Spring Housing Market Is a Bust With US Hit by ‘Double Whammy’
A selection of the various indicators for the industry, which drives economic activity through home construction along with purchases of new appliances and services from plumbing and electrical to interior design, shows things are trending weaker.
- Sales of existing homes ran at their weakest pace for the month of May since 2009.
- Sales of new homes, which can be volatile month-to-month, tumbled in May, with the three-month average down 3.5% from the same period a year before.
- The inventory of unsold new properties climbed to the highest level since 2007.
- With sales weak, builders broke ground on the fewest new homes in May since the 2020 Covid shutdowns.
- Just over 28% of US homes are selling above the asking price — “the lowest level for this time of year since 2020, when the start of the pandemic ground the housing market to a halt,” according to Redfin’s Dana Anderson.
The bottom line, JPMorgan Chase’s global economic and housing team said this week: “The US housing market is best characterized as frozen.” (Ironically, Treasury Secretary Scott Bessent in the chill of February predicted “that the housing market, sometime in the next few weeks, is going to unfreeze.”
It’s the second straight disappointment for the housing industry, after builders had anticipated lower interest rates would be kicking in by spring 2024 to juice sales. Sticky inflation meant the Federal Reserve held off until late in the year, however — leaving mortgage rates at levels way above what buyers had been used to.
This chart from Apollo shows how Americans are disinterested in buying new homes:
China Tech Firms Ramp Up M&A Deals With the Blessing of Beijing
(…) With China’s economy struggling to pick up much growth momentum and tensions with the US and others rumbling on, the government’s stance has shifted — especially in areas such as artificial intelligence and tech more broadly where it’s trying to stride ahead of rivals.
“We’re seeing more normalization when it comes to regulation of tech in China, which gives confidence to both companies and investors to start looking at deals again,” said Allan Chu, UBS Group AG’s co-head of technology, media and telecommunications investment banking in the Asia Pacific region. “China wants to create national champions in areas such as AI and robotics, so we’re poised to see more deals in those areas.” (…)
The uptick has come with the blessing of Beijing, eager to reduce any reliance on US technology. President Xi Jinping has met with prominent entrepreneurs to stress his support for them and the private sector. In September, a fresh batch of policies was introduced, emphasizing themes such as business upgrades and innovation, and allowing listed companies to conduct more cross-sector deals. (…)
China’s advantages in developing artificial intelligence are about to unleash a wave of innovation that will generate more than 100 DeepSeek-like breakthroughs in the coming 18 months, according to a former top official.
The new software products “will fundamentally change the nature and the tech nature of the whole Chinese economy,” Zhu Min, who was previously a deputy governor of the People’s Bank of China, said during the World Economic Forum in Tianjin on Tuesday.
Zhu, who also served as the deputy managing director at the International Monetary Fund, sees a transformation made possible by harnessing China’s pool of engineers, massive consumer base and supportive government policies. (…)
Bloomberg Economics estimates the contribution of high-tech to China’s gross domestic product climbed to about 15% in 2024 — from near 14% a year earlier — and could exceed 18% in 2026. (…)
Source: Bloomberg
High tech is now larger than housing in China’s GDP. The housing drag will rapidly diminish.
The US Has More Copper Than China But No Way to Refine All of It The industry will need to overcome high energy and labor costs, environmental regulations and a glut of cheap Chinese competition to make US copper smelting great again.
(…) it takes an average of 29 years from the discovery of a US copper deposit to the start of production—the longest development time in the world after only Zambia. And even if Trump can deliver on his pledge to speed up permitting, the US would still lack the key smelting and refining operations to process all that ore domestically. (…)
China produces about 13 times more refined copper than the US. The Asian country operates more processing facilities than anywhere else in the world, part of a nationwide project that began in the ’90s to meet demand for copper in construction, electronics and manufacturing. (…)
Trump Considers Naming Next Fed Chair Early in Bid to Undermine Powell Warsh, Hassett and Bessent are among those under consideration as Trump evaluates their commitment to cutting rates
President Trump’s exasperation over the Federal Reserve’s take-it-slow approach to cutting interest rates is prompting him to consider accelerating when he will announce his pick to succeed Chair Jerome Powell, whose term runs for another 11 months.
