 Okay, a very good morning to you. It is Wednesday the 15th of December and of course we start now to kick off the central bank announcements The major ones for this week with the Fed the FMC later today Then we get the Bank of England the ECB tomorrow on Thursday And so I'm gonna jump straight in and start talking about the Fed rather than looking too much at the charts this morning things are Relatively flat. We did have in terms of the close on Wall Street a slightly negative finish Nasdaq once again slightly underperforming down around 1.1% the S&P down about three quarters of 1% In terms of where we're trading at the moment very much sideways price action As you would imagine a lot of people sitting on their hands now just awaiting the FMC announcement later In terms of the currency markets, we have got Cables a touch firmer and we've just had the UK inflation figure come out And it was quite a bit stronger than expected 5.1% against expected 4.7 Upward contributions to the change on the 12 month inflation rate between October November 2021 were quite broad based So as we've been seeing I was wearing the lights of the US kind of moving away from those more pandemic kind of Indio Syncratic issues related to more supply constraints and so on so becoming more broad based the largest coming from transport particularly motor fuels Clothing and footwear was the rationale there so cable outperforming euro dollar a little bit a bit of sterling strength this morning But look let's talk straight on the Fed because that is really the main feature of of today And this is a timeline from the analysts at Goldman Sachs And of course we're looking at turbo tapering to be announced later today. It's been very well telegraphed So the fact of that happening them increasing their tapering amount from 15 to 30 billion It's probably not going to come as a huge surprise I'd say the consensus is very much leaning in that direction and it comes amid of course the transitory word being dropped by Jerome Powell and a recent Senate speech and also generally the more hawkish turn We've heard from him and his fellow colleagues on the FMC And so yeah, this is the timeline We're looking at a tapering pace to be picked up and if they now sit now It's really to execute that plan from January and that means then by January through to then March They will look to conclude and wrap up then the process of tapering that then leaves a period of let's say roughly Two to three quarters of which then according to Goldman's they're looking and anticipating that rate rises from the Fed in May July and November and we'll have a look at a little bit of a difference then of what different banks are looking out for that But this is what's ultimately going to be quite key because not only do we get the Statement the tapering obviously announcement coming out from the Fed because it's a December meeting This is one of the four of a year on a calendar quarter Excuse me That will also get the economic projections and of the of note and the one that people will be most focused on of Course is the dot plots This is what I'm referring to here It's just the composition of the voting of the members of the FMC and Generally what we're looking at here not to go into too much detail right now is this is mapping then What goldman's are looking at as the current composition of dots on the left on each box So each box would signify where interest rates would be at the end of each subsequent year. So Then looking at so I'm just getting my bearings here So the end of next year would be here 2022 So this would be one of the closest ones watched to see how many rate hikes anticipating money end of next year 23 24 and then the long run and as you can see here the general idea is that in the near term So particularly 22 23, there's a slightly more distinct move higher in the average Median dot plot and that then is indicative of interest rates rising and goldman's like Morgan Stanley They've come out They expect the Fed to double the pace of tapering as we've discussed and they believe the dots will show two hikes in 2022 three in 2023 and four in 2024 for a total of nine and so slightly more aggressive in Fitting then with the general hawkish turn we've had from Fed commentary Now a couple of things to be aware of with the dots them themselves The one thing is is that any more hawkish kind of trajectory of rates for the future is likely going to be somewhat Offset by downside risks linked to Omicron So you'd expect a fairly tactful approach from how to come out perhaps in the press conference and if the Projections are quite aggressive to then talk it down saying look this is quite a fluid situation with Omicron We will adapt and change as we see fit and guide the market appropriately That type of classic central bank language The other thing as well is that President Joe Biden still has three Nominations to make for the Fed board and two regional Fed banks from the process of searching for new leaders So when you think about that then particularly the fact that there's three nominations for the Fed board White House officials have talked about this happening relatively soon Where it actually means then the composition of the Fed for next year might look a little bit different or at least unknown To what we actually know at this point in time And so it's hard to really take too much away from these dots because a they're hardly ever accurate Be that's because based on the reason it's very hard to predict the future And that future has become ever more uncertain under the Omicron pandemic environment and then three there's a number of people yet to be determined and so We don't have full visibility or clarity yet of their policy stance So although definitely intraday tonight you'll probably see quite a large reaction to tonight's announcement The overall takeaway might be not crystal clear until actually another month or two down the line And obviously there will be better equipped with where inflation is at this point in time Has it now peaked and so forth? So yeah, this is what we're generally looking at There's also here the goldman's have mocked up the December FMC statement This is really useful They're nearly always on point and the reason why is because there's very rarely too much text change here that happens So it's fairly easy to predict But if you want to check this out just jump on my Twitter I shared all of those graphics I've just flashed up on my screen if you want to prepare for the FMC But essentially there's some slight tweaks at the top of the paragraph and essentially this is about Previously the statement reflected Factors that are expected to be transitory and we've course now that that's going to be dropped So that's why that's been a kind of Exed out in that sense and then the others are fairly limited changes But the notable one will be further down here in around the fourth paragraph when they talk about accelerating of tapering It's from 15 to 30 billion and of course that split 20 billion for Treasury securities and up to 10 for MBS securities All right