Increasing pessimism about growth. More ceos than ever see a slowdown. Sophie chinas mystery virus is spreading through persontoperson contact. Hubs stepping up passenger screening. Lets turn to selina wang in beijing with australian markets coming online. Selina we did see australian markets red hot. We are now starting to see them drift slightly lower, marginally except for the new zealand up. 2 after gaining 3 since the start of this year. We did yesterday see the equities hit record highs when it comes index price and private equity valuations. So, that would be enough to ring bells in normal times but our strategists say that macro backdrop in australia is dire enough to call this rally into question when you consider the massive wildfires that are damaging their economy. With increasing focused on environmentally sustainable investing, that rally is potentially at risk. I want to check on that a little bit more with this next chart. Thelook at that rally in context of the u. S. China trade deal and lower reserve Bank Interest rates that pushed it into overbought territory. As you can see from this chart, australian stocks look overbought for the First Time Since july. 14 days the asx 200s relative index edged about 70. Signaling the markets rally have may have gotten too hot. This week we will see if that starts to pare back even further. Sophie the imf predicts the World Economy will strengthen in 2020, although at a slightly slower pace than anticipated. Cranfeld joins us from wellington. What cues can investors take from this outlook here . Is theye main thing will be encouraged by the fact that the outlook for 2020 is significantly better than it was 12 months ago. If you remember this time last year, the imf was downgrading everything and as it turned out the final result for the year was 2. 9 growth for the Global Economy, which wasnt too bad. They are looking for more than 3 growth this year. They have shaped the little bit off their forecast but in the big picture, its a very small amount. They are still looking for a better year in 2020 than 2019 but not quite as good as 2018. Overall people are comforted by the fact that the Global Economy is going in the right direction. Its a very big week with all the Major Players at davos. We may hear some contradictory views from that. In general, investors are expecting this year, the growth is on the right footing. Intorade wars have moved the background and people are concerned about getting on with business. Thats being reflected in slightly better economic data. Most significantly we have seen a last week with china, Industrial Production and retail sales, investment all going in the right direction. And if china starting to improve thats good news for everybody. So, although the imf is being more cautious, people will see what is happening on the ground as being pretty decent. A situation where if we do not get any major catastrophes, the Global Economy is in decent shape. It should be a good year for growth. Sophie in fact, were adding haidi or hoping to add to that picture waiting for those 20 days of south korean exports due any minute. Not so positive is the latest downgrade by moodys on hong kong. Is that likely to cause any kind of reaction in the equity session . Gradualthink this is a of and for hong kong. People on the ground are not surprised. They could see it coming less year, really since the protests got worse and the third and Fourth Quarter last year. You could already see it reflecting in hong kong underperforming against other places. The data is reflecting that unemployment has risen in hong kong. Passenger arrivals have gone down at the airport. Generally, the outlook for business is a bit worse than it has been for several years. That probably means you will see equities be an underperformer relative to the rest of asia for some time. Its already started to happen. We are seeing weakness yesterday as well. Although the Global Economy, Global Equities are probably going to have a decent year, just means that hong kong will be one of the laggards. There will be some companies that can beat that, because their businesses outside of the territory. Those businesses most exposed to hong kong will feel it. Also, Hong Kong Companies that borrowed outside hong kong, if they borrow in u. S. Dollars or other currencies, they will see a gradual increase in their cost of borrowing. It will not be massive. Hong kong is still a aarated country. But they will see a slight costs. Of widening of if the hong kong situation does not improve quickly, it will gradually be reflected in higher costs to Hong Kong Companies. Ranfield with the latest. You can follow all the days trading on the bloomberg. The International Monetary fund is toning down risk warnings. Can take a look on this terminal chart. Looking at exactly what mark was referring to earlier. This picture of positive green shoots. You can see improvement shipments out of south korea for the first 10 days. Returning to growth as that export number expected in the first 20 days to come to any minute now. Singapore domestic exports were also positive. The china data points have been bouncing off the lows we saw. The question is how does this factor into global currency . Ofs is north american head currency joins us from toronto. Does this mean that we see the e. M. Continue to see strength . Yeah, we think so. Part parcel of that is going to be the recovery story in china. And in the asia economy as a whole. Last weeks phase one agreement subtracted the negatives. You should see some support for growth leverage currencies like the korean won and the Singapore Dollar as well. Haidi where does the u. S. Dollar strength fit into this . Areause most analysts you going to see another europe dollar in the absence of anything else, except for maybe sterling. We are Firm Believers in reflation trade. Part of it is our bearish outlook for the u. S. Dollar. You