US ECONOMY & POLITICS

US Housing Starts Rise on Pickup in Multi-Family Projects – Bloomberg, 10/18/2023

• New US home construction rose in September, led by a pickup in multi-family groundbreakings.
• Residential starts increased 7% last month after falling by the most in over a year in August, according to government data released Wednesday.
• Multi-family dwellings rose more than 17% after also slumping the prior month.

• Applications to build — a proxy for future construction — fell to 1.47 million.
• Permits to build one-family homes ticked up to the highest level since May 2022, while multi-family authorizations declined to the lowest in nearly three years.
• Housing starts rose in all regions except the Northeast, where groundbreakings sunk to the lowest level in more than two years.

Republicans Delay Speaker Vote as Jim Jordan Struggles to Gain Support – Bloomberg, 10/18/2023

• Republican Jim Jordan’s hardball tactics cost him votes Tuesday in his campaign to be US House speaker, dragging out efforts to fill a congressional leadership vacuum into a third week.
• Twenty GOP holdouts withheld support from the ultra-conservative backed by former President Donald Trump on an initial ballot Tuesday.
• Republicans later postponed any more speaker votes until Wednesday at 11 a.m., a sign he wasn’t able to demonstrate momentum.
• Jordan, who spent the day pressing lawmakers for support, said he is gaining backing and will stay in the race.
• “We have narrowed it down,” he said of the opposition.
• But one Republican official familiar with Jordan’s campaign said late Tuesday Jordan appeared to be losing – rather than gaining – support.
• Republican Lori Chavez-DeRemer, who voted for McCarthy, said Jordan’s allies “are resorting to threats against anyone who refuses to back him.”

Fed to Propose Lowering Debit-Card Swipe Fees – Wall Street Journal, 10/18/2023

• The Federal Reserve is preparing a proposal that would lower the fees merchants pay to many banks when consumers shop with debit cards.
• Today, merchants pay large card issuers 21 cents plus 0.05% of the transaction amount, the level set by the Fed in 2011.
• The Fed on Tuesday said it would hold a meeting next week to vote on a proposal about revising the fee cap, without being more specific.
• The proposal would lower the cap, according to people familiar with the matter.
• The Fed would then start a public-comment period that would likely include heavy lobbying from card issuers and merchants and congressional discussion.
• It would require a final vote by the central bank’s governors to be implemented.

Why One Fed Official Is Ready to Stop Raising Rates – Wall Street Journal, 10/18/2023

• The Federal Reserve should extend its pause on interest-rate increases because of growing evidence that higher borrowing costs will slow the economy despite recent signs of hiring and spending strength, a top central bank official said.
• Philadelphia Fed President Patrick Harker in a Tuesday interview said he thinks the central bank can likely wait until early next year to decide whether rapid rate increases over the past 20 months have done enough to keep inflation heading lower.
• “This is a time where we just sit for a little bit. It may be for an extended period; it may not. But let’s see how things evolve over the next few months,” said Harker, who has a vote on interest-rate policy this year.
• While recent economic data have been surprisingly brisk, Harker said anecdotal, on-the-ground reports from business “contact after contact after contact is that things seem to be slowing down.”
• For example, bankers have reported more business loans are coming due and will need to be renewed at much higher rates.
• “They’re concerned that some of those businesses and their business models will not be able to survive those higher rates,” said Harker, a former university president.
• “If inflation were moving up in a sustained way, then I would behave very differently than if I saw just continuing strength in, say, retail sales for another month or so,” Harker said.
• “We’re not there yet, but we believe in lags,” he said.
• “So if we get into the range of, I don’t know, let’s call it 2.5%, [and] we’re continuing to move down, then something like that would at least have me considering whether or not it’s time for rates to start coming down.”

Health Insurance Premiums Now Cost $24,000 a Year, Survey Says – Bloomberg, 10/18/2023

• Health insurance premiums jumped this year amid a post-pandemic spike in costs of care, adding to the burden on employers and workers as inflation erodes broader buying power.
• The average employer-sponsored health insurance premium for US families rose 7% to almost $24,000 this year, according to an annual KFF survey of more than 2,000 US companies, compared with a 1% increase last year.
• Premiums for individual employer coverage rose at the same rate.
• Premiums for the estimated 153 million people in the US who get coverage through their employers go up each year, but the acceleration in 2023 is particularly threatening to employers amid rising prices for other goods and services.
• The cost of premiums is typically shared between employers and workers, with companies paying 71% on average for family coverage in KFF’s survey.
• The 7% increase was the biggest the survey reported since 2011, though Rae cautioned that it’s not statistically higher than some years, given the survey’s margin of error.
• “Clearly inflation is being passed on to premiums,” through elements like higher wages for health-care workers, Rae said.

