North Korea says it is able to immediately launch a nuclear attack

A piece in Korean media, Dong A Libo, reporting that North Korea had described plans to “put strategic armed forces on a high alert operation”

It means that North Korea is able to immediately launch a nuclear attack anywhere in Northeast Asia, stressing that it owns leadership for nuclear deterrent,” said Ryu Sung-yeob, a senior researcher at the Korea Research Institute for Military Affairs.
That does not sound too encouraging.
A piece in Korean media, Dong A Libo, reporting that North Korea had described plans to "put strategic armed forces on a high alert operation"

On the politics front today – China expected to pass Hong Kong law

Its expected that the national security law will pass China’s National People’s Congress (NPC) parliament Thursday 28 May 2020.

This (in very brief) law imposes a new national security law in Hong Kong, bypassing the city’s legislature, with stricter measures on sedition, secession and subversion against Beijing. The new law allows mainland Chinese national security agencies to operate in HK.
I’ve been saying on this law that the NPC passing it is basically a done deal, the annual parliament sits to rubber stamp drafts. To that extent its passing is an event factored into the market already.

China press warn of the danger of Trump administration downplaying the coronavirus

China’s Global Times with the piece. GT is not the most, err, independent of media but given the Chinese experience with the dangers of COVID-19 they do have a point:

  • coronavirus continues to spread rapidly across the US
  • officials including President Donald Trump and some in the public still seek to downplay the risk of the deadly virus
  • an apparent bid to avoid disruptions to economic activities by arguing the common flu is more fatal than COVID-19
  • raises questions about whether the epidemic can be contained effectively
  • irresponsible for public health security

OECD cuts 2020 global economic forecast to 2.4% from 2.9% previously

OECD warns that the global economy may shrink in Q1 2020

This follows their November forecast here previously. Notably, they have slashed China’s growth forecast to 4.9% from 5.7% previously. Meanwhile, in the US they forecast a 1.9% growth for the year – slightly lower by 2.0% previously.

As for the euro area, OECD sees growth of 0.8% this year, down from 1.1% previously. They note that the forecasts are currently based on the coronavirus epidemic peaking this quarter and says Japan and Europe risks a recession in their downside scenario.

AUD/USD on 0.65 big figure, first time in a decade

Australia is closely interlinked with China’s economy, and thus getting hit by the fallout of the outbreak

AUD/USD under 0.66 first time since 2009 with the news worsening on the coronavirus today, cases accelerating in South Korea. A freer media in South Korea reporting on cases is further cementing doubts about the veracity of the data on the virus impact out of China.
NZD taking a hit also
ps.  This from Goldman Sachs overnight:
  • “The number of ‘missing work days’ in China will be roughly equivalent to the entire US workforce taking an unplanned break for two months.”

Moody’s on the phase 1 US-China deal – will not resolve core differences

Moody’s downbeat not only on the trade deal …

  • says outlook for APAC corporates remains negative in 2020 amid slowing global growth and trade policy uncertainty
  • “while positive, the US-China trade agreement will not resolve core differences, dampening business sentiment globally”
  • global economic growth will remain lacklustre, with growth in the US and China decelerating to 1.7% and 5.8% respectively in 2020
  • expects major central banks, including US Fed ECB, & BOJ will maintain accommodative monetary policies

Dunno, at least until the November US election we can expect US-China differences to be swept under the carpet? Or, maybe not?

APAC is Asia-Pacific in case you are wondering.

3 big doubts on the phase 1 US-China trade deal

The Financial Times flags concerns that business have with the trade truce signed by the US and China

  • left billions of dollars of US tariffs on Chinese goods in place
  • doubts about whether the truce will stick
  • a desire for US officials to complete the work by extracting further structural concessions from Beijing
The piece does say, more positively that the risk of a new escalation in tariffs and tension in the near term – and possibly even until after the November 2020 presidential election – is lower.
  •  there is still broad concern in corporate America that the truce is fragile and limited. If the Trump administration believes that China is not living up to its commitments, it could quickly and unilaterally move to impose new tariffs on Chinese goods, leading to a new escalation.
Yep … this is not over, as we all know.
FT link, may be gated.

UN sec-gen ‘deeply concerned’ North Korea said it could resume weapons tests

Celebrated trolls of the year (2019 version) North Korea / Kim Jong Un are off to a lead position for 2020.

Kim Jong Un said earlier in the week that there are no longer grounds for him to be limited by his self-declared moratorium on intercontinental ballistic missile and nuclear weapon testing & a “new strategic weapon” will be unveiled in the near future
Prompting United Nations Secretary-General Antonio Guterres to say (through a spokesperson) that he hopes there will no new tests.
The 2020 US election year will be, I suspect, very interesting indeed. In Chinese curse terms that is.

North Korea tests missiles a month ahead of deadline for US talks

Breaking a month-long lull in missile tests, North Korea fired two short range missiles into the sea off its east coast on Thursday in what appeared to be the latest try out of its new multiple rocket launchers, South Korea’s military said.

The test-firing came as the clock ticks down on the year-end deadline that Pyongyang had given the United States to restart stalled denuclearisation talks.

South Korea’s Joint Chiefs of Staff (JCS) said the North fired the two missiles into the sea from launchers in the eastern coastal town of Yonpo at around 5 p.m. (0800 GMT).

The rockets travelled up to 380 kilometres (236 miles) and reached an altitude of 97 km (60 miles), the JCS said.

Japanese Prime Minister Shinzo Abe said the launch was a threat to not only Japan but the region and beyond, though his defence ministry said the projectile did not enter Japanese airspace or its Exclusive Economic Zone.

“We will remain in close contact with the United States, South Korea and the international community to monitor the situation,” Abe told reporters. (more…)

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