Weekly wealth information sharing

Concerns about the U.S. economic recession continue to cool down. The Dow Jones Industrial Average and the S&P 500 hit both record highs on Friday. The S&P 100 once rose 0.47% and exceeded 5,100 points. I will briefly report to you the latest changes in the market:

1) Chip giant Nvidia continues to be sought after by investors under the auspices of the artificial intelligence craze. Its stock price rose by up to 4.9% to hit a record high of US$823.94, and its market value briefly exceeded US$2 trillion to more than 2.03 trillion US dollars. US dollar, the closing price increase narrowed to 0.4%, still a new high. The U.S. government is fueling the development of artificial intelligence and encouraging the world’s top semiconductor companies to return to the U.S. market to produce chips. It is reported that the Biden administration is negotiating to provide more than $10 billion in subsidies to Intel. OpenAI, the company that developed ChatGPT, is seeking support from the U.S. government to raise funds from the Middle East and other regions to significantly increase global artificial intelligence chip production capacity.

2) Investors’ enthusiasm for U.S. stocks continues. Bank of America quoted EPFR Global data as showing that in the week ending February 21, global stock funds attracted US$15 billion. Among them, US stock funds recorded an inflow of US$12.2 billion, which was the first time in eight weeks. The most since. Michael Hartnett, a strategist at Bank of America, said that as the Federal Reserve’s monetary policy moves toward easing, speculation in artificial intelligence (AI)-related stocks and optimistic expectations for economic growth have become magical ingredients that push U.S. stocks further higher. He pointed out that the “Seven Heroes of Technology Companies” accounted for more than 60% of the S&P Index’s increase in the past 12 months. JP Morgan’s team of strategists headed by Mislav Matejka mentioned that fourth-quarter earnings per share of U.S. companies increased by 7%, while European companies fell by 11%, and the profit performance gap widened, supporting their view that they prefer U.S. stocks to European stocks. A Bloomberg survey showed that economists surveyed raised their forecast for the annual U.S. economic growth rate this year to 2.1% from 1.5% last month. At the same time, the probability of economic recession next year is only 40%, the lowest since mid-2022.

3) In the face of strong inflation data, several Fed officials did not turn sharply hawkish. The core view is that they need to see more data to patiently wait for the opportunity to cut interest rates, and at the same time they are open to starting to cut interest rates in the next few months. . Wall Street banks generally expect the Federal Reserve to begin cutting interest rates as early as June, later than estimated at the beginning of this year, mainly due to stubborn inflation. Large brokerages that expect to cut interest rates in June include Goldman Sachs, UBS and Morgan Stanley. Their estimated interest rate cuts this year are 100 basis points, 75 basis points and 100 basis points respectively. Interest rate futures data show traders see a 65% chance of a rate cut by the Fed in June. The main theme of interest rate cuts this year will not change. The current 10-year U.S. bond interest rate is close to the 4.3% resistance line we predicted in January, so there is an opportunity for bargain hunting.

4) The Shanghai Composite Index continued its strong start to the Year of the Dragon, rising for 8 consecutive days, and closed above the 3,000-point mark last Friday. The stock market rebounded after hitting the bottom. On the one hand, the national team entered the market to protect the market. On the other hand, it was boosted by policy tightening. Since Wu Qing, the new head coach of the China Securities Regulatory Commission, took office, he has launched a series of strict regulatory measures aimed at enhancing market vitality, optimizing market structure, Protect the rights and interests of investors, thereby enhancing market confidence. However, it should be noted that the key to whether the market can continue to rise in the future still depends on the improvement of economic fundamentals. The current economic data cannot be said to have significantly improved. Reuters calculated based on data released by the National Bureau of Statistics that the price index of newly built commercial housing in 70 large and medium-sized cities fell by 0.7% year-on-year in January, the largest decline in 10 months; it also fell by 0.3% month-on-month. It has fallen for 7 consecutive months, with the decline narrowing by 0.1 percentage points compared with December last year.

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