 Hello and welcome to episode 49 of the market maker podcast and stay tuned for next week episode 50. We do have a little special something happening. I'll explain more at the end of the episode. So you're going to have to stay tuned for now. But yeah, to mark the 50th occasion, there will be something happening, rest assured. But before I begin, as ever, I've got the co-founder head of trading peers current with me. We're going to go over some of the major news of the week first couple of highlights from across the board really from single stock to macro to the celebrity gossip I've got for you this time peers as well. So going to go through that first, then we'll talk real turkey about US inflation, we'll talk about Fed pricing, we'll talk about how equities have been performing under the kind of high yields in the future. And then we'll, of course, we got to talk about Boris Johnson, another headache has emerged amongst other things. And so we'll try and break that down as to a what's going on. Are we going to have a new prime minister and then see the markets even care at this point and some of the subsequent timelines on that so start things off then couple of highlights from the week. We're all rollercoaster, really for equity markets I'm looking at my charts now that ours back down nearly 400 the NASDAQ selling off again. We've gone through a period of the beginning of the week, the NASDAQ had had five straight losses on the back of how we performed prior week. And then we had this almighty bounce and reports were the retail crowd. They love it, stepped in and bought $1 billion of stocks, apparently, on Monday alone, but helping support a little bit of that kind of more midweek bump was the power. We had kind of one of his hearings with the Senate Banking Committee, just this is kind of the formality of the approval of his next term as the Fed chair. And as much as he committed to the fact that really markets are right, right, rates are going to go up sooner, rather than later. He did push back about this idea of the shrinking of the balance sheet and that was quite critical. Tech loved it at the time. They're not loving life so much now, but very briefly had a little bit of a relief rally. Then we moved on we had US CPI probably major event of the week. CPI came at 7% talk about that a little bit more detail in a moment, and what that means and where it might go but it was the highest reading in 39 years. Plenty of Fed speak this week all queuing up for rate hikes seems like the doves are on board as well which would mean March. They would pull the trigger when tapering of course is expected to to finish at this point in time. On the other side of this, there's there's not much panic in the oil market fourth weekly advance we're heading for which would be the longest street since October. I'm kind of like what we've been talking about here is we've discussed Omicron so forth. The analyst at Goldman Sachs saying earlier this week that demand impact from that variant has been modest. So amongst other things oil still tracking higher rub around 83 bucks a barrel at the moment, and then flipping to single stocks, Ford motor. We've talked EV a lot. We haven't talked really about Ford motor and you know how much Ford was up last year percentage. I actually do because because I read your market maker email. Every day most days 130 132%. Yeah, you know, opening rate every day peers. I'm disappointed. But yeah, Ford. I mean, Tesla was up. I think it was 56% last year. Obviously the S&P was up 27. We're talking about 130 plus for Ford and it kind of went about its business pretty discreetly, but they this week hit a market value of 100 billion for the first time. Long story short, it's all about them going EV and a full pivot in that direction, but away from there we had bank earnings. They commenced today. So Friday we're recording this and JP Morgan reported record annual profits, best in banking, surging black rock. The world's largest asset manager has become the first to surpass $10 trillion of assets under management. Wow, I was going to say 9 trillion, but yeah, you just lose count. That's crazy, isn't it? Right. And so to put it in some context, they've grown assets by 15% in Q4. Right. And that's now larger than the hedge fund, the VC and the PE industry combined. Just their growth in quarter four. The total. Okay. I mean, that is the 10 trillion is more than. Yeah, it's just insane. Those numbers. And then to kind of wrap off the wrap up the week, aside from Boris, which we'll discuss no facts. Djokovic has obviously been in the in the news a lot. And then you've got Prince Andrew. Yeah. Yeah. That's not going to end well. I fear for Prince Andrew at this point in time. And then finally got a shout out to my main man, money made weather and also Kim Kardashian. They've been sued. Don't know if you've read about this. I haven't. They've been sued over promoting the alt coin, Ethereum max as part of an alleged crypto scam. Right. The scam. The major two points here of the scam. The main problem is Ethereum max has absolutely nothing to do with Ethereum. Right. One. And it's crashed 98% since June, which is when it was promoted by these two celebrities. Now question for you. How much was two questions? First one. How much does Kim Kardashian get paid to post