Real-Estate Commissions Could Be the Next Fee on the Chopping Block – Wall Street Journal, 10/18/2023

• In recent years, technology has made a host of consumer transactions cheaper—from booking a vacation to buying stocks—but commission rates for selling a home haven’t really budged. That could soon change.
• A pair of class-action lawsuits challenging real-estate industry rules—including one that went to trial beginning this week—and continued pressure from U.S. antitrust officials are threatening to disrupt a compensation model that hasn’t meaningfully changed in decades.
• The plaintiffs in the class actions, who are home sellers in different regions of the country, say the longstanding industry rules amount to a conspiracy to keep costs high in violation of U.S. antitrust law.
• Buyers, they say, have little incentive to negotiate with their agents because they don’t pay them directly, while sellers are loath to experiment with a lower commission rate for fear that agents will steer clients away from their home.
• The National Association of Realtors, a defendant in both cases, says the current system helps first-time home buyers and those with modest means by sparing them a significant upfront cost when purchasing a home.
• Buyers might otherwise put themselves at a disadvantage by not having their own agent, the group says.

Mortgage demand falls to the lowest level since 1995 as interest rates near 8% – CNBC, 10/18/2023

• Mortgage rates last week rose for the sixth straight week, causing demand for home loans to drop to the lowest level since 1995.
• Total application volume fell 6.9% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
• Applications for a mortgage to purchase a home dropped 6% week to week and were 21% lower than the same week one year ago.
• Applications to refinance a home loan fell 10% for the week and were 12% lower than a year ago.
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.70% from 7.67% and points decreased to 0.71 from 0.75 (including the origination fee) for loans with a 20% down payment.

EUROPE & WORLD

Shares of critical chip firm ASML drop after new U.S. curbs, outlook warning – CNBC, 10/18/2023

• Chip equipment firm ASML reported a year-on-year rise in profit in the third quarter and beat analyst estimates, but forecast 2024 revenue will be flat.
• Net sales: 6.67 billion euros ($7.1 billion) versus 6.71 billion euros expected
• Net profit: 1.89 billion euros versus 1.8 billion euros expected
• ASML net bookings in the third quarter totaled 2.6 billion euros, a 42% plunge from the previous quarter, as its customers cut back on spending.
• Still, ASML has reaffirmed its guidance for net sales to increase 30% year-on-year for 2023.
• Wennink added that the company is taking a more “conservative view” of 2024 and expects a revenue number similar to 2023.

Adidas shares climb after boost from Yeezy sales, guidance raise – CNBC, 10/18/2023

• Adidas on Tuesday hiked its full-year guidance and posted stronger-than-expected third-quarter earnings, aided by sales of its Yeezy inventory.
• Third-quarter operating profit came in at 409 million euros, down from 564 million for the same quarter in 2022.
• The German sportswear giant, in a surprise preliminary estimates release, projected a full-year operating loss of 100 million euros ($106 million), a significant improvement on its previous forecast of a 450 million euro loss, and expects revenues to decline at a low-single-digit rate for 2023.
• “Including the positive impact from the two Yeezy drops in Q2 and Q3, the potential write-off of the remaining Yeezy inventory of now around € 300 million (previously: € 400 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), adidas now expects to report an operating loss of around € 100 million in 2023 (previously: loss of € 450 million),” the company said.
• “While the company’s performance in the quarter was again positively impacted by the sale of parts of its remaining Yeezy inventory, the underlying adidas business also developed better than expected,” Adidas said in its earnings report.

ABB slips as engineer flags Q4 slowdown and China challenges – Reuters, 10/18/2023

• ABB flagged a slowdown in revenue growth in the fourth quarter and reported a continued decline in orders in China, sending its shares lower even as the Swiss engineering group posted third-quarter earnings broadly in line with forecasts.
• Revenues at the company, which competes with Germany’s Siemens and France’s Schneider Electric rose 8% on a comparable basis to $8 billion, slightly below analysts’ forecast for $8.1 billion.
• ABB reported a 13% increase in its operational earnings before interest, tax and amortization (EBITA) to $1.392 billion during the three months to Sept. 30, broadly in line with a company-gathered consensus of forecasts.
• ABB said its order intake fell 2% during the quarter with double-digit growth in the United States, its biggest market, and growth in India and elsewhere in Asia partially helping to offset a decline in China, ABB’s second-largest market, and Europe.
• He said orders in Europe declined because of a softening of the underlying market, accentuated by a high comparable last year due to timing of larger orders booked.
• For the whole of 2023, the group said it expected a low double-digit rise in comparable revenue, and an operational margin of 16.5% to 17.0%.
• Previously, it had forecast revenue growth of at least 10% and an operational margin above 16%.

