US ECONOMY & POLITICS

US Housing Starts Fell in June After Surging in Prior Month – Bloomberg, 7/19/2023

• New US home construction retreated in June after surging a month earlier, to a pace that still indicates builders are working to fill the void left by lean housing inventory in the resale market.
• Residential starts fell 8% last month to a 1.43 million annualized rate, according to government data released Wednesday.
• The median estimate in a Bloomberg survey of economists was for a 1.48 million pace.
• Applications to build, a proxy for future construction, slipped 3.7% to an annualized pace of 1.44 million units.
• However, permits to build one-family homes increased to a one-year high.
• Single-family homebuilding decreased 7% in June, but to a pace that’s the second-strongest in a year.
• Multifamily construction dropped nearly 10%.
• Applications to build multifamily dwellings such as apartments fell by the most since November.
• Mortgage Bankers Association data released earlier on Wednesday showed applications for home purchases dropped last week as the contract rate on a 30-year fixed mortgage — while improved — remained close to 7%.

Senators to Propose Ban on U.S. Lawmakers, Executive Branch Members Owning Stock – Wall Street Journal, 7/19/2023

• Two U.S. senators are set this week to introduce bipartisan legislation to bar members of the federal executive branch and lawmakers from owning stock in individual companies, as new polling shows broad public support for such a measure.
• The bill from Sens. Kirsten Gillibrand (D., N.Y.) and Josh Hawley (R., Mo.) would permit the president, vice president, lawmakers, Capitol Hill aides and employees of the executive branch to own mutual funds and broad industry and index funds.
• But it would prohibit them from owning stocks in individual companies, even in blind trusts.
• “It is critical that the American people know that their elected leaders are putting the public first,” said Gillibrand in a statement, “not looking for ways to line their own pockets.”
• The bill includes stiff penalties for government officials who violate the rules.
• Employees of the executive branch would have to forfeit any profits from stock trading and face fines of $10,000 or more.

EUROPE & WORLD

Critical chip firm ASML, caught in China export restrictions, posts 38% rise in profit – CNBC, 7/19/2023

• ASML, one of the world’s most important semiconductor equipment firms, posted a jump in revenue and profit in the second quarter, but warned of macroeconomic “uncertainties” ahead.
• Net sales: 6.9 billion euros ($7.7 billion), compared with 6.72 billion euros expected.
• Net profit: 1.9 billion euros, versus 1.82 billion euros expected.
• ASML said it expects net sales in the third quarter of this year to sit between 6.5 billion euros and 7 billion euros.
• The company also raised its outlook for 2023, now anticipating its net sales this year to grow 30% year-on-year, up from a 25% growth estimate previously.
• ASML said that the brighter outlook is due to strong revenue from its deep ultraviolet (DUV) lithography machine, which is used to manufacture memory chips.
• “All in all, when you look at export control measures in total, we don’t expect a significant impact on our 2023 year,” but also on the longer term outlook, Wennink added.

UK Inflation Falls Below 8% in Breakthrough Against Price Spiral – Bloomberg, 7/19/2023

• Britain’s inflation rate dropped to the lowest in 15 months, fueling hopes among investors and economists of a shift away from the worst price spiral in the Group of Seven nations.
• Official data showed that annual consumer price growth cooled sharply to 7.9% in June from 8.7% the previous month, marking the first time in five months that the headline reading came in lower than expected.
• Core inflation — which strips out volatile food and energy prices — dropped for the first time in five months to 6.9% and there was also a cooling in services price increases, a measure the BOE has highlighted as important to its thinking.
• Inflation is set to fall even further in July’s data as the UK’s energy price cap limiting bills for households will fall.
• The price of goods leaving factory gates fell 0.3%, leaving them up just 0.1% on the year.

Euro-Area Core Inflation Quickened More Than Thought in June – Bloomberg, 7/19/2023

• Euro-area underlying inflation, the key measure of price gains for the European Central Bank, accelerated more than initially reported in June, cementing the interest-rate increase widely expected next week.
• The main gauge of inflation was confirmed at 5.5% — the lowest level since before Russia invaded Ukraine.
• Core consumer prices, stripping out volatile elements like food and energy, rose 5.5% from a year earlier, Eurostat said Wednesday.
• That compares with a preliminary estimate of 5.4% and a reading of 5.3% in May.