In recent weeks, the president has toyed with the idea of selecting and announcing Powell’s replacement by September or October, according to people familiar with the matter. One of these people said the president’s ire toward Powell could prompt an even-earlier announcement sometime this summer. (…)
Because the new chair wouldn’t take office until next May, announcing the pick this summer or fall would be far earlier than the traditional three-to-four month transition period. An early announcement could allow the chair-in-waiting to influence investor expectations about the likely path for rates, like a backseat driver, attempting to steer monetary policy before Powell’s term ends.
When asked if Trump was entertaining an earlier Fed chair announcement, the White House said the Fed should pursue a growth-oriented monetary policy. (…)
“I know within three or four people who all I’m going to pick,” Trump said during a press conference at the NATO summit. “He goes out pretty soon, fortunately, because I think he’s terrible.”
Trump faces an overarching challenge as he seeks to bend the historically independent institution to his will: Find someone who will prove both loyal to the president’s desires for an easier interest-rate policy and skilled at persuading the Fed’s broader rate-setting committee to fall in line. Fed policy is set by a committee of 12 policymakers, a majority of whom Trump won’t be able to pick unless sitting governors leave their seats early.
The Fed has guarded its autonomy to set monetary policy ever since the very high inflation of the 1970s, which followed President Richard Nixon privately pressuring his Fed chairman to keep rates low ahead of the 1972 election. (…)
When Trump interviewed Warsh for the job eight years ago, he frequently remarked on Warsh’s handsome hair and appearance; after picking the silver-haired Powell, who is 17 years older than Warsh, Trump told associates he thought Warsh, who was then 47, was too young-looking for the role.
Hassett, another possible contender, has told people he isn’t interested in the job. (…)
Though Bessent has publicly said he is committed to serving out his term as Treasury secretary, people close to both him and Trump say the longtime investor has raved about the idea of one day becoming Fed chair and hasn’t privately ruled out the idea.
Bessent told lawmakers earlier this month he’s “happy to do what President Trump wants me to do.”
Having a personal rapport with Trump could help. Trump barely knew Powell when he picked the then-Fed governor to become chair for a term starting in 2018. Trump doesn’t want to repeat what he perceives as his mistake of selecting someone who won’t be unstintingly loyal, people familiar with the matter said. (…)
Trump has warmed to Malpass as a potential Fed chair due to his recent support for lowering rates, these people said. Malpass dinged the Fed’s models as antiquated in a Journal opinion article this month in which he called for rate cuts.
But during conversations at recent private lunches and dinners about who should replace Powell, the president has privately raised doubts over whether Malpass has the right made-for-TV appearance.
Fed governor Adriana Kugler’s term is up at the end of January. If Powell leaves the Fed board after his term as chair ends, Trump would be able to name two additional governors and would rely on those appointees to persuade the broader committee.
Fed governor Waller has gained White House attention for being the first policymaker to advocate for cutting rates as soon as the Fed’s next meeting, in late July. (…)
Last fall, Bessent publicly pitched naming a “shadow chair” that would allow the administration to do an end-run around Powell. Billionaire investor Stanley Druckenmiller, who is Bessent’s mentor and Warsh’s business partner, later called it “a horrible idea and irresponsible.” In an interview days after Trump’s election, Bessent withdrew his support for it.
The shadow chair gambit carries some risk for Trump because Powell doesn’t have to leave the Fed’s board until 2028, meaning he could choose to stay for 1½ years after his term as chair ends. Powell has repeatedly declined to say whether he will step down from the board when his term as chair is over. (…)
The Federal Reserve was created by an act of Congress in 1913 and, since 1977, has been charged with promoting maximum employment and stable prices. In practice, independence means that the Fed can set interest rates without interference from Congress or the White House even if politicians aren’t unhappy with Fed policy—and say so publicly.
Congress could, of course, change the law, but no bill to alter the Fed’s mandate or governance has gone very far. That’s because members of Congress generally recognize that if they or the president were able to directly influence the setting of interest rates, higher inflation would be the likely outcome.
Central banks in nearly all major capitalist democracies are similarly insulated: Elected governments set the central bank’s mandate, but the central banks have the freedom to deploy their tools (primarily interest rates) to achieve that mandate.
