In this briefing:
- The Year of Dithering Dangerously
- Macro Debt Risks in China According to the PBOC
- FLASH: UK’s No-Confidence Vote in May Day
1. The Year of Dithering Dangerously
President Joko Widodo, cabinet-level policymakers and the broader political elite are neglecting the imperative for economic reform at a particularly critical juncture. Prospects for improvement in a second Widodo term are questionable.
2. Macro Debt Risks in China According to the PBOC
If there is one thing China is acutely aware of it is the debt risks. For many years, I questioned whether China even understood the enormity of its debt risks. Due to a number of factors, I have actually become quite convinced that yes they do understand these debt risks. It should be emphasized that just because they understand the size and enormity of the debt risks does not mean they are going to take corrective steps that in normal financial markets we would expect (I will return to this point later). However, they do clearly grasp the underlying risks of the debt buildup.
3. FLASH: UK’s No-Confidence Vote in May Day
- The threshold for a confidence vote in UK Prime Minister Theresa May has been triggered and will be held at 6pm GMT, with results available at about 9pm. I expect Conservative MPs to oust May now rather than be bound to keep her as Leader for another year.
- It is likely to be a close vote. Either way, the political outlook will change. Replacing Theresa May would take a few weeks and would raise the risk of a managed “no deal” Brexit, as candidates compete for the Eurosceptic membership.