might get bouts of dollar strength. The move in reflation is not going to be one way. A sporadic bout of strengthen the dollar. Again, if we are looking at a loser military policy outlook combined with the more relaxed fiscal policy and cyclical conversion of economies outside of north america, then to us suggests there will be some degree of dollar selling as the year progresses. Boj decisionve the coming up this. Tuesday the yen has depreciated back towards the 110 level. Long yen. Whats here . When you look at the yen. There are two ways of looking at it. The first one, its a risk off tone to global markets. The second is you see. A stronger and dodge in his picture in japan we think it is going to be more of the latter. You have a government that just initiated of fiscal spending plan. And you have additional tourism from the olympics for the summer. And you also have to look at the backup of yields over the last couple of months. If you look at the spread towards gjb and bonds. This diversions is a temporary thing. We will look at dollaryen 106 levelsthe tactically for the time being. Sophie do you see the yen reaching 100 this year . This year is going to be tough. If we look at the pro risk mood it suggest that the yen will not get the same support. Its going to be a more gradual move as opposed to anything swift and violent. Much volatility do you assigned to, given that this a yen that has given us significant geopolitical bumps already. Even the ones that we do know about, like the u. S. Election. I mean, there are potentially catalysts to drive currency higher. What we should be looking at are the catalysts that could drive global rates highers. Giving the fact that we are dealing with such an expansive environment for global liquidity, we do not see the setting for rates to move higher. Currency volatility a subdued. They will not stay this low forever. We saw similar low volatility before the shock five years ago in the middle part of the last decade. These regimes do not tend to last long. If youre looking for clues, you should be looking in the global rate space. Haidi how do you play the Arbitrage Trade between all the aussiekiwi . The good news out of china will affect the both equally. With respect to that, we think the kiwi shoul outperform. Dwe do expect the reserve bank of new zealand is going to be a little bit more cautious in terms of rate cuts. There are more andogenous issues in australia in regards to the bushfires that will shave some growth there. If we are talking another rba cut we know from prior speeches from the governor that q. E. Might not be that far behind. If that is the cas, it looks like rallies are fading. Sophie lastly, lets go back to your view on the chinese yuan. What kind of outside pressure do you see for the currency given the momentum we are seeing an economic indicators. It is hard to get in the way of an appreciating yuan. There are limited appreciation if we do get consolidation we do expect the yuan will further appreciate. One not just a phase agreement story. It is also the story of loose credit and the chinese economy. Moving towards more activity. A weve been in this downturn in chinese pmis for a couple of years. We expect a gradual upturn an activity which should translate into a bullish outlook for the yuan going forward. Sophie thank you so much. The north american head of fx strategy in toronto. Su that mystery virus in china. It is spreading across asia through persontoperson contact and heightening concern about wider infection. The number of cases is surging on the mainland. From its origins in the central city of wuhan to the north in beijing and self to guangdong. Authorities worldwide are stepping up testing in ports and airports for symptoms that include fever and coughing. Meanwhile, the first day of the extradition case against huawei s cfo has seen her defense team denounced u. S. Fraud charges as a facade. Lawyers say she should not be sent to the u. S. , because her defense to not meet canadas legal test for extradition. The hearings are her first chance to avoid being sent to the u. S. Where she is accused of lying to banks about huaweis links to iran. Civil authorities in iran have released a second report into the downing of that ukrainian passenger point saying it was hit by two missiles after takeoff. All 176 people on board the boeing jet died when it came down outside tehran on january 8. Iran initially blamed technical issues but later admitted the plane had been wrongly identified as a cruise missile. U. S. Have the reached the truth on digital tariffs that will mean neither side imposes duties this year. Tweeted thatron he and his counterpart had a great discussion and they will Work Together to avoid an escalation of tariffs. The accord brings france and the u. S. Back from the brink of a flu boeing a full blown trade war. Global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. More onahead, we get the tech truce between paris and washington. Haidi and europe and the u. S. Pulled back from a fullblown trade war. Sophie up next, oil slightly higher with wti staying below 60 bucks a barrel. We discuss the implications. This is bloomberg. Is trading slightly higher after raising higher the world supplies counted libya. S over iraq and it seems like this is a market word takes a high threshold of a shock for it to react. Weve seen a little bit of upside. I think it would be wrong to underestimate the disruption caused in libya. They usually produce about 1. 