The rationale is that elected politicians will tend to favor lower interest rates now to boost the economy, but this comes at the expense of more inflation later, and that’s not in the best interests of the overall economy. Independent central bankers, the argument goes, can make unpopular decisions, such as raising interest rates, when circumstances demand.
Academic research supports the case that economies with independent central banks tend to have lower—and less volatile—inflation rates.
Here’s how Fed Chair Ben Bernanke, now at Brookings, put it in a 2010 speech: “Policymakers in a central bank subject to short-term political influence may face pressures to overstimulate the economy to achieve short-term output and employment gains that exceed the economy’s underlying potential. Such gains may be popular at first, and thus helpful in an election campaign, but they are not sustainable and soon evaporate, leaving behind only inflationary pressures that worsen the economy’s longer-term prospects. Thus, political interference in monetary policy can generate undesirable boom-bust cycles that ultimately lead to both a less stable economy and higher inflation…”
“To be clear,” he added, “I am by no means advocating unconditional independence for central banks. First, for its policy independence to be democratically legitimate, the central bank must be accountable to the public for its actions … [T]he goals of policy should be set by the government, not by the central bank itself; and the central bank must regularly demonstrate that it is appropriately pursuing its mandated goals. Demonstrating its fidelity to its mandate in turn requires that the central bank be transparent about its economic outlook and policy strategy.”
The Drug-Price Surrender to China Trump’s most-favored-nation executive order would collapse the American pharmaceutical industry’s innovation edge.
(…) President Trump’s executive order on most-favored-nation drug pricing proposes to tie U.S. prices to the lowest prices paid by other wealthy countries. At first glance, it seems reasonable. Who doesn’t want to pay less at the pharmacy? But the policy misunderstands global pharmaceutical markets and our own benefit system. It risks giving Beijing exactly what it wants: the collapse of America’s innovation edge in medicine, and perhaps one of America’s remaining bastions of industrial leadership.
Instead of pushing allies to pay a fair price for life-changing medicine, a most-favored-nation regime would import the same price controls other countries achieve by restricting access to care and underpaying for U.S.-developed therapies. It would peg our prices to what foreign bureaucrats think a drug is worth, often using outdated formulas that assign a value of less than $40,000 to a year of human life.
Meanwhile, China isn’t catching up—it’s surging ahead. In 2024 Chinese companies launched more clinical trials than U.S. firms. Analysts expect 37% of new licensed compounds this year will come from China. Once known for copying Western drugs, Chinese companies are now developing their own, especially in areas like oncology and immunology. At the same time, European countries with price controls have seen an exodus of clinical trials and lost their leadership in drug development. (…)
America is the world leader in biopharmaceuticals. Maintaining that leadership isn’t only about access to innovative medicine or jobs. It’s about national security. The same companies that develop breakthrough cancer treatments are also key to helping us get through a pandemic or a bioterror event. Undermining those companies with price controls that drain investment and stall research won’t only slow medical progress. It’ll weaken the infrastructure needed during a crisis. (…)
The U.S. should press wealthy nations to create pricing systems that fairly pay for medicines commensurate with the value those cures bring to health and equalize the value other nations get from U.S.-led research. (…)
We face a choice: Adopt Europe’s failing price controls and bureaucratic healthcare system, while watching China gain ground, or stand up for American innovation, hold our allies accountable, and protect the free-market engine that powers the next generation of medical breakthroughs.
ProPublica, “a nonprofit newsroom that investigates abuses of power”, wrote a piece about Richard Burr in 2020:
In his 15 years in the Senate, Richard Burr, a North Carolina Republican, has been one of the health care industry’s staunchest friends.
Serving on the health care and finance committees, Burr advocated to end the tax on medical device makers, one of the industry’s most-detested aspects of the 2010 Affordable Care Act. He pushed the Food and Drug Administration to speed up its approval process.
As one of the most prominent Republican health care policy thinkers, he has sponsored or co-sponsored dozens of health-related bills, including a proposal to replace “Obamacare.” He oversaw the implementation of major legislation to pump taxpayer money into private sector initiatives to address public health threats. “The industry feels very positive about Sen. Burr,” the president of North Carolina’s bioscience trade group said during Burr’s last reelection campaign. “He’s done a stellar job.” (…)
Mr. Burr, currently principal policy adviser at DLA Piper LLP, provides strategic consulting to life sciences and healthcare clients, including pharmaceutical companies.
