Category Archives: Aging of the Population

Keys to July Retail Sales and Walmart Earnings Results

Keys to July Retail Sales and Walmart Earnings Results


Plus the Biggest Threat to the German Auto Industry

On this episode of the Thematic Signals podcast, we’re digging into the July Retail Sales and quarterly earnings results from Walmart as both confirm the hard-blowing tailwinds associated with our Digital Lifestyle, Middle-Class Squeeze, Aging of the Population and Cleaner Living Investing themes.





We also breakdown a recent article in The Wall Street Journalthat discusses how one aspect of our Cleaner Living investing theme — electric vehicles — could threaten the German economy. It’s the same structural shift that should have folks more than a little concerned about Tesla, both its business as well as its shares. All that and much more on this episode of the podcast. 

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

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People older than 65 outnumber children under five

People older than 65 outnumber children under five

A new report from the United Nations highlights the fact there is no slowing down the aging process and the growing cohort of people over 65 years old across the globe. This is one of the key drivers behind our Aging of the Population investing theme, which focuses on the growing array of products and services that will cater to this demographic group. The UN report also calls out the upside down age  pyramid that will result given low fertility rates, which will also spur the demand for services as well as raise questions over how they will be paid for in the coming years.

The bottom line is this UN report clearly speaks to both the global tailwinds and headwinds associated with our Aging of the Population investing theme.

At the Osaka G20 summit in Japan, world leaders are grappling with one of the most challenging issues humanity faces today: We’re not getting any younger.

Last year, for the first time in human history, the number of people on Earth aged 65 or older outnumbered children under five, according to a recent United Nations report. People over 65 are now the world’s fastest-growing age group. Three decades from now, one-quarter of the population in Europe, the United States and Canada will be over 65.

“Historically low levels of fertility combined with increased longevity ensure that populations in virtually all countries and areas are growing older,” the report observed.

Aging populations place an enormous burden on the young, because there are fewer of them every year in relation to the old – fewer taxpayers to prop up health and pension plans, fewer consumers to drive a domestic economy, fewer children to offer comfort and support for elderly parents.

Different countries approach the question of aging differently, depending on attitudes toward family, elders, children and foreigners. “It depends on what kind of social structure you have,” Mr. Ishikane said. Developing societies face even greater challenges than developed ones, because they lack the resources to establish social safety nets for the elderly. “Each country has its own challenge.”

Source: People older than 65 outnumber children under five, putting burden on younger generation – The Globe and Mail

Ep 7. With the G20 in the Rearview Mirror, What’s Next

Ep 7. With the G20 in the Rearview Mirror, What’s Next



On this episode of the Thematic Signals podcast, Tematica’s Chris Versace digs into why investors should be watching in the month of July. Between the June quarter earnings season, the Fed and the latest economic data, there is no shortage of things investors need to watch. In Chris’s view that’s especially true given the potential for the Fed to NOT cut interest rates at its July monetary policy meeting, and for earnings guidance to be softer than Wall Street is expecting. We’ve also got several thematic signals, including ones for our Digital Lifestyle, Aging of the Population and the new Cleaner Living Index. If you listen carefully, Chris mentions not only one of his favorite companies for the second half of the year, but also how the Cleaner Living signal ties into the Tematica Research Cleaner Living Index. 

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

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Aging of the Population a concern for Italy, Germany, Japan, and other OECD countries

Aging of the Population a concern for Italy, Germany, Japan, and other OECD countries

If a picture says a thousand words, then in our view here at Tematica the below chart is simply screaming about the productivity and economic headwind to be had in the coming years associated with our Aging of the Population headwind. While some countries within in the OECD will see a surge in the working age population and benefit from it, those that do not, such as Italy, Germany, Korea, and Japan, will face several economic hurdles. Country-specific ETF buyers beware.

 

Infographic: Decline of Working Age Population Concern for Some OECD Countries | Statista You will find more infographics at Statista 

Within the OECD, Korea, Japan, Germany and Italy are among the countries most heavily affected by a decline of their working age populations. Taking each country’s population between the ages of 20 and 64 in the year 2000 as a base, the OECD calculated that by 2050, that population would only be around 80 percent of its original size in Korea and Italy. In Japan, the country most heavily affected, that number would be just over 60 percent.

For the OECD in total, the size of the working age population is actually expected to increase and be at 111 percent of the 2000 figure in 2050. The growth is driven by countries with strong birth rates and large populations, like Australia, Turkey and the United States.

