January 27: The Week Ahead

DeepSeek Rattles AI, The Fed, Looming Trump Tariffs
BY TEMATICA

In this edition of The Week Ahead, we discuss fresh questions raised by the rise of China’s DeepSeek AI model that are pressuring AI spending projections and the shares of companies, like Nvidia (NVDA) that benefit. We also layout the gauntlet of events the market will face this week, including earnings from Microsoft (MSFT), Meta (META), and Apple (AAPL) to the Fed’s potentially hawkish policy meeting that could set a showdown between Fed Chair Powell and President Trump.

As we move through the week, eyes will also be on Trump and the White House as we approach February 1, the date Trump indicated we could see tariffs go into effect.

Recent Thematic Signals

Just in case you missed our recent communique:

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.
  • CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
  • Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
  • Consumer Inflation Fighters – Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
  • Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
  • Cybersecurity – Companies that focus on protecting against the penetration of digital networks and the theft, ransom, corruption or destruction of data.
  • Digital Infrastructure & Connectivity –The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
  • Digital Lifestyle – The companies behind our increasingly connected lives.
  • Data Privacy & Digital Identity – Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
  • EPS Diplomats – Profitable large capitalization companies proven to produce above-average EPS growth and provide investors with the benefit of multiple expansion.
  • 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.
  • Market Hedge Model –  This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
  • Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
  • Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
  • 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.
  • Space Economy – Companies that focus on the launch and operation of satellite networks.

The Strategies Behind Our Dividend Income Models

  • Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
  • ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
  • ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.

Don’t be a stranger

Thanks for reading and if you have a suggestion for an article or book we should read, or a stream we should catch, email us at info@tematicaresearch.com. The same email works if you want to know more about our thematic and targeted exposure models listed above.

Other posts

USDJPY: Update and Strategy Observation

BY JON WEBB
As USDJPY probes back towards the lows of its “liftshaft” experience in early August, longer dated implied volatility is on the rise and skew favours puts over calls even more than before. Read more →

C8 Bulletin: Gauging the Impact of US Debt Limit Dynamics – Part II

BY JON WEBB
In February, one of our index providers, IVI Capital, outlined how the Debt Ceiling impasse would lead to an expansion of US liquidity, and more benign financial markets, until the Congressional stand-off was resolved. With the Debt Ceiling increase finally agreed, we asked IVI for an update. Read more →

Thoughts From the Divide: The (Golden) Path

BY JON WEBB
While the road to hell is paved with good intentions, it appears that the “golden path” to a soft landing (which by way of reminder is a “triumph of hope over experience”, if you ask Mr. Summers) is paved with rate cuts. In an interview earlier this week, the Chicago Fed president Austan Goolsbee cast another vote in favor of “adjustment cuts”, saying that “You risk the golden path if you are going to be as restrictive as we are now”. Meanwhile, Jerome Powell was quick to assure the audience during his latest interview that “today I am not going to be sending any signals, one way or the other on any particular meeting” as far as rate cuts are concerned. However, that did not prevent the Chair from referring to ol’ reliable of monetary policy, “long and variable lags”, to explain why, “if you wait until inflation gets all the way down to 2%, you’ve probably waited too long”. Read more →
Back to all posts →