2 million barrels. This is considerable disruption. And its certainly lending some decent support to the market. As you mentioned at the top, the markets is was applied in weve seen that in u. S. Inventories data in recent weeks. So that will certainly temper any ructions from libya and ir aq, which we have seen in the last few days protests there that have halted some production. Production disruptors are ongoing, there will be possibly some upside. Balancing the supply picture. We will get a clearer picture on supplies later in the week when the u. S. Government does its we can report. Sophie how does iran factor into the equation . James iran continues to bubble under. Reports of more conflict between iran and the e. U. On how they are moving forward with the nuclear talks. It seems that iran is being increasingly belligerent in the face of tougher stance from the u. S. Theres always potential for that situation to flare up. Traders should be aware of that. Politicald, tensions can have an initial price spike. But a longerlasting impact is not as great as it was. Be wrong to underestimate the risks. Ands a very volatile region could continue to be so in the months and years ahead. Sophie the libya noc declared force majeure, meaning it will impact delivery contracts. How long do think this will be happening . James a very good question. We had a meeting in germany on sunday aimed at brokering a truce between the rival factions in libya. The report suggested was a bit of a bust. No agreement respurred and the libby and strong and who the libyan strong man who is holding the oil market for ransom with the blockade he is put on the exports. Hes digging in. No sign of him agreeing to a truce. Thosere this goes on, disruptions are ongoing. That being said, the political volatile. In libya is we could well get an agreement within a matter of days and think and quickly returned to normal. Im not expert on libyan politics. All of the traders are in the same boat. Haidi thank you so much. James thornhill in sydney. Well get more on the outlook for commodities later. Guest will be whether senate are. Do not miss out on a big guests from dom us including the imf chief. Thewell be speaking to u. S. Transportation secretary elaine chao as well. This is bloomberg. China has pneumonia like virus is spreading across asia through persontoperson contact. The number of cases is surging forcing airports to introduce screenings. Massconcerns with the migration of Lunar New Year around the corner. Tom mackenzie has the latest in beijing. What is the breakdown, and what are Chinese Health officials doing with this latest information . Tom it really points to the key reasons for heightened concern. One is that Health Officials have determined this is being transparen transmitted persontoperson. Number two we are in a period where hundreds of millions will be traveling for the chinese new year, potentially 3 billion trips across the country and outside of the country as well. In terms of the numbers, the cases were already at 200, according to officials. There have been cases in everywhere from the source of beijing, quando, south korea, japan and thailand. You see increased screening at airports and ports in railways airports like san francisco, los angeles, new york as they expect hundreds maybe thousands of visitors from Mainland China to be heading to countries around the world for the spring festival holiday. Stepping up the screening. The concern is the transmission rates will pick up significantly as the number of people surges across the country on these trips. How health of 30s are looking at it, wto meeting in geneva on the 22nd. Tomorrow to work out how they should respond. Weve had three confirmed deaths so far. And, of course, the imperial researchers suggest the number 700cases could easily be 1 according to their research. The concern is that this is numbero pick up in the of cases and the number of deaths going forward. Haidi tom, what are we expecting to see in terms of the economic in the Market Impact of this . Tom weve already seen reflected in some of the stocks in china. The pharmaceutical stocks, linked to antibiotics, they surg ed in anticipation there is going to be greater demand for those types of drugs. On the flipside youve seen everything that is linked to two o travel. Air china, china southern, casino stocks as well as restaurants, a food chain. All of these companies are under pressure. In expectation the people are going to be curtailing the trips and staying away from crowded places. Again, just to highlight the extent of the sarslike virus, if you compare it to sars in and that led to 800 deaths significant economic turmoil as it spread across china and hong kong. Were hoping it will not get his bat is that. Officials are monitoring closely the cases are picking up very quickly. We are at a Crucial Point where hundreds of millions of people will be making trips across china. Theres a a lot of concern here. Haidi picking up quickly. As were speaking china report infrom the corona virus wuhan city. We are just getting that across the bloomberg now. As we get further reports of contamination, of contagion and fatalities, a fourth being reported from this a virus, what it we hearing from authorities and what are we anticipating the measures to be put in place . Tom first of all, we do not know what the source of this buyers this virus is or how its transmitted. Those are two questions that need to be answered. We have the president addresses publicly in state media yesterday saying the country needs to do everything to halt the spread of this virus. We will see a step up in terms of the approach by officials, Health Authorities as they try to increase screening around the country and around these ports, around trains and railways and airports. But, of course, china also has a history of covering up and not being fully transparent about these diseases. Sophie well get more details of what could be ahead for, regarding the outbreak of this corona virus, next. This is bloomberg. And they lived happily ever after. The end. The end might not be as happy as you think. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. Life line screening is the easy and affordable way to make you aware of undetected Health Problems before they hurt you. 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