The Next Big Theme: December 2019
Follow the leaders
Social media-based advertising is now a core element of political campaigns. However, social media platforms increasingly face bipartisan criticism for perpetuating misinformation, enabling groupthink and possibly favoring certain political leanings. Meanwhile, a debate about what constitutes free speech muddies the regulatory backdrop, leaving oversight to the social media companies.
On one end of the spectrum, Twitter recently announced an outright ban of political ads, setting a public precedent, though political ad spending on the platform ($5.2mn since 2018) pales in comparison to Google ($32mn) and Facebook ($67mn).1 Weeks later, Google took a middle-ground approach by forbidding ad-targeting based on public voter records or political affiliation. As for Facebook, it has yet to enact any new rules since its September announcement that it would no longer fact-check political ads. However, it is in talks with ad-buyers about broadening the reach of targeted ads.
A team from Switzerland’s Electromagnetic Compatibility Laboratory developed an artificial intelligence-based system that can predict when and where lightning will strike with almost 80% certainty.2 Comparing 10 years of temperature, humidity, air pressure, and wind speed data with associated lightning strikes, the system’s algorithms were able to establish a pattern that will only improve with further use. The simplicity of the input parameters creates a world of possibility for use in areas that lack access to communication networks. Additional use cases could include disaster preparedness and mitigating potential damage, among many others. Similar predictive systems have been developed for weather projections in the past, relying on complex data sets and advanced GPUs to process them.
Department of Homeland Cybersecurity
The US Senate advanced two pieces of cybersecurity-related legislation. The State and Local Government Cybersecurity Act lays the foundation for better cybersecurity preparedness, calling for the Department of Homeland (DHS) to coordinate information sharing on cybersecurity risks with state and local governments. The National Cybersecurity Preparedness Consortium Act (NCPCA) builds on this and charters the establishment of a cybersecurity consortium of experts from universities and other bodies. The act authorizes a pseudo task force to work with DHS to prepare for and act on cybersecurity risks at the national, state, and local levels. In particular, both pieces of legislation expand the cybersecurity toolbelts of state and local governments to help protect their constituents from cyberattacks and ransomware.
The world is one step closer to a practical quantum computer thanks to researchers at the University of Waterloo in Canada. Quantum computing uses the laws of quantum mechanics to allow for the simultaneous and immediate calculation of advanced computations. But until now, it wasn’t possible to assess the quality of quantum computers’ solutions. The new development? Waterloo’s researchers developed a new quantum computing method called cycle benchmarking that allows for comparison of quantum processors’ accuracy per users’ computing use case.3 Now, researchers will be able to gauge quantum computers strengths and identify areas where they can be improved better than before.
Long lines followed by a rush of deal-seeking shoppers when stores opened their doors on Black Friday seems to be a thing of the past. Consumers ditched brick-and-mortar stores this year, or at least spent less while visiting stores. According to Adobe Analytics, Black Friday brick-and-mortar retail sales fell by 6.2% compared to last year.4 Shopping behavior continues to shift online because of quick delivery times, price comparison, and overall convenience. Black Friday pulled in a record of $7.4 billion in online sales this year, a 19.6% year-on-year increase. Smartphones accounted for $2.9 billion of total sales.5
Genomics and Biotechnology
A Genomic Leap
CRISPR Therapeutics and Vertex Pharmaceuticals reported encouraging data from the first company-backed study that tests a CRISPR/Cas9 gene-editing therapy in humans. The treatment, CTX001, is in two phase 1/2 studies, testing treatments for transfusion-dependent beta thalassemia and sickle cell disease. The data come from one patient in each trial. The sample size is too small to fully determine CRISPR’s efficacy, but it illustrates gene editing’s potential.
The beta thalassemia patient needed an average of 16.5 blood transfusions per year before the study. Nine months after receiving CTX001, the patient no longer needed transfusions and had near-normal hemoglobin levels. The sickle cell patient had seven painful vaso-occlusive crises per year before CTX001. Four months after CTX001, the sickle cell patient had no vaso-occlusive crises and similar hemoglobin levels.6
MORE Progress in Cannabis Legalization
The House Judiciary Committee recently approved a bill to fully legalize cannabis in the US. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act seeks to decriminalize cannabis, expunge prior convictions for cannabis offenses, and establish a 5% federal tax on cannabis and its derivatives. The tax revenue will fund job training and legal assistance to those communities hit hardest by the war on drugs.
The bill just completed the first stage of the legislative process and now will be sent on to the House. The legislation could pass in the Democrat-controlled House but may face strong opposition in the Republican-controlled Senate. It will then have to be signed by the President to become law. According to Skopos Labs, an automated predictive intelligence platform, the bill has a 1% chance of being enacted.7
A Developing Market
The Tesla-dominated electric vehicle (EV) market keeps many consumers on the sidelines waiting for more options, and more price-friendly options at that. But an average battery price pack around $120 kw/h means prices would need to fall about 20% to reach price parity with an internal combustion engine. Yet, consumers can start getting ready with more options are coming to market in the next few years. Mainstream OEMs have EV models that could hit the market soon. Ford unveiled its new all-electric Mustang SUV in November, which will hit the market in 2020. And VW announced a €60 billion investment in electric mobility, hybrids, and more, to support the rollout of an estimated 26 million EVs by 2029.8
The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs.
INTRO TO THEMATIC INVESTING COURSE – ELIGIBLE FOR CE CREDIT
Global X has developed an interactive, self-guided Intro to Thematic Investing course, that is designed to share the latest ideas and best practices for incorporating thematic investing into a portfolio.
This program has been accepted for 1.0 hour of CE credit towards the CFP®, CIMA®, CIMC®, CPWA® or RMA certifications. To receive credit, course takers must submit accurate and complete information on the requested forms, complete the entire course, and receive a 70% or higher on the Intro to Thematic Investing Quiz.
Questions on receiving CE credit may be sent to: Education@globalxetfs.com
KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X
To learn more about the disruptive themes changing our world, read the latest research from Global X, including:
- Joe Lowry (aka “Mr. Lithium”) on The State of the Lithium Industry
- The Global X Thematic Growth ETF (GXTG): A Multi-Theme Solution
- Introducing the Global X Cybersecurity ETF (BUG)
- Introducing the Global X Video Games & Esports ETF (HERO)
- Meet the Sector Disruptors
- Thematic ETF Report Q3 2019
- How to Value Disruptive Themes