 Okay very good morning. It is Monday the 1st of November and for any traders this week Do not forget because it's easy to do so, but UK clocks change at the weekend US clocks do not change until the end of this week And so the time differential between London and New York is four hours instead of five So major US data if you're based in the UK is going to be at 12 30 Obviously the nides you open at 130 for the whole week and definitely there's some big events happening this week Of course, you got the Fed on Wednesday night So it's gonna be a little bit earlier and you've got non-farm payrolls as well on Friday Which means you've got all of the major US data coming out as the prelude to that in the labor space But otherwise in terms of this briefing there's a lot for me to discuss I'm gonna keep the technical chat to an absolute minimum and just talk about the news and fundamentals of wrapping up What's happened at the weekend? We've had things like a Japanese election some commentary on the US EU trade and also an update on Brexit with the new spat happening on fishing between the UK and France and then we look at the week ahead I mentioned the Fed, but we've also got a really Hotly contested Hawks doves battle playing out in the Bank of England whether they're gonna hike rates or not this week on Thursday So we'll talk about that. We've also got the likes of the RBA Rate decision as well happening tonight going into this time tomorrow morning There's a whole bunch of earnings still coming out And then we've also got the OPEC plus meeting on Thursday as well with the US exerting again more pressure on some of those Middle-Eastern and African based oil producing Nations so that's what's on the agenda Let me just give you a quick flavor at least of the general charts for this morning and equity index futures are a touch higher We printed highs initially overnight In the US futures although have faded that move slightly so again north of 4,600 as far as the S&P future is concerned This came after Japanese equities were up more than 2% following the outcome of the election Which we'll look at the details in a moment otherwise in the FX space the overall currency pairs Are showing a little bit of dollar strength so both euro dollar and cable down Around 25 pips or so the dollar index is trading up about one-tenth of 1% this morning Gold flat T-notes pretty similar move to that and WCI crude is down and modestly Around 50 cents this morning sitting at the 83 dollar handle But let's go straight into it and talk about the news because as said lots to get through Starting off with yeah, Japanese equities actually moved higher nearly two and a half percent in overnight trade This came after the risk event on Sunday, which was the Japanese snap election and The outcome of that was the ruling coalition secured an election victory that was better than what many had it Expected paving the way for the administration And this is to kind of take home point that Kashida now can begin to enact further economic stimulus The more control you have in Parliament the more likelihood is that that can pass through without any hiccups The ruling LDP defied worst case scenarios to secure a majority by itself seats 261 seats while the party lost 15 seats The idea here was that the losses were far more contained than what forecasters were expecting so that's the Japanese situation so likewise the Japanese yen under the cover if you like of More fiscal stimulus just seeing the equity markets move higher the dollar a little bit bid So actually dolly end moving a little bit higher as well in overnight session Otherwise in terms of elsewhere just quickly US EU on Sunday took steps to re-establish a transatlantic trade flows in steel and aluminium It is part of a two-year ceasefire deal reached for the US to ease tariffs on European steel and aluminium and in return The European Commission has promised to EU member states that they will temporarily drop retaliatory tariffs Appause legal action in any World Trade Organization talks as well So some positive developments there after what had been a spat obviously that started during the 2018 period under the Trump administration On the inactioning of national security type tariffs that we had had put into place at the time And then on the Brexit front again not surprising to be quite honest Macron France have always been the thorn in Britain side if you like in Brexit negotiations Away from the Northern Ireland protocol of which the Brexit Minister Frost has come out with some Pretty frosty comments this morning on that particular Topic but this is looking more so on Britain and France clashing again on the post-Brexit Fishing Rowel the French government on Tuesday So Tuesday this week is set to introduce additional controls on goods moving across its border with the UK and block British fishing boats and offloading their catches in France This comes as a retaliation for what it sees as unjustified restrictions on French trawlers from Britain So that's the latest there and that deadlines tomorrow. So I'm sure you'll get more Brexit comments coming out over the next 24 hours Okay, so let's look at the week ahead First things first is on Wednesday. We have our next public finance accelerator Which is our fully hands-on practical online simulation that you can do to experience in reality sales trading market making And asset managing so just check that out amplify me.com you can register here just by booking for your free simulation And we'd love to get you on board for that and for you for yourself if you're a student to see What your skills are and based