Alice in Wonderland Economy, China Dump, Trump Tax Fail: Eco Day

(Bloomberg) -- Welcome to Thursday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

• The U.S. government is borrowing bucketloads of money, with budget deficits on track to hit $1 trillion and rising. Yet the debt deluge isn’t pushing interest rates up from paltry levels –- or stoking inflation
• China’s first batch of major official indicators this year is forecast to show that an investment recovery that began in mid-2018 is set to continue, but the economic slowdown and trade war are still undermining factory output and consumption
• The Tax Cuts and Jobs Act was as close as the real world gets to a laboratory experiment on whether supply-side theory works. More than a year on, we have an answer. It is “meh,” writes Tim Mahedy
• President Donald Trump acknowledged concerns in Beijing about the possibility of him walking away from a trade deal, offering to push back a summit with President Xi Jinping until a final deal is reached
• Britain’s vote to leave the EU has already come at a cost regardless of where Brexit goes from here. Some damage is tangible, such as jobs, investment and capital; some less so, like clout and talent
• Down in Australia, bond yields have fallen below 2% for the first time since September 2016 as bets rise on an interest-rate cut this year
• ECB policy makers are to blame for bankers’ woes, Deutsche Bank’s chief economist says, blaming monetary policy decisions and financial regulations for worsening profitability. Finally there’s some good news for German economic growth as the Rhine river refills
• Softer inflation in India puts the central bank in a position to support economic growth, said former governor Bimal Jalan. The RBI’s latest study on investments by India Inc. shows it’s still the big cleanup for private firms after the borrowing binge at the start of the decade
• Brazil’s central bank would be better equipped to contain inflation if its autonomy to decide on monetary policy was guaranteed by law
• Senior U.S. Treasury official David Malpass is on track to be named next president of the World Bank after no other candidates emerged

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Tracy Withers

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