Four billion people on the earth have no internet access. That will change if Facebook founder Mark Zuckerberg’s solar powered drone plan works.
Ahead of this week’s G-20 summit in Hamburg, Germany, Donald Trump called the leaders of China and Japan to discuss the “threat posed by North Korea’, along with trade issues, the White House said on Sunday. Trump spoke with Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe, whose LDP had just suffered a devastating loss in the Tokyo Assembly elections, and according to the White House read out, “both leaders reaffirmed their commitment to a denuclearized Korean Peninsula” adding that “President Trump reiterated his determination to seek more balanced trade relations with America’s trading partners.”
The terse statement did not provide further details of the call or say if Trump managed to persuade Xi to endorse his approach of exerting maximum pressure on North Korea, including a slew of further economic and trade sanctions.
According to Reuters, the call may have been prompted by Trump increasing frustration with China’s inability to rein in North Korea, and the reference to trade was an indication the president may be ready to return to his tougher-talking ways on business with Beijing after holding back in hopes it would put more pressure on Pyongyang. Trump and Xi discussed the “peace and stability of the Korean peninsula”, China’s Foreign Ministry said, without elaborating.
Tesla chief executive Elon Musk tweeted overnight that the electric automaker would deliver its first batch of mass-market geared Model 3 vehicles on July 28.
EM FX ended the week on a mixed note, as investors await fresh drivers. US jobs data on Friday could provide more clarity on Fed policy and the US economy. Within EM, many countries are expected to report lower inflation readings for June that support the view that most EM central banks will remain in dovish mode for now. We remain cautious on the EM asset class near-term.
Caixin reports June China manufacturing PMI Monday, which is expected at 49.8 vs. 49.6 in May. Official manufacturing PMI was already reported at 51.7 vs. 51.2 in May. While the two series often diverge, we warn of upside risk to the Caixin reading. For now, markets are comfortable with China’s macro outlook.
Thailand reports June CPI Monday, which is expected to remain flat y/y. This remains well below the 1-4% target range. Bank of Thailand meets Wednesday and is expected to keep rates steady at 1.5%. Indeed, with no price pressures to speak of, we believe rates will remain steady into 2018.
Indonesia reports June CPI Monday, which is expected to remain steady at 4.3% y/y. This remains well within the 3-5% target range. Bank Indonesia next meets July 20 and is expected to keep rates steady at 4.75%. While the bank has signaled an end to the easing cycle, we do not see any tightening in 2017.
Just days before Trump’s meeting with the Chinese president in Hamburg later this week for the G-20 summit, the Trump administration sent a guided-missile destroyer near Triton Island in the South China Sea, Bloomberg reported, a move “which may cause concern ahead of President Donald Trump’s meeting with his Chinese counterpart.”
According to an anonymous official cited by Bloomberg, the U.S. Navy sent the destroyer USS Stethem within 12 nautical miles (22 kilometers) of Triton Island on Sunday, passing through the contested waters on the basis of “innocent passage.”
The Arleigh Burke-class guided-missile destroyer USS Stethem
It was the second such operation conducted by the US during Donald Trump’s presidency. On May 24, the US Navy guided-missile destroyer, the USS Dewey, came within 12 miles of the Mischief Reef in the Spratly Islands, another disputed archipelago that lies in the southern part of the South China Sea. At that time, the Chinese Defense Ministry also sent two frigates to “warn off” the US vessel and said that it was “firmly opposed to the US behavior of showing force and boosting regional militarization.”
The news of the US ship deployment to the contested area comes just days after reports suggest China has completed construction of new missile shelters on Mischief and Fiery Cross reefs.
A stinging rebuke by voters in the Tokyo Metropolitan Assembly election Sunday is certain to set off postmortem finger-pointing and a strategic recalibration within Prime Minister Shinzo Abe’s ruling party as he weighs a path forward for amending the constitution.
“We take the results seriously,” a stunned Liberal Democratic Party Secretary-General Toshihiro Nikai told reporters Sunday night. “We will reassess what needs to be reassessed and do our best to recover our lost ground.”
Hakubun Shimomura, who heads the LDP’s Tokyo chapter but faces allegations of receiving murky political donations, attributed the party’s loss to trouble on the national level. “Heavy headwinds were blowing far above, in national politics,” he said in a Fuji Television program. He later told reporters that he plans to step down to take responsibility for the loss.
Abe’s party had enjoyed unrivaled strength since unseating the Democratic Party of Japan in December 2012, as victories in three national-level elections followed. But a favoritism scandal involving a veterinary school run by a friend of Abe’s as well as a gaffe by his hawkish defense minister on the campaign trail appear to have weakened public support.