BTW:
A May 2025 executive order directs the U.S. Food and Drug Administration (FDA) to, within 180 days, take steps to eliminate duplicative or unnecessary regulations or guidance to streamline the approval of domestic manufacturing plants for pharmaceutical products. The EO also directs the FDA Commissioner to, within 90 days, enhance the inspection of foreign manufacturing facilities. The U.S. Environmental Protection Agency (EPA) is also directed to streamline reviews of permits to expand domestic manufacturing capacity in the U.S.
Meanwhile,
- The Trump administration has implemented deep cuts to federal science agencies, including the National Institutes of Health (NIH), National Science Foundation (NSF), and Department of Energy, resulting in the termination of research programs and cancellation of billions in grants to universities.
- Thousands of government scientists have been laid off, many clinical trials halted, and over 1,000 grants in areas like cancer, Alzheimer’s, and HIV prevention have been terminated.
- The administration is considering further drastic reductions, such as cutting the NIH budget by 40% in 2026, which would severely curtail early-stage biomedical research and innovation.
- Cuts to NIH and other research funding directly impact universities, which are major sites for pharmaceutical R&D, potentially slowing the discovery of new drug targets and therapeutic approaches.
- HHS Secretary, Robert F. Kennedy has advocated redirecting NIH research funds away from traditional biomedical research toward preventive, alternative, and holistic health approaches.
- Kennedy has proposed barring government scientists from publishing in top-tier medical journals (e.g., NEJM, JAMA, The Lancet), claiming these are controlled by pharmaceutical interests. Instead, he suggests creating government-run journals, which critics argue could delegitimize taxpayer-funded research and diminish the global influence of U.S. science, further isolating American researchers and weakening the pharma industry’s access to peer-reviewed validation.
You might have noticed the large imports of pharmaceuticals into the US in April. That was tariffs related:
90% of the prescription drugs consumed in the US are produced outside the US, and many of them come from China: 95% of US Ibuprofen comes from China, 91% of Hydrocortisone, 70% of Acetaminophen, and 45% of Penicillin.
I asked Perplexity.ai:
How is China Pushing Biotech and Pharma Investments? (My emphasis)
China is aggressively advancing its biotechnology and pharmaceutical sectors through a coordinated mix of government policy, regulatory reforms, direct investment, and international partnerships. Here are the key strategies and initiatives driving this push:
1. Strategic Government Planning and Investment
China’s central government has made biotechnology a pillar of its national industrial policy, notably through the “Made in China 2025” strategy and successive Five-Year Plans, which set explicit goals for biotech innovation, drug development, and global competitiveness.
In 2024, China invested over $4 billion in biomanufacturing, with plans to accelerate this further in 2025, aiming for “significant” growth and global leadership in the sector.
The government’s action plans call for expanding pilot programs for biopharmaceutical production, streamlining market entry for innovative drugs, and supporting foreign-invested projects in biotechnology and wholly foreign-owned hospitals.
2. Opening Up to Foreign Investment
China is easing restrictions on foreign investment in biotech, especially in select free-trade zones (FTZs) like Beijing, Shanghai, Guangdong, and Hainan. Foreign-invested enterprises can now engage in cell and gene therapy R&D, production, and marketing within these FTZs, with approved products allowed nationwide.
The 2025 Action Plan encourages foreign equity investment in listed Chinese companies and aims to provide “whole-journey services” for foreign-invested projects in biotech and healthcare.
3. Building Innovation Ecosystems
China has created a robust ecosystem for biotech startups, offering funding, discounted or free lab space, and grants. Science parks and biotech hubs in cities like Shanghai and Suzhou now rival those in the U.S., enabling startups to move from launch to clinical trials in as little as 18 months—much faster and cheaper than in the U.S..
The country is also investing heavily in R&D infrastructure, with Beijing and Shanghai leading the world in laboratory and R&D space construction.
4. Regulatory Reforms and Speed
China’s regulatory environment is becoming more adaptable, with efforts to streamline drug approvals, optimize procurement policies, and improve predictability for medical devices and innovative drugs.
