 Okay, it's Monday the 20th of September, just coming into the open on the New York Stock Exchange, first trading day of the week, and in terms of the global asset class movement, a bit of apprehension in the air, almost palatable because China Evergrande was down as much as another 20% overnight, the Hangsang was down almost 5%, and stock index futures are indicative of a sharply lower open of Wall Street. The Dow futures down about 650 points at the moment. So Eddie, can you get us up to speed? What's the latest on Evergrande? Yeah, in short, it's all kicking off, but Evergrande shares are now they've closed with their lowest level since 2010. They're expected to now default within hours on a bank loan that's due today, and then they've got a crucial interest payment deadline on some offshore bonds that is looming on Thursday. So yeah, lowest market cap ever closed down 10%, but I think more worrying now is it's this fear of contagion and the correlations and the exposure, both in China, but now across the world, it's starting to cause some fear in global markets and kind of add to that souring Chinese sentiment that us three have all been talking about. Some kind of quotes here. Evergrande is just the tip of the iceberg, and this is Louis C wealthy security. So it's really about now they've got 310 billion in on balance sheet liabilities. What is being hidden right in this whole real estate sector? There's other kind of real estate developers as well that of course are correlated to this move, Sunak, R&F, Minchen Bank, Country Garden, Chinese life insurance are all trading at their lowest price since 2007. There's a huge amount of wealth in China tied to real estate. So it's about 74% of Chinese household wealth is in real estate. And of course, where do these people get these mortgages get these loans from the banking sector. So if there's a ripple effect and there's some defaults here, which is likely to happen, not just with Evergrande, but in other Chinese construction companies, then it's obviously going to have a big impact on the financial sector. So in short, it's all kicking off. Okay, let me just cycle through some of the main charts here. So I'm going to start with the S&P 500 future on the daily as we go into the open in about 35-40 minutes or so. And really key long-term level here I was talking about with some of the guys earlier this morning, which is a trendline from really March of this year in combination with the 50DMA, which despite the brief one day break below, but respected on the channel that we saw in June, it's been a really well respected area of support in combination all the way up until a sharp gap down the recommencement of trade given the overnight age of PAC move leading to this negative kind of setup for the open. Key level of course here is 43, 473 quarters in the S&P future, which is that low that we printed back in mid-August. It's had a brief momentary dip below and it's just holding there at the moment and you would imagine holding now until we really get the opening bell to see where we go from here. I've seen the Morgan Stanley Chief Investment Officer, he's been out already pre-market, said he sees growing risks of a 20% drop. I didn't catch the context, it was just a news text headline I saw come across the tape. But before I go to the other charts, Piers, any feelings about the setup generally for this morning? Well, I mean, yeah, certainly, well clearly, heavily negative sentiment stemming out of Asia and I mean, I think if you just step outside, I mean, obviously, how big can this problem be will be really determined on how the Chinese government reacts here. What kind of rescue package I think rescues the wrong word, but what kind of action will the government take to make sure this doesn't become a systemic risk? We talked about this on our podcast on Friday, but maybe I think if you're a shareholder, forget it, you've lost your money or you already have. If you're a bondholder, you've probably lost most of your money and that's fine from the government's point of view. They're all about the collective and the people and so it might be that the government come in, let Evergrande go, let them go bankrupt, come in and then somehow, I guess, renationalize them and then get on with the key thing here, which is actually building the properties that Chinese consumers have already paid for off plan. These are the guys that are demonstrating out on the streets, they bought properties off plan, they've paid a load of money and now they're left maybe with nothing and I think that's what the government are going to come in and actually deal with. But where does this go in terms of the sector generally? Because what's the ripple effect? Because if you add up all the suppliers and property sales, it's about 30% of Chinese GDP property sector. So if the property sector properly collapses, then that's really bad for the economy, but it's a knock-on effect for stuff like, I don't know, raw materials, copper for example, 20% of China's copper purchases is used in the