on Instagram? You as well. Yeah. That is a car. That's what how many followers has she got? Second question. I don't know how you want to work this out though. So let's go first, then you might reverse it. My knowledge here on Insta's low. I'm going to start at a point that I do know. Ronaldo is the highest. And he's got 300 million followers. I think he broke 300 million and 300 million. Yeah. Is that right? Anyway. I'm going to go back. I reckon she's got 100 million. So a post, her post, that's got to be a pun. You could charge a lot for that. $10 million. She was. So in terms of followers, I liked where you were heading. Now, if I was interviewing Piers Karan, I'd be like, okay, yeah, yeah. I'm liking this. The logic is there. I said, which ruined it all. You had the job, then you blew it. So her followers, you're right. Ronaldo is up there, but she's very close as well. So she's on 279 million followers. And per post, she gets $860,000 a post. What? You think she's lowballing that? Yeah. If you're an agent, you'd be saying, look, 10 mil if you want Kimmy to... I think she's low. I'm going to stick to my gun. I think she's lowballing that. Okay. Let me... My 15,000 Twitter followers. Via what other channel could you access 280 million engaged followers? I reckon she's lowballing that. Yeah. Okay. I'll send her a message. Yeah. I'll send her a DM. All right. Hit her up on the DMs. Well, let's get straight into it and talk about, I guess it's appropriate to start with the inflation numbers that will lead us into what the Fed speakers is kind of saying and then the policy going forward. So US CPI 7% in 2021, largest 12 months gained since 1982, core prices, biggest advances, 1991. The increase in CPI led higher by prices and shelter and used vehicles, food contributed, but energy prices, which are a key driver in inflation, of course, through the predominant part of the year fell last month. But looking at the price movement of oil, that's not shocking at all. But bond markets are pricing in now 90% probability that the Fed will deliver four rate hikes now in 2022. And obviously their official communication is in their projections is three at this point in time. Thoughts on CPI first, and then we'll talk a little bit about what Powell said and what the rest of the gang at the Fed are saying. Yeah. I think whilst obviously sensational headlines, 40 year highs, you know, 7% handle. That's kind of what was expected, though. So, you know, it's still, it's still more of the same. Where the same is, oh, wow, that's, you know, inflation is high. So I don't think it changes the feds, what is already a very aggressive hawkish pivot. Obviously it kind of adds justification to their aggressive hawkish pivot, but it's too early still for inflation to start coming down, like naturally creeping back lower due to base effects. Part of the reason why it's high is because of base effects. And those base effects won't come out of the equation until we get into the spring. So it's not surprising that inflation is still rising. But, you know, I'm not trying to suggest that it's not something we should be worried about because it definitely is. But yeah, I think it's status quo where we were already in that position of inflation is high, the feds super hawkish, and we're still there. So perhaps the bigger talking point of what's happened this week is not so much the inflation figures, but it is the clarity that came by way of Jerome Powell when he kind of alleviated what felt like anxiety that was resulting in this like surge in yields where we ended last week and is still kind of dominating the psyche a little bit, it feels at the moment. But he kind of, that was because markets were connecting this simultaneous trigger policy events, tapering finishing, rates rising, and also the balance sheet reduction. But he came out and said, look, that I've got it here. He said, it tends to take two to four meetings to work through the balance sheet decision. Now, just looking at the timing of the Fed meetings, that wouldn't be much. And then there's a gap. And I think it's May is that that would be that meeting of three. If you take the middle midpoint of that. So was that the key thing for you? Yeah, definitely. I mean, I think we talked about this in the podcast last week where maybe the markets have just gone up. They've gone too far in pricing in the hawkish pivot. And maybe Jerome was listening in. Well, you know, Jerome friend of the pod was obviously listening in. He thought, oh, yeah. I mean, I love it when we go for a Friday afterward drink with Jerome Powell and Kim Kardashian, you know, just marriage made in heaven right there. So I reckon he was he did the right thing in his comments on Tuesday and just took that, that, that ridiculous idea off the table, which was in March, they will hike rates and they'll start quantitative tightening at the same time. I mean, that's just insanity land. So yeah, he's pushed that out till I mean, even I say pushing it out till June. So that's, I mean, even that's crazy. But yeah, so I think that's why you got that little bit of a bump higher, perhaps on stocks. But yeah, I mean, it's a subtle difference. Look, we're still in the same jet. Basically, we're still in the same situation. Flation is still really high. The Fed still super hawkish