Source: • Chart: Decline of Working Age Population Concern for Some OECD Countries | Statista

The Elderly will make hospitals a growth industry

The Elderly will make hospitals a growth industry

As the saying goes, there is no fighting Father Time. There is also the fact that as we age, our bodies suffer from wear and tear. Put those two simple facts together and the demographic shift we are seeing unfold before us that reflects our Aging of the Population investing theme likely means hospitals as well as out surgery centers are poised to become growth industries.

People over 65 represent roughly 16 percent of the American population, but account for 40 percent of patients undergoing surgery in hospitals — and probably more than half of all surgical procedures.

Those proportions are likely to increase as the population ages and more seniors consider surgery, including procedures once deemed too dangerous for them.

As older people undergo more operations, the coalition has focused on the results. Perhaps unsurprisingly, older surgical patients often fare worse than younger ones.

Patients in their 80s undergoing major surgery for lung, esophageal and pancreatic cancer have substantially higher mortality rates than those aged 65 to 69, another study found; they’re also more likely to go to nursing homes afterward.

Why? Older patients often have chronic health problems, aside from whatever the surgery is supposed to fix, and take long lists of drugs. The hospital itself, where they risk acquiring infections or losing mobility after days in bed, can endanger them.

Source: The Elderly Are Getting Complex Surgeries. Often It Doesn’t End Well. – The New York Times

Welcome to the New Thematic Signals Podcast

Welcome to the New Thematic Signals Podcast


Welcome to the Thematic Signals podcast, where we look to distill everyday noise into clear investing signals using our thematic lens and our 10 investing themes. Every week we not only discuss key events that are shaping the stock market, but we also look at key sign posts for the changing economic, demographic, psychographic, and technological landscapes that are driving the structural changes occurring around us. 

On this episode, with retailer earnings in the spotlight, we dig into which ones are winning the fight for consumer wallet share and those that are losing. The implications are huge given that retail accounts for nearly 20% of the S&P 500 and roughly 16% of US GDP.  Those that are winning the wallet share fight, such as Target, Hibbett Sports, Walmart, TJX Companies. Best Buy and others are leveraging our Middle-Class Squeeze, Digital Society and to a lesser extent our Aging of the Population investing theme. We also talk about what investors should be looking for next as earnings season winds down and share some of the latest signals for our 10 investing themes.

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

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Unity Biotech using molecular biology to target aging

Unity Biotech using molecular biology to target aging

As we have long said, thematic intersections can pave the way for pronounced transformation as two tailwinds change the existing landscape. As we continue to age and live longer, companies are examining new solutions to improve those aged lives. In the past, we’ve seen those take on a variety of forms, and now we are seeing it start with molecular biology. These dual waves that cross our Aging of the Population and Disruptive Innovators investing themes will be something to watch in the coming years.

Unity is among a small group of companies, including the Google health-care subsidiary Calico, that are attempting to harness advances in molecular biology to increase the human health span, the length of time that a person is healthy. The idea, David says, is not just to prolong life but to allow older people to live healthier lives. “We are not purely a senolysis company. We will also be exploring alternative mechanisms that can extend human health span,” he says.

The reaction from the pinstriped crowd in New York—which included analysts from Citigroup, Goldman Sachs, and Morgan Stanley—was respectful but muted. After all, only about 12 percent of drugs that enter clinical trials are successful, according to a 2018 report by the Tufts Center for the Study of Drug Development. And the science upon which Unity has based its approach is largely untested in humans; scientists have only recently begun to understand the links between senescence and the diseases associated with aging.

Osteoarthritis of the knee is a painful condition in which the cartilage between the bones wears away. In 2018 there were 725,000 knee replacements in the U.S. If successful, Unity’s drug for the condition could reduce the need for surgery while generating as much as $6.7 billion a year in revenue, according to a recent Goldman Sachs Group Inc. research note on the company.

Source: Unity Biotech’s Osteoarthritis Injections Could Fight Aging – Bloomberg

The Middle Class Squeeze and Aging of the Population Themes Converge Under the Golden Arches

The Middle Class Squeeze and Aging of the Population Themes Converge Under the Golden Arches

According to a report by the Economic Policy Institute (EPI):

  • The average household aged 56-61 has amassed a $163,577 nest egg.
  • Over the course of a 20-year retirement, $163,577 amounts to just $8,178 a year, or $681 a month, of income.
  • The median savings for that age group is just $17,000, which means a large number of workers have far less than the average.
  • An estimated 41% of households aged 55-64 have no retirement savings at all.
  • An estimated 21% of married Social Security recipients and 43% of single recipients 65 and over-rely on their monthly benefit checks to provide at least 90% of their income.

