US ECONOMY & POLITICS

Powell Says Fed Has Resolve to Bring U.S. Inflation Down – Wall Street Journal, 5/18/2022

• Federal Reserve Chairman Jerome Powell said the central bank’s resolve in combating the highest inflation in 40 years shouldn’t be questioned, even if it requires pushing up unemployment.
• “Restoring price stability is an unconditional need. It is something we have to do,” Mr. Powell said in an interview Tuesday during The Wall Street Journal’s Future of Everything Festival. “There could be some pain involved.”
• Mr. Powell signaled Tuesday that the central bank was likely to follow a half-percentage-point raise earlier this month, to a range between 0.75% and 1%, with similar moves at meetings in June and July.
• “We will go until we feel like we are at a place where we can say, ‘Yes, financial conditions are at an appropriate place. We see inflation coming down,’” Mr. Powell said. “We will go to that point, and there will not be any hesitation about that.”

US Housing Starts, Building Permits Stall as Mortgage Rates Bite – Bloomberg, 5/18/2022

• US new-home home construction slipped in April amid ongoing supply-side challenges and the steepest climb in mortgage rates in decades.
• Residential starts decreased 0.2% last month to a 1.72 million annualized rate after a downwardly revised 1.73 million pace in the prior month, according to government data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 1.76 million pace.
• Applications to build, a proxy for future construction, fell 3.2% to an annualized 1.82 million units.
• Single-family starts fell 7.3% in April to an annualized pace of 1.1 million units as multifamily starts — which tend to be volatile and include apartment buildings and condominiums — rose 15.3%.
• The report showed the number of single-family homes authorized for construction but not yet started — a measure of backlogs — rose slightly to the highest level in over 15 years. Overall backlogs climbed to the highest since 1974.
• The number of single-family properties under construction continued to rise as builders make some headway, reaching 815,000, the most since 2006. The total number of units that remain under construction advanced to a record.

Biden Administration to Continue Pandemic Health Emergency – Wall Street Journal, 5/18/2022

• The Biden administration is continuing the pandemic’s public-health emergency beyond July 15, meaning the declaration and its slew of health-related provisions such as expanded coverage to millions of lower-income people could extend into the fall.
• The administration told states it would give them 60 days’ notice if it was halting the public-health emergency, which was set to expire on July 15.
• The lack of an alert to states means the declaration will be renewed for up to 90 days.
• Unwinding the health provisions ushered in by the declaration will be hard whenever the emergency does end—and harder still as time goes by, some political and health policy analysts say.

Pennsylvania GOP Senate Race Might Be Headed for Recount – Wall Street Journal, 5/18/2022

• The outcome of Pennsylvania’s intensely fought Republican U.S. Senate primary remained uncertain as election officials continued to count mail ballots early Wednesday, the day after primaries in five states showed there are limits to Donald Trump’s grip on GOP voters.
• With 95% of the expected vote tabulated, the Associated Press had yet to call the contest, as celebrity surgeon Mehmet Oz and former hedge-fund executive David McCormick were separated by a razor-thin margin that could potentially send the race to a recount.
• Unofficial results showed Mr. McCormick leading in votes cast by mail counted so far, while Mr. Oz was ahead in the Election Day vote.
• Army Reserve veteran and commentator Kathy Barnette, who had surged late in the contest, was in third place and too far behind to be a contender.
• The day of balloting showed Mr. Trump’s influence on GOP voters remains significant, but not absolute.
• North Carolina delivered a split verdict on his highest-profile endorsements in the state.
• His candidate, Rep. Ted Budd, won the GOP’s U.S. Senate nomination, while Rep. Madison Cawthorn, the youngest member of Congress and someone dogged by a series of indiscretions and blunders, lost his primary to state Sen. Chuck Edwards.

EUROPE & WORLD

U.K. Inflation Hits 40-Year High, Putting Government on Defensive – Wall Street Journal, 5/18/2022

• The U.K.’s annual rate of inflation jumped to a forty-year-high in April, the highest level recorded by an industrialized nation since the start of the global price surge last year.
• Consumer prices in April were 9% higher than a year earlier, a jump from 7% in March and the highest inflation rate since March 1982, the Office for National Statistics said.
• The pace is now the highest recorded by one of the Group of Seven rich economies in about a year.
• The pickup in overall inflation was in line with the Bank of England’s expectations.
• It expects inflation to peak at over 10%, following the anticipated fall hike in home energy prices.