Draft laws and guidelines are being released to encourage innovation, prevent commercial bribery, and relax cross-border data transfer requirements for pharmaceutical research.
5. International Partnerships and Licensing
Chinese biotechs are increasingly licensing their innovations to Western pharmaceutical companies. In 2024, Chinese firms accounted for 31% of major global pharma licensing deals, up from 12% two years earlier.
Major Western pharma companies, including AstraZeneca, Pfizer, GSK, Sanofi, and Novartis, have invested billions in acquiring or partnering on Chinese-developed drugs, especially in oncology and emerging therapies.
6. Emphasis on Advanced Technologies
China is integrating artificial intelligence and machine learning into drug discovery, enhancing the speed and accuracy of R&D.
The focus extends to advanced therapies such as cell and gene therapies, mRNA, and genomics, with FTZs serving as testbeds for these innovations.
7. Global Expansion and Geopolitical Strategy
Facing U.S. scrutiny and sanctions, Chinese biopharma firms are expanding into Southeast Asia, using the region as a manufacturing and R&D base to diversify supply chains and mitigate geopolitical risks.
China leverages public health partnerships and technology transfers in the region to build influence and secure new markets for its biopharmaceutical products.
8. Talent and Patent Growth
China boasts a large and growing pool of scientific talent, with a rapid increase in pharmaceutical and medical technology patents—up 379% over the past decade.
China’s push in biotech and pharma is multifaceted: it combines top-down government support, regulatory innovation, incentives for foreign and domestic investment, and a focus on speed, cost, and global integration. These efforts are rapidly positioning China as a global leader in pharmaceutical innovation, challenging the dominance of traditional Western hubs and reshaping the competitive landscape.
Why are Chinese biotech companies able to move faster and cheaper than US counterparts
- Government Investment and Ecosystem Support: The Chinese government has prioritized biotechnology as a strategic sector, providing substantial funding, discounted or free lab space, and grants. This has fostered a robust ecosystem where startups can quickly access resources and infrastructure.
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Lower Costs: Staffing, supply chain, and clinical trial costs are significantly lower in China. Companies can run clinical trials at a fraction of the cost compared to the U.S., and access to large patient populations enables rapid enrollment and data collection.
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Flexible Regulatory Environment: China’s regulatory agency, the National Medical Products Administration (NMPA), allows for parallel trials and faster drug approvals, sometimes based on smaller or earlier-phase studies. In contrast, the U.S. FDA requires larger, more time-consuming trials, which slows down the process.
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Speed to Market: Chinese startups can progress from launch to clinical trials in as little as 18 months, compared to several years in the U.S. This is enabled by efficient networks, government backing, and regulatory agility1.
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Talent Pool: China has cultivated a large, skilled workforce focused on biotech, with many scientists and professionals returning from overseas or trained domestically in advanced research.
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Manufacturing and Scale: China’s dominance in pharmaceutical production and manufacturing infrastructure enables companies to scale up quickly and cost-effectively.
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Business Model and Licensing: Chinese companies often pursue in-licensing and early-stage licensing deals, which allows them to commercialize innovations rapidly and attract global investment, while U.S. firms tend to rely more on mergers and acquisitions
Effective planning + coordination + the law of large numbers are key ingredients to success. The US lacks all relative to China.
FYI:
RFK Jr.’s New Vaccine Advisers to Re-Examine Shot Advice for Children Panel’s new chairman questions hepatitis B vaccine timing, even as CDC nominee says vaccines save lives
Health Secretary Robert F. Kennedy Jr.’s new panel of vaccine advisers will re-evaluate the recommended schedule for vaccines for children and teenagers, including for measles and hepatitis B, its new chairman said Wednesday.
The new slate of advisers met for the first time Wednesday in Atlanta, kicking off a two-day meeting with an agenda partially set by political appointees. Meanwhile, on Capitol Hill, the nominee to lead the Centers for Disease Control and Prevention, Susan Monarez, told senators she believes vaccines save lives and there is no causal link between vaccines and autism.