compared to what they were a couple of months ago. And that's why, you know, in the end, you know, looking at things like fine, a little bit of upside briefly. But, you know, we're closing out the week on the lows. This is the lowest the Nasdaq index has been since the end of October. So, you know, it's starting to, it's now, it's now you can say multi month lows, right? We haven't, we haven't been able to say that about stocks. I mean, I don't know how long actually when we last able to say stocks are making multi month lows. You'd have to check, you'd have to fact check that. But it may well be more than 12 months. Well, it might not last for long because one of the recurring calls from the suits on Wall Street is Goldman Sachs UBS Global Wealth Management reiterated their bullish calls. They said equities can weather high interest rates arising bond yields. Black Rocks Investment Institute recommending investors use sell-offs to add risk. And the perma balls that JP Morgan Monday is was arguably overdone, they said. And to be fair, very short term, they were, they were right the following days, whether that will be right over the longer time period we'll see. But yeah, still seemingly keeping their heads fairly cool at the moment in terms of their view. And I guess this was what a lot of the banks were talking about the end of last year, you know, even though we'll finish 2022 possibly higher, which is the median kind of consensus on the street. That's not without its drawdowns at some point. And I guess, you know, this is a very, well, it's very minor at this point. It's nothing to get too deeply concerned about. But is that just. I want to take you back to 20 and the 2015 for a good sort of comparison because what tends to happen is when the Fed get hawkish markets don't like it. And until we're confident enough that actually the economy is solid and strong. And once we get our head to that point, then actually hiking rates is fine. And then it becomes not, oh my God, they're hiking. It just then becomes, well, how quickly are they going to hike? Right. And so we just move forwards in the kind of narrative one step. So at the end of 2015, the Fed went hawkish and they hiked. At the same time, we had other issues as well. There was a big concern around China at that point through the summer of 2015. And anyway, we had a wobble and markets sold off into the end of 2015 and the start of 2016. And then they're actually, well, I mean, back then the Fed held off a little bit on hiking more, but then as we got to the end of 2016, they started hiking and they hiked four times in 2017. This idea of four hikes in a year, everyone's going, oh my God, what? That's, but they hiked four times in 2017. It's not so long ago. And the point is how do equities react to hikes? It's entirely dependent on market sentiment, which is dependent on how solid is the economy below that. And if the economy is super strong and if we're coming out of Omicron and you're going to get some powerful economic momentum, well then hikes are fine. Stocks can go up in a rate hiking cycle. Just go and have a look. It's just we're in that transition at the moment between the Fed's hawkish pivot prior to the hike starting and you've still got a bit of Omicron uncertainty in the mix and the supply chain and the inflation stuff. So it's all kind of in the melting pot, but I think that's why banks are pretty much happy to say, look, buy the dip because they think we're going to get on to the hiking cycle and in previous cycles, as long as the economy's solid, then it's fine. And if the economy's not solid, well then the Fed won't hike. Unless we've got an inflation problem. Unless we've got stagflation. I'll just practically leave that on the table. That's your nightmare where economy's slow and inflation stays high. But if COVID goes away, I can't quite see how that works. So I don't think that's a genuine risk. Yeah. I mean, at the moment, one thing that's happening today at the end of the week is that stocks are a little bit lower, but actually oil's firmly higher. Yields at the moment haven't seen too much movement. We've been pretty much sideways for the last couple of days now. So, yeah, it's interesting. It's predominantly equities which are reflecting the anxiety to some extent at the moment. And I guess what you generally look for though is when there's a multi-asset uniformity to movement, which is then something more substantial where equities could possibly then really roll over. The asset classes are really playing that tune at the moment. Yeah. What I will say on oil, what's really interesting on oil, certainly WTI crude at least. It's the October 21 high. We're right on it and we've kind of been flirting with it for the last week or two. But like powerful end to this week and we're pretty much right on their big level to look out for, you know, let's say going into next week and let's say into the end of the month. Because, you know, can oil kick onto $100 is the question. And you've obviously got on the demand side, Omicron going away or at least proving to be milder. And so as long as economies, you know, don't lock down, then obviously demand side, that's a positive factor. And if OPEC kind of stick to their current situation and if you've got the other stuff, one offs like, you know, Libyan