European Midday Briefing : Focus Remains on U.S. -2-

ATHENS-Greece's governing center-right resoundingly beat its left-leaning opponents in national elections Sunday, as voters rewarded Prime Minister Kyriakos Mitsotakis for a robust recent economic performance.

But with Mitsotakis falling just short of a majority in Parliament, Greece is expected to hold another national vote in late June or early July, under a different electoral system that is likely to help his New Democracy party win an outright victory.

Bakhmut Is Largely Under Russian Control, Says Ukrainian General

KOSTYANTYNIVKA, Ukraine-Ukrainian forces have lost effective control of the eastern city of Bakhmut, Ukraine's top commander in the region said, as Moscow declared its first significant conquest since last summer after months of relentless fighting that has cost thousands of lives and obliterated the city.

Col. Gen. Oleksandr Syrskiy said Ukrainian forces were clinging to a tiny part of Bakhmut and advancing around its flanks, but acknowledged that the city was largely under Russian control.

GLOBAL NEWS

Biden, McCarthy Attempt to Revive Budget Talks as Debt Default Looms

President Biden and House Speaker Kevin McCarthy agreed to meet Monday afternoon in a last-ditch effort to reach a deal to avoid a default on U.S. sovereign debt after negotiations to raise the federal borrowing limit reached an impasse.

Talks between White House and House Republican negotiators largely ground to a halt this weekend, with both sides blaming the other for a failure to bridge their differences over spending levels.

Biden says he likely has authority to use 14th Amendment on debt ceiling, but it may be too late

President Joe Biden said Sunday that he believes he has the authority to invoke the 14th Amendment to resolve the debt-ceiling crisis, but that it may be too late in the game to go that route.

"I'm looking at the 14th Amendment, as to whether or not we have the authority. I think we have the authority," Biden said, speaking to reporters in Japan following the G-7 summit.

Bank Runs Trash Long-Held Assumption on Deposits

The recent spate of bank failures is upending a long-held theory among banking executives and regulators-that the value of a lender's deposit business goes up when interest rates move higher.

The theory rests on an assumption: That banks don't have to pay depositors much to keep their money around, even as rates rise. The deposits would be a stable source of low-cost funding while the bank earned more money lending at higher rates.

Stock Prices of Office Landlords Plummet as Short Sellers Pile In

Share prices for some of the largest office landlords have dropped to near historic lows, reflecting a sluggish return-to-office rate and a rise in the number of investors betting that these stocks will keep falling.

SL Green's share price closed at $22.54 on Friday. That is barely above the New York office firm's 1997 initial-public-offering price and a fraction of its post-global-financial-crisis peak of more than $140 in 2015. Vornado Realty Trust, which owns marquee office buildings in San Francisco, Chicago and New York, closed at $13.13 a share on Friday. Vornado's share price topped $67 as recently as 2020.

Fed Rate Increases Hit Small Businesses the Hardest

For companies that need to borrow money these days, it pays to be big.

The Federal Reserve's rate-raising campaign has put a notable crimp in financing for companies with smaller payrolls and valuations. The average rate for a loan from the U.S. Small Business Administration, which historically costs less than a bank loan, has reached double-digits, driving many small firms to borrow less.

Biden Sees Potential Thaw With China After Tough G-7 Statement

HIROSHIMA, Japan-President Biden said Sunday he expected a thaw in relations with China, a day after he and other Group of Seven leaders took steps to tackle what they see as Beijing's economic intimidation.

Biden said at a news conference wrapping up the G-7 meeting in Japan that the U.S. wants to open more lines of communication with China.

To Aid Ukraine in Fight Against Russia, Allies Look to Security Model Like Israel's

WARSAW-As Ukraine enters a pivotal stage in its war with Russia, U.S. and NATO leaders are coalescing around a vision for shoring up Ukrainian defenses and seeking to guarantee the country's sovereign future. It is a security model that Western leaders, including President Biden, have compared with what Israel has now.

Over the past several months of the war, the grinding fight for Bakhmut has taken center stage. But after the largely-obliterated Ukrainian city fell into the hands of the Russian mercenary group Wagner over the weekend, a broader challenge is coming into focus: How to transform the country into a bulwark against Russian aggression.

Debt-Ceiling Talks Devolve Into Finger Pointing and Frustration as Deal Remains Elusive

WASHINGTON-Just days ago, White House officials and Republican lawmakers alike expressed cautious optimism that a deal to raise the federal government's borrowing limit was within reach.

Now, negotiations have hit an impasse, with frustrations boiling over on both sides as the deadline for avoiding a first-ever default approaches.

Tim Scott Bets Personal Story Will Boost Long-Shot 2024 White House Bid

NORTH CHARLESTON, S.C.-Tim Scott's effort to secure the 2024 Republican presidential nomination will test whether a campaign centered on his own rise from poverty and the need for better economic opportunities can garner support in a field dominated by former President Donald Trump.

The 57-year-old South Carolina senator is set to officially announce his bid on Monday after he filed his statement of candidacy Friday with the Federal Election Commission and spent months building his campaign infrastructure.

Seeking a Bigger Bang, U.S. Invests in Advanced Explosives

American Switchblade suicide drones successfully deployed by Ukraine against Russia have a special ingredient: a warhead packed with a material that carries a bigger punch than more commonly used explosives.

That explosive material, called CL-20, was developed by the U.S. in the 1980s but is used in only a handful of the Pentagon's weapons. It is up to 40% more powerful than older explosives, yielding a bigger explosion and giving shells more range.

China Seeks to Counter Musk's Starlink With Own Satellite Network

China is ramping up efforts to develop a satellite-powered internet network that can compete with Elon Musk's Starlink, which has quickly expanded around the world and whose military applications have been on display in Ukraine's defense against Russia.

Beijing's ambition to build a satellite-broadband network has faced hurdles including limited launch capacity and technological barriers. But Starlink's ability to maintain high-speed internet connections to Ukraine despite the country's damaged telecommunications infrastructure underscored the need for similar fleets of satellites orbiting close to Earth-known as constellations.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-22-23 0624ET