Truck maker Volvo’s quarterly profit surges, beats estimates – Reuters, 7/19/2023

• Swedish truck maker Volvo on Wednesday logged a better-than-expected 57% jump in second-quarter adjusted operating profit, helped by price hikes.
• “We have been successful in improving margins while managing cost inflation and increased disturbances in the supply chain,” Chief Executive Martin Lundstedt said in a statement.
• Operating profit before restructuring charges and legal claims surged to 21.7 billion crowns ($2.1 billion), beating a Refinitiv consensus estimate of 18.4 billion crowns.
• Orders for the quarter fell 10%, which Lundstedt said was partly due to Volvo’s reluctance to take on too many orders as well as partly the result of buyer caution.
• Volvo also boosted its estimates for industry-wide heavy truck sales in Europe and North America, saying it now expects 330,000 in each market up from 320,000 and noting that larger fleets were continuing to replace older vehicles.

U.S. Venture Firms’ Deals in China Tech Investigated by Congress Panel – Wall Street Journal, 7/19/2023

• A clutch of American venture-capital firms are being investigated by a congressional committee over their funding of Chinese tech companies—part of a push in Washington to scrutinize and potentially ban such deals.
• The House’s select committee on the China threat this week notified GGV Capital, GSR Ventures, Walden International and Qualcomm Ventures—the investment arm of chip company Qualcomm—that the panel is examining many of their investments in Chinese companies involved in semiconductors, artificial intelligence and quantum computing.
• Those Chinese companies, the committee said, threaten U.S. national security and have been involved in human-rights violations.
• By extension, the American firms’ investments “directly contribute” to those human-rights abuses, China’s military modernization and its effort to supplant U.S. technological leadership, according to letters sent to the venture firms and reviewed by The Wall Street Journal.
• Set up this year and formally known as the Select Committee on the Chinese Communist Party, the committee is increasingly targeting the role of American businesses in abetting Beijing’s superpower ambitions.
• Its work is emblematic of a shift in thinking in the White House and on Capitol Hill that once supported U.S. business ties with China but now see some investment as counter to American interests.

U.K. Clinches $5 Billion EV-Battery Plant as Race for Green Investments Heats Up – Wall Street Journal, 7/19/2023

• The owner of Jaguar Land Rover plans to build a large battery factory in the U.K. to supply electric vehicles, throwing a lifeline to Britain’s auto industry and highlighting the global race for green investment as carmakers shift to EVs.
• Tata Group said Wednesday that it expects the plant to start delivering batteries in 2026 and supply future electric vehicles built by its JLR business, which makes Range Rover, Defender, Discovery and Jaguar cars.
• The Indian company said it was investing 4 billion pounds, equivalent to about $5.2 billion, in the project.
• Tata’s decision to build the factory in the U.K. comes as European governments compete for a slice of the billions of dollars that the automotive industry is investing in its shift toward electric vehicles.

Blasts Hit Military Base in Russian-Occupied Crimea – Wall Street Journal, 7/19/2023

• Explosions tore through a military base in Russian-occupied Crimea on Wednesday—days after Ukraine targeted a bridge connecting the peninsula to Russia—reaching behind the front lines as Kyiv’s forces struggle to gain ground on the battlefield.
• Hours earlier, Russia targeted the Ukrainian port city of Odesa with a barrage of missiles and drones in a second consecutive night of strikes, after Moscow pulled out of an international agreement ensuring safe passage for Ukraine’s grain exports through the Black Sea.
• The blasts in Crimea took place in the peninsula’s eastern Kirovsky district, Russian state news agency TASS said.
• More than 2,000 residents were being evacuated due to a fire at a military training ground, said the Russian-appointed governor of Crimea, Sergey Aksyonov, without disclosing the cause.
• Refat Chubarov, the head of the Crimean Tatar community, said it was an ammunition storage facility.
• Ukraine’s air force said Russia unleashed a barrage of 30 cruise missiles, 32 Iranian-made kamikaze drones and an airborne missile on Ukraine overnight.
• A total of 37 drones and missiles were shot down by Ukraine’s air defenses, the air force said, but several struck the port of Odesa.

