Daily Memo: Sagging Economic Numbers, Ongoing Protests in Hong Kong, Italy’s Political Drama

All the news worth knowing today.


Reading the economic tea leaves. Germany’s real gross domestic product in the second quarter contracted by 0.1 percent month on month. According to Destatis, the culprits were a decline in gross fixed capital formation in construction and weak export performance. Germany’s economy minister admitted the data betrayed weakness in the German economy but also insisted that a recession could be avoided if “the right measures” were put in place – likely a reference to Chancellor Angela Merkel’s statement yesterday that she saw no need for a fiscal stimulus package. European Union-wide growth in the second quarter was just 0.2 percent. Meanwhile, China reported a raft of worrying economic data of its own, including record-high urban unemployment of 5.3 percent and the slowest growth in industrial production (4.8 percent month on month) since early 2009. U.S. consumer debt continues to reach new highs, with the Federal Reserve Bank of New York releasing new debt figures yesterday that showed, among other things, an increase in the proportion of U.S. credit card balances substantially past due.

The song of angry Hongkongers. Hong Kong’s Airport Authority said it had secured an interim court order to stop protesters from obstructing operations at Hong Kong Airport, where a demonstration featuring a sit-in complete with a Les Miserables sing-along forced the cancellation of hundreds of flights on Monday and Tuesday. The airport has since deployed dozens of security staff, and local police are stationed at the entrance outside the express train that runs between the city and airport terminals. The South China Morning Post reported that the number of protesters at the airport had dwindled to roughly 50 by earlier this morning as a result. This all comes as the Global Times has released video of People’s Liberation Army military vehicles pouring into nearby Shenzhen and as U.S. President Donald Trump has announced that U.S. intelligence indicated the PLA was deploying troops to the Hong Kong border. Meanwhile, the head of China’s Communist Party Office of Foreign Affairs visited New York yesterday to discuss bilateral relations with the U.S. secretary of state.

More political drama in Rome. Italy’s Senate, freshly recalled from vacation, decided to reject a call by Deputy Prime Minister Matteo Salvini for an immediate vote of no confidence in Prime Minister Giuseppe Conte. In a surprising coalition, a majority of senators from the Five Star Movement (M5S) and the Democratic Party voted together to instead set the vote of no confidence for next Monday, Aug. 20. The leader of the Democratic Party, former Prime Minister Matteo Renzi, delighted in thwarting Salvini’s ambitions and told him to get back to drinking on the beach. For his part, it appears Salvini hoped that he could get M5S to support his call for an immediate vote of no confidence by supporting an M5S reform that would reduce the number of Italian parliamentarians, apparently to no avail. It should be an interesting few days for Italian politics, and if the last 24 hours’ proceedings are any indication, there is a chance Salvini will have to take Renzi’s advice.

A Transatlantic trade deal? Britain’s new chancellor of the exchequer met with the U.S. national security adviser yesterday. The two reportedly discussed the possibility of a temporary U.S.-U.K. trade deal covering all sectors and that would go into effect on Nov. 1 – the day the U.K. is set to depart the EU. According to an unnamed official who spoke to NBC News, the United States is trying to make a symbolic show of unity with the United Kingdom. The “show of unity” comes just weeks after U.S. President Donald Trump blew up at the British ambassador to Washington when his cables to the British Foreign Ministry about the “dysfunction” and “ineptitude” of the Trump administration were made public and after Boris Johnson took up residence at No. 10. The two sides are hoping to make an announcement at an upcoming G-7 summit. There is little reason to think that such a deal would put pressure on the EU to revise its position on Brexit or that it would allay the short-term shock of a no-deal Brexit.

Honorable Mentions

  • South Korea’s Defense Ministry announced it would purchase two additional ground-based anti-missile early-warning radar systems and build three Aegis-equipped destroyers in the next five years to deal with the threat from North Korea.
  • China declined to approve the visit of two U.S. warships, the USS Green Bay and the USS Lake Erie, to Hong Kong.
  • The Greek navy will not participate in a U.S.-led multinational naval force to patrol the Persian Gulf, focusing its resources instead on potential Turkish activity in the Eastern Mediterranean.
  • TASS reported that Russian military officials canceled the evacuation of Nyonoksa, located near a naval missile range where an explosion has resulted in radiation levels 16 times higher than normal, saying that the evacuation is no longer necessary.
  • The Iranian Labor News Agency quoted the commander of Iran’s Islamic Revolutionary Guard Corps as saying that negotiations with foreign countries have “failed” Iran.
  • North Korea’s state-run Rodong Sinmun newspaper expressed support for China in dealing with unrest in Hong Kong.