US ECONOMY & POLITICS

US Business Activity Growth Slows While Demand Outlook Dims – Bloomberg, 7/24/2023

• US business activity expanded in early July at the slowest pace in five months as services growth moderated.
• The S&P Global flash US composite purchasing managers index fell 1.2 points to 52 in July, the group reported Monday.
• A gauge of future activity also declined, slipping to its weakest level this year as service-provider optimism waned.
• Service providers reported higher operating expenses, with wages being the primary driver as companies continue to have difficulty retaining workers.
• The group’s overall services gauge dropped 2 points to a five-month low of 52.4.
• The manufacturing index continued to show contraction, though at a slower rate.
• Factories pared inventories of materials and finished goods as domestic and global demand remained soft, the report showed.
• Manufacturers expect a brighter future, though, bolstered by hopes of a greater ability to hire and cooling input costs.

EUROPE & WORLD

Ryanair cautious about winter travel after quarterly profit soars – CNBC, 7/24/2023

• Ryanair on Monday struck a cautious tone about travel demand for the rest of the year and cut its passenger growth forecast due to Boeing delivery delays after its quarterly profit flew past pre-pandemic levels.
• The Irish airline, Europe’s largest by passenger numbers, posted a 663 million euro ($737.26 million) after-tax profit for the three months ending in June after traffic rose by 11% year-on-year and average fares jumped by 42%.
• It now expects traffic in the year to March 2024 to grow by 9% to around 183.5 million compared to the 185 million originally expected, citing Boeing delivery delays.
• Ryanair shares, up 26% so far this year on the back of a post-pandemic travel boom, were 4.3% lower at 15.74 euros in early trade.
• Ryanair, which flew a record number of monthly passengers both in May and June, said demand looked robust for the rest of the summer with fares expected to keep growing but at a slower low double-digit percentage rate from July to September.
• Fares for passengers booking close to their date of departure softened in late June and early July and CEO Michael O’Leary said the low-cost carrier would likely have to stimulate demand through lower prices this winter when it will have 25% more seats to fill than in 2019.

Philips shares retreat after fourth straight drop in order intake – Reuters, 7/24/2023

• Health technology group Philips posted a fourth straight drop in order intake on Monday and warned that it expects global market conditions to remain highly uncertain, sending its shares down 5% from a recent 12-month high.
• The Amsterdam-based group, a former industrial conglomerate that now focuses on medical technology, said order intake had decreased 8% in the April-June period, the fourth quarterly fall in a row.
• Q2 EBITA 453-million-euro vs forecast 394 million.
• The maker of electric toothbrushes and CT scanners said it had a “particular concern” on the development of relationships between the United States, China and the European Union, as well as China’s drive to become self-sufficient in critical technologies, including in health-related areas.
• The group reported a 15% sales increase in its so-called “growth geographies region” for the quarter and said China, the Middle East, Turkey and Latin America had strongly contributed to this rise.
• The group slightly updated its full-year targets and now expects comparable sales growth of “mid-single digits” versus previous guidance of low-single-digit growth.
• The adjusted EBITA margin is now seen at the upper end of the previously forecast “high single-digit” range.

U.S. Weighs Potential Deal With China on Fentanyl – Wall Street Journal, 7/24/2023

• The Biden administration is discussing lifting sanctions on a Chinese police forensics institute suspected of participating in human-rights abuses, people familiar with the matter said, in a bid to secure Beijing’s renewed cooperation in fighting the fentanyl crisis.
• Secretary of State Antony Blinken during meetings in Beijing last month proposed setting up a new working group with China to try to resuscitate stalled talks on combating fentanyl.
• Chinese officials, however, stuck to their long-held position that the U.S. must first remove the sanctions on the police institute as a precondition for restarting joint counternarcotics work, the people familiar said.
• U.S. officials see China as having a critical role in that effort.
• Chinese companies produce chemicals, known as precursors, that are shipped to cartels in Mexico, which use them to produce fentanyl and smuggle it into the U.S.

Germany Readies €20 Billion in Aid to Bolster Chip Output – Bloomberg, 7/24/2023

• Chancellor Olaf Scholz’s government plans to dole out €20 billion ($22 billion) to bolster semiconductor manufacturing in Germany in a push to shore up the country’s tech sector and secure supplies of critical components amid growing geopolitical tension.
• The money is to be distributed to German and international companies by 2027 and will be drawn from the Climate and Transformation Fund, according to people involved in the negotiations.
• The off-budget pot, known as the KTF, was originally set up to invest in the decarbonization of the economy, but its scope has been expanded as Germany seeks to rein in regular government spending.
• The allocation of as much as €180 billion is currently being negotiated within the government and will be published in the coming weeks, said the people, who asked not to be identified because the discussions are private.

Russia Attacks Ukrainian Grain Terminal, Blames Kyiv for Fresh Drone Strikes – Wall Street Journal, 7/24/2023

• Airstrikes between Russia and Ukraine escalated sharply Monday, with Russia attacking a Ukrainian grain terminal on the border with Romania, while Ukraine unleashed a wave of drones on Moscow and Crimea, Russian officials said, hitting an arms depot on the Black Sea peninsula.
• Russia’s strike on the Ukrainian port of Reni, on the Danube River, follows a series of similar attacks on ports and storage facilities along the Black Sea coast.
• The attacks were intended in part to curb Ukraine’s grain exports after Moscow pulled out of a pact allowing safe passage of Ukrainian grain through the Black Sea, primarily to markets in Africa and the Middle East.
• Russian drones and missiles bombarded Odesa’s main port in the aftermath of Russia’s withdrawal from the deal, with Monday’s attack on Reni pushing grain prices higher and bringing the conflict closer to Romania, a North Atlantic Treaty Organization member, which shares a river border with Ukraine.
• The strikes have shown how the Black Sea has emerged as an increasingly important new front in the war in recent days, both militarily and economically.