production dropping and that kind of situation. And then you've got the medium term to long term lack of investment into, you know, finding more supply. In the end, that's the underlying slow burner that's driving this price up. And so I'm now in the $100 camp for $22. Nice. Okay. Yeah. Well, look, I know you're heavily invested in oil infrastructure and oil pipeline. What are you talking about? Okay. Well, let's move away from there and let's talk a little bit about UK politics and Boris Johnson because it's been a hell of a week for Bojo under pressure from senior Tories, of course, after he admitted the drinks party at number 10 garden on the 20th of May, 2020, when, as you can remember, we were all in lockdown. And so being defiance of his own government's rules. The FT reported earlier in the week that MP said letters of no confidence were starting to be handed in and just a little bit of understanding of how that actually works. So Graham Brady, the chair of the Tory back bench 1922 committee, I think if you're an American trying to understand UK Parliament, even just understanding of the Lords and what are they wearing and what are they doing and just the noises that come out of parliamentary debate. But so there's this back bench and actually as unimportant as that sounds, it's very important the back benches is kind of like where the power kind of truly comes from. And essentially, then the chair of the back bench committee, there's a set number that you need to have, which is a total of 54 letters. So 15% of Tory MPs would have to then put in this call of no confidence for a vote then to happen. And as many as 30 letters of no confidence have been submitted is what they were saying early in the week. So the key figures, 54 at around 30, which is quite high actually. I'd say the closer you get, the more that kind of value of that one vote accounts for much more. There's always going to be like very out out there candidates who drop of a hat cast and no confidence. It's really the deciding ones. And as we'll talk about, it's the cabin. The cabin is key. If you lose your cabinet, you're out basically. Yeah, you have no support. So the prime minister's approval rating is falling dramatically. It's been going that way for some time. There was a you go poll that came out for the times on Wednesday night. I think it was Labour now have a 10 point lead over the Tories for the first time in nearly a decade. So it's been 10 years. It basically he's his approval rating is falling as fast. And it's almost as low as Theresa May at the end of her premiership. And one of the things that you generally start to see in politics is it's very seldom the fact that once this decline happens in confidence, it doesn't really change. You might be able to stabilize, stop the rock, but you can never reclaim former glory really. And obviously he's gone through a sequence of different events. So yeah, feel free to jump in. There's a couple of really interesting points that came out of an article of the spectator who I guess for a lot of particularly students, you might not follow the spectator. And definitely one thing I'd say if you're going into a global markets division type role, which could be quite a wide variety of positions, you really should have a base competency knowledge of certainly if you're based in London, UK political system structure and the US because obviously it's midterms that ends the year. So if you're not comfortable with the differences of the two and the structure and how they operate, just spend honestly like an afternoon on each one just reading online about it in terms of just hit wiki and stuff like that to get an understanding of structure. It will hold you in good stead because lo and behold, I can tell you what they'll be talking about at the beginning of November of this year. Yeah, it's a set political event, right? So and that will dictate lots of different things. So just a word to the wise just make sure you get that down. But going back to this article, they were saying a couple of things. What was striking about the Tory rebellion against vaccine passports, for instance, was how many of the rebels had backed Johnson in the 2019 leadership contest. He has alienated allies and his enemies as they are. They're already lying in wait for the best moment to strike. So you've already lost those because it's never fully favourable when you come in unless you're Tony Blair back in 19. Only Tony. Then you've got then you've got what is the issue. I thought this was an interesting point. The party gate. Let's call it party gate. It's not a complex issue. Yeah. And so even if Sue Gray, who's the person investigating this to find out, has he done something wrong? Is it criminal and so forth? She sets out the facts. And the response from the public is obviously very key for confidence. And it's an issue that everyone can understand because there are many things that Boris has done in his life. It's so integral to the just the complication of like Brexit and things like that. You wouldn't really understand it because it's just boring and it's just of not of interest. But when it comes to like what the media are doing, which is the Queen sitting solo wasn't there and all these different sorts of things. It's going to resonate. And that's a massive problem