construction industry and China buys the most copper on the planet. So you've got a lot of potential contagion on commodity pricing here, the big miners are down, big time today, iron ores down below $100 today for the first time in over 12 months, aluminium's down, you've got all these industrial metals now on the slide and the miners are going with it. So this is obviously then feeding into this negative sentiment and just as all that's happening, we were kind of worried about stuff anyway with regards to the Fed and is inflation transitory or not? And maybe inflation is going to stay stubbornly high, just as Delta is kind of just hampering growth momentum and yet the Fed are going to have to taper anyway. And so you're getting this bit of a cocktail of events that's creating this negative storm, which is what's playing out in markets this morning. But yeah, what happens next and how far do the markets like the S&P go? Well, I think first and foremost, depend on what happens with Evergrande in the next, well, 24 hours perhaps. But I think for without that disaster scenario, I think trade 20% down on the S&P, who was it you said that? The CIO of Morgan Stanley. All right, I'm not sure I'm in his camp yet or her camp, I don't know. I think that's a little bit too sensationalist at this point. It just depends on what happens with Evergrande and the contagion impacts, and especially on the banking system, as Eddie was saying. Okay, so two questions, one for Eddie and one for you, Piers. Eddie, firstly, do we know can we quantify at all any type of exposure to European names outside of, say, specifically domestic China? Yeah, so as always, it's never plain sailing and easy to determine because there's trillions in derivatives exposures, there's obviously bank lending more traditionally. One thing we do know, of course, is there's bondholders that fall within Europe. So not a European name, but BlackRock, Paris based and Mundi, UBS, Ashmore, HSBC, Fidelity, PIMCO, Goldman Sachs asset management, all large on holders of Evergrande debt. But of course, it's not just Evergrande that they most likely hold, it's other real estate names and the related companies. So you want to stay away from those names that have exposure, at least that you can see and then that kind of off sheet stuff that will likely come to light as this rumbles on over the week, we'll kind of see that play out. And to you, Piers, I guess you might have already really advanced at this, but at the moment, the 10-year is up about 14 ticks. So it's already seen a pretty decent move. Gold, though, actually it looks like it's livening up a little bit, about nine and a half dollars in the futures at the moment, but it's coming towards the top end of its daily range at the moment. So worth keeping an eye on for sure as we go into the US swing. But correlation-wise, and anything, they're looking at Bitcoin as well in the crypto space, seeing a bit of a selloff as well. Yeah, one reason why I'm not in that 20% selloff camp at the moment is I'm looking at some of the key safe havens and they're not, they haven't reacted that much. I mean, I know the VIX is up 20 odd percent, but that's often incredibly low base. But gold is up, but still way off the levels it was trading at the start of last week. It was trading up at $1,800 gold. So it's still way off that. T-notes, yes, have risen, but we were trading higher than this on T-notes on Thursday. So it's not like it's gone very far. The dollar is strengthening. And I think that is playing a role in hampering that kind of gold upside. What's going on with Bitcoin? I mean, I don't know. I mean, is that supposed to be a safe haven? Clearly not. I mean, maybe it's getting impacted by dollar strength as well. So yeah, so for now, that correlation into that safe haven bid tone, it's there, but it's nowhere near as powerful as that kind of selloff we're seeing in some of those stocks, which leaves me to believe that at the moment, it's more of a profit-taking move on things like the S&P rather than a full-on, right? Actually, let's properly change up our asset allocation here. Yeah. And I was just going to have a quick look outside of the S&P. This is the Dow future. It's had a bit of a bounce off the run low. It just saw a moment ago, but we've got that low that would come in on the 19th of July, still a good 350 points below the current price of the futures. And if we jump over to the DAX also in sympathy, filling some pressure, but the DAX is also equally key level. So some really important closes on the daily today to dictate then where we head for the next 24 hours, 48 hours. And as the guys were saying, I think what do we hear from Evergrande over the next 24, 48 hours is going to be really key for global markets going forward. Yeah. And I've just seen European banks are now down 4%. So you can see where the concern is sector-wise. Cool. All right. Well, look, thanks guys. I know it's got a busy afternoon ahead, half an hour to the open. So I'll catch up with you shortly. Yeah. Cheers, Sam. Cheers, Sam.