 Okay, very good morning to you. It's Friday the 3rd of December and before I begin a normal briefing Just wanted to say a massive thank you to everyone who listens to the podcast on Spotify, Apple and on Apple if you have been a listener on there We've been trying to aim for a hundred ratings and reviews on the Apple store before year-end and you guys have already taken Us up to 108 so we smashed through our target. So again, thank you very much and a brand new episode will be coming out with Piers the head of training myself later on today after non-farm payrolls if you want to check it out But what are we going to talk about in this briefing today? Well, get you up to speed on quite a few things to unpack actually from Fed commentary Supporting pals kind of hawkish pivot. We've got the update of course that we had from OPEC and the seesaw price movement We had yesterday. Of course little update on Omicron Where are we there? US debt ceiling vote that went through last night You've gone up there in US Iran talks some Chinese data the Turkish lira Fresh lows after a downgrade on their outlook to negative from Fitch the rating agency So much to talk about and I'll do my best to keep it as on point as possible But looking at the overall flavor for this morning There's a bump up in the dollar this morning actually and that is putting a bit of downside pressure on Both major currency pairs albeit in a moderate fashion You can see here euro dollar just breaking down through its a pack lows Just extending a bit of a run then down to the s1 in the futures market this morning And if we're looking at cable very respectful of a trend line We've been watching here for quite some time in Installing dollar and I'm just gonna change my chart Sizing so you can see it This goes back to the peak of price activity on that double top from the 18th and 19th of November We've had a couple of retest well respected and again Just a little bit of a move downward from an initial test of pivot seen in the APAC session as European participants come in and we see some mild strengthening of the dollar So I guess that takes us into one of our first headlines and that is in regards to Fed Speak so what's been happening here? Well more Fed reserve officials All voting members called Bostick and Mary daily laid out the case for speeding up the removal of Policy support amid higher inflation And of course then this does include you know someone like Mary daily is Definitely much more on the dovish end of the spectrum and so much more Coordination happening now which definitely does cement then the view going into the blackout period ahead of the Fed meeting which will happen on the 14th. I think it is For what they're going to do, which is likely pay heat to the fact that they'll accelerate tapering come perhaps in the new year Details kind of pending. So a bit of dollar strength this morning These comments were all largely yesterday, but kind of ratifies the weekly shift that we've seen from federal reserve officials As far as the equity markets are concerned Worse noting then we did have a pretty decent bounce yesterday Stocks actually notched their best biggest and best advance since October some dip buyers Obviously emerging and around these lower levels just around 4,500 in the S&P After some of the two days of selling that we had seen particularly Dominated by the Omicron variant and the various global outbreak that we're seeing at the moment I did see an almost joked about of my my tweet this morning for my for my rundown That the turmoil may offer investors a chance to position for a trend reversal in reopening and commodity traits According to JP Morgan strategists. They were talking about this kind of buying the dip idea But you know whenever a Wall Street Bank comes out and makes these types of calls You've got to look at it in context the bank JP Morgan has always been very Dismissive almost of the COVID situation and very bullish for equities And their chief strategist has always been it's almost the opposite of Morgan Stanley's Mike Wilson Who's much more a perma bear the JP guys are much more on the bullish side So it doesn't come as too much of a surprise to be quite honest The other chart of course from yesterday that was super interesting was oil And as you can see here this kind of downward move that we saw going through And also an initial release of the OPEC meeting and then this really big bounce that we had and actually by the time We got to about 5 30 London time. We've taken back the entire move So we went from you know putting this into perspective Oil's been moving a lot lately, but this is a 67 to a 62 and a half price and back again That's pretty pretty sizable moves actually and now we're actually trading even higher We're back up and we claimed a close to a sixty eight dollar hand and we're up about a dollar thirty four This morning and if you put it on a daily chart, there was an interesting technical level of close support We were keeping an eye on you have this trend line going back down from April retest in August and we perfectly respected that on the initial move when the Price came down on 30th of November. We briefly broke through that and snapped down to sixty two fifty before seeing a bit of this Reversal in price and you can see here though. This is the kind of context I guess on the daily chart for the week This is when we had the first emergence of the new South African identified variant to where we are at the moment So all in all from the peak of multi-year high price action We were training just around a month ago. We have traded down around 25 percent in crude oil So definitely sizable moves Now what exactly happened yesterday and what were OPEC saying? Well, this was let me give you the overall gist The group agreed to add four hundred thousand brows per day of crude to global markets in January And of course markets were kind of prepping themselves up for potentially They weren't going