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Virus Threatens Stabilization, China PMIs, Fed CPI Goal: Eco Day

Virus Threatens Stabilization, China PMIs, Fed CPI Goal: Eco Day

(Bloomberg) -- Welcome to Wednesday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

  • The outbreak of coronavirus threatens to derail a fragile stabilization in the world economy, which appeared poised to benefit from the phase one U.S.-China trade deal, and signs of a tech turnaround
  • China’s January PMIs are set to drop -- likely by more than the consensus expects -- and register some early impact from coronavirus, writes Chang Shu
  • Some Fed officials are already shifting their approach to hitting the central bank’s inflation goal even before the conclusion of a policy framework review. Meantime, Bloomberg’s U.S. economists say if push comes to shove, the Fed is more likely to cut rates to promote growth as there’s little evidence of overheating inflation pressures
  • Mark Carney’s final decision at the Bank of England is on a knife edge, and the governor hasn’t done anything to ease the tension. Brexit uncertainty could plague the British economy for years to come after the U.K leaves the EU, new research claims
  • Ewald Nowotny says the ECB must adopt a flexible approach to price stability or risk losing its credibility, as the outlook for ECB policy is repriced amid concerns about coronavirus. Meantime, the European Commission is considering penalizing imports from polluters, amid ever louder warnings that the plan could trigger retaliation
  • The Richmond Fed’s regional manufacturing index surged at the start of 2020, while U.S. consumer confidence also exceeded expectations. The Congressional Budget Office says strong U.S. economic growth that’s pushed unemployment to a five-decade low will contribute to an uptick in inflation this year
  • The global monetary stimulus that kept growth from sinking further last year carries potential costs from “stretched” asset markets and elevated debt levels, the IMF said
  • Canada’s job market has been firing on all cylinders and it’s been especially strong for men, unlike its neighbor to the south
  • New Zealand central bank official Christian Hawkesby says a lower currency is helping shield his nation’s economy
  • The U.S. and Kenya are expected to announce negotiations on a free-trade agreement next week, America’s first such deal with a sub-Saharan country
  • Peru’s “disappointing” 2019 economic growth figure didn’t accurately reflect strong numbers in several key areas, central bank President Julio Velarde said, prompting the government to consider overhauling the way GDP is measured
  • The lesson from the past week in the world of trade is really quite simple: Tariffs are contagious. Oh, and they don’t always work as planned, writes Shawn Donnan in Terms of Trade
  • Leon Li is the rarest of Chinese crypto magnates -- one who’s won Beijing’s backing. The founder of Huobi Group is now set to play a pivotal role in China’s effort to build a homegrown crypto-industry
  • One way the rich get richer is through inheritance, and they’re barely paying taxes on it. Americans are projected to inherit $764 billion this year and will pay an average tax of just 2.1% on it. Meanwhile, former Treasury Secretary Lawrence Summers proposed a suite of steps the U.S. can take to raise trillions of dollars without adopting a wealth tax

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Alexandra Veroude, Michael Heath

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