because this is all about optics. The ironic thing is the improving outlook for COVID, which you rightly said, he kind of called it right. Ironically, that's changing the calculus for some Tory MPs because that was a risk of calling a leadership context. Who would want to do it when there's such uncertainties, but actually we're getting emerging clarity coming, which is giving more greater conviction that look, that's not so much of an issue now because hopefully boosters and the natural way of which waves get less potent over time. Well, then that's not so much of an issue. So it's interesting how that's changed and shifted. There's now a sense that with the virus in retreat, all restrictions likely to be lifted later this month. It might be possible to do some, you know, change horses so to speak and who you're backing in that respect. The crucial difference between now and the first phase of the Premiership. And this was another interesting point. If you think about when he came in, you needed Boris to do two things. You needed him to get Brexit done. And you needed him to beat Jeremy Corbyn. And for that purpose, he was probably a very good fit. He smashed it on that front, on those two fronts. But that meant they were backers within the party were prepared to overlook some of these circumstances because he was the man for the job to win on those two fronts. However, they've kind of, the narratives shifted and the tolerance has gone now. And the incidents have become multiple. And then added to this argument that Johnson's departure would allow Tories. This is another important thing about the management of the party after Boris. And this is a good point. It's that if the Tories as a party now use him as the scapegoat to some degree, well, they could argue they understand the anger over hypocrisy, the sense that there's one rule for those in power. That's not for the others. Yes, we understand Boris needs to go. And so therefore you give a clean fresh slate within the same leading party in that sense, which makes sense to strategy. So, yeah, timing wise, the thing that the reason why this might not happen immediately and obviously very telling that Rishi decided not to be around for Wednesday when he was getting a grilling and PM cues about all this. And I think he tweeted at like 8pm in the evening kind of half-heartedly backing him. So the talk is obviously is Rishi going to do it. He's the favourite. But timing is key. It always is. And there's local elections happening in the UK. So I would say the likelihood is that nothing's going to happen probably until then. And I remember Theresa May, it was all going terribly and then she had the European MEPs, wasn't it? And I think the Tories came like fourth or fifth. Yeah, that's right. And when it's like an official, formal democratic process like that, there's no grey area of was I at a party, was I not? Did I, you know, was it this or that? It's like, no, you are now not a vote winner. Right. And so now you go. And for Rishi, if I think about May Bank of England might have got another hiking. The Fed have got some clarity. Omicron's now where are we at there? Perhaps better position. Economy's moved on a bit. Just wait, you know, this is all about let himself implode don't force yourself. And then it will happen. But, you know, these politicians like have they got patients? I'm not sure. They're all power hungry animals, aren't they? I mean, I like your thesis. You're mentioning the spectator. I won't say much on this other than the spectator. You know, Boris was the editor of the spectator before he became an MP. Did you know that? He's got a bit of a track record on lying as well. Because you know what he said to the spectator, the condition was you can only become editor if you don't run to become an MP. He said, yeah, deal. So then he became editor and then he went and ran to become an MP. So he's got a bit of a, I guess he's got a history of lying is the point. And here we are again with him lying. But as you definitely you're spot on with the fact that it's much more relatable for the electorate. This story partying during lockdown when everyone else isn't allowed to party isn't allowed to go to funerals, you know, you can't go to weddings or this kind of stuff that's gonna piss people off. And I think you're right. Timing wise only when the evidence is at the polling ballot at the polling booths in May if that's a car crash of a regional election then yeah, I think that's your moment for Rishi to ride in. So Boris has got four months to turn it around and can't quite see what's on the slate for him to be able to do that. I mean, I think the we've got this meeting at the end of the month on restrictions and I think those are going for sure. In Boris' self-interest he'll need to get rid of as many restrictions as possible to try and get some of those more right-wing conservatives can he save the relationship with any of those or not? But yeah, you probably say the writing's probably on the wall now for Boris. So I guess a point of clarity for those that aren't familiar with how this really works. So when you hear a poll and the poll is suggestive of Labour like in its best position in 10 years how are you to actually take that because just want to make clear this doesn't mean that Labour now rides in and