent, while the working-age population (aged 20–64) will remain largely unchanged and the child population (aged 0–17) will decrease by 24 percent. This shift will result in an old-age dependency ratio of 38 older adults per 100 working-age adults, up from 24 in 2020, and the highest ever recorded. Read more here
Position: Labcorp LH
Artificial Intelligence
Last October, a survey by Deloitte on uptake in Europe found almost half (47 per cent) of respondents familiar with generative AI had used it for personal activities, while a quarter (23 per cent) had used it for work. The report also revealed that a quarter of employees used models that they paid for themselves. Read more here
Position: Alphabet GOOGL, Amazon AMZN, Meta META, ServiceNow NOW
Artificial Intelligence, Cybersecurity & Data Privacy
Italy’s business elite has been roiled by a scam that used an artificial intelligence-generated voice mimicking Italian defence minister Guido Crosetto to ask tycoons to wire millions to overseas bank accounts to help pay ransoms to free Italian journalists kidnapped overseas… Investigators said the calls appeared to come from telephone numbers belonging to the defence minister’s staff — which they believed had been cloned. Read more here
Cybercriminals are using GhostGPT, a newly discovered and completely uncensored AI chatbot, for malware creation, phishing scams and more… The Abnormal report revealed that GhostGPT is readily available to cybercriminals using the Telegram messaging service where it can be accessed as a Telegram bot once a fee is paid. “It lowers the barrier to entry for new cybercriminals, allowing them to buy access via Telegram without needing specialized skills or extensive training,” Read more here
Lee Enterprises, one of the largest newspaper groups in the United States, says a cyberattack that hit its systems caused an outage last week and impacted its operations. In a Friday filing with the U.S. Securities and Exchange Commission(SEC), the company said the February 3 cyberattack was behind the outage that impacted its business operations. Read more here
Position: Alphabet GOOGL, Elastic ESTC, First Trust Nasdaq Cybersecurity ETF CIBR, Microsoft MSFT
Artificial Intelligence, Digital Infrastructure
As Nvidia’s most important AI server maker, Hon Hai’s performance is a bellwether for the AI infrastructure build-out. It said first-quarter sequential growth, or the increase from the December quarter, would be “better than the average level” of the past five years. That’s a rosier projection than the “roughly similar levels” the company teased last month. Read more here
Spending by the four leading U.S. tech companies surged 63 per cent to historic levels last year. Now executives are vowing to accelerate their AI investments, dismissing concerns about the vast sums being bet on the nascent technology. Microsoft, Alphabet, Amazon and Meta have reported combined capital expenditure of $246bn in 2024, up from $151bn in 2023. They forecast spending could exceed $320bn this year… Read more here
Major tech companies including Microsoft Corp., Alphabet Inc., and Meta Platforms Inc. have all announced plans to invest tens of billions of dollars this year in AI and appeared unfazed by the success of the seemingly lower-cost models from Chinese startup DeepSeek. Amazon.com Inc. alone is aiming to spend $100 billion on AI. Read more here
Position: Marvell MRVL, Nvidia NVDA, Eaton
Cash-Strapped Consumer
US consumer debt outstanding unexpectedly surged by the most on record in December, reflecting massive increases in credit-card balances and non-revolving credit. Total credit jumped $40.8 billion after a revised $5.4 billion decrease a month earlier, according to Federal Reserve data released Friday. Read more here
The Happiest Place on Earth has long felt like one of the most expensive spots on the planet for many Americans—but the allure of a magical family vacation kept visitors streaming in. Then, as postpandemic demand soared, Disney put price hikes into overdrive, putting vacations at its theme parks out of reach for many American families. Attendance growth has slowed over the past few years, and even some families that were once regulars are canceling their pilgrimages.
One-day adult passes to Disneyland broke the $200 mark for the first time in October. It now costs $206 on the most popular days at the theme park, more than $100 more than the price of admission on the lowest-cost day. Read more here
Position: Amazon AMZN, Costco COST
Cash-Strapped Consumer, Homebuilding & Materials
Nationwide, 17.2% of U.S. homeowners with mortgages have an interest rate greater than or equal to 6%, the highest share since 2016, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s up nearly five percentage points from 12.3% in the third quarter of 2023. If this growth rate were to continue, which is feasible, the share of homeowners with a rate of at least 6% would nearly double in the next three years. Read more here
Position: None
Digital Lifestyle
Consumers in the U.S. are increasingly mobile-first shoppers. Reaching for their phones has become a normal part of their shopping experience. This goes beyond just making online purchases. The average U.S. shopper conducts one digital shopping activity on their phones almost every day. Read more here
Energy Pain Point
Vietnam's Prime Minister Pham Minh Chinh has instructed two state-owned groups, Electricity of Vietnam and Vietnam Oil & Gas Group, to complete the construction of two nuclear power plants in Ninh Thuan province by the end of 2030… Vietnam's proposed Ninh Thuan nuclear power project consists of two plants, with each plant comprising two reactors. The Ninh Thuan 1 plant is located in Phuoc Dinh commune, Thuan Nam district. The Ninh Thuan 2 plant is located in Vinh Hai commune, Ninh Hai district. Read more here
Position: Eaton ETN, VanEck Uranium & Nuclear ETF NLR
Guilty Pleasure
Mondelēz International and Hershey warned that stubbornly high cocoa prices are expected to weigh on their businesses throughout 2025. Dirk Van de Put, Mondelēz CEO, said in a statement that the Oreo and Toblerone maker is focused on navigating “unprecedented cocoa cost inflation.” The snacking giant estimated higher cocoa prices and inflation would lower its adjusted earnings per share in 2025 by approximately 10%. Read more here
Guinness owner Diageo estimated a $200 million hit to operating profits in its next financial quarter, beginning in March, if tariffs on the U.S. and Mexico go into effect next month. Nik Jhangiani, the spirit producer’s chief financial officer, said on an earnings call Tuesday that 45% of its net sales in the U.S. are derived from products made in Mexico and Canada, with the “vast majority” of them being tequila. Read more here
Position: None
Homebuilding & Materials
“We expect the challenging environment for homebuilders to persist through [the first half of 2025]. Investors tend to focus on demand, but we are more concerned about higher cost inflation (rising land prices) and a more competitive selling environment (increasing inventory and higher mortgage rates),” Read more here
“If you look at the home builders, they’re generating a lot of cash and they’re not growing as much,” says Tony Avila, founder and CEO of Builder Advisor Group. “The builders are generating cash right now and looking at how to grow this year and beyond. They’re looking at M&A and that’s what keeps us very busy.” Read more here
Position: None
The Strategies Behind Our Thematic Models
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.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
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.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
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.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
