Once-in-a-century chaos

Your Balance of Power today focuses on the extraordinary drama around picking a new US House Speaker [View in browser]( [Bloomberg]( Republican Kevin McCarthy’s drive to become speaker of the US House of Representatives suffered a once-in-a-century humiliation as opposition by ultraconservatives in his own party denied him a majority in three rounds of voting. It was the first time since 1923 the position wasn’t decided on the first ballot — emphasizing the division that’s consumed the GOP since Donald Trump’s loss to Joe Biden in the 2020 presidential election. Key reading: - [McCarthy’s Speaker Ambitions Suffer Blow as He Loses Three Votes]( - [House Adjourns With McCarthy’s Speaker Bid Still in Doubt]( - [McCarthy Loses Three Votes as Path to Speakership Gets Narrower]( - [Santos Sits Alone as Resignation Calls Mount Over His Lies]( The impasse means no other House business can proceed, such as the swearing in of hundreds of lawmakers. It raises fundamental questions about the Republicans’ ability to steer a chamber that must grapple with key issues such as raising the debt ceiling and funding the government of the world’s biggest economy as a global recession looms. McCarthy, a 57-year-old California congressman, made a number of concessions to Trump loyalists, including a rule to make it easier to oust the speaker, effectively weakening his position should he secure it. Trump yesterday encouraged him to stay in the race, but the former president’s acolytes are demanding more, such as votes on a balanced budget and term limits for members of Congress and a strict Texas border plan, political minefields that moderates want to avoid. They also accuse him of not doing enough over the years to stop Democratic-backed spending packages. Democrats, who lost their House majority in the unexpectedly close midterm election in November but retained control of the Senate, are enjoying the spectacle of McCarthy’s protracted suffering. While he may still realize his longtime ambition when members convene later today for another attempt to choose the speaker, Republican control of the House has gotten off to the worst possible start. Whoever ends up in the post, it doesn’t bode well for the legislative year ahead. — [Flavia Krause-Jackson]( McCarthy after a House Republican caucus meeting at the Capitol yesterday. Photographer: Al Drago/Bloomberg [Click here]( to listen to our Twitter space conservation today at 7am ET/midday London about the biggest themes in global politics in 2023 (yes, we have a lot to talk about). And if you’re enjoying this newsletter, sign up [here](. Global Headlines Property slump | Chinese authorities plan to bring in further [support]( measures to help shore up the balance sheets at some of the nation’s too-big-to-fail developers, sources say. The government has implemented a string of policy steps since November and hinted at further aid for a real-estate market mired in a record slowdown and a deepening liquidity crunch. - China meantime is pausing [massive]( investments aimed at building a chip industry to compete with the US, as a nationwide Covid resurgence strains the world’s No. 2 economy and Beijing’s finances. - Chinese bureaucrats are discussing plans to resume some imports of Australian [coal]( after a more than two-year ban, as relations between the nations improve. Commuters ride a subway train in Shanghai yesterday. Photographer: Qilai Shen/Bloomberg Arming up | Ukraine is hopeful it will receive armored Bradley Fighting Vehicles in the next few months as it discusses weapons [deliveries]( with the US, while Germany’s foreign minister said there’s little sign Russian President Vladimir Putin plans to end his war anytime soon. Interfax reported that Putin plans to hold talks today with Turkish leader Recep Tayyip Erdogan, who has acted at times as an intermediary between Moscow and Kyiv. - Russia raised the death toll in a Ukrainian rocket attack on New Year’s Day to 89, the largest such loss it’s acknowledged. It blamed [soldiers’ mobile-phone use]( for exposing their location. Incursions by China’s warplanes into a sensitive area around Taiwan [nearly doubled]( in 2022, reflecting increased tensions over the democratically run island. The Chinese military sent more than 1,700 planes into Taiwan’s air-defense identification zone, versus 960 in 2021. Of those, nearly 670 crossed the Taiwan Strait’s so-called median line as China cuts the time Taiwan’s military would have to react to any attack. Political ads | Twitter said it will [relax]( a three-year ban on political advertising to “facilitate public conversation around important topics.” In a sign of its ongoing policy shift after the takeover by Elon Musk, Twitter said it will expand the ads it permits in coming weeks and align its advertising policy with those of TV and other media outlets. Best of Bloomberg Opinion - [Gradually Then Suddenly, New Questions About China: John Authers]( - [Frederick the Great’s Advice for Ukraine Talks: Andreas Kluth]( - [Trump Lit the Fire Burning Down McCarthy’s House: Joshua Green]( Going home | The British Museum and the Acropolis Museum are closing in on an agreement to [return]( the Parthenon Marbles over time to Greece, ending a feud that dates to the 1800s, [Alberto Nardelli]( and [Alex Wickham]( report. Under the proposal, a proportion of the marbles would be sent to Athens on rotation over several years, with other objects loaned to the museum in London, sources say. The UK could also get plaster copies of the sculptures, which were removed from the ruins of the Parthenon in the early 19th century by Lord Elgin. Explainers you can use - [Food Inflation Climbs to a Record High in British Shops]( - [Europe Gas Falls Again as Warm Weather Brings Relief for Markets]( - [Fed Minutes to Reveal Source of Inflation Angst Pushing Up Rates]( Digital awakening | As global supply snarls recede, they’re giving way to a [different kind of disruption]( in the $10 trillion global logistics industry: a tech transformation, where everything between an assembly line and a store shelf will be tracked in real time where possible, fortified with artificial intelligence and automated. As [Brendan Murray]( explains, the long-term economic upside of the shift will be a disinflationary force after three years of price pressures from the supply side. Tune into Bloomberg TV and Radio air Balance of Power with [David Westin]( on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here](. News to Note - Biden will meet Japanese Prime Minister Fumio Kishida at the White House on Jan. 13, as Tokyo looks to [bolster]( its defense capabilities amid North Korean missile tests and Chinese military drills that have stoked concern across the Pacific. - Italian Defense Minister Guido Crosetto called into question [the legitimacy]( of the European Central Bank’s independence from national governments and European Union authorities. - French Finance Minister Bruno Le Maire said he will present a “[green industry](” bill as Europe seeks to stop businesses being lured across the Atlantic by billions of dollars of subsidies under the US climate law known as the Inflation Reduction Act. - Egyptian businesses reduced output and cut jobs as they grappled with the impact of a dramatic [currency devaluation]( that helped authorities secure an International Monetary Fund deal. - NATO peacekeepers helped remove [road blocks]( in Kosovo that ethnic Serbs had erected in their weeks-long standoff with the largely ethnic-Albanian authorities as the EU seeks to jumpstart dialog between the Balkan foes. And finally ... During its more than three-decade boom in Russia, McDonald’s navigated economic crises, anti-US nationalism, kleptocratic officials and international sanctions by going as native as possible. As [Clint Rainey]( reports, that ended when Putin’s invasion of Ukraine prompted the fast-food giant to [exit]( the market, taking with it a taste of America many Russians had yearned for since before the collapse of the Soviet Union. At the Moscow McDonald’s in 1991. Photographer: Chris Steele-Perkins/Magnum Photos Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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