—— U.S. Stocks Show Dot-Com Era Risks; KPMG Partners Earn Over £700K; U.S. Home Price Growth Slows; U.S. Job Openings Unexpectedly Surge; UPS Revenue Drops, Cuts 12,000 Jobs; Neuralink Completes First Human Trials; U.S. VC Firms Sitting on Record Amount of Uninvested Funds
1. U.S. Stocks Show Dot-Com Era Risks
JPMorgan Chase & Co. quantitative strategist reported that the total market capitalization of the top 10 U.S. stocks now accounts for 29.3% of the entire U.S. stock market, nearing the 33.2% level seen during the internet bubble in June 2000.
Currently, the top 10 companies come from just four industries, down from the historical average of six industries, indicating an increasing concentration risk.
Strategist Khuram Chaudhry warned that most of the gains in MSCI USA have been driven by the top 10 companies, and if these stocks face a sell-off, it could drag the entire market down.
The rapid stock price increases of tech companies like Nvidia and Microsoft are driven by investor optimism about the future of AI, which may have bubble-like characteristics.
JPMorgan believes investors are likely to sell off these top stocks at high prices, potentially leading to a market pullback.
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2. KPMG Partners Earn Over £700K
Last year, KPMG UK was fined £25.8 million for audit failures, and revenue increased by only 9% to £2.96 billion, below the previous year’s 16% growth.
However, for the fiscal year ending September, KPMG UK partners’ average pay rose by 4% to £746,000.
KPMG UK faced penalties for failing to effectively audit Carillion, resulting in a £23 million fine, along with three other penalties totaling £2.8 million.
Despite recent poor performance, KPMG’s partners saw a significant rise in compensation.
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3. U.S. Home Price Growth Slows
According to the latest adjusted data from S&P CoreLogic Case-Shiller, U.S. home prices rose by 0.2% month-over-month in November, slower than the 0.6% rise in October.
Home prices increased by 5.1% year-over-year in November, slightly higher than October’s 4.7%.
Mortgage rates peaked at 7.79% in October, causing most buyers to hesitate, though lower rates and tight inventory continue to keep prices high.
U.S. home prices are expected to continue rising this year, though at a slower pace.
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4. U.S. Job Openings Unexpectedly Surge
The U.S. Bureau of Labor Statistics’ latest JOLTS report showed that U.S. job openings unexpectedly surged to 9 million in December, the highest in three months, exceeding all economists’ forecasts.
Job openings in education, healthcare, manufacturing, and business services saw the biggest increases.
This data shows that the demand for hiring remains strong, with employers needing to offer higher wages or benefits to fill positions.
The Fed is hoping to see fewer job openings and a slowdown in hiring.
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5. UPS Revenue Drops, Cuts 12,000 Jobs
Today, UPS CEO Carol Tome stated that the company plans to cut 12,000 managerial jobs and may sell its trucking brokerage business, Coyote.
After the layoffs, UPS expects to save $1 billion this year and more in the future. Additionally, Carol plans to require white-collar employees to work five days a week.
UPS’s revenue fell by 9.3% in 2023, and the company expects only a 1.1% increase in 2024, due to weak demand in Europe and the U.S.
UPS’s reliance on Amazon for revenue has increased, and union protests have had a significant negative impact on operations.
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6. Neuralink Completes First Human Trials
Elon Musk tweeted today that his startup Neuralink has successfully implanted its Telepathy chip into the brain of the first human patient. The patient’s recovery is going well, and the surgical results are optimistic.
Neuralink’s chip enables paralyzed patients to control computers with their minds.
In May of last year, Neuralink received FDA approval to conduct its first human trials, recruiting patients paralyzed from spinal injuries.
Neuralink plans to conduct 11 more experimental surgeries this year.
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7. U.S. VC Firms Sitting on Record Amount of Uninvested Funds
According to market data firm PitchBook, U.S. venture capital firms raised a total of $435 billion between 2020 and 2022.
However, these firms still have $311 billion in uninvested funds as they have reduced high-risk VC investments and shifted focus to returning funds to limited partners (LPs) as quickly as possible.
Many firms that once focused on early-stage startups are now looking at more mature companies or adding to existing portfolio companies.
LPs are beginning to pressure VC firms to return funds, resulting in a decrease in investments.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.