US ECONOMY & POLITICS

US Existing-Home Sales Slide on Higher Rates, Lean Inventory – Bloomberg, 8/22/2023

• Sales of previously owned US homes fell in July to the lowest level since the start of the year, constrained by a lack of inventory and higher borrowing costs.
• Contract closings decreased 2.2% from a month earlier to a 4.07 million annualized pace, National Association of Realtors data showed Tuesday.
• Sales were down more than 18% from a year earlier on an unadjusted basis.
• More recently, the average 30-year fixed rate has pushed well above 7% to the highest level in more than two decades, suggesting demand will continue to struggle.
• While the number of homes for sale rose from a month earlier to 1.11 million, it marked the smallest total inventory for any July in data back to 1999.
• At the current sales pace, it would take 3.3 months to sell all the properties on the market.
• The median selling price rose 1.9% from a year earlier to $406,700.
• The NAR’s report showed 74% of homes sold were on the market for less than a month.
• Properties remained on the market for 20 days on average in July, up from 18 days a month earlier.
• Resales fell in three of four regions.
• The pace of purchases in both the South and Midwest was the slowest since January, while sales in the Northeast slumped to the lowest in 13 years.
• Single-family home sales decreased to an annualized 3.65 million pace, while condominium and co-op sales also fell.
• First-time buyers made up a historically low 30% of purchases.
• Cash sales represented 26% of total sales.

Fed Credibility at Risk If Inflation Target Changes, Barkin Says – Bloomberg, 8/22/2023

• The Federal Reserve could lose credibility if it were to consider changing its 2% inflation target before achieving that goal, Richmond Fed President Thomas Barkin said.
• “It’s not like 2% is some magical unicorn of a number that we could never hit,” Barkin said Tuesday at an event hosted by the Danville Pittsylvania County Chamber of Commerce in Danville, Virginia.
• He said criteria that might allow for a reduction in rates include seeing when inflation cools month to month and looking at demand that has settled.
• Barkin on Tuesday repeated a speech he gave on Aug. 3 and Aug. 8, in which he said the greater-than-expected easing in inflation in June may be an indication that the US economy can have a “soft landing,” returning to price stability without a damaging recession.
• Even if a recession emerges, less dislocation in the labor force due to strong demand for front-line workers, latent demand by consumers for supply-constrained items like cars and conservative moves by businesses to manage inventory should lessen its severity, Barkin said.

EUROPE & WORLD

SoftBank’s Arm Files for IPO That Is Set to Be 2023’s Biggest – Bloomberg, 8/22/2023

• SoftBank Group’s Arm Holdings took a step toward what’s set to become the biggest initial public offering of the year, a bet that the once-obscure designer of phone chips can flourish in the era of artificial intelligence computing.
• In a long-awaited regulatory filing Monday, Arm said the offering is being led by Barclays, Goldman Sachs Group, JPMorgan Chase and Mizuho Financial Group.
• The document listed 24 other underwriters below that top tier — with Morgan Stanley notably absent.
• A successful debut by Arm would provide a windfall for SoftBank founder Masayoshi Son, whose Vision Fund lost a record $30 billion last year.
• Arm plans to start its roadshow the first week of September and price the IPO the following week, Bloomberg has reported.
• The company didn’t disclose proposed terms for the share sale in the document, but it’s expected to seek a valuation of $60 billion to $70 billion.
• Arm, based in Cambridge, UK, also has held talks with some of its biggest customers about backing the IPO.

China’s Baidu reports 15% revenue growth, beating expectations – CNBC, 8/22/2023

• Chinese tech company Baidu on Tuesday reported better-than-expected revenue, up by 15% year-on-year in the second quarter and bolstered by growth in advertising.
• Revenue: 34.1 billion yuan ($4.7 billion) versus 33.28 billion yuan expected.
• Within Baidu’s core businesses, online marketing revenue rose by 15% to 19.6 billion yuan in the second quarter, and non-online marketing revenue added 12% to 6.8 billion yuan.
• Baidu also operates self-driving taxis under the Apollo Go brand in China.
• In the second quarter, Baidu said it ran roughly 714,000 robotaxi rides, up from 660,000 in the first quarter.
• Earnings per American Depositary Share on a non-GAAP basis were 22.55 yuan, versus 15.79 yuan in the year-ago period.