Otherwise before I move on don't forget. I'll drop the link as well on the bottom of the video If you go to Amplify me comm slash market hyphen maker pop in your email You'll get the daily email from me Deconstructing typically macro events on a day-to-day basis So if you're a student and you are thinking about a career in finance And you really want to up your game and your commercial awareness This is what I'm attempting to do with my daily emails. I also put out kind of job Adverts that I get from my contacts in the industry from investment banking to quant roles and everything in between So definitely worth checking out and we put together a weekend one where we comprised then live M&A deals SPAC deals Fundraising as well as global market stuff and crypto and DeFi as well So do check that out and feel free to subscribe otherwise the other big news of course came last night, which was a slightly perplexed Boris Johnson because he remains very much so under pressure and he suffered his biggest Rebellion since becoming Prime Minister last night almost a hundred Tory MPs voted basically against his proposal And that meant then that the ruling Conservative Party had to lean on the opposition Labour Party To support part of the key strategy for containment of this latest Omicron outbreak The Tories the rebels opposing the plan to main date mandate the use of so-called COVID passes at nightclubs and other venues in England As they tried to stem the tide of what's anticipated to be much further rising in if COVID case is led by Omicron This particularly sensitive timing because tomorrow we get the parliamentary seat of North Shropshire Which in normal time should be a fairly safe seat for the Tories They're defending a majority of almost 23,000, but they're in danger according to reports So it's apparently very tightly run against who were third place in 2019 Which is the Liberal Democrats who are going to run that Tory candidate close and again somewhat symbolic then of How the the needles kind of shifted a little bit on the popularity of the the Conservative Party at this point in time under Many different issues they've been confronting The government strategy for tackling the UK Surgeon Omicron infections is already facing setbacks as well Is what some reports are suggesting as you can see here commented in Bloomberg Medics warning of bottlenecks Starving shortages, you've also had I don't know if you've done it But I certainly did trying to book online your booster shot was Took took me about an hour because the site kept crashing You'd get through pick and date and there was no actual time slots and so on So there's a lot of pressure at the moment actually because the rollout program is facing and so you would anticipate logistical issues The Times newspaper has also reported citing the NHS leaders as saying the year-end deadline is Unlikely to be met at this point in time So that's the latest that you've got on the the situation of COVID in the UK As I said though the pound this morning is actually moving a little bit higher So it's not really reacting to politics It's reacting short-term to some of the inflation metrics that we've had as I mentioned the year-in-year CPI for the UK came in hot at five point one percent above the expected four point seven and if anything it then it just makes the Decision for the Bank of England all the more awkward tomorrow, which is they don't want to get behind the curve with tackling inflation But at the same time Omicron is going to get worse before it gets better And that's gonna Omicron lead to probably more onerous restrictions Which is going to impede economic activity going forward And so the pounds just running up to a near-term area of technical resistance from some of the price action of recent sessions going back to Last week and the beginning of the week on Monday and so a little bit of strength and out performance is sterling for now But we'll talk more about the banking Bank of England, of course tomorrow The other thing then is talking about COVID a little bit more on a global level Initial lab findings indicate that China's Sinovac shot Which is actually just given the population terms one of the world's most used in the world that saw as vaccines Concerned the latest finding suggests that the vaccine itself doesn't provide sufficient antibodies to neutralize the Omicron various virus variant some 2.3 billion doses of the vaccine have been administered so far mainly in China and the developing Wilds so yeah somewhat concerning on the fact that given those locations the size of populations obviously the Pandemic in itself is a global issue. And so given the differences in these different vaccines This is much more of a long-term effect, but one that's quite important All three us authorised covid vaccines Moderna J&J and Pfizer appear to be significantly less Protective against the Omicron variant According to laboratory testing but a booster dose likely restores most of the protection that came out of the Massachusetts General Hospital Harvard and MIT study as well over overnight yet to be peer reviewed, but Not too dissimilar from what our initial assumptions have been anyway at this point from a restrictions point of view Italy Scotland Netherlands are tightening restrictions South Korea is strengthening a social distance in measures at this point in time so everyone's trying to get ahead of the curve and Contain at least limit the impact of what Omicron is likely to have going forward Few other final points just to cover off. We've done some Chinese data overnight We had the Chinese industrial production number for November year and year came in touch firm and expected 3.8 against 3.6% expected retail sales though were touch week 3.9 against 4.6% Markets really for the European Open not reacting or too bothered by those Chinese metrics We've had the UK data. So then we move over to what else is in store for this afternoon Ahead of the FMC. We do get the latest US retail sales report analysts at ING Note that it's set to post another decent outcome Thanks to rising incomes and wealth providing a strong underpinning for spending Industrial production should also grow strongly since manufacturing surveys have all been pointing to robust activity And then yeah, we go to Before the Fed the oil infantry numbers Just a recap. You did have the API's last night and we had the headline figure was a drawdown 815,000 slightly Smaller drawdown than anticipated at 1.7 cushing those size will build 2.257 gasoline 426 distillates a drawer of a million No real definable impact though short-term in WTI front-month futures And then the Fed at 7 obviously a two-part event as usual And then we'll get the press conference of drone powell What my plan of action is is I'm not going to cover the Fed live But what I will do is I'll come on and I will do a video debrief at the close of Wall Street trade So you're fully up and running then for what happened and also then for Thursday's trading session All right with that have a good day and yeah, catch you later on this evening. Take care