Cocktail Investing

Download Episode As we get ready to break for the Thanksgiving holiday and prepare for the 2017 holiday shopping season to hit in full force, we're also seeing a lot of headlines and stories on autonomous vehicles, which is one aspect of our Disruptive Technologies investing theme. Here's a sampling of what we've seen in just the last few weeks:

• Uber Strikes Deal With Volvo to Bring Self-Driving Cars to Its Network
• 7 Lessons From Cadillac's Partial Self-Driving Car
• Volkswagen to Invest $40B+ on EVs, Autonomy
• Driverless cars on British roads as Jaguar Land Rover moves ahead in race for autonomy
• Foxconn Floats the Idea of Autonomous Vehicle-Only Lanes on Wisconsin Interstate
• Japan hopes to show off self-driving cars at 2020 Olympics
• Driverless trucks are coming to Canada and the impact will be profound
• Fully autonomous cars to be on UK roads by 2021
• Autonomous cars likely to transport elderly, children in future

Several of those headlines, to our delight, show this Disruptive Technologies meshing with several other Tematica investing things, like Aging of the Population, Rise & Fall of the Middle Class and Asset-lite Business Models. The only thing better than a strong thematic tailwind in the intersection or two or more thematic tailwinds. When we see an array of headlines like the ones we shared above that denote a flurry of activity, it can lead to questions and sometimes confusion as investors new and old look to understand the opportunities as well as potential risks and timing That's why on this week's episode of Cocktail Investing, we're sharing an excerpt of our conversation with Brad Stertz, Director of Government Affairs at Audi, to put some context and perspective around the market opportunity for autonomous vehicles. Companies mentioned on this podcast

• Alphabet (GOOGL)
• Amazon (AMZN)
• AT&T (T)
• Avis Budget Group (CAR)
• Delphi Automotive (DLPH)
• FedEx (FDX)
• Ford (F)
• General Motors (GM)
• Hertz Global Holdings (HTZ)
• Intel (INTC)
• Lyft
• Motorola Solutions Inc (MSI)
• Nuance Communications (NUAN)
• Nvidia Corp (NVDA)
• QUALCOMM (QCOM)
• Tesla (TSLA)
• T-Mobile (TMUS)
• Uber
• United Parcel Service (UPS)
• Verizon (VZN)
• Volkswagen AG (VLKAY)

Resources for this podcast:

• Chris Versace – @_ChrisVersace
• Lenore Hawkins – @EllesEconomy
• Brad Sterz — @BradSterz
• Tematica Research – https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting

Download Episode The Economic Impact of the Expanding Global Middle Class This week, Tematica's investing mixologists Chris Versace and Lenore Hawkins walk through the global impacts of the Rise and Fall of the Middle Class, focusing in Part I of this series on the Rise portion of this investing theme. The expanding global middle class will account for nearly half of all consumption in the coming years, but as we discuss the where and why behind this new middle-class is reshaping industries and business models at Amazon (AMZN) and General Motors (GM) to McCormick & Co. (MKC) and many, many more. For over 90% of the past two millennia, China and India dominated the global economy, generating over half of the world's GDP in terms of real purchasing power. The end of the 17th century saw a seismic change with the start of Europe's Industrial Revolution, which later spread to the New World. From 1820 to 1950 Asia's share of GDP plunged from just under 60% to 16 percent and by the middle of the 20th century the West had come to dominate global growth with the United States generating over a third of world GDP by the end of World War II and when combined with Western Europe, accounted for nearly 60% of global GDP. However, this would not be permanent. Asia's return to its multi-millennial dominant role began in the 1950s and started accelerating in the 1980s to rise from 16% to over 30% by 2000. Today Asia's share of global GDP, excluding the Middle East, has reached a 160-year high of 43%. During that time, the share of the United States and Western Europe has fallen to a 166-year low of 33%, with the U.S. share cut to half its mid-20th peak and Western Europe losing nearly one-third of its share just since the start of the 21st century — all part of the story behind the Rise portion of our Rise and Fall of the Middle Class as the west loses its dominance while emerging economies come into their own. The incredible volume of sales generated by Alibaba (BABA) over the weekend for Singles' Day illustrates the reemergence of that economic power and the convergence of our Rise and Fall of the Middle Class with the Connected Society as a stunning 90% of the transactions were done via mobile, which we discussed here earlier in the week. As the center of gravity for middle class households shifts from west to east, it will open up new opportunities for those companies that adjust their strategies accordingly, generating tailwinds for growth. Those that miss this tectonic shift will face challenging headwinds. Along the way, our mixologists talk about which sectors and companies are poised to prosper from the emerging middle class in the East as well as giving an assessment of the recent moves in the markets. Companies mentioned on this podcast

