One of the wonderful things about thematic investing when it is done right, is the number of recognizable and relatable points of confirmation to be had once an investor has fine-tuned their focus, or as we at Tematica like to say, strapped on your thematic lens. The traditional investor analyzes and assess a variety of data points ranging from monthly and quarterly economic data to survey findings and third-party research reports as well as industry and company specific news and events. We at Tematica do all that as well, given our fundamental and global macro upbringing, but we also look for other confirming data points such as new product introductions, M&A activity as company’s look to reposition their offerings, new partnerships and the like. This has us being those pesky people that slowly walk the aisles of store, be it grocery or other, looking for the new, new thing while also noting how much of the floor and shelf space has been usurped by products that fit hand in glove with our investment themes. That’s pretty much week in week out for the Tematica team but from time to time there is a confirmation blitz, and it so happens the 2021 Super Bowl was just such an event.
While the 2021 Super Bowl may have been a meh event to many, it was still the most watched television event so far this year and was likely at least on par with the 100 million people in the US that have watched each Super Bowl over the last decade. On a global basis, total viewership is estimated to be another 30-50 million more. The sheer magnitude of eye-balls being captured during the game means it’s a big-ticket item for a company to reach all those viewers, roughly $5.5 million in 2021 for a 30-second spot. In today’s digitally connected world, that increasingly favors ad placement with focused online content, it means the Super Bowl is one of the last bastions of major mass marketing in which advertisers can reshape their brand awareness, oftentimes looking to become a household name. And that doesn’t factor in the additional views to be had on YouTube and other video platforms, given the penchant to discuss them as part of pop culture and the latest zeitgeist.
From our perspective, it means companies are looking to use this event to reach viewers they may not normally speak to and reveal to them, sometimes in a subtle way, how they are tilting their businesses into the thematic tailwinds that are unfolding before our very eyes. For Tematica, this year’s Super Bowl ads were a cornucopia of confirming data signals for many of our themes. Here are some examples:
Digital Infrastructure & Connectivity
Unlike many thematic strategists Tematica doesn’t just look for themes that “could be happening if” or the companies that are “skating to where the puck will be.” We focus on the themes arise from structural changes in behavior and spending and the companies whose business models allow them to prosper. And yes, we recognize that neither Verizon (VZ) nor T-Mobile (TMUS) are in our Digital Infrastructure & Connectivity Index, but the focus of their commercials on 5G speak to the one of the key drivers of that theme and index as well as as the corresponding ETF. The bottom line is this – the ad spending on Super Bowl LV while providing pivot points for some, re-enforced to us that our investment themes and indices are on track.
- Chipotle Mexican Grille (CMG) is a constituent in Tematica Research’s Cleaner Living Index.
Just when you thought that the digital infrastructure underlying the internet and overall connectivity wasn’t strained enough in the work-from-home, learn-from-home, stay-at-home era, it appears that Google has joined the ranks of direct streaming services switching on direct to YouTube capabilities on its Stadia gaming platform.
Rolling out to some users now, Stadia appears to finally be adding support for direct streaming to YouTube without any extra software.
Source: Stadia YouTube direct streaming is rolling out – 9to5Google
In as much as everyone is focusing on 5G, self-driving cars, and an impending IoT revolution there is already plenty of demand for high bandwidth digital infrastructure.
Virgin Media has revealed that Tuesday 10 November saw its busiest day on record for internet traffic across its network.
Source: Virgin Media sees record breaking network traffic on day of Xbox Series X/S launch
The first known cyberattack hit in 1988, when what became known as the Morris Worm installed itself on a computer every one out of seven times, even if the computer claimed it already had the program. With each installation, the infected computers would become further debilitated until they finally crashed. The worm damaged approximately 6,000 computers, which represented 10% of the entire internet at the time, and we have never looked back.
Over the ensuing three decades, computing and connectivity would become increasingly ubiquitous as more of how we work, play, and live becomes digital, and the combination of chips and sensors have become the fabric of our lives.
The dark side of this increasingly digital lifestyle is the voluminous growth in the number of attack vectors by cybercriminals and other bad actors. While driven primarily by financial motives, one of the more lucrative areas for cybercriminals today is data theft. Early in 2020, the Department of Homeland Security warned of an increase in cyber threats due to heightened tensions with Iran. Later in 2020, a little thing known as the coronavirus accelerated the adoption of digital technologies and solutions, leaving us and our data increasingly vulnerable as companies were forced to go virtual nearly overnight.
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When we look back on 2020, there will be several notable items that jump out from the record books. The COVID-19 pandemic and its impact on the global economy will likely be at the top of the list, as will the pull-forward in digital transformation that ensued as people adjusted how they worked, lived, and played.