to do that just in the light of what we've had from the US tapping the SPR and now this new variant That's on the loose But the cartel did say they've left the door open to changing the plan at short notice They stated they remained effectively in session Meaning it can change policy without warning ahead of its next gathering And that's not scheduled to the 4th of January of next year What FT are talking about here and it's something definitely appears and I'll talk about in podcast a bit more is whenever you talk about oil You've got to talk about the kind of geopolitics behind a lot of the rationale and decision-making that's happening from these oil exporting nations and a decision by Saudi Arabia who's basically the de facto leader of OPEC comes after high-level US delegation held meetings in the kingdom this week and a long story short Bidens have a print it has had a pretty standoffish relationship with Saudi Arabia He hasn't even talked to MBS has only been content talking to King Salman himself So a little bit of warming on that front If you like on behalf of led by the US to get more of what they want rather than this kind of Just coming out with quite assertive commentary against OPEC nations seemingly has done the job And kept Saudi on board and they've gone ahead and kept this deal in place So we initially dipped you reversed on the back of this open kind of commitment that they can change their mind Of course depending on the Omicron developments on that front. What exactly is happening? Well, one of the latest pieces here is the urgent studies to understand how effective COVID vaccines are against a new virus On a global collaboration may yield some answers in the next few days Three days more specifically as according to the World Health Organization Scientists, however, they also put out caveats saying but we shouldn't put too high an emphasis on three days This normally takes two weeks. So just to kind of put it into A bit of context as a reminder The Omicron variant has 30 or more changes in the spike protein half of which are in the area that binds the enzyme That the coronavirus targets to enter cells then and thus cause the infection Mutations there can make the pathogen less recognizable to antibodies and hence the reason why people are Very tentative about the efficacy of vaccines in their current form It's possible that SARS-CoV-2 will eventually accumulate enough mutations to escape antibody detection completely and warrant the need for booster shots But with a slightly Altered formulation, which is what we already kind of know But that's the kind of status quo at the moment And that's why you've had companies like Moderna and others talking about Updating of the formula to counteract wants to have more information on the underlying kind of mutation information on the the latest variant Couple of other things I thought were interesting. One was the South African National Institute for Communicable Diseases, otherwise known as NICD. They've came out overnight and they've released the latest study It showed that Omicron variant Reinfection risk is three times Great as prior COVID-19 variants That's a little bit wishy-washy and they're not specifically saying because obviously transmissibility between Beta, Delta, Gamma, Alpha and so on have all been slightly different But the idea is that this new infection could be multiple times more Transmissible than others is one of the things The final thing then on the on the COVID front is Biden came out yesterday. This is when he was outlining his kind of COVID winter strategy Although the president here said he doesn't want to He doesn't want lockdowns. He won't expand vaccine mandates to fight the COVID this winter He did have slightly contradictory is New York Mayor de Blasio who commented there should assume that the community spread of Omicron Is already taking place in New York City More interestingly here. What's happening is that in New York They've registered the most daily COVID-19 cases since January So this is even before the kind of sequenced information about whether or not it's omicron But COVID cases are already at the highest that they've been since the beginning of the year Which is when we peaked if you remember post Thanksgiving Christmas new year last year in the states So this is going back beyond the summer wave back to them And New York cases are right back up there at that level again So definitely keeping a half an eye on these things at the moment Particularly if then case rates starts to accelerate if indeed then this new virus variant is more transmissible In Europe, they've taken a pretty firm hand on how they want to respond to this One of the departing things from angler-merkel and now Olaf Scholz has been at germany has imposed stringent nationwide Restrictions they're now saying there's going to be new curbs including allowing only people who are vaccinated or Recovered into restaurants theaters and non essential stores and of course germany having to take fairly abrasive and strict action given the fact that A low vaccination take-up kind of circa 70 percent Which is much lower compared to many european peers has meant then that the spread has been quite quite rapid in latest case rates Okay, other things to be aware of Um Surprisingly actually Because this you know all over all of the years. I've been following markets normally Then as we come to the end of the year funding for us government, they tend to take it all the way down to kind of New Year's Eve I remember one year I actually went to Hong Kong to spend that time with my family and I actually had to deliver Some live Squawking at the time from Hong Kong in a hotel Because of the fact that obviously most people on holiday, but the us still hadn't struck a deal Then they were going to shut down at the time So do you have some not so fond memories of this? But the idea being that they managed to actually get this over over the line a lot easier