Strained Relations, Swedish Lesson, Australia Blowout: Eco Day

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

• The unexpected U.S. decision to order China’s consulate in Houston to close delivers a severe diplomatic blow and China vowed to retaliate. Donald Trump tried to balance the demands of hardliners for a crackdown on China against his desire to cultivate a stronger relationship with Xi Jinping. But the hawks are in charge now
• If the Swedish experience holds, it shows when policy is insufficient to stop the spread of the virus, both public health and economic output decline together, writes Johanna Jeansson
• Australia’s business investment is set to plunge this fiscal year, smothered by the economic shutdown and a renewed lockdown in Victoria, as the government prepares to flag a huge budget deficit
• The U.S. labor market’s rebound is increasingly at risk of being cut short after a survey showed employment dropping sharply
• South Korea’s economy slid into a recession with activity falling in the second quarter as the coronavirus pandemic sent exports plummeting and forced businesses to cut investment
• The Olympic cauldron will remain unlit and its stadium empty on Friday as the virus-triggered postponement of the Tokyo Games leaves disappointed fans wondering if it’s still worth holding on to tickets and hotel operators fretting over thousands of vacant rooms
• The mix of grants and loans in Europe’s rescue package could have been better, according to ECB chief Christine Lagarde. She also says female leaders proved themselves in the crisis
• Bank of England chief Andrew Bailey has broken new ground in his choice of private secretary -- a role described by one lawmaker as the central bank’s “unofficial governor”
• For a soft-spoken and unfailingly polite figure, Judy Shelton is inspiring no shortage of fear in Washington right now
• President Vladimir Putin gave the go ahead to consider hedging Russia’s massive oil and gas export revenues to protect the country from drops in prices, according to a senior official
• Turkey’s economic order is due for the biggest makeover in generations led by the influential head of the country’s wealth fund
• Prime Minister Boris Johnson will stress the value of the U.K. in a visit to Scotland on Thursday, seeking to head off growing support for Scottish independence

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