China’s Growth Beats Forecasts as Consumer Spending Improves – Bloomberg, 10/18/2023

• China’s economy gained momentum last quarter as people ramped up spending on everything from restaurants and alcohol to cars, offsetting a drag from the property crisis and putting Beijing’s annual growth goal well within reach.
• Gross domestic product for the three months ended September expanded 4.9% year-on-year and 1.3% from the previous quarter, far exceeding economists’ expectations as government stimulus efforts appeared to take root.
• The figures got a boost from bumper retail sales growth last month, which recorded the biggest jump since May.
• The nation is “very confident” that it can reach an annual growth goal of about 5% for 2023, National Bureau of Statistics Deputy Head Sheng Laiyun said at a briefing Wednesday discussing the data.
• GDP will need to grow more than 4.4% in the final three months of the year to hit that target.
• Property investment contracted 9.1% in the first nine months of the year, data showed Wednesday.
• Home sales by floor area fell 6.3% year-to-date, while construction of new housing starts plunged almost 24%.
• Industrial output rose 4.5% in September from a year earlier, above the median estimate of a 4.4% increase.
• Retail sales expanded 5.5% in September; median forecast was 4.9%.
• Fixed-asset investment increased 3.1% in the first nine months of the year compared to the same period in 2022, lower than the median forecast of 3.2%.
• The jobless rate was 5% at the end of September, improving from August.

Israel Lays Out Case It Didn’t Attack Gaza Hospital – Wall Street Journal, 10/18/2023

• Israel on Wednesday offered what it said was proof that it wasn’t responsible for the deadly explosion at a Gaza hospital compound, an incident that has caused widespread outrage in the Middle East and complicated a visit to Israel by President Biden.
• Israelis and Palestinians blame each other for the explosion at Al-Ahli Arab Hospital in Gaza City Tuesday night.
• The Hamas-run Gaza Health Ministry said Wednesday that the blast killed 471 people, a number that couldn’t be independently verified.
• On Wednesday, protesters gathered in Iran, Jordan, Kuwait, Egypt, Tunisia and in the West Bank, where they clashed with security forces from the Palestinian Authority.
• In Lebanon and Iraq, protesters tried to break through security barriers leading to the U.S. and French Embassies, chanting “death to America” and “death to Israel.”
• After landing in Israel on Wednesday, Biden said he was “deeply saddened and outraged” by the explosion.
• “Based on what I’ve seen, it appears as though it was done by the other team,” he said.
• “But there’s a lot of people out there not sure, so we’ve got a lot—we’ve got to overcome a lot of things.”
• Rear Adm. Daniel Hagari, Israel’s chief military spokesman, told a news conference that there had been no Israeli strike in the hospital area and that the explosion was caused by a misfired rocket launched by the Palestinian militant group Islamic Jihad.
• Hagari shared what he said was an intercepted conversation between two unidentified Hamas operatives saying the rocket was fired by Islamic Jihad militants from a cemetery near the hospital.

US vetoes UN Security Council action on Israel, Gaza – Reuters, 10/18/2023

• The United States vetoed a United Nations Security Council resolution on Wednesday that would have called for humanitarian pauses in the conflict between Israel and Palestinian Hamas militants to allow humanitarian aid access to the Gaza Strip.
• The vote on the Brazilian-drafted text was twice delayed in the past couple of days as the United States tries to broker aid access to Gaza.
• Twelve members voted in favor of the draft text on Wednesday, while Russia and Britain abstained.
• Washington traditionally shields its ally Israel from any Security Council action.
• The draft resolution also urged Israel – without naming it – to rescind its order for civilians and U.N. staff in Gaza to move to the south of the Palestinian enclave and condemns “the terrorist attacks by Hamas.”

China’s Leaders Are Directing Jet-Fighter Harassment of U.S. Aircraft, Pentagon Says – Wall Street Journal, 10/18/2023

• Chinese jet fighters have performed reckless maneuvers close to American and other military aircraft almost 300 times in the past two years under a centrally directed campaign of coercion, the Pentagon said.
• Offering new video footage and photos, the U.S. gave the most detailed account yet of dangerous encounters involving Chinese jet fighters and leveled its most direct accusation that the incidents are orchestrated by senior Chinese leaders.
• In maneuvers over the East China Sea and South China Sea this summer, one Chinese jet fighter deployed flares near a U.S. aircraft and another performed an aerobatic roll around a U.S. aircraft.
• Several flew as close as a few dozen feet to U.S. planes, according to the accounts, images and video from the Pentagon.
• American military officials say aggressive behavior by Chinese fighter pilots reflects a pattern of increasing assertiveness by China across the Asia-Pacific region.
• More than 180 of the close encounters with jet fighters have involved American aircraft over the past two years, but China has confronted other nations as well.
• On Monday, a Chinese jet fighter flew close to a Canadian patrol aircraft over the East China Sea and released flares, according to video footage of the incident.
• Canada’s defense minister called the Chinese action dangerous and reckless, while a Chinese Foreign Ministry spokeswoman said Canada “has sent warplanes halfway around the world to stir up trouble and make provocations at China’s doorsteps.”

