—— U.S. New-Home Sales Surge; Investors Shift from Stocks to Bonds; U.S. Inflation Unexpectedly Worsens; JPMorgan May Hit $1 Trillion Valuation; Goldman and Citi Crack Down on ChatGPT; Saudi Developer Lists in London; NetEase and Alibaba Shares Plunge
1. U.S. New-Home Sales Surge
According to data released today by the U.S. government, sales of newly built homes rose 7.2% year-over-year in January to a seasonally adjusted annual rate of 670,000 units—up from 625,000 in December and beating economists’ forecast of 620,000.
Across the country, the southern U.S.—the largest regional market—saw a 17.1% year-over-year sales increase, while all other regions declined. The South effectively carried the nation’s overall sales numbers in January.
At the end of January, there were 439,000 new homes available for sale nationwide—the lowest level since May 2022. At the current pace of sales, it would take 7.9 months to sell through inventory, also the lowest in a year.
The median new-home price fell 0.7% year-over-year to $427,500—the first annual decline since August 2020.
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2. Investors Shift from Stocks to Bonds
According to the latest data from EPFR Global, for the week ending February 22, global equity funds saw $7 billion in outflows, while money market funds lost $3.8 billion. In contrast, bond funds gained $4.9 billion—the longest streak of inflows since November 2021.
Strategists at Bank of America Corp. said this trend reflects investor concern over prolonged hawkishness from the Federal Reserve.
Globally, emerging market equity funds attracted $2.1 billion in new capital. In the U.S., small-cap and value stock funds had net inflows, while large-cap growth funds saw net outflows.
By sector, energy funds drew the most inflows, while significant outflows occurred in materials and financials.
Bank of America analysts continue to forecast that the S&P 500 could fall to 3,800 by March 8.
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3. U.S. Inflation Unexpectedly Worsens
According to new data released today by the U.S. Commerce Department, the Personal Consumption Expenditures (PCE) Price Index rose 0.6% in January from the previous month—its biggest monthly gain since June and well above expectations. Year-over-year, the index rose 5.4%, up from the prior month.
Inflation-adjusted personal spending rose 1.1% month-over-month—the largest gain since March 2021—driven by motorcycles, dining services, and lodging.
In response, U.S. Treasury yields climbed and the S&P 500 extended its losses from the previous day.
The U.S. labor market remains strong, with the unemployment rate at a 53-year low. Companies are being forced to raise wages and benefits to attract workers, increasing Americans’ earnings and savings, and fueling greater spending on goods and services—further entrenching inflation.
The surprise uptick in the PCE index has intensified pressure on the Federal Reserve to continue raising interest rates.
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4. JPMorgan May Hit $1 Trillion Valuation
Morgan Stanley analyst Betsy Graseck wrote in a recent note that JPMorgan Chase & Co. could double its market capitalization to $1 trillion in 2023.
She believes that if U.S. benchmark interest rates remain elevated, JPMorgan—the country’s largest bank—will see significant growth in net interest income, while also boosting its fee revenue and operational efficiency.
Graseck argues that JPMorgan’s current share price does not reflect its long-term growth potential. So far this year, the bank’s stock is up 4%, giving it a market cap of $411 billion. If net interest income accelerates, the company’s valuation multiples could also rise.
As the largest U.S. bank, JPMorgan may be one of the biggest beneficiaries of a sustained high-rate environment.
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5. Goldman and Citi Crack Down on ChatGPT
Sources report that Citigroup, Goldman Sachs, and Wells Fargo have recently moved to restrict the use of the AI chatbot ChatGPT.
ChatGPT can generate text, images, and other media in response to brief prompts, and workers across various industries are testing the tool to streamline tasks.
Citigroup has reportedly limited access to the tool. Goldman Sachs traders have also faced restrictions. Wells Fargo is deploying third-party software to monitor and limit ChatGPT usage.
Experts believe that as ChatGPT improves, it could eventually assist analysts in drafting pitch decks—or even build investment portfolios independently.
Despite its powerful capabilities, ChatGPT still carries a risk of producing inaccurate content.
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6. Saudi Developer Lists in London
Saudi luxury property developer DarGlobal is planning a direct listing on the London Stock Exchange, aiming to raise $72 million.
Unlike a traditional IPO, a direct listing allows existing shareholders to sell their shares without issuing new stock.
According to Dealogic, there have been no major IPOs in global markets so far this year.
DarGlobal CEO Ziad El Chaar said London is the company’s preferred capital market and that the listing would help expand its global visibility.
DarGlobal’s portfolio includes 11 properties: 4 in Dubai, 3 in Spain, and the remaining 4 in Qatar, Oman, the UK, and Bosnia.
DarGlobal’s offering will mark the first major IPO on the UK market this year, potentially giving it a $600 million valuation.
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7. NetEase and Alibaba Shares Plunge
Today, NetEase Inc. and Alibaba Group Holding Ltd. shares fell 11% and 5.4%, respectively, after earnings reports disappointed investors. The Hang Seng Tech Index has dropped 17% from its January peak, hitting a two-month low.
Recently, Chinese and Hong Kong tech stocks have been under pressure. The Hang Seng China Enterprises Index has erased all its gains for the year.
Although regulatory headwinds have eased in the tech sector, investors remain focused on China’s broader economic recovery.
This week, JD.com announced a $1.5 billion investment to fend off price competition from rivals like PDD Holdings. Meanwhile, Meituan said it plans to hire 10,000 workers to expand market share.
Fierce price wars in China’s e-commerce sector are putting pressure on the earnings of tech giants.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.