• Alphabet (GOOGL)
• Amazon (AMZN)
• Apple (AAPL)
• Ford Motor (F)
• General Motors (GM)
• Home Depot (HD)
• McCormick & Co (MKC)
• Samsung (SSNGY)
• Target (TGT)
• Wal-Mart (WMT)
• Whirlpool (WHR)

Resources for this podcast:

• Chris Versace - @_ChrisVersace
• Lenore Hawkins - @EllesEconomy
• Tematica Research - https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting
• Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns

Books we're currently reading:

• Versace: Pines
• Hawkins: Quantum Physics for Poets

Download Episode This week, Tematica's investing mixologists Chris Versace and Lenore Hawkins discuss numerous current headlines that illustrate the power of some of Tematica's investing themes. The powerful intersection of Content is King, Connected Society and Disruptive Technology themes has driven a company like Apple to evolve from primarily a hardware and associated OS developer into now producing shows with Hollywood stars Jennifer Aniston and Reese Witherspoon. Apple is also moving deeper into our Cashless Consumption theme as its latest iOS beta software debuts Apple Pay Cash The combined force of Disruptive Technology, Connected Society and Cashless Consumption is lifting millions of people in sub-Saharan Africa out of poverty. While the velocity of corporate earnings begins to slow, we're once again hearing of brick & mortar retail woes as same-store-sales growth continues to fall. Our mixologist also breakdown the current state of the markets and analyze the latest economic data rolling in, much of which is at least flashing a yellow warning light:

• Oil prices are the highest they've been since 2015, putting a strain on the already struggling Cash-Strapped Consumer as gas prices soar 17% year over year.
• The dollar continues to strengthen, which is a headwind for those companies that generate a large portion of sales overseas – we're looking at you big tech.
• Corporate debt levels are at record highs and margin debt has been growing at a 12% annual rate while equity fund cash balances are at near record lows – who's left to keep buying and what does it mean if the market hits a speed bump?
• With trading volumes falling and breadth getting weaker, we can see that those indices are breaking new record highs based on fewer and fewer buyers. Another reason we ask, who's left to keep buying?
• With Investor Intelligence survey reporting 5 bulls for every bear and Market Vane putting equity bulls at 70%, near the top of the historical range, who's left to get bullish?
• In D.C., tensions are rising as the GOP lost some key battles for state governors as President Trump's approval rating continues to drop, making tax reform by year's end increasingly unlikely. If holiday shopping is weaker than expected and tax reform is pushed into 2018, will this endless equity melt-up get a winter chill?

Companies mentioned on this podcast

• Activision Blizzard (ATVI)
• Amazon (AMZN)
• Apple (AAPL)
• Costco (COST)
• Facebook (FB)
• JC Penny (JCP)
• Kohl's (KSS)
• Macy's (M)
• Netflix (NFLX)
• PayPal (PYPL)
• Take-Two Interactive (TTWO)
• Target (TGT)
• Venmo (PYPL)
• Wal-Mart (WMT)

Resources for this podcast:

• Chris Versace - @_ChrisVersace
• Lenore Hawkins - @EllesEconomy
• Tematica Research - https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting
• Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns

Books we're currently reading:

