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Monthly Archives: September 2016

You can only shop as fast as your connection

You can only shop as fast as your connection

The backbone of our Connected Society thematic, and to some extent our Content is King thematic, is the speed at which individuals around the world can connect to the internet. It impacts everything from the security and speed to browsing and processing online transactions, to the ability to stream movies and other digital content.

For that matter, internet access and high-speed internet access have become as critical to the Rise and Fall of theMiddle-Class thematic and the evolution of emerging markets as clean water, food supply and education.

We look to this annual State of the Internet report from Akamai each year as a confirming data point that the spread of high-speed internet access is on-going. Of course, we aspire to the fact that it’s children of the world downloading education videos and adults shopping for digital books on economics, religion and philosophy . . . but we know that it’s probably just more people keeping up with the Kardashians.

“The continued increase in average connection speeds is a reassuring trend as online retailers prepare for the busy holiday shopping season,” said David Belson, editor of Akamai’s State of the Internet Report. “However, recent Internet disruptions caused by everything from government-ordered blackouts to a lone monkey sparking a widespread outage are reminders of the many factors that can affect access to and use of the Internet that is so often taken for granted.”

Highlights from Akamai’s Second Quarter, 2016 State of the Internet Report:Global Average Connection Speeds and Global Broadband Connectivity

• Global average connection speed decreased 2.3% from the first quarter of 2016 to 6.1 Mbps, a 14% increase year over year.

•Global average peak connection speed increased 3.7% to 36.0 Mbps in the second quarter, rising 2.5% year over year.

•Global 10 Mbps broadband adoption rate grew 0.7% quarter over quarter, but 15 Mbps and 25 Mbps broadband adoption rates fell 0.8% and 2.1%, respectively.

Source: Global Average Connection Speed Increases 14 Percent Year over Year, According to Akamai’s ‘Second Quarter, 2016 State of the Internet Report’ – Yahoo Finance

Taking another run at this Cash-strapped Consumer thematic position

Taking another run at this Cash-strapped Consumer thematic position

Including today, there are just three trading sessions left for the week, for the month of September and for the third quarter of 2016 — that will make for a neat and tidy wrap-up to things come Friday evening!

Last week, of course, we had the Fed standing firm with interest rates, which the market gladly welcomed with open arms. Then this week, the headlines have been dominated by Monday’s presidential debate, which according to Nielsen, averaged 84 million TV viewers — the most in the history of the debates. Add in the many millions who likely watched it via live streams on the web and you get a pretty hefty number.

Who won the debate?

That’s not a call for us to make. To some extent America won with so many people at least engaged in the process. We could question the motivations of many for tuning in — and frankly if America is really winning at all with this election — but at the very least an informed electorate is a better electorate and that is a good thing.

The reality is, it is going to be a close election, which means the markets will likely continue to move sideways until after the votes are tallied in November and Wall Street and the boardrooms across the country have a better handle on what the landscape will be for the next four years.

That doesn’t mean we’re standing still. 

This week’s issue of Tematica Investing includes:

  • HEADING BACK TO THE WAREHOUSE: After being stopped out of our position in Costco (COST) earlier in the year, we’re taking another run at this Cash-strapped Consumer play, adding it back onto the Tematica Select List. Read More >>
  • THERE IS SUCH A THING AS A BAD WIN: Nike posted results last night, and while results beat EPS expectations, it wasn’t a pretty win. The market reacted immediately, both when results were posted, and then again after the company earnings call. We have a plan for what we’re going to do with our position in this Rise & Fall of the Middle-Class position. Read More >>
  • END OF THE QUARTER MEANS OUR WORKLOAD RAMPS UP: while things don’t pick-up full bore until next week, the flow of earnings announcements have already started. We’re getting prepped for CalAmp’searnings, while also covering updates on SHW, WHR, T and DY. And lastly, in the quiet before the storm, we dig into one of the names on our Contender List that could soon be coming off the bench, Universal Display (OLED). Read More >>

 

You can click below to download the full report.

downalod-pdf

As we’re waitin on Yellen, we review thematic data points

As we’re waitin on Yellen, we review thematic data points

While the decision appears to be a foregone conclusion, given all the data we’ve reviewed and re-reviewed here at Tematica Research the past few weeks, the reality is we’re all waiting in anticipation for Janet Yellen and crew to announce this afternoon what we already know — that the Fed will once again do nothing and leave interest rates remained unchanged.

Of course, the devil will be in the details, and the wording of the statement could lead to a ruckus in the market should the Fed be less than clear… again.

Yes, folks, the language in this afternoon’s official statement will be overly prodded, poked and dissected to determine what may come next, and unfortunately, as so often is the case lately, a jumpy Wall Street could very well fail to read between the lines and comprehend what Yellen and the other “Fed heads” are really communicating.

