Bloomberg - Evening Briefing - Still in the woods

Bloomberg Evening Briefing

Xi Jinping’s government announced its most forceful attempt yet to rescue the beleaguered Chinese property market, relaxing mortgage rules and urging local governments to buy unsold homes as authorities become increasingly concerned about the sector’s drag on economic growth. The support package also includes lower down-payment requirements for homebuyers and 300 billion ($42 billion) of central bank funding to help government-backed firms buy excess inventory from developers. Those properties would then be converted into affordable housing. Still, the funding is a fraction of what some analysts say is needed to address China’s supply-demand mismatch in housing, and many potential buyers are waiting for prices to fall further before stepping in. “This is a little bit similar to the bailing out of financial institutions going through the Great Financial Crisis,” said Professor Zhu Ning of the Shanghai Advanced Institute of Finance. “In the end, unless the central government is stepping in and extends its own credit to the real estate market, it’s a little difficult or too premature for us to believe we’re out of the woods.” 

Here are today’s top stories

The Biden administration is quadrupling US tariffs on electric vehicles manufactured in China. But Chinese-made cars are still finding their way into a receptive North American market to the north. Canada is seeing a surge of imports of Chinese-made EVs, particularly Teslas made in Shanghai. The number of cars arriving from China at the port of Vancouver rose more than fivefold last year after Elon Musk started shipping Model Y vehicles made there. The situation is drawing howls of protest from some auto-industry players who want Canadian Prime Minister Justin Trudeau to follow the White House’s lead and do more to protect domestic industry. It seems Trudeau may be listening.

For the first time in its 128-year history, the Dow Jones Industrial Average of American blue chips closed above the 40,000 mark, with the abrupt breakout happening at the very last minute of trading. Following inflation reports that reignited hopes of Federal Reserve rate cuts this year, stocks notched their longest weekly winning streak since February. Strong earnings have also fueled gains, with the focus now shifting to next week’s results from artificial intelligence darling Nvidia. Larry Tentarelli at Blue Chip Daily Trend Report says “if the Goldilocks scenario continues to play out,” it will set the stage for a move to 42,500 by the end of this year.

Boeing’s growing list of crises now extends into the realm of space travel. The embattled planemaker’s first crewed spaceflight using its Starliner craft has been delayed for a third time this month due to a helium leak. Boeing and NASA now plan to launch from Florida no earlier than May 25, instead of May 21. The announcement is the latest in a long series of delays and setbacks for the program. Flight engineers first spotted the leak during preparations for a launch attempt originally scheduled for May 6.

Boeing’s Starliner spacecraft atop a United Launch Alliance Atlas V rocket at Cape Canaveral, Florida Photographer: Joe Raedle/Getty Images North America

Citigroup was accused in a lawsuit of racial discrimination for its policy of waiving ATM fees for customers of minority-owned banks. The plaintiffs, who don’t bank with Citigroup, claim they were charged out-of-network fees for transactions at the bank’s ATMs in Florida, while customers from minority-owned financial institutions weren’t. The law firm behind the suit is known for representing right-wing plaintiffs in hot-button cases, including one that led to the Supreme Court upending affirmative action.

The coronavirus pandemic killed more than 1.1 million Americans. It has also shaped perceptions of both the Trump and Biden administrations. Donald Trump took office in 2017 amid a well-established US economic expansion. Biden arrived in 2021, greeted by the lingering fallout of the pandemic recession. Since then, the US has seen its employment picture brighten to 1960s levels, with an economy that’s lapped international peers such as the European Union and Japan. Biden has credited his landmark rescue packages and infrastructure spending for America’s good fortune, saying that without them there would have been a painful downturn. Still, the inflation triggered by the pandemic, Russia’s war on Ukraine, and some say in part by Biden’s Covid payouts, has yet to fully subside. And that’s bad news for the Democrat, because most Americans say Trump is better when it comes to the economy.

With America’s supply of beef cattle the lowest since 1961, dairy farmers are finding another way to make money: breed more calves for slaughter. Dairy farmers traditionally produce new milking cows to replace their outgoing ones. But these days they’re increasingly churning out meatier offspring that they can sell to ranchers. Those hybrid calves—created by artificially inseminating a dairy cow with semen from a beef bull—are beefier than a pure dairy animal and can fetch the seller hundreds or even thousands of dollars apiece. That’s a big payday in an industry that last summer had such a milk glut that farmers dumped much of it down the drain.

You’ve been there. The long, plexiglass-lined aisles of your local pharmacy where, even if you can find an employee to unlock the cabinet, your favorite toothpaste is out of stock. Nearby, long lines of customers wait under dreary fluorescent lighting for prescriptions doled out by a thinly staffed pharmacy. Unsurprisingly, profit margins are falling at the biggest chains, CVS and Walgreens. Once a fierce competitor, Rite Aid recently went belly up. So what’s the problem? It’s the front of the store, where competition and inflation are making it harder to turn a profit. So now, after decades of not changing their standard model, the two US drugstore giants are unveiling plans to fix America’s broken pharmacies

A CVS in Miami Beach, Florida Photographer: Jeff Greenberg/Getty Images

What you’ll need to know tomorrow

Hamptons or Maldives? Now You Can Have Both

Wall Street South is getting its Hamptons, and it’s not West Palm Beach. In fact, it’s going to look like the Maldives. Developer Rafael Reyes, owner of Rockwell Island Development Group, is building an oasis on the Bahamian island of Bimini just 48 nautical miles off the Florida coast to serve the increasing number of moneyed professionals that call Miami home. First, he’s building a series of dining and beach clubs, including an outpost of Bonito, which runs the renowned spot of the same name in St. Barts. Next will come a series of 54 waterfront mansions with prices to list upward of $3.5 million, each with a pool, 90-foot-plus dock and garages custom-built to fit Moke jeeps. But the pièce de résistance? A Banyan Tree resort with the country’s first overwater villas on a series of four man-made islands facing a giant lagoon. They go for $3,000 a night.

A rendering of Banyan Tree’s Bimini project Source: Recent Spaces

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