Aside from the current state of Social Security, what makes this problem even direr is the fact the aging Baby Boomers of today are living longer than the generations that came before them. This means they will need to stretch their savings even further, while potentially cutting spending even more than expected — a blow to the consumer-led domestic economy.

When placed in front of this backdrop, it makes this recent CNN report about fast-food chain McDonald’s working with AARP to recruit older employees to fill its ranks amid historically low unemployment rates entire unsurprising:

The fast food chain [McDonald’s] said on Wednesday that it is partnering with AARP, a nonprofit interest group for aging Americans, to help attract workers who are aged fifty or above. That demographic makes up just 11% of the workforce at corporate-owned stores, according to the company.McDonald’s (MCD) hopes that the new recruitment tactic will attract workers for breakfast and lunch shifts, in particular. Now, McDonald’s tends to attract younger workers who either can’t work mornings because of school, or prefer not to start early in the day. Hiring older workers is also a way to attract talent as US unemployment, now at 3.8%, hovers near all-time lows.McDonald’s has posted positions to its AARP site. The process is being piloted in Florida, Illinois, Indiana, Missouri and North Carolina, with a national rollout planned for this summer. McDonald’s would like to fill 250,000 jobs.

Source: McDonald’s is partnering with AARP to hire older employees – CNN

 

 

Walmart Store Revamp Checks Several Thematic Boxes

Walmart Store Revamp Checks Several Thematic Boxes

News coming out of Bentonville, AR this week details a series of store enhancements and renovations to 500 Walmart stores in the coming years.  As we read through the discount retailer’s plans, the “ding” buttons were going off in our heads as many of them directly touch upon our investment themes at Tematica Research.  At a reported total cost of $11 billion, these plans are set to have a major impact on both store operations and the customer experience of shoppers. Here is a quick rundown of what we learned through an article on Digiday.com:

Middle-Class Squeeze: while Walmart’s rise can be directly attributed to the financial struggles of the middle class in the United States in recent years as families look to stretch their dollars as much as possible, some might view several of these store enhancements as only contributing to the cause by eliminating the need for many of their store employees:

The retailer said it’s doubling down on automation to make store operations more efficient, including the addition of 1,500 autonomous floor cleaners; 300 autonomous shelf scanners; 1,200 unloaders that scan and sort items unloaded from trucks; and 900 pickup towers, or vending machines that dispense online orders within stores. Read More

Digital Lifestyle: Much has been written about Walmart pivoting its business model to compete with the rise of Amazon.com. Many of those moves have been focused on the beefing up of its own online capabilities through the acquisition of jet.com, Shoebuy, Bonobos and other moves. But included in its upcoming store overhaul are several moves that focus on Walmart’s arrow into its quiver in the online battle — physical stores for quick delivery and returns:

By the end of the fiscal year, Walmart expects to have a total of 1,700 pickup towers, 3,100 grocery pickup locations and 1,600 grocery delivery locations. “We’re using the stores as that connector to be able to serve customers how and whenever they want,” said Walmart spokesperson Delia Garcia. “Customers can order online and use [in-store] pickup towers, and some customers want to browse and look for things, and we want it to be pleasant and convenient.”Read More

Digital Infrastructure / Disruptive Innovators: Obviously, all of these robots,  automation tools and e-commerce solutions will also draw heavily from the Digital Infrastructure and Disruptive Innovators theme as they will demand significant amounts of bandwidth and robotics. Keep in mind, the $11 billion planned investment is to overhaul 500 Walmart stores — the company has over 5,000 stores worldwide. This investment is just the tip of the iceberg.

Aging of the Population: Almost as an aside, two enhancements that were mentioned that while not specifically tied to this theme, appear to be driven by a more senior population are “adding new signage” and “pharmacy department makeovers that will include private consultation rooms”.  More details will have to be gathered but our guess is that Walmart is recognizing that its pharmacy departments are going to be under tremendous demand as more and more Baby Boomers head into their senior years. Also, as a nod back to the battle against Amazon and its acquisition of Pillpak, having physical pharmacies is to its advantage over online-only.