Ahead of that event, we are staying pat with the Tematica Investing Select List… for now. We’ll let the dust settle, and then decide what moves we want to make.

In today’s issue (a comparably short one to last week’s MONSTER 18-pager!) we recap favorable data points that add credence to our decisions to scale into several thematic positions last week. Later this week, we get more data points to watch in the form August Existing Home Sales and quarterly earnings from Finish Line (FINL), and so we dig into those a bit and dissect what we’ll be looking for.
You can click below to download the full report.downalod-pdf

PwC Data Confirms Our Content is King Investing Theme

PwC Data Confirms Our Content is King Investing Theme

We’ve touched on this aspect of our Content is King investing theme before, but nothing like data from PricewaterhouseCoopers to confirm it and the theme itself!

Box-office markets over the next few years are expected to grow more quickly abroad than in North America, where receipts have been relatively flat and are forecast to expand only modestly. That dynamic already is changing the way movies get made in Hollywood, as studios focus on big-tent productions like superhero epics that play across borders, or find story lines they know will fly in censorious countries.The Wall Street Journal used analysis by PricewaterhouseCoopers to give a fuller picture of the five fastest-growing box-office markets around the world.

Source: A Look at the Five Fastest-Growing Markets for Movies – WSJ

NBC proves an endangered species — live audiences — is a real money-maker

NBC proves an endangered species — live audiences — is a real money-maker

Yesterday, the CEO of NBC Universal revealed that even though the numbers were down, the Olympics still brought in a hefty haul for the Peacock.  Why? The Olympics bring out the endangered species — a live audience. And by “live”, we mean living breathing people sitting and watching a TV without fast-forwarding through commercials.

And so, while the total number of viewers was down, and down considerably compared to the London games, for NBC it didn’t matter because for delivering advertisers a unique, rare audience, they were able to charge a hefty premium. In particular, Olympic coverage attracts an audience that doesn’t typically watch sports — which is hard to find in this age of DVR’s, stream on-demand and social media clips.

 

 

Speaking Wednesday at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference, NBC Universal CEO Steve Burke characterized the Olympics as a “tremendous success,” adding that the company “made over $250 million in Rio,” thanks to a 20% increase in ad sales volume compared to what it took in during the London Games.The Rio cash surplus more than doubled the $120 million NBC pocketed four years ago in London. Mr. Burke noted that the profit marked a stark contrast versus the NBC-produced Olympics of yesteryear, when the network would lose as much as $200 million on the 17-day event.

Source: NBC Makes $250 Million Profit on Rio Olympics | Special: The Olympics – AdAge

Using Market Flip Flops to Scale Several Positions and Add a New One As Well

Using Market Flip Flops to Scale Several Positions and Add a New One As Well

A hearty welcome back!

The stock market is moving a little faster and more volatile over the last few days, far different than what we saw through most of the summer. Inside this issue we recap the drivers for the flip-flopping — it’s a technical term, trust us 😉 — of the market and what’s  likely to be on investor radars next.

While some see pain as the market has fallen 2.5 to 2.7 percent depending on the index one is looking at, we see better prices for recently added positions like Sherwin Williams (SHW) and United Natural Foods (UNFI)even though their thematic tailwinds continue to blow. We’re doubling down on these two names and another — details inside.

We’re issuing a Buy rating on speciality contractor Dycom Industries (DY)and placing it on the Tematica Select List with a $115 price target, which offers more than 35% upside from last night’s closing price. While you may read speciality contractor and have a preconceived thought or two, Dycom is a crucial part in working with AT&T (T), Verizon (VZ) and Comcast (CMCSA)in expanding their existing networks and deploying the next and future generations. That makes Dycom a Connected Society contractor in our eyes. More details inside.

Any normal issue would not be complete without some updates on existing Tematica Select List positions. Because we’ve been away, we’ve got more than a few and that’s pushing this issue to the max (or at least 18 pages). All the latest and greatest, is just a click away.

You can click below to download the full report.

downalod-pdf

NFL Football: the last great audience

NFL Football: the last great audience

200+ cable channels, DVR’s, streaming content, chord-cutting . . . the list goes on and on as the reasons for declining audience levels. The one hold-out is the NFL gridiron, which seems to have been able to resist the trendline and drive large, live audiences.

While the first Clinton-Trump debate of 2016 could bring in large numbers, it’s more likely that many will watch it via streaming audiences, or just watch the live / taped clips streaming across Twitter and Facebook Live. Gone are the days of the nightly News, must-see NBC Thursday nights, and frankly anything other than NFL and College Football games that will bring an audience. The reality is that of the Top 20 broadcast TV events of all-time, all but two are NFL games. The two outliers:  the Cheers Finale from 1993 at #20, and the finale of M*A*S*H in 1983 at #8.

