Markets

Animation: The Rapidly Aging Western World

Published

6 years ago

November 7, 2017

Jeff Desjardins

From issues such as declining fertility rates to the ongoing complications resulting from China’s famous “One Child Policy”, there are many demographic challenges that the world must grapple with in the coming years.

However, one problem of particular importance – at least in places like Europe and the Americas – is a rapidly aging population. As the population shifts grayer, potential consequences include higher dependency ratios, rising healthcare costs, and shifting economies and cities.

Europe: A Prime Example

We’ve discussed Germany’s demographic cliff before, but it’s not only Germany that will be impacted by a rapidly aging population.

Europe median age

The above animation from data visualization expert Aron Strandberg shows the median age of European countries between 1960 and 2060.

Starting about a decade from now, you can see that the U.N. projects some European countries to start hitting a median age of 50 or higher. This includes countries like Spain, Italy, Portugal, and Greece, and then later Germany, Poland, Bosnia, and Croatia.

The UK, France, Ireland, Scandinavia, and former Soviet countries will be younger – but only slightly so. Median ages in these places by 2060 will be in the early to mid-forties.

The Americas

Populations in North and South America are also graying fast, though not quite at Europe’s pace.

Here’s a similar map of the Americas that highlights median age between 1960 and 2060, based on U.N. projections.

Americas median age

Chile and Brazil, in particular, are trending older. Meanwhile, Canada is not far behind with an expected median age of 45 in 2060. Interestingly, the United States is anticipated to only hit a median age of 42 by 2060, which is lower than almost all Western countries.

While this makes the U.S. look younger in comparison, the country will still experience the same type of economic burden from an aging population. In fact, it’s expected that the population of Americans older than 65 years will nearly double from 48 million to 88 million over the coming three decades.

Related Topics:aging demographics united states europe population

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Technology

Just 20 Stocks Have Driven S&P 500 Returns So Far in 2023

From Apple to NVIDIA, megacap stocks are fueling S&P 500 returns. The majority of these firms are also investing heavily in AI.

Creator Program

Published

4 days ago

May 24, 2023

Dorothy Neufeld

Just 20 Stocks Have Driven Most of S&P 500 Returns

Just 20 firms—mainly AI-related stocks—are propping up the S&P 500 and driving it into positive territory, signaling growing risk in the market.

The above graphic from Truman Du shows which stocks are making up the vast majority of S&P 500 returns amid AI market euphoria and broader market headwinds.

Big Tech Stock Rally

Tech and AI stocks have soared as ChatGPT became a household name in 2023.

The below table shows data from last month, highlighting that just a small collection of companies drove most of the action on the U.S. benchmark index.

Company Rank	Name	Contribution to S&P 500 Return	Average Weight
1	Apple	1.49%	6.61%
2	Microsoft	1.15%	5.72%
3	NVIDIA	1.00%	1.62%
4	Meta	0.66%	1.15%
5	Amazon	0.51%	2.56%
6	Tesla	0.50%	1.39%
7	Alphabet (Class A Shares)	0.34%	1.72%
8	Alphabet (Class C Shares)	0.31%	1.53%
9	Salesforce	0.19%	0.51%
10	Advanced Micro Devices	0.16%	0.39%
11	General Electric	0.10%	0.28%
12	Visa	0.10%	1.08%
13	Broadcom	0.09%	0.73%
14	Intel	0.09%	0.35%
15	Walt Disney	0.08%	0.55%
16	Booking Holdings	0.07%	0.28%
17	Exxon Mobil	0.06%	1.37%
18	Netflix	0.06%	0.44%
19	Oracle	0.06%	0.40%
20	Adobe	0.06%	0.49%
	Top 20 Companies	7.05%	29.17%
	S&P 500*	7.55%	100.00%

*Based on the Vanguard S&P 500 ETF as of April 11, 2023. Source: Vanguard S&P500 ETF, Bloomberg.

Microsoft invested $10 billion into OpenAI, the creators of ChatGPT. It has also integrated generative AI into its search engine Bing. This large language model is designed specifically to make search capabilities faster, generate text, and perform other automations.

Also of interest is NVIDIA, which is the most valuable chipmaker in America. It sells $10,000 chips called A100s that allow machine learning models to run. These models perform multiple tasks simultaneously to develop neural networks and train AI systems, including OpenAI’s ChatGPT. Companies that are developing AI-related services, such as chatbots or image generation, may use up to thousands of these chips.

Despite being the world’s most valuable company and a key driver of returns, Apple is an outlier among tech giants with no major projects announced in AI (so far).

Implications of Market Divergence

The problem with the strong gains seen in a few select AI-related stocks is that it clouds wider stock market performance.

Without the AI-led rally, the S&P 500 would be returning -1.4%. as of May 17, 2023.

4. AI is fueling the stock market

A handful of stocks are spearheading the S&P 500's impressive 9% rally this year.

Here’s the kicker: if you excluded AI stocks, the S&P 500 would be down over 1% (according to Societe Generale). pic.twitter.com/SME1mJVpoW

— Rowan Cheung (@rowancheung) May 22, 2023

This form of steep divergence, known as market breadth, often signals higher risk in the market.

When more companies experience positive returns it is less risky than a small handful seeing the majority of the gains. Today market breadth is very narrow, and these companies make up over 29% of the entire index’s market capitalization.

How long AI-related firms mask the broader performance of the S&P 500 remains to be seen. A growing number of market pressures, from higher interest rates to banking uncertainty could add further challenges.