like the palace. This is not how it works. I'd go as far as to say that's irrelevant other than it persuades Rishi to go for a leadership challenge. It's irrelevant with regards to who's going to govern this country because the conservatives have a huge majority and the next general election is not for three and a half years. Labour will not get into power until at the earliest I think it's May 2025 right? Or no sorry no 2022 I think is when was the last general election Boris won in 2019 2019 it was a winter election for the first time winter 2024 we're mid-cycle and sure the polls are going to go up and down Labour versus conservatives at this point in the political cycle it's not relevant from who's going to run the country it's purely just down to who's going to be the head of the conservative party and can Boris cling on and somehow come back from the ashes or will step aside and maybe a Rishi might come in what a ride for Rishi I mean until he appeared I can't remember what it was Boris was so ahead at the time of I can't remember what was happening it was almost like it was a shoe in there's no point Boris turning up to some of these TV debates so he sent Rishi out and it's like who's this Rishi Sena and this was like two and a bit years ago I mean incredible it's been a meteoric rise and he's young as well I don't know how old is he and would he be the youngest Prime Minister for many a year well maybe since I think maybe he's 41 I'm not sure how old Cameron was when he came in I thought Cameron was a bit younger than that was he younger than that I think it's close gotta be close well look I mean Rishi's highly relatable as ever married into a billionaire family so just like every one of us so it's great to have another representative of the people of Britain but I guess moving back to markets Rishi coming in I mean let's just say he does in say the summer let's just pick a timeline does that have any implications for markets I don't think so I don't think it particularly because you're not getting a it's just a change in leadership like within the party right and okay I know that means a new Prime Minister because they're the governing party but from a policy point of view certainly from an economic policy point of view I mean Rishi's the chancellor so if he becomes the Prime Minister then from an economic policy point of view there's going to be no change so therefore from a markets point of view I don't really see that being the influencing factor of no actually through some of the recent COVID decisions Rishi's always kind of sat more on the looser restrictions and reopen faster side and if Omokron does prove to be more mild it's probably even more optimal in that sense because he's more coming from the treasury so economy focused so time will tell well look we'll wrap it up there and just to conclude then as I was saying the next episode is number 50 so to fulfil on our pledge to empower you our community particularly students looking to kind of find their future in finance whatever that might be what we're going to do for the 50th episode is I want to email me directly my email is a.chung c-h-e-u-n-g amplifytrading.com and I want you to tell me out of the 50 episodes you can throw in as well the additional career ones that we did what was your favourite episode and why and the one who can give the most convincing argument should we get them on the pod? let's get them on themselves what we were going to do was I was going to give you the shout out we know we have some of our corporate clients as well who listen to this podcast channel and I was going to promote you and say you're the best candidate and give me the skinny and I'll give you the shout out and get you some coverage but I think we should get them on let's give them the stage let's do it the next episode number 50 hit me on the email a.chung.com and the three of us we'll get it on let's do it and just before we go we'll know Vax Djokovic be still in the draw for the Australian Open whilst we do the 50th episode in a week's time yes or no you're a fan so I'm interested in your angle here should he play or not if he does play he'll win the whole thing yeah because purely on the basis not because he's the best player in the world I mean yes he'll win because of that but because he's the sort of guy where I would imagine he'll be angry he gets so much hate he has only I think achieved the success that he's had by using that hate in a very positive way which is to dominate his sport and he will be I'm going to say it as much as it pains me he will be the greatest tennis player that has ever lived because he's going to win more than 21 which will take him to the top of the Grand Slam the guy's going to win 25 plus and then it's not even a conversation piece so so far you've dodged the question he's going to play he's going to win do you think he should play no good there you go I just needed to I had to squeeze it out he shouldn't good come on Andy well I don't know how he did actually he got to the semifinals at the Sydney tournament first time he's won three in a row ATP level since 2019 or something like that so never know dark horse I'm not sure English sport in Australia at the moment is not going so well alright have a great weekend peers and everyone take care see you guys see you later