Trump’s Turkey Threat, U.S.-China Talks, Embracing MMT: Eco Day

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

• Donald Trump appeared to backpedal after giving Turkey a green light to attack U.S.-allied Kurdish forces in northern Syria, saying he would “totally destroy and obliterate” the country’s economy if it takes unspecified “off limits” actions
• Central bankers have given a thumbs up to their own actions over the past decade, saying negative interest rates and asset purchases helped growth and inflation, according to a Bank for International Settlements survey
• The Bank of Japan will leave its negative interest rate unchanged unless it is completely convinced a deterioration of the global economy will spark stock market jitters and a jump in the yen, says a former executive director of the central bank
• World Bank President David Malpass said the global economic outlook is deteriorating amid Brexit-related uncertainty, trade tensions and a downturn in Europe
• The U.S. and China are unlikely to reach a compromise in this week’s trade talks and any meaningful resolution won’t come until after the 2020 U.S. presidential election, says Bob Michele, global chief investment officer at JPMorgan Asset Management
• Chinese officials are signaling they’re increasingly reluctant to agree to a broad trade deal pursued by Trump. Meantime, the president warned China that if the country does anything “bad” to quell protests in Hong Kong, the negotiations would suffer
• China’s economy is probably expanding at a pace close to what official figures show, though growth has likely been more volatile than the numbers indicate, Federal Reserve researchers said
• U.S. budget deficits and the national debt are on track to keep growing because both Trump and his Democratic rivals want to use low interest rates to finance more spending -- in effect embracing some form of Modern Monetary Theory
• The Philippines, a country of 7,000 islands where you’re rarely more than a few miles from the sea, wants a bigger slice of Asia’s growing cruise-tourism industry

To contact the reporter on this story: Chris Bourke in Sydney at cbourke4@bloomberg.net

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

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