US ECONOMY & POLITICS

U.S. housing starts fall sharply; permits increase – Reuters, 8/18/2021

• U.S. homebuilding fell more than expected in July, the latest sign that surging construction costs and home prices continued to constrain the housing market early in the third quarter.
• Housing starts dropped 7.0% to a seasonally adjusted annual rate of 1.534 million units last month.
• Data for June was revised up to a rate of 1.650 million units from the previously reported 1.643 million units.
• Starts increased 2.5% on a year-on-year basis in July.
• Single-family starts, which account for the largest share of the housing market, fell 4.5% to a rate of 1.111 million units.
• Starts for the multi-family segment tumbled 13.1% to a rate of 423,000 units.
• Permits for future homebuilding rose 2.6% to a rate of 1.635 million units in July.
• Single-family permits fell 1.7% to a rate of 1.048 million units.
• Permits for multi-family housing projects jumped 11.2% to a rate of 587,000 units.

U.S. mortgage applications drop as mortgage rates edge above 3% -MBA – Reuters, 8/18/2021

• Mortgage applications declined last week, especially for refinancing, as mortgage rates rose back over 3% for the first time in about a month.
• The Mortgage Bankers Association (MBA) said on Wednesday its average contract interest rate for traditional 30-year mortgages inched up to 3.06% from 2.99% in the week ending Aug. 13.
• The seasonally adjusted market index tracking mortgage applications fell 3.9% from a week earlier, reflecting a 5.3% decrease in applications to refinance existing loans.
• Purchase applications declined 0.8%, the MBA said.

Fed minutes likely to detail bond-buying taper talks, inflation worries – Reuters, 8/18/2021

• Insight into the Federal Reserve’s debate over when to end its pandemic-era emergency programs and the level of concern among officials over a spike in inflation should emerge on Wednesday with the release of a readout of the U.S. central bank’s policy meeting last month.
• The minutes of the July 27-28 meeting, which are due to be released at 2 p.m. EDT, will cover a session at which the Fed said it still had faith in the U.S. economic recovery even as the Delta variant of the coronavirus was fueling a troubling rise in cases.
• Officials also continued laying plans for the eventual end of the central bank’s $120 billion in monthly purchases of Treasury bonds and mortgage-backed securities (MBS).
• Analysts expect the Fed to announce its plan for a “taper” of its asset purchases as early as the Sept. 21-22 meeting of the policy-setting Federal Open Market Committee (FOMC), with less certainty about how fast the actually reduction in the bond-buying program will proceed.

Nancy Pelosi Braces for Showdown With Moderates Next Week Over Infrastructure Vote – Wall Street Journal, 8/18/2021

• Top House Democrats said the chamber would move forward with voting on the budget blueprint for a $3.5 trillion healthcare, education and climate package next week, rebuffing demands from a group of centrist Democrats to first vote on a $1 trillion infrastructure bill and urging their caucus to stay unified around President Biden’s agenda.
• Mrs. Pelosi in a letter on Tuesday night exhorted House Democrats to pass the budget measure next week, writing that “any delay in passing the budget resolution could threaten our ability to pass this essential legislation.”
• Once the House adopts the budget resolution, lawmakers will begin crafting the details of the $3.5 trillion legislation.
• In the narrowly divided House, Democrats can afford no more than three defections. None of the nine centrist Democrats who have demanded the infrastructure vote first spoke about the issue during the call, according to a lawmaker who participated.
• Dozens of members of the Congressional Progressive Caucus have indicated that they will oppose the bipartisan infrastructure package if it comes to the floor before the $3.5 trillion bill, and many progressives have been infuriated with the recent threat from centrists.

EUROPE & WORLD

U.K. Inflation Posts a Temporary Slowdown on Its Way to 4% – Bloomberg, 8/18/2021

• U.K. inflation eased in July in what is widely seen as a blip on its way to double the Bank of England’s target this year.
• Consumer prices fell back to the 2% goal for the first time since April, easing from a 2.5% increase in June, the Office for National Statistics said Wednesday. It’s the first time in four months that inflation rose less than economists had expected.
• About 0.2 points of the easing in inflation were due to base effects from last year.
• Input prices rose 9.9% from a year ago in July. That’s more than the 9.7% pace of the previous month, which was revised higher.
• Output costs rose 4.9%, the highest since December 2011 and more than economists had forecast.
• July’s retail price index, which is usually used to set rail fares starting in the following January, stood at 3.8%.
• That’s more than double the rate of a year earlier.
• The Bank of England predicts price growth of 3% in August and more than 4% in the final two months of the year.

Tencent beats estimates with gaming and advertising uplift – Reuters, 8/18/2021

• Chinese gaming and social media giant Tencent beat forecasts with a 29% jump in second-quarter profit, helped by an increase in revenue from popular games and growth in online advertising sales.
• Revenue jumped 20% to 138.3 billion yuan with sales from mobile games up 13%.
• Robust demand for games such as “Honor of Kings” and “PUBG mobile” offset a decrease in revenues from its battle royale title “Peacekeeper Elite”.
• Net profit for the three months through June came in at 42.6 billion yuan ($6.6 billion), above a Refinitiv consensus estimate of 34.4 billion yuan.
• Profit was also boosted by an increase in the fair value assessment of some of the companies Tencent has invested in.

Carlsberg raises guidance as beer volumes recover – Reuters, 8/18/2021

• Danish brewer Carlsberg raised its full-year earnings guidance on Wednesday after reporting second-quarter sales above expectations as beer volumes exceeded pre-pandemic levels.
• Sales between April and June rose 17% to 18.69 billion Danish crowns ($2.94 billion), compared with a 17.97 billion crown forecast in a company-compiled poll of analysts.
• It registered 2% organic growth in overall beer volumes in the first six months of the year compared with the same period in 2019. The world’s third-biggest brewer said beer volumes in key markets China and Russia rose to “well above” 2019 levels.
• Carlsberg said it now expects operating profit to grow by between 8% and 11% this year, up from its previous guidance of 5-10% growth.
• The company also launched a 1 billion crown share buyback programme on Wednesday.

Rift Forms on Didi’s Board Following Beijing’s Regulatory Assault – Wall Street Journal, 8/18/2021

• A rift has developed among the top executives of three of China’s internet giants, in the wake of Didi Global’s ill-fated decision to go public in New York.
• After the listing, Tencent President Martin Lau and Alibaba Chairman and Chief Executive Daniel Zhang were surprised and furious when they learned that Didi was in trouble with the Cyberspace Administration of China, according to people familiar with the matter.
• Two of the people said Didi executives didn’t fully inform the board about the cyberspace regulator’s concerns before the IPO, making it hard for board members to fully ascertain the risks of going ahead.
• The fallout from Didi’s IPO—and China’s intensifying regulatory crackdown on internet-technology and other businesses—have rippled across companies and Chinese stocks listed on several exchanges.

Factmonster – TODAY in HISTORY

• Mongol conqueror Genghis Khan died in China. (1227)
• Congress established the Bureau of Immigration, forerunner of the Immigration and Naturalization Service. (1894)
• When Tennessee ratified the 19th Amendment to the Constitution, the three-quarters of the states necessary was achieved and American women got the right to vote. (1920)
• Spanish poet and playwright Federico Garcia Lorca was shot and killed by Franco’s soldiers during the Spanish Civil War. (1936)
• Vladimir Nabokov’s novel Lolita was published. (1958)