on their performance heat map of what potentially could be the best path for your career going forward So do check that out amplify me.com Also, if you just scroll to the bottom for anyone who is interested I do put out a daily email called the market maker Just punch your email into there hit subscribe and you're good to go And you'll start getting a daily email from me wrapping up some of the main market things that have happened on that day All right, let's look at the week ahead going to go through chronological order some really important central bank decisions happening because we're a real junction now for monetary policy overall and starting off with the RBA happening tonight and I've got a good quote here from Analysts at Goldman Sachs and they said the RBA appears to be dropping its yield curve control policy Their base case goldman's is now that the RBA acknowledges this at this this meeting happening tonight But it's a close call and they say they 40% chance that the RBA comes in to defend the target next week and delays a change in YCC policy until next year so Yeah, the idea here is about The relaxation of active your curve control would be tantamount to being A slight normalization of policy This is where they kind of pin down a certain part of the curve in order to just keep lending conditions suppressed In certain parts of the curve and in this case by dropping that because Australian yields have been moving quite aggressively higher Would be indicative of the fact that they're getting closer to that decision of just kind of removing that particular tool So something that's quite unique to the likes of the RBA the boj not something adopted by other western central banks like the Fed or the boe or ecb But that's the latest what we're looking out for on information tonight And then as far as the Fed is concerned, obviously this is a particular meaningful meeting in the sense of the formalization of tapering So they're very much expected to announce the 120 billion Dollar in monthly purchases and treasury bonds and mortgage match securities will start to be reduced However, the main thing here is this has been incredibly well telegraphed We've been talking about tapering for months and months So the tapering itself is not necessarily a market moving event albeit it's very It's a very big milestone for the commencement of normalization of policy Traders are going to be keen on a couple of different factors really What's the size and pace of the decreases and that's very much priced in for 15 billion a month in terms of the reductions But then in terms of the timeline as to Fed rate increases in future. That's the area. It's going to be quite key to watch Going forward. So while policy makers have previously been divided on whether they expect to raise rates in 2022 or 2023 investors are stepping up their bets in recent weeks that just given the increase and more stickiness of inflation and rising inflation expectations That they're going to it's going to force the fed's hands to raise rates well into 2022 Goldman Sachs as you can see here they now expect inflation will force the fed to hike in terms of a timeline They say in next july a year earlier than gs had previously expected The second increase then they say will follow in november of 2022 So they're looking for the first hike in july second in november 22 And then the central bank will raise rates two times the year after in 2023 So looking at four rate hikes by the end of 23 So again quite a substantial upgrade and acceleration of rate hikes on the back of inflation Which is the obviously recurring theme on the global level. I'm going to be covering this Live on the youtube channel. So if you are watching this video on youtube, just hit the subscribe button Hit the bell icon. You'll be notified as soon as I go live But i'm going to cover this live I'm going to cover the bank of england live and i'm going to cover non-farm payrolls all live on the youtube channel So hopefully that'll be useful Looking at the bank of england then this is this is arguably one of the Most interesting actually of of the lot on the on the week and the reason for that is it's just so Finally balanced and whether or not they're going to hike or not hike their interest rates and when a decision is that On the line typically then the reaction effect is going to be big whatever the outcome Given how 50 50 the market is generally seeing this So the bank of england will publish its monetary policy report And its decision on thursday and that's important because that means that we're getting their latest forecasts So unlike the fed an ecb who do it on the end of a courtly Kind of calendar. So march june step deck. It's a slightly off-paced But a similar cycle for the bank of england with their inflation and growth outlook forecasts In terms of that coming out in the last one's august. We now get the november report Andrew Bailey the governor is also going to of course hold his press conference Market pricing suggests interest rates are set to rise Above 1% by the end of 2022 reaching their highest level since 2009 with an initial 15 basis point increase Taking their benchmark rate from 0.1 to 0.25 percent. That's what's expected of this week And just having a look at this chart here. You can see then what what we've got here is a real big ramp up since the last Probably five or six weeks in the pricing of bank of england rate hike expectations Which is surged higher and a lot of this has come After some of the commentary that we've had from a lot of bank of england members And so just going to flip over to here to look at who