Pain points tend to give way to solutions, and given the number of pain points that emerged as a result of the pandemic, we have seen digital solutions come about in part to solve consumers’ needs.
With the deployment of new connective technologies such as 5G and gigabit fiber bringing greater data speeds and network capacity as well as lower latency compared to existing networks, there will be no putting the digital genie back in the bottle.
Read more here…
Whether it’s the comments from companies over the last few months or the monthly Retail Sales reports of late, there is little question over the accelerated shift to digital shopping as a result of the pandemic. New data shows this adoption is rather widespread, and in what may be surprising to some includes Boomers. Chalk it up to Mother Necessity, we see this as the intersection of our Digital Lifestyle and Aging of the Population investing themes. And we suspect that like most others when the Boomers realize the ease of digital shopping they may only selectively go back to brick & mortar shopping.
Social distancing and stay-at-home measures have upended the shopping habits of US consumers across generations, including older cohorts. In May 2020 data from CouponFollow, nearly half of US boomer internet users said they increased their digital spending since the coronavirus pandemic.
Source: Nearly Half of Boomers Have Increased Digital Spending Since The Pandemic – eMarketer Trends, Forecasts & Statistics
e recently discussed the market opportunity and some of the technical aspects associated with 5G, shorthand for the fifth generation of mobile network technology that is widely expected to expand the scope of mobile data and connectivity. The simple truth is that for carriers to recoup their hefty investments in any new mobile network, consumers and businesses need to be able to connect to that new network as well as the existing ones. That means devices not only need to access the latest and greatest network, they also need to be backward compatible with prior ones to ensure usage as the new network’s capacity is built out.
While there have been several devices that have connected to mobile networks, including PCs, tablets, and wearables, the original big seller was the mobile phone. While such a rudimentary device can still be found if one searches high and low, it has been replaced by the ubiquitous, wondrous and highly addictive smartphone. Smartphones don’t just make calls — they are used increasingly to access the internet, shop, chat, stream videos, interact on social media, and access other services. In 2019, smartphone shipments totaled 1.38 billion, down modestly from 1.41 billion according to data published by IHS Markit, but as we’ve seen in the past, the deployment of next-generation networks that bring greater data speeds tend to foster a smartphone upgrade cycle. For context, exiting 2019 GSMA found there were 5.175 billion unique mobile subscribers across the globe.
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We’ve been hearing about this new 5G technology for years and how it is going to revolutionize our lives, make autonomous vehicles, the Internet of Things possible, and reduce cholesterol levels. Ok, maybe not that last one, but it has been touted as being a Very Big Deal. So just what is 5G?
- 5G refers to the 5th generation mobile network. It is a set of technology standards that drive very low latency with a very large number of simultaneous connections allowing for data transmission at very high speed. Say that five times fast.
- It also tends to be used as a shorthand method for referring to a series of spectrum bands.
- It is also referred to in use cases, such as with the aforementioned driverless cars.
- It is also used to distinguish a certain class of devices from others. For example, while Apple’s next-generation iPhone will be the iPhone 12, its being commonly referenced as Apple’s 5G iPhone.
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Just as the internet has changed how we can communicate, transact, consume, and produce, so will Augmented Reality (AR) and Virtual Reality (VR) improve, and in some respects, utterly transform our lives.
Source: An Investor’s Primer on Virtual Reality (VR) and Augmented Reality (AR) | Nasdaq
“Desperate times call for desperate measures” is a famous saying and given the weeks of COVID-19 led lockdown, it’s not surprising to see businesses being hit by sagging sales are getting creative. This creativity includes leveraging Tematica’s Digital Lifestyle investing theme and in the case of 7 Eleven, it also means tapping into our Guilty Pleasures one as well. Who can blame the company, but the question lingering in our collective Tematica brains is if this is a sustainable shift in consumer consumption habits or is it just a short-term fix while bars and restaurants are closed? Time will certainly tell.
7-Eleven customers can now use the 7NOW delivery app to order wine, beer or liquor anytime in participating markets, as well as hot or ready-to-bake whole pizzas on weekends. The convenience store chain is running a promotion on pizzas each Friday, Saturday and Sunday until May 17, according to an announcement.
Sales of wine, beer and liquor for off-premise consumption are also seeing increases, as most bars and sit-down eateries are now closed. Alcoholic beverages were up 22 percent in the week concluding March 28, per one study cited in the announcement, which claimed that 7-Eleven “is one of the top retailers of cold beer and other canned alcoholic beverages in the U.S.”
The 7NOW delivery app is available in about 400 cites, providing more than 35 million U.S. households with access to more than 3,000 products they might require during the pandemic. Merchandise includes hot and fresh foods, groceries and over-the-counter medicine, among other products.
Source: 7-Eleven Delivers Alcohol, Whole Pizzas Via App | PYMNTS.com