European Union Sets Out Plan to End Russian Energy Imports – Wall Street Journal, 5/18/2022

• The European Union released a $317 billion plan it said would end the region’s dependence on Russian energy within five years, testing the bloc’s political will to overhaul its energy policy and infrastructure in response to the invasion of Ukraine.
• The plan, released on Wednesday by the European Commission, the EU’s executive arm, seeks to cut imports of Russian gas by two-thirds this year and end its dependence on them entirely by 2027.
• The plan envisions European countries cooperating in the near term to negotiate gas supply deals from producers in the U.S., the Middle East and Africa to replace gas from Russia.
• At the same time, the bloc would launch a massive expansion of renewable energy construction by boosting funding for projects and streamlining regulations that slow them down.
• The plan calls for 45% of energy to come from wind turbines, solar panels and other renewable sources by 2030, up from the 40% that was proposed last year as part of a sweeping plan to curb greenhouse gas emissions.
• In 2020, 22% of the bloc’s energy came from renewable sources.

Tencent Posts Steepest Profit Decline Since Going Public – Wall Street Journal, 5/18/2022

• Tencent Holdings posted its worst-ever quarterly profit drop and slowest revenue growth in nearly two decades, as China’s pandemic resurgence hit a technology giant already struggling with a yearlong regulatory crackdown.
• The social-media and videogame behemoth said Wednesday that first-quarter revenue rose 0.1% from a year earlier to 135.47 billion yuan, or $21.3 billion, based on an exchange rate of 6.3482 yuan to a dollar that Tencent used.
• The slowdown was primarily due to a 1% revenue decline from Tencent’s domestic games business, one of the company’s largest income streams.
• Revenue from online advertising, another key business segment, fell 18% in the first quarter.
• Sharply higher costs, including a 41% jump in general and administrative expenses, further hit Tencent’s bottom line.
• The company said the cost increase was “due to higher share-based compensation expenses, R&D expenses and staff costs” from new investments and overseas subsidiaries.
• Net profit fell 51% to 23.41 billion yuan, the world’s largest videogame developer said.

Singapore Airlines narrows annual loss, says outlook improving – Reuters, 5/18/2022

• Singapore Airlines (SIA) on Wednesday posted a narrower annual loss of S$962 million ($694.08 million), at a time when demand remained low due to the pandemic, but said the outlook was improving as travel restrictions were lifted.
• Annual revenue doubled to S$7.6 billion.
• SIA’s loss in the 12 months ended on March 31, its third consecutive year in the red, was an improvement from the S$4.3 billion loss a year earlier that included impairment charges on 45 older aircraft.
• SIA said passenger capacity would average around 61% of pre-pandemic levels in the first quarter and 67% in the second quarter as the outlook improved.
• It added that forward sales, when measured as a percentage of available seats, were approaching pre-pandemic levels for the three months up to August.

French Shipping Firm to Take Stake in Air France-KLM in Air Cargo Expansion – Wall Street Journal, 5/18/2022

• French container shipping firm, CMA CGM Group, said it would take a stake in Air France-KLM as part of a deal to combine the airfreight operations of both companies amid a boom in demand for cargo since the start of the pandemic.
• Under a 10-year agreement, the two companies will combine and jointly market their airfreight operations including a fleet of 10 dedicated freighter aircraft as well as another 12 jets on order.
• The deal also covers the belly-cargo operations of Air France-KLM’s passenger aircraft, which includes more than 160 long-haul aircraft.
• Under the CMA CGM and Air France-KLM deal, the two companies will jointly design flight networks for their dedicated freighter jets and combine those with CMA CGM’s ground and sea links, the companies said.
• The initial deal covers 10 years, but will likely be renewed beyond that, executives said.

China’s New Home Prices Fall for the First Time in More Than Six Years – Wall Street Journal, 5/18/2022

• A monthly measure of new home prices in China fell for the first time in more than six years, offering further evidence of the pain that Beijing’s regulatory campaign is inflicting on a sector that has long served as an economic growth engine.
• Average new-home prices in 70 major cities edged 0.11% lower in April from a year earlier, according to Wall Street Journal calculations based on data released Wednesday by China’s National Bureau of Statistics.
• When compared with the previous month, Chinese new-home prices declined for an eighth consecutive month, falling 0.3% in April—wider than March’s 0.07% month-to-month decrease.
• As of Monday, full or partial lockdowns have been implemented in 38 Chinese cities, affecting 271 million people, according to analysts at Nomura, an investment bank.

Factmonster – TODAY in HISTORY

• Napoleon Bonaparte was proclaimed Emperor of France by the French Senate. (1804)
• The Supreme Court affirmed racial segregation in Plessy v. Ferguson as “separate but equal.” (1896)
• Pope John Paul II was born near Krakow, Poland. (1920)
• India became the 6th country to become a nuclear power. (1974)
• Mount St. Helens, in Washington state, erupted after being dormant for 123 years. (1980)
• Israeli troops withdrew from the Gaza strip after three decades of occupation and Palestinians took over. (1994)
• Sonia Gandhi stunned her party, the Indian National Congress, by refusing to accept the prime ministership of India. (2004)