• Versace: Pines
• Hawkins: Dark Matter

Download Episode

In This Week's Cocktail Investing Podcast: Tematica Research's investing mixologists Chris Versace and Lenore Hawkins walk through the profound impacts of the forces responsible for our Connected Society investing theme. As the name implies, our world is becoming ever more interconnected as today we can instantly and near effortlessly interact with people on opposites sides of the earth. The increasing interconnectedness has completely changed the way we buy things, watch movies, listen to music, share memories, make new friends, look for love, sell our homes, research new things we want to buy and even do our homework. Amazon, for example, just added a new augmented reality feature to its iOS app that you can read about here. This interconnectedness also means that moments we wish we could erase from everyone's memory instead can be relieved over and over again, such as this priceless moment. We live in a world in which nearly all that is known to mankind is available in the palm of one's hand. Lenore and Chris talk about how the profound waves of innovation driving this interconnectedness have created headwinds that destroyed some of the most well-known global brands and tailwinds that have led companies that didn't even exist 10 years ago to be international superstars. Along the way our mixologists talk about which companies are poised to prosper from the intersection of our Connected Society with the Cash-Strapped Consumer and Disruptive Technology and Safety and Security investing themes. They also discuss how the evolution of this theme is leading to the "datafication" of our lives and who is leading the charge. Companies mentioned on this podcast

• Alphabet (GOOGL)
• Amazon (AMZN)
• Apple (AAPL)
• Best Buy (BBY)
• Cisco (CSCO)
• Costco (COST)
• Dell
• Facebook (FB)
• Fedex (FDX)
• Fitbit (FIT)
• Garmin (GRMN)
• Home Depot (HD)
• Hudson Bay Company (HBAYF)
• Mastercard (MA)
• Netflix (NFLX)
• Paypal (PYPL)
• Staples
• Target (TGT)
• Twitter (TWTR)
• United Parcel Service (UPS)
• Venmo
• Visa (V)
• Wal-Mart (WMT)

Resources for this podcast:

• Chris Versace - @_ChrisVersace
• Lenore Hawkins - @EllesEconomy
• Tematica Research - https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting
• Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns

Books we're currently reading:

• Versace:
• Hawkins: Quantum Physics for Poets

Download Episode This week, Tematica's investing mixologists Chris Versace and Lenore Hawkins do a deep dive on our Aging of the Population investing theme. The simple fact is both the U.S. and global population are skewing older and this dynamic has a number of ramifications for companies, some of which will ride that tailwind and cater to the emerging demand and pain points of an older population while others see their business hit a profound headwind. Lenore and Chris talk about these as well as discuss the larger headwinds this investment theme for economic growth to be had as the aging population continues to grow over the ensuing decades. Along the way, our mixologists talk about which companies are poised to prosper from the intersection of our Aging of the Population theme with our Connected Society, Cash-strapped Consumer and Disruptive Technology investing themes. And they even share the term "CamperForce," something that has been of keen use to Amazon and is likely to be for Wal-Mart and others as they ramp their e-commerce businesses. Companies mentioned on this podcast

• Alphabet (GOOGL)
• Amazon (AMZN)
• Apple (AAPL)
• Charles Schwab (SCHW)
• Facebook (FB)
• Fitbit (FIT)
• LPL Financial (LPLA)
• Johnson & Johnson (JNJ)
• Sonos
• United Parcel Service (UPS)
• Wal-Mart (WMT)

Resources for this podcast:

• Chris Versace - @_ChrisVersace
• Lenore Hawkins - @EllesEconomy
• Tematica Research - https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting
• Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns

Books we're currently reading:

• Versace: The Obstacle is the Way
• Hawkins: Trespassing on Einstein's Lawn

Download Episode On this week's podcast, Tematica's investing mixologists Chris Versace and Lenore Hawkins breakdown the latest economic and market news and share what it means through Tematica's thematic investing lens. As we move deeper into 3Q 2017 earnings season, results from IBM (IBM), General Electric (GE), Honeywell (HON) and others suggest we could be in for a rougher ride ahead compared to the Teflon market's melt up over the last several weeks. Volatility remains depressed with the market at richer than rich valuations, and 3Q 2017 earnings could be the spark that leads the stock market to revert to the mean. That likely means the domestic stock market giving back some of its recent gains off the August lows. We also point out signals for our Connected Society, Cashless Consumption, Fattening of the Population, Food with Integrity and Safety & Security investing themes are paving the way for investable opportunities that are poised to become supercharged in the weeks and months ahead. We also review what we see happening in the markets and what the latest economic data reveals as well as share what we'll be watching in the week ahead. Companies mentioned on this podcast