Kennedy earlier this month dismissed all 17 previous members of the Advisory Committee on Immunization Practices, accusing the panel of conflicts of interest. Several of the new replacements have articulated antivaccine positions in the past. (…)
Sen. Bill Cassidy, the Louisiana Republican leading Monarez’s confirmation hearing for CDC director on Wednesday morning, reiterated his call that the Atlanta sessions be postponed, saying that many of the secretary’s appointees lacked the right experience and that some may even harbor biased opinions against vaccines.
“Given that there is no confirmed CDC director, along with an ACIP panel which has very few members, many of whom lack broad vaccine and immunological expertise, there are concerns about the rushed nature of this process,” said Cassidy, chairman of the Senate’s health committee.
The doctor from Louisiana, who cast the deciding vote to advance Kennedy’s nomination as secretary of the Department of Health and Human Services, made his first significant rupture with Kennedy earlier this week when he called for the meeting to be delayed.
Kennedy on Wednesday announced he was withdrawing U.S. funding to Gavi, an international alliance that helps provide vaccines to the world’s poorest children. Monarez told senators she wasn’t involved in that decision but said that vaccines save lives. (…)
The vaccine advisory panel is set Thursday to hear a presentation on thimerosal, a preservative that antivaccine activists have often blamed for autism, from Lyn Redwood, a nurse practitioner who is president emerita of Children’s Health Defense, an antivaccine nonprofit previously helmed by Kennedy. Antivaccine activists have long claimed that thimerosal causes autism. Rates of the disorder have continued to climb even after thimerosal was removed from most vaccines in the early 2000s. (…)
Kennedy on Tuesday evening posted an essay on X about the dangers of thimerosal, which he said the media ignores.
A document posted on the CDC website earlier in the week for the immunization panel’s meeting concluded that a range of studies with consistent results showed thimerosal in vaccines isn’t linked to autism or other neurodevelopmental disorders. The document, prepared by CDC staff, appeared to be missing from the website Wednesday.
The HHS spokesman said the document didn’t “go through the appropriate process to be posted.” (…)
New York’s Leftward Shift Jolts US Politics Zohran Mamdani’s ascendancy has rocked the political establishment in the world’s financial capital
(…) With his plans to tax millionaires and corporations to pay for free bus services, universal child care and rent freezes, Mamdani’s ascendancy rocked the political establishment in the world’s financial capital. Real-estate stocks slumped, billionaires called their estate lawyers, and Wall Street priced options on Plan B: The scandal-scarred incumbent, Eric Adams, whom big-dollar donors had largely abandoned.
President Donald Trump labeled Mamdani a “100% Communist Lunatic” and warned that the Democratic Party had been taken over by the far left — giving him a useful foil as he tries to maintain Republican control of Congress in midterm elections next year. The razor-thin GOP margin in the House of Representatives could hinge on swing seats in New York City suburbs. (…)
But Mamdani’s rise — mirroring that of progressive counterparts in Boston, Chicago and Cleveland — suggests Democrats aren’t just splintering. They’re testing what happens when movement politics meets municipal power.
As such, it follows an international pattern of voters disaffected by business-as-usual turning to anti-establishment candidates, from Romania to Argentina.
Now, New York, poised to elect its first Muslim mayor and its youngest in more than a century, is suddenly the front line in a fight over what comes next — and who gets to run the city that runs so much else.
- The People’s Republic of New York City Zohran Mamdani’s victory in the Democratic mayoral primary signals the rise of leftwing economic populism.
The easy victory by Zohran Mamdani in Tuesday’s Democratic mayoral primary marks a sharp left turn for New York City. But perhaps more important is that it signals the rise of leftwing economic populism as a leading alternative to the MAGA Republicans.
Democrats nationwide have been debating how to respond to their defeats in 2024, and the victory by the 33-year-old assemblyman is a triumph for the Bernie Sanders-Alexandria Ocasio-Cortez faction. (…)
He wants even higher taxes on already overtaxed businesses and high earners (top city tax rate: 14.78%), government-run grocery stores, free bus rides, and a mandatory freeze on 43% of the city’s rental units. These policies won’t work, but they sound appealing to Democrats who don’t think New York works now. (…)
If Trumponomics fails to deliver strong growth and gains in real incomes, the leftwing populists will be waiting as the main alternative.
