Sound and Fury, Signifying...Something?
This week, President Trump's off-the-cuff
threat to rain “fire and fury and frankly power” on North Korea -- which responded with it's own threat to envelop Guam in fire
-- left markets scrambling to divine the real risk of all-out conflict over the Korean Peninsula. The issue was the biggest mover on this week's Scoreboard, jumping 65 percentage points in a week (the score last week was negative). What is certain is that the war of words has galvanized both Korean security insiders' and markets' attention to an even greater extent than actual weapons tests. Predata signals
measuring digital activity in both of these camps spiked together for only the fourth time since 2016. Even if both leaders' threats are empty, experts and observers are taking notice.
Chinese Corporates: The Debt is Still Too Damn High
Concern over a Chinese corporate debt bubble rose this week, as the PRC's state planner warned that despite some deleveraging success, corporate borrowing ratios remained excessively high
. According to the Bank of International Settlements, Chinese corporate debt was 166% of GDP at the end of 2016, with non-financial corporations' leverage ratios the highest of any advanced economy. Moreover, after several quiet months, Predata signals that anticipate Chinese corporate defaults spiked, indicating heightened risk of major company defaults in the near-term.
Kenya Votes, Kenyatta Wins
Kenya's general election, held Tuesday, generated the strongest interest on the Scoreboard this week. With 98% of polling stations reporting, President Uhuru Kenyatta leads perennial challenger Raila Odinga by 1.4 million votes. The result is consistent with our digital campaign scores
, which showed Kenyatta gaining momentum online in the days leading up to the vote. As the count rolled in, Odinga cried fraud, triggering street violence that killed five. An observer mission led by former U.S. secretary of state John Kerry is urging calm, and the country is holding its breath, hoping to avoid a repeat of the 2007 fighting that left more than 1,000 dead.
Markets Ready for Merkel To Return from Wilderness
Germany's upcoming federal election and EU Reform, which will prove to be a major campaign issue, both made significant gains on the scoreboard this week. While Merkel, whose CDU has a comfortable lead in the polls
, enjoys her Italian summer vacation
, main challenger Martin Schulz and the SPD have kept their foot on the gas
. Six weeks out from the vote, markets seem eager to stake out a position on the outcome of what is shaping up to be a very quiet campaign