• Adobe Systems (ADBE)
• Alphabet (GOOGL)
• Amazon (AMZN)
• American Express (AXP)
• Apple (AAPL)
• Coca-Cola (KO)
• Comcast (CMCSA)
• Costco (COST)
• Disney (DIS)
• Facebook (FB)
• General Electric (GE)
• Honeywell (HON)
• IBM (IBM)
• Insulet (PODD)
• International Flavors & Fragrances (IFF)
• MasterCard (MA)
• Netflix (NFLX)
• PepsiCo (PEP)
• Proctor & Gamble (PG)
• SAP (SAP)
• Snap (SNAP)
• Twitter (TWTR)
• Visa (V)

Resources for this podcast:

• Chris Versace - @_ChrisVersace
• Lenore Hawkins - @EllesEconomy
• Tematica Research - https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting
• Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns

Books we're currently reading:

• Versace: The Industries of the Future
• Hawkins: Trespassing on Einstein's Lawn

Download Episode This week, Tematica's investing mixologists Chris Versace and Lenore Hawkins discuss some recent examples of the investing herd coming around to see what we've been talking about for quite some time with respect to companies such as Universal Display and Applied Materials. Last week we discussed the possibility that Amazon and Walmart could be the Coke and Pepsi of future mega-retailing. This week we give more of the rationale behind why retail-mageddon is about more than just the forces behind our Connected Society investing theme as the shrinking middle-class aspect of our Rise & Fall of the Middle Class and Cash Strapped Consumer themes are also having a major impact on malls across America. We also point out other areas in which our investing themes are intersecting, making for investable trends that can become supercharged. We also review what we see happening in the markets and what the latest economic data reveals.

• The record number of retail stores closing isn't just about the impact of our Connected Society investing theme. Since 1996, 40% of the U.S. population has seen their inflation-adjusted incomes decline while an additional 20% have stayed roughly flat. Meanwhile, the cost of college tuition, childcare, and healthcare went up 200%, 125%, and 120%, respectively.
• America simply doesn't have enough long-term care facilities to accommodate the needs of our aging society and 90% of seniors want to stay home – Disruptive Technology meets Aging of the Population inside the Connected Society - a triple play for our investing themes.
• Our Cashless Consumption investing theme continues to gain momentum, showing up in Shake Shack, with the addition of Apple Pay to Yelp and with the continued growth of digital banking.
• Our Connected Society also continues to wreak havoc with traditional content distribution and can been seen accelerating the impact of scandals ranging from the Hollywood earthquake around Harvey Weinstein to the mind-boggling fraud of Kobe Steel.
• In the markets, volatility continues to be elusive as those FAANG stocks keep outperforming. Just this morning Netflix shares surged past $200 for the first time.
• The infamous Buffet Indicator (The Wilshire 500 market cap versus U.S. GDP ratio) is today at 1.3 - just shy of the dotcom bubble peak of 1.36 and well above the 1.05 peak prior to the financial crisis bear market.
• Wednesday's minutes from the latest Federal Reserve meeting reveal to us that a hike in December, may not be quite the done deal the market expects.
• Despite some an added post-hurricane boost, September retail sales disappointed, rising just 1.6% versus expectations for 1.7% while real average hourly earnings rose just 0.7% in September on a year-over-year basis and just 0.2% for production and nonsupervisory.
• With growth in spending outpacing earnings, no wonder this week Citigroup revealed that it is increasing its allowance for consumer loan losses much more than expected, so it comes as little-to-no surprise that growth in savings account balances is today at the lowest level we've seen since the depths of the recession.