With the recent trend line of the Super Bowls hitting the top line numbers each year, we would expect this year to be the Final Call for Cheers on this list — sorry, Sam, but it’s time to turn the sign to Closed.

 

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So in nearly 25 years, only two shows have drawn larger numbers than NFL games, which is why the league is able to command such large dollars for audience-hungry advertisers — advertisers that don’t seem to have figured out how to market and advertise their products and brands outside if the boob-tube. We’re talking to you Ford (F), Chevy (GM) and McDonald’s (MCD).

Part of the enduring appeal of “Sunday Night Football” lies in its unmatched reach in primetime. According to Nielsen live-same-day data, last season’s Sunday night slate averaged a staggering 22.5 million viewers and a 13.0 household rating, which marked a 5% increase from the prior season. Whereas every high-profile scripted series last season suffered significant ratings erosion — TV’s top-rated drama, “The Walking Dead,” saw its C3 numbers drop 15%, while the No. 1 comedy “The Big Bang Theory” fell 14% — “Sunday Night Football’s” growth suggested that the NFL may well be the last remaining TV property that is immune to the ravages of time-shifting/cord-cutting/millennial drift/Netflix-and-chill.

Source: NFL Ad Rates Soar to Record Levels | Media – AdAge

PlayStation 4 Pro delivering 4K content for all those TV’s

PlayStation 4 Pro delivering 4K content for all those TV’s

While 4K TV sales are dominating the shelves these days, there isn’t much 4K content on those TV’s . . . Sony is looking to change that in advance of the holiday season . . .

On stage, Cerny showed off actual 4K game footage from games like Spider-Man and Deus Ex: Mankind Divided, not just 4K video running through the PS4 Pro. Cerny noted that the PS4 Pro was able to pull new detail out of the scenes from these games, even though they were developed for the original PS4. But he went on to say that select PS4 games will have improved graphics to take full advantage of the the PS4 Pro.

Source: Sony announces PlayStation 4 Pro with 4K and HDR output | The Verge

Apple Music: when all else fails, cut the price

Apple Music: when all else fails, cut the price

Tomorrow, September 7th is the anticipated launch of the iPhone 7. We have to say anticipated because Apple hasn’t officially said its planned event is for the launch of its latest iThingy. Of course, everyone knows it’s going to be the launch of the 7, so this dance is starting to get a little old, to say the least.

We could go on and on, but, anyway . . .   Another “anticipated”, but not confirmed — but everyone knows about it — component of tomorrow’s event is the update to Apple’s streaming music service, amply called Apple Music. There is a host of new features expected (oops, “anticipated”), but most important are the new offer — $99 for 12 months, which undercuts the cost of industry-leading Spotify and it’s 30 million users. While Apple has seen it’s numbers increase, last reported to be 13 million in April of this year, it hasn’t been able to catch-up with Spotify’s numbers.

It’s said in business school that there are only three ways to compete:

  1. Service
  2. Features
  3. Price

Seems like Apple is pulling the lever on #3 to see if that will propel it to #1. We’ll see.

To further differentiate itself, Apple Music is slashing its price. Apple is selling 12-month subscriptions to the music streaming platform for $99 via gift cards, bringing the monthly cost down from $9.99 to $8.25.

Source: Apple (AAPL) iPhone Sept 7 event: What to expect from Apple Music — Quartz

CBS taking a page from Amazon and Netflix

CBS taking a page from Amazon and Netflix

Commercials. No Commercials. That’s the headline of this article. It’s what’s below the headline that caught our attention, where it refers to CBS coming out with original series programming, including what appears to be a brand new Star Trek.

Taking a page out of the Amazon (AMZN) and Netflix (NFLX) playbook,  CBS is embracing a future of its programming that might not be broadcast-only, and the Star Trek franchise is a perfect platform for taking its All Access service to the next level in terms of participation. Announced last November, the new deep space “The new series will blast off with a special preview broadcast of the premiere episode on the CBS Television Network, and the premiere episode and all subsequent first-run episodes will then be available exclusively in the United States on CBS All Access.”

 

CBS All Access’s on-demand programming includes more than 7,500 episodes from shows like “Blue Bloods,” “Madam Secretary,” and “The Odd Couple,” as well as late-night and news content. CBS All Access’s upcoming original series, including an installment in the “Star Trek” franchise, will also be available through the commercial-free plan.

Source: CBS Launches Commercial-Free Streaming Option – WSJ