As Ukraine’s Counteroffensive Grinds On, Russia Seeks to Advance in the North – Wall Street Journal, 8/22/2023

• Russia is on the attack in northeastern Ukraine as it seeks to take back territory that Kyiv recaptured last fall and to divert Ukrainian forces from their counteroffensive in the south and east.
• The main fighting is taking place around the village of Synkivka, just 16 miles from the Russian border, where Russia is trying to traverse Ukrainian minefields and advance on the city of Kupyansk to the south.
• Ukraine has been inching forward in the south and east as it presses on with a counteroffensive launched against deeply fortified Russian positions.
• But Russia’s efforts around Kupyansk show that Moscow still harbors ambitions to take more territory, even as its own invasion stalls.
• Footage posted online on Monday showed what Russian military bloggers said was the destruction of a bridge over the Oskil River that bisects Kupyansk, which would complicate Ukraine’s resupply effort and make a Russian ground attack on the city center harder in case Russian forces reach its outskirts.

Commerce Secretary Gina Raimondo to Visit China – Wall Street Journal, 8/22/2023

• Commerce Secretary Gina Raimondo will head to China for meetings with senior Chinese officials Aug. 27-30, the Commerce Department said, becoming the latest senior Biden administration official to travel there in an effort to stabilize rocky U.S.-China relations.
• The long-expected visit is aimed at deepening communications with Beijing, the department said.
• Raimondo also plans meetings with U.S. business leaders in China.
• Raimondo plays a key role in the bilateral relations, with her department overseeing export controls on advanced technology that China has protested.
• News of her visit comes as China’s economy slows down, weighed down by sluggish exports and a property-sector slump.

Kim Jong Un’s Provocations Prod South Korea to Nationwide Drills – Bloomberg, 8/22/2023

• South Korea will call for people to clear off the streets when it conducts its first nationwide civil defense drills in six years, which come as North Korea made a fresh threat of nuclear war on the peninsula.
• The scheduled 20-minute exercise will begin with an air-raid warning siren at 2:00 p.m., according to the Ministry of the Interior and Safety.
• After the siren starts, drivers in certain areas of Seoul will be required to park or pull over, while pedestrians must move to the nearest safe-haven or underground shelter for about 15 minutes.
• Wednesday’s exercise coincides with joint military drills between the US and South Korea, known as Ulchi Freedom Shield that started on Monday.
• North Korea has condemned the drills, calling them a “war rehearsal” and said it could “punish the hostile forces threatening the sovereignty of our state,” the state’s official Korean Central News Agency reported Tuesday.
• Pyongyang says an unprecedented large-scale “thermonuclear war” is approaching the Korean Peninsula.

Factmonster – TODAY in HISTORY

• The English Civil War began between supporters of King Charles I (Royalists or Cavaliers) and those of Oliver Cromwell (Roundheads). – 1642
• King George III proclaimed the American colonies to be in open rebellion. – 1775
• The United States annexed New Mexico. – 1846
• The U.S. yacht America outraced the British Aurora off the English coast to win a trophy that became known as the America’s Cup. – 1851
• Theodore Roosevelt became the first United States president to ride in an automobile. – 1902
• Korea was annexed by Japan after five years as a protectorate. – 1910
• Alabama’s chief justice, Roy Moore, was suspended for refusing to move a Ten Commandments monument from the state courthouse. – 2003
• A version of Edvard Munch’s painting The Scream was stolen in Norway. Another version had been stolen in 1994. – 2004