Companies mentioned on this podcast

• Alphabet (GOOGL)
• Amazon (AMZN)
• Apple (AAPL)
• Applied Materials (AMAT)
• Best Buy (BBY)
• Boeing (BA)
• Citigroup (C)
• Costco (COST)
• Credit Suisse (CS)
• Facebook (FB)
• Foot Locker (FL)
• Ford (F)
• Gap (GPS)
• General Motors (GM)
• JCPenny (JCP)
• JP Morgan (JPM)
• Kobe Steel (TYO)
• Kohl's (KSS)
• Morgan Stanley (MS)
• Netflix (NFLX)
• Payless
• Radio Shack
• Sears (HLD)
• Time (TIME)
• Toyota Motors (TM)
• Shack Shack (SHAK)
• Universal Display (OLED)
• Wal-Mart (WMT)

Resources for this podcast:

• Chris Versace - @_ChrisVersace
• Lenore Hawkins - @EllesEconomy
• Tematica Research - https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting

Books we're currently reading:

• Versace: MINDSET MATTERS MOST How to Create Success & Happiness by Releasing from the FEAR, LIMITATIONS & SELF-DOUBT
• Hawkins: Trespassing on Einstein's Lawn

As discussed in the recent episode of the Cocktail Investing Podcast, last week TechCrunch reported: Amazon has acquired Body Labs, a company with a stated aim of creating true-to-life 3D body models to support various b2b software applications — such as virtually trying on clothes or photorealistic avatars for gaming. Video demos on Body Labs' website show its tech being used to augment a human with digital content as the person moves around by cladding them in a full-body gaming avatar 'suit' or adding boxing gloves and bunny slippers to a dancing man.Body Labs also says its "SOMA Shape API" can be used to "accurately predict and measure the 3D shape of your customers using just a single image", suggesting this can power "custom apparel" or be used by fashion ecommerce retailers wanting to offer sizing recommendations.The company also suggests additional uses-cases for its 'fat and all' 3D body modeling tech in health and fitness tracking, and even equipment design and manufacturing. Full Article: Amazon has acquired 3D body model startup, Body Labs, for $50M-$70M | TechCrunch Tune in below for this quick excerpt from a recent episode of Cocktail Investing where Co-Hosts Chris Versace and Lenore Hawkins assess the impact of Amazon's acquisition and Chris challenges Lenore as to whether this could be the tipping point for Amazon to make significant inroads in apparel sales. Hint: there is one more piece of the puzzle Lenore thinks Amazon needs to add. Download Episode

Download Episode This week, Tematica's investing mixologists Chris Versace and Lenore Hawkins discuss the impact of the twin hurricanes on the economic data coming in, with another potentially on the way, and the fallout from the horrific event in Las Vegas. Our Safety and Security investing theme takes front stage as Congress questions the former CEO of Equifax and the nation tries to cope with the pain and devastation caused by both Mother Nature and a single twisted soul in Nevada. As we head into the holiday shopping season, our Connected Society theme presents major headwinds to brick and mortar retailers, while those who "get it" in the online and mobile shopping sphere stand to capture even more market and wallet share. Chris and Lenore also debate Amazon and Walmart, the Pepsi and Coke of the future of retail? We also discuss some fascinating data trends, including why Wal-Mart is once again trotting out its layaway program this holiday shopping season. For those who want to see the charts as well as Lenore's recap of the week that was, please go to our Weekly Wrap for the week, which can be found here.

