Thread by @Trinhnomics

Good morning Asia - won't be a pretty day given the retaliation of China (smaller than the US but still signifying of icy relation); Look at CNH 👇🏻 - flew yesterday & sign that China is trying to use this route to offset erosion of price competitiveness. Still, what's the limit?

a) External debt USD1.97trn w/ 1.22trn or 62% short-term 👇🏻(general gov debt very small & it's mostly financial & corps).

So if it weakens the CNY too much, the issue is assets & liabilities mismatch for sectors most exposed (deposit taking corp ex CB is USD899bn or 46% of total

b) Given weak domestic demand, core CPI is stable. But we got a🐽🐖problem in Asia & pork is key b/c key protein for China & the gov' says price will exceed 70% in H2 2019.

Look at wut happened last time 🐷prices went up, yes headline goes 📈. A weaker CNY'll import more CPI too

Global equity performance in May in USD:

a) Everyone is a loser ex Argentina
b) Turkey biggest loser (mostly lira languishing)
c) Korea doing badly in the cross-fire of trade-war so both KRW & KOSPI weakness
d) China erasing gains so far fast
e) US too but lesser
f) VN resilient

Global fixed income (govies 10-yr) enjoying a rally, as in investors are scared & buying more bonds:

They are buying everything (JGB & Bund went negative) while Indonesia got sold off a bit 👇🏻

Back to food price, check out these destructive pest 🐛spreading 🌽🌱👇🏻. Btw, if inputs go up, output price will need to rise (restaurants raising prices to protect profit margin) 👇🏻

theepochtimes.com/destructive-pe…

Official data sticky (real GDP growth) but under the green shoots there are plenty of bad roots (look no further than investment, which is nominal btw, & particularly PRIVATE INVESTMENT).

Spike of layoff searches on Baidu👇🏻🧐

ft.com/content/c4001b…

Why do workers worry? B/c trade war uncertainty adds to already rising costs of production in China & firms respond by doing 2 things: a) offshore to lower costs - Vietnam; b) increase usage of robots to reduce workers. Both of these 📉reduce demand for labor & that's bad news.