U.S. and North Korea Start Talking About American Soldier Who Crossed the Border – Wall Street Journal, 7/24/2023

• The United Nations Command has begun talking with North Korea about an American soldier who crossed the border from South Korea without authorization last week, the deputy commander said Monday.
• British Army Lieutenant General Andrew Harrison told a briefing on Monday that conversations have begun through a communication line established under the armistice agreement that ended combat in the 1950-53 Korean War.
• Private 2nd Class Travis King, 23 years old, has been detained in North Korea since he crossed the border while on a tour last Tuesday of the Joint Security Area, part of the Demilitarized Zone separating the two Koreas.
• “The primary concern for us is Private King’s welfare,” Harrison said.
• He said he remains optimistic, but declined to provide details on the talks, citing their sensitivity.

Israel Approves Part of Netanyahu’s Controversial Judicial Overhaul – Wall Street Journal, 7/24/2023

• Israel’s Parliament on Monday passed a divisive judicial overhaul bill that triggered mass protests and exposed rifts over the country’s identity.
• Prime Minister Benjamin Netanyahu’s entire coalition of 64 lawmakers voted in favor of the legislation, after efforts to reach a compromise collapsed.
• Opposition lawmakers in the 120-seat parliament, known as the Knesset, walked out of the room.
• “With this government, it’s impossible to get an agreement that safeguards Israeli democracy,” opposition leader Yair Lapid said earlier of the failed efforts to reach a compromise.
• Late Sunday, President Biden urged Netanyahu to focus on “pulling people together and finding consensus.”

North Korea Launches Cruise Missiles Into Yellow Sea – Wall Street Journal, 7/24/2023

• North Korea fired several cruise missiles shortly after a U.S. nuclear submarine deployed as a show of strength against Pyongyang’s threats left the Korean Peninsula.
• North Korea fired several cruise missiles into the Yellow Sea around 4 a.m. local time on Saturday morning, according to South Korea’s Joint Chiefs of Staff.
• Seoul’s military didn’t reveal where the missiles were fired from or how far they traveled.
• “Our military has bolstered surveillance and vigilance while closely cooperating with the U.S. and maintaining a firm readiness posture,” JCS said.

China Holds Off on Major Stimulus as It Signals Property Easing – Bloomberg, 7/24/2023

• China’s top leaders signaled more support for the troubled real estate sector alongside pledges to boost consumption and resolve local government debt, though fell short of announcing large-scale stimulus to support the slowing economic recovery.
• The ruling Communist Party’s 24-member Politburo — its top decision-making body led by President Xi Jinping — promised “counter-cyclical” policy, according to a readout published Monday by the official Xinhua News Agency.
• That suggested more economic support as well as an “adjustment” of restrictions in the property sector.
• The meeting — during which leaders set the rest of the year’s economic policy agenda — did not include language indicating major fiscal or monetary loosening.
• The Politburo vowed to effectively deal with the risks of local government debt and “come up with and implement a series of new policies to reduce debt.”

BOJ Mulls Sharp Increase in 2023 Inflation Outlook – Bloomberg, 7/24/2023

• Bank of Japan officials meeting this week will probably consider a sharp increase to their inflation forecast for this fiscal year, while also discussing concerns about whether the upward trajectory is sustainable, according to people familiar with the matter.
• The central bank’s policy board is likely to mull raising the consumer inflation projection to around 2.5% for the year ending in March, up from 1.8% in the April estimate, according to the people.
• They expect projections for the following fiscal years to be largely unchanged to reflect a lack of confidence the bank can achieve its 2% inflation goal in a stable manner, the people said.
• The BOJ will release its quarterly economic report together with a policy statement at the Friday conclusion of the two-day policy board meeting.

Tesla to discuss factory plan for new $24,000 car with India commerce minister, says report – CNBC, 7/24/2023

• Tesla representatives are set to meet India’s commerce minister this month to discuss plans to build a factory to produce what the company has described as an all-new $24,000 car, a person with direct knowledge of the matter told Reuters.
• Tesla has expressed an interest in building a factory in India that would produce low-cost electric vehicles for the local market and for export, the person said, adding that the company had indicated that it would be for the new vehicle.
• The meeting with the commerce minister would be the highest level discussions between Tesla and the Indian government since June when Elon Musk met India’s Prime Minister Narendra Modi and said he intended to make a significant investment in the country.
• The 2 million rupee ($24,000) EV Tesla representatives were said to have described in discussions about a potential Indian plant would be 25% cheaper than its current lowest priced offering, the Model 3 sedan which sells for the equivalent of just over $32,200 in China.

Factmonster – TODAY in HISTORY

• Brigham Young and the first members of the Church of Jesus Christ of Latter Day Saints (Mormons) arrived at the Great Salt Lake. – 1847
• Tennessee became the first Confederate state to be readmitted to the Union. – 1866
• Charges against five black men accused of raping two white women in the Scottsboro case were dropped. – 1937
• The U.S. Supreme Court unanimously ruled that President Richard Nixon had to turn over White House tapes to the Watergate special prosecutor. – 1974
• Nine coal miners were trapped in a mine in Pennsylvania. All were rescued three days later. – 2002