• Our deepest respect for those individuals and companies lending aid to those suffering from the recent hurricanes such as: Royal Caribbean, who cancelled a cruise to use the ship to aid victims of Maria; Mark Cuban who used the Maverick's team plane to deliver food, water and supplies to Puerto Rico; and Tesla, who shipped hundreds of Powerwalls to Puerto Rico to aid during the extended power outages.
• We discuss third quarter results for the U.S. stock market that blew the doors off expectations given September's reputation for volatility and declines. The question is - will 2017 finish the year with the record for the smallest drawdown during the year for the S&P 500?
• Investor Intelligence bulls outnumber bears 3 to 1 and Market Vane bullish sentiment nears decade high. We dissect this Wall Street lingo and explain what this means for the markets going forward.
• Equity portfolio managers are sitting on record low levels of cash as margin debt continues to grow faster than market cap with volatility at prolonged, historic lows indicating there is just no more fear left. We discuss what this means for overall index level returns in the years to come.
• The ISM Manufacturing and Non-Manufacturing surveys for September painted one hell of a rosy picture but Markit's reports contradicted. We explain why they differ so much and what this means for the economy.
• Inflationistas found fodder in the "prices paid" component of the ISM PMIs, but we think their conclusions are wrong.
• We dive deep into forecasts for the holiday shopping season, which companies are likely to be winners and which is facing strong headwinds as reflected by our Connected Society and Cash-Strapped Consumer investing themes.
• How does mobile shopping figure into these holiday forecasts and what do the Toy "R" Us bankruptcy and Star Wars mean for holiday toy sales?
• What's the likely sleeper stocks to benefit this holiday shopping season? Chris and Lenore share their view and explain why.
• Over the coming week, we'll be watching the NFIB Small Business report, the latest Federal Reserve minutes, Retails Sales for September along with how Business Inventories are adjusting as we head into the holiday season.

Companies mentioned on this podcast

• Alix Partners
• Alphabet (GOOGL)
• Amazon (AMZN)
• Apple (AAPL)
• Best Buy (BBY)
• Body Labs
• Circuit City
• Cushman and Wakefield
• Deloitte & Touche
• Dick's Sporting Goods (DKS)
• eMarketer
• Equifax (EFX)
• Hhgregg (HGGGQ)
• NetElixir
• Nike (NKE)
• Royal Caribbean Cruises (RCL)
• Sports Authority
• Sports Chalet
• Tesla (TSLA)
• Toys R Us
• Wal-Mart (WMT)
• Yahoo

Resources for this podcast:

• Chris Versace – @_ChrisVersace
• Lenore Hawkins – @EllesEconomy
• Tematica Research – https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting

Download Episode This week, Chief Investment Officer Chris Versace is joined by Tematica's "Man Behind the Curtain" Chris Broussard in a very special conversation with Brad Stertz, Director of Government Affairs at Audi. Our in-depth conversations with Brad puts some context and understanding around the issues and developments surrounding the self-driving car market as well as the far-reaching impact this revolution will have beyond just the automotive sector. Audi is at the center of Volkswagen's expertise for autonomous cars, an area it's been focused on for more than a decade, and Brad has been there for most of it. This Cocktail Investing podcast episode is another one of those conversations that takes you behind the scenes and puts you in the know on a topic that is filling headlines on a daily basis, with wide implications for a number of industries and investment themes. We discuss the evolution of autonomous vehicles, including several obvious and not so obvious tailwinds behind the evolution of this technology from dream to reality. Even we were somewhat surprised at the number of implications across several of our investment themes, including the Aging of the Population and Disruptive Technologies themes, but also Asset-Lite Business Models, the Cash-Strapped Consumer, Safety & Security and of course, the Connected Society as the impact on car ownership and usage, fleet management, delivery services and logistics is felt, as well as urban planning and the electric grid are forced to adapt. We also discuss several potential roadblocks, including state and local governments and interestingly enough privacy concerns over all the data that an autonomous vehicle will generate. Companies mentioned on this podcast

• Alphabet (GOOGL)
• Amazon (AMZN)
• AT&T (T)
• Avis Budget Group (CAR)
• Delphi Automotive (DLPH)
• FedEx (FDX)
• Ford (F)
• General Motors (GM)
• Hertz Global Holdings (HTZ)
• Intel (INTC)
• Lyft
• Motorola Solutions Inc (MSI)
• Nuance Communications (NUAN)
• Nvidia Corp (NVDA)
• QUALCOMM (QCOM)
• Tesla (TSLA)
• T-Mobile (TMUS)
• Uber
• United Parcel Service (UPS)
• Verizon (VZN)
• Volkswagen AG (VLKAY)

Resources for this podcast:

• Chris Versace – @_ChrisVersace
• Lenore Hawkins – @EllesEconomy
• Brad Sterz — @BradSterz
• Tematica Research – https://www.tematicaresearch.com
• Themes Report: https://www.tematicaresearch.com/whatisthematicinvesting