China’s Xi Doubles Down on Belt and Road as Path to New World Order – Wall Street Journal, 10/18/2023

• With one war raging in Ukraine and another unfolding in the Middle East, Chinese leader Xi Jinping is promoting his signature foreign-policy project as a force for unity, cooperation and prosperity around the globe.
• At a summit convened here to celebrate the Belt and Road Initiative, the picture looked more fractured.
• “We don’t do ideological confrontation, we don’t do geopolitical rivalry and we don’t do bloc politics,” he said, taking aim at unilateral sanctions, economic decoupling and other tools that Beijing accuses the U.S. of exploiting to contain its rivals.
• “What has been achieved in the past 10 years demonstrates that Belt and Road cooperation is on the right side of history.”
• Invited to speak directly after Xi, Russian leader Vladimir Putin praised what he said were the trillion-dollar infrastructure program’s efforts to build a “fairer, multipolar world and system of international relations,” according to a translation by Chinese state broadcaster CGTN.
• “The Chinese side supports the Russian people taking the path of their own choice for national rejuvenation, defending national sovereignty, security, and development interests,” Xi told Putin, according to Chinese state media.

US Targets Hamas’ Financial Network, Key Members With Sanctions – Bloomberg, 10/18/2023

• The US sanctioned several individuals associated with Hamas’ “secret” investment portfolio as well as two senior members of the organization’s leadership in a move designed to limit the group’s ability to raise funds following its attack on Israel.
• Six of the individuals are accused of running an investment portfolio worth hundreds of millions of dollars with companies in Turkey, Algeria, Sudan, the United Arab Emirates and other countries.
• The network uses front companies to disguise its activities and generates revenue used to support senior Hamas officials, allowing them to live in luxury, Treasury said in a statement Wednesday.
• The US also sanctioned two senior members of Hamas’ leadership and a virtual currency exchange based in Gaza.
• The investments and networks allow Hamas — which is categorized as a terrorist organization by the US and European Union — to raise money independently of the support the group receives from Iran, Treasury said.

Putin Sends Jets With Hypersonic Missiles to Patrol Black Sea – Bloomberg, 10/18/2023

• Russian President Vladimir Putin said he’s ordered fighter jets armed with hypersonic missiles to begin round-the-clock patrols over the Black Sea, ratcheting up tensions with the US amid the war in Ukraine and the spiraling crisis in the Middle East between Israel and Hamas.
• Putin told reporters in Beijing after talks Wednesday with Chinese President Xi Jinping that he’d ordered MiG-31 aircraft armed with Kinzhal missiles that “have a range of more than 1,000 kilometers at a speed of Mach 9” to conduct permanent missions over neutral waters in the Black Sea.
• “This is not a threat, but we will exercise visual control — control with weapons — over what is happening in the Mediterranean Sea,” Putin said.
• The US has moved two aviation groups into the Mediterranean in response to the Israel-Hamas war, and its recent delivery of ATACMS long-range missiles to Ukraine showed Washington was getting more deeply involved in the conflict there, he said.
• “All this is heating up the atmosphere” against the backdrop of the conflict in the Middle East, the Kremlin leader said.
• Putin said the US made a “mistake” in supplying Ukraine with ATACMS to help Kyiv’s counteroffensive aimed at reclaiming occupied territory seized by Russia in the invasion.
• The missiles “just prolong the agony” for Ukraine, and Russia will “certainly be able to repel these attacks,” he said.

Factmonster – TODAY in HISTORY

• Ferdinand II of Aragón married Isabella of Castile, uniting Spain and making it a dominant world power. – 1469
• The boundary between Maryland and Pennsylvania, the Mason-Dixon line, was agreed upon. – 1767
• The United States took possession of Alaska from Russia. – 1867
• The first Balkan War broke out. – 1912
• The U.S. Olympic Committee suspended two black athletes for giving a “black power” salute during a victory ceremony at the Mexico City games. – 1968
• Gilad Shalit, a 25-year-old Israeli soldier, is released after being held for more than five years by Hamas. He is exchanged for 1,000 Palestinian prisoners. Shalit had been held in Gaza since Palestinian militants kidnapped him in 2006. – 2011