Bloomberg - Evening Briefing - Housing market surge

The number of US homes beginning construction unexpectedly surged in May by the most since 2016 and applications to build increased, suggesting residential construction is on track to help fuel economic growth—something Federal Reserve Chair Jerome Powell alluded to during last week’s rate decision meeting. Homebuilders are responding to limited inventory in the resale market, and—despite higher mortgage rates—have grown more upbeat as demand firms up, materials costs retreat and supply-chain pressures fade. Stock markets nevertheless edged lower on Tuesday. Here’s your markets wrap. —Margaret Sutherlin

For all their savvy dealmaking, even the titans of private equity were caught unprepared for the swift rise in interest rates. Many buyout firms considered hedging against rising interest rates to be a waste of time and money. Their debt-laden companies are now paying the price.  

Secretary of State Antony Blinken’s trip to China may have ended with the best possible result for the US: more talks. After a muted reception, the White House said the visit had achieved its goal because the two sides restored some senior-level communications, with promises to send official delegations to Washington and Beijing. For his part, Chinese leader Xi Jinping called the progress “very good,” warm words from a taciturn leader who held off confirming a meeting with Blinken until the last minute.

A China Central Television news broadcast showing footage of US Secretary of State Antony Blinken, left, meeting with Chinese leader Xi Jinping, on a giant screen outside a shopping mall in Beijing Monday.  Photographer: Greg Baker/AFP

There’s an unusual amount of activity in the early weeks of the Atlantic hurricane season. Tropical Storm Bret is nearing the Caribbean while a second system looks to be gathering strength behind it. Meanwhile, across the middle of the US, cities are bracing for a brutal heat wave set to test the fragile power grid. 

Hunter Biden will plead guilty to two misdemeanor tax charges and enter an agreement with federal prosecutors to potentially avoid a gun charge. The deal appears to end a politically charged five-year probe of President Joe Biden’s son. But Congressional Republicans are unlikely to be finished with their own wide-reaching investigation of the younger Biden’s business dealings, especially as the presidential campaign season begins in earnest.

Chinese tech giant Alibaba is bringing back two of Jack Ma’s longest-serving lieutenants to try and turn the company around. Co-founder Joseph Tsai—a prominent blockchain proponent and owner of the Brooklyn Nets basketball team—will return as chairman of the board and Eddie Wu will become chief executive, replacing Daniel Zhang. The company has struggled to regain its footing after Beijing’s regulatory crackdown on the tech sector in 2021.

Rescue efforts remain underway after a submersible viewing the Titanic shipwreck went missing Sunday. Rescue teams from the US, Canada and France are searching for the pod, which had five people aboard and is operated by OceanGate Expeditions. Rescuers estimate the submersible—called the Titan—should have 40 hours of oxygen left. 

Photographer: Mathew, Shaji

Spotify is planning a new super-premium tier for subscribers—with high-fidelity audio—in an effort to drive more revenue and appeal to subscribers. 

• Italian jewel Pirelli draws a blueprint for pivoting away from China.
• Canada’s key to boosting its economy: embrace immigrants.
• The US government is rethinking how it reviews bank mergers.
• A common ADHD drug is running low, exacerbating a national shortage.
• Eli Lilly is spending $2.4 billion to acquire immune drug developer Dice.
• Jets are the stars at the Paris show, but engine talk dominates.
• Bloomberg Podcasts: Cracks form in FTX despite glitzy endorsements.

Temperatures in Ahmedabad can be downright dangerous. The Indian city is taking on a mix of policies to try and fight extreme heat, and it’s becoming a case study for other cities in developing countries. They’re beginning to accept the new reality of a planet that continues to warm.

A vendor takes a break at a wholesale flower market in Ahmedabad, India. Cities all across the developing world are trying to adapt to dangerously high temperatures. Photographer: Prashanth Vishwanathan/Bloomberg

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