U.S. House Backs Israel in 412-9 Vote After Democrat Called State ‘Racist’ – Wall Street Journal, 7/19/2023

• The House voted overwhelmingly to pass a resolution affirming America’s strong support for Israel and condemning antisemitism, a move that sought to put Democrats on the spot after a progressive leader called the country racist.
• The measure passed 412-9, with one member voting present.
• In remarks to reporters, Biden said that the U.S. commitment to Israel is “ironclad.”

Finland Tells Russia to Close Its Consulate, Intensifying Spat – Bloomberg, 7/19/2023

• Finland told Russia to close its consulate on the southeastern coast, deepening a diplomatic dispute between the neighbors.
• The Nordic country is withdrawing consent for Russia to operate its consulate general in Turku as of Oct. 1, the government said in a statement on Wednesday.
• The Russian ambassador has been notified, it said.
• The move is a response to a Russian decision to close Finland’s consulate in St. Petersburg as of Oct. 1.
• Both countries have in recent weeks also expelled each others’ diplomats, and Finnish missions in Russia have had difficulties with their bank accounts.

Russia’s Near-Record Diesel Exports Help Lift Refined Fuel Flows – Bloomberg, 7/19/2023

• Russia’s oil-product exports are now on track to edge higher this month, as near-record diesel and rebounding naphtha shipments are set to offset lower flows of other fuels.
• The market is keeping a close eye on trade figures for any signs of Russian output cutbacks, with Moscow keeping production data a state secret.
• The country’s crude shipments slipped to a six-month low in the latest four-week period, suggesting it’s finally making good on a pledge to cut supply to world markets.
• In the first 15 days of July, Russia’s refined fuel cargoes rose about 81,000 barrels a day compared with June’s total, according to data compiled by Bloomberg from analytics firm Vortexa.
• They’re at about 2.49 million barrels so far, heading for a three-month high amid a ramp-up in refinery operations in the country.
• Shipments of diesel or gasoil — the top export product — rose 8.5% to about 1.27 million barrels a day.
• That’s near the 1.3 million barrels a day seen in March when flows reached the highest in Vortexa data since the start of 2016.
• Daily average flows are so far about 33% higher than year-ago levels.
• Gasoline and blending component flows have more than halved from June’s total to just 45,000 barrels a day, which would be the lowest since December 2017.
• Exports of naphtha — a feedstock used in petrochemical plants and also gasoline blending — have recovered to about 395,000 barrels a day.
• That’s up 28% from June levels, when average flows plunged to the lowest in Vortexa data since the start of 2016.
• Fuel oil shipments — which account for more than a quarter of Russia’s refined fuel flows — slipped from June to about 671,000 barrels a day.
• Exports to Africa have gained, while cargoes signaling the Middle East have shrunk.

Putin Skips BRICS Summit in South Africa, Avoiding Arrest Threat – Bloomberg, 7/19/2023

• Russian President Vladimir Putin won’t attend next month’s summit of BRICS leaders in Johannesburg in person, resolving a potential dilemma South Africa faced over whether to execute an International Criminal Court warrant for his arrest if he did come.
• “By mutual agreement, President Vladimir Putin of the Russian Federation will not attend the summit but the Russian Federation will be represented by Foreign Minister Mr. Sergei Lavrov,” South Africa’s Presidency said in a statement on Wednesday.
• Putin’s possible participation in the gathering was being closely monitored by Washington and its allies as they seek to isolate Moscow for its invasion of Ukraine.
• South Africa has adopted a non-aligned stance toward the conflict, a position that has drawn harsh criticism from some of the nation’s largest trading partners, including America and the European Union.

Factmonster – TODAY in HISTORY

• The first women’s rights convention, called by Elizabeth Cady Stanton and Lucretia C. Mott, was held in Seneca Falls, New York. – 1848
• The Franco-Prussian war began. – 1870
• Winston Churchill was the first to use the two-finger “V is for Victory” sign. – 1941
• Fifty year-old singer Frank Sinatra married 21-year-old actress Mia Farrow. – 1966
• Geraldine Ferraro became the first woman nominated for the vice-presidency by a major political party. – 1984
• President Clinton announced the “Don’t ask, don’t tell” policy regarding gays in the military. – 1993