this time all things considered The democratic controlled us senate last night passed a bill 69 to 28 to fund the government through mid February averting the risk of a shutdown After overcoming a bid by some republicans to delay the vote in a protest against vaccine mandates The senate acted just hours after the house of representatives approved the measure By a vote of 2 2 1 2 2 12 where the democrats have greater control So Yeah, what does this mean? Well worst case Averted yes, but you remember before we were here a few months ago. They kicked the can to december Well, they just kicked it to february So this will just reemerge as another potential risk on the horizon But once again, they'll do exactly what they've done here. So again, it's not really a big deal. I would say Elsewhere other news Unsurprisingly the us and iran both sounded pessimistic yesterday about the chances of reviving the 2019 iran nuclear deal With washington saying it had little cause for optimism And to around questioning the determination of us and european Negotiators to really have the appetite to even want to do a deal Talks did resume on monday. And if you remember, this is a this has been the recommencing of talks after somewhat a five month hiatus Prompted by iran's elections of an anti-western Hardliners their president so to be honest Although this doesn't sound particularly great as a headline. I think it's completely as to be expected They've had a five month gap. You've got a new president in power in iran. This is just a feeling out session I guess the only positive you could perhaps look for here is the fact that they Open to potentially continue to talk That in itself the whole looks somewhat in jeopardy given how pessimistic both sides are on this first encounter But as they said, I wouldn't have really expected anything else Final things then you had some chinese data overnight occasion service pm. I did come at a 52.1 slightly below the expected 52.6 So still expanding Service sector in china But at a slower pace in the latest reading amid inflationary kind of rising inflationary pressures Continuing small-scale covet 19 outbreaks. We've been seeing various different provinces And with that kind of zero tolerance policy that china has obviously impacts Confidence to a certain degree And then another one we haven't really talked about much this week, but certainly is still Feeling the pressure is the turkish lira It has indeed hit a new all-time low of 14 this week. Of course as president erdogan Defended his low rate economic policy Comes in combination, of course with the hawkish Pivot we've seen out of the fed led by pow earlier in the week and there's other officials as I mentioned following suit Which is strengthening the dollar and exacerbating that lira weakness to a certain degree As you can see from the headline the latest piece of information is that rating agency phitch has revised turkish outlook to negative from stable over risks Pertaining to these monetary policy outlook that's coming from the government's involvement All right. Well, let's have a look at the Calendar for today this morning. You do have a few things, but these are final service PMI readings Not expecting a great deal the real emphasis and talking point of today, of course is on non-farm payrolls And let's have a quick look at the graphic here and a few things to be aware of So economists polled by bloomberg are expecting a number Around 550,000 pretty similar to last month and obviously a bit more robust than what had been a disappointing reading on three occasions through Really july august and september The unemployment rate is expected to fall to 4.5 as well and that would leave employment about 3.7 million Jobs below its peak in february of 2020 as far as the headline figure is concerned expected at 550 Got a range of 306 at the low to about 800k on the high Employment gains in november again likely to be led by leisure and hospitality businesses Following a pretty similar pattern to what we saw in the october report Although that might be the case it will be interesting as i just mentioned new york is seeing the highest Covid case rates now in january We've had the first identification of omicron and if that does prove to be more transmissible Then obviously leisure and hospitality will be one of the first areas to be impacted if we start to see kind of localized federal state led action taken from restrictions point of view strong employment gains would add To solid consumer spending manufacturing data in suggesting That the economy was accelerating after hitting a bit of a speed bump in the third quarter That would put again more pressure on an early rate rise from the fed on the table Hence the reason why for a lot of that economic rationale why the fed Of course in addition to rising and surging inflation at multi decade highs Want to become more hawkish? But of course the big elephant in the room at the moment remains Covid-19 and what happens there and a lot of that clarity might not come until really The actual day of the fed event given that that's about two weeks away We should be much more equipped with how impactful potentially omicron will be On the us and global economy or not And then otherwise in terms of the calendar beyond non-farm payrolls at 130 We also have the CAD jobs data at the same time We're going to get factory orders and ism services PMI coming out at 3 p.m Speaker wise ECB president Lagarde speaks at 8 30 this morning Bank of England saunders the hawk on the MPC at 11 a.m And the chief economist of the ECB at 1 p.m. This afternoon with non-voting Fed member Bilal to speak at 2 15 That is it remember to check out the podcast if you haven't already done so Just an informal chin wag between me and the head of trading To really wrap up everything that's happened this week to make sure you're completely on top of your game Otherwise with that, I wish you a fantastic weekend ahead. All right, take care