Bloomberg - Evening Briefing - American under watch

Bloomberg Evening Briefing

Everyone seems optimistic in Washington as the government hurtles toward potential economic disaster. President Joe Biden on Thursday said that he and Republican House Speaker Kevin McCarthy “had several productive conversations” and “our staffs continue to meet.” The GOP says both sides are narrowing their differences over raising the debt limit, but still haven’t reached an agreement to avert default. Should a deal be reached soon, Tuesday is emerging as the likely day for a House vote. The Senate would then need to act quickly to send it to Biden’s desk before June 1, the date by which Treasury Secretary Janet Yellen has said her department could start running out of cash. But as the brinkmanship intensifies, not everyone is singing a happy tune. Two ratings agencies, including Fitch, just put America’s AAA credit rating under watch

Here are today’s top stories

Failed regional lender First Republic Bank made its name catering to wealthy clients across California and New York, reeling in many with unusually sweet mortgages. The system made its employees rich. The San Francisco-based bank—which regulators seized and sold to JPMorgan early this month—was said to be paying dozens of employees more than $10 million apiece before its collapse. One of them was even making more than Jamie Dimon. But those days are over it seems: First Republic’s new boss just told 1,000 employees they won’t be returning.

The Supreme Court put new limits on the Clean Water Act, slashing the power of federal regulators to protect wetlands in a long-sought victory for a couple seeking to build a house near an Idaho lake. With one member of the court’s six Republican-appointees defecting as to the ruling’s reasoning, the conservative majority has potentially given companies a freer hand to discharge pollutants. A victory for property-rights advocates and defeat for environmentalists and the Biden administration, the opinion was written by Associate Justice Samuel Alito.

Associate Justice Samuel Alito Jr. Photographer: Eric Lee/Bloomberg

The leader of the far-right “Oath Keepers” group was ordered to serve 18 years in prison for his role in the 2021 attack on the US Capitol and conspiring to use force to keep Donald Trump in power after he lost the 2020 presidential election. The prison term for Stewart Rhodes was the longest handed down so far in the government’s prosecution of more than 1,000 people over the Jan. 6 insurrection.

US Special Counsel Jack Smith is wrapping up his investigation into Trump’s refusal to return highly classified documents after his defeat and is said to be poised to announce possible criminal charges in the days or weeks after Memorial Day. Separate state and federal criminal inquiries into efforts by Trump and his allies to reverse the 2020 election continue, probing what the Jan. 6 committee concluded was an attempted coup.

US apartment landlords who benefited from rapid rent growth during the pandemic are suddenly in the red. Higher interest rates and surging expenses are erasing their profits, even as rents are still climbing in many places. Debt payments already exceed income from multifamily buildings financed with more than $47 billion of securitized loans.

China’s muted economic rebound and Beijing’s reluctance to deploy large-scale stimulus are reverberating around the globe, crushing commodity prices and weakening equity markets. Investors are pulling back expectations for the world’s second-biggest economy as worries mount that its recovery from pandemic restrictions has lost momentum.

The Singaporean dollar surged to the strongest level on record against the Malaysian ringgit, with the latter suffering more from weakening confidence in China’s economic recovery. “Historical ringgit volatility is picking up again, and I think that the main driver is the market’s incrementally more bearish views on China,” said Galvin Chia, a currency strategist at NatWest Markets. Recent worries about the potential disruption to China’s consumer sector amid another Covid wave there presents new headwinds, he added.

What you’ll need to know tomorrow

When Catastrophe Came to East Palestine

The Feb. 3 Norfolk Southern train derailment in the small, tight-knit community of East Palestine, Ohio, was just the beginning. Chemicals leaked into the soil and creeks amid a massive fire, and the intentional detonation of toxin-laden railcars spewed smoke into the air and across the landscape. The calamity prompted an evacuation order in this village near the Pennsylvania state line, as residents on both sides of the border said they suffered illness in the days and weeks afterwards. Months later, questions still remain. On this episode of Bloomberg Investigates, we speak to residents, experts, government officials and the train company’s chief executive to find out exactly what happened and how this small town can recover. Meanwhile, battle lines over the environmental fallout—and who is responsible—are being drawn.

A dead frog floats in Leslie Run creek in East Palestine, Ohio, on Feb. 20. Months after a Norfolk Southern Corp. train crashed, caught fire, and then saw several toxin-laden cars intentional detonated, releasing hazardous chemicals into the air and water, the town’s residents have more questions than answers. Photographer: Matthew Hatcher/Bloomberg

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