and remind you of the mpc members Two of them have already voted for tighter policy So if you go the right hand side, it's the most hawkish members those more in favor of Kind of wrapping up qe and looking to hike interest rates more sooner And on the left is your more dovish the opposite case So you've got saunders and rams din Another two so hu pill the new chief economist and andrew bailey the governor Have all kind of talked about the idea of of higher rates. They've really not pushed back against market pricing of quite aggressive rate hikes in future And a looming rate hike happening this thursday That leaves then given the fact that these three here kathleen man ten reiro and johnson haskell have been quite clear that The economy as they they see it is not yet up to the point of rate hikes And so what bloomberg are suggesting is the balance of power in this decision on thursday Lies in the hands of the deputy governors ben brawbent and john cunliffe who tend to sit more center in terms of the spectrum But they're them shifting one way or the other is really set to be the deciding balance So whether or not the bank of england really pulled the trigger Um a couple of things then just going to jump over to i've got another graphic here This is four different potential scenarios for the bank of england I know it's a bit small to look out on the screen, but if you just jump on my twitter account You can access the actual image and this is a kind of potential scenarios In a in a card by how Dovish or hawkish the reaction would be by the analyst at ing Similar to the ecb one that we look at and so this is good to think about okay So what would constitute a kind of a baseline reaction? What would be something then would be more dovish and and what type of complexion would it need to come on growth and inflation And forward guidance and information on future tightening to constitute those types of reactions And so yeah, the bank of england are going to publish their new economic forecasts for this decision Including its annual assessment on the supply side of the economy But analysts have said it's going to be missing some key information Policy makers have signaled in the boe that they'd like to see october's labor market data Showing any fallout from furlough's end before acting The point being is is that those figures will only be received just before the december meeting So at the moment if you're talking about the labor market specifically these npc members making their decision this week Are not armed with sufficient information about the quality of the labor market post furlough And does that mean that they're going to have to wait? There's other considerations, of course as well There's obviously the covet situation Decrease generally in efficacy rates the ability to roll out now booster shots Shots to the young demographic who are at school and so on And so there's some question marks there on the flip side. It's inflation inflation inflation Just like legard. I was kind of saying yesterday Last week and so that's what the the kind of argument is between the hawks and the doves So yeah, check check that out. That's going to be a really interesting event I and g add that if the bank of england's new forecast Shows inflation falling below target in the medium term the medium term We tend to refer to as a two-year horizon Based on these expectations It would be implicit hint that the market pricing has gone too far So by what they're saying is if inflation is showing Basically that it's going to peak now So peak inflationary pressures and then it's by a two-year horizon It would have moderated back below two percent Then that would be indicative by the forecast because they will not be explicit in what they say You'll have to read between the lines at the numbers of these forecasts Then that would be implicit that the market's got this wrong And actually it's overpriced and in that scenario the pound would decline quite aggressively So yeah, lots to chew over with this. I'd suggest that you tune in Just ahead of midday on Thursday and I'll cover this all live and go into it in more detail again And then you've got an OPEC meeting happening on Thursday You probably read some headlines over the weekend. The US is talking to other energy consuming nations about how to Put pressure on OPEC plus to boost output to address the current supply crunch according to senior US officials The leaders also discussed how they might respond if the OPEC plus group and including russia doesn't take action Although they would not speculate on what those options might be As we've mentioned before given the price Just last week we saw get up to 85 dollars. So these are multi-year highs It's putting higher energy prices Germany globally starting to inflation. It's more expensive at the pump. This is politically quite Harmful, particularly in the US and so on and so the US continuing to just up the ante on that kind of rhetoric In terms of what the OPEC meeting is likely to be though The outcome is the OPEC plus are probably going to ignore a lot of these requests Particularly led by the US and they're likely to stick to the scripts and raise output in december But by no more than the previously Agreed timeline, which is a 400,000 bpd increase as they go months to month Which is much much more steady than what the US would like, which is much more sizeable faster return At this point in time to tame some of the price rise And then looking at non-farm payrolls we've got non-farm payrolls, of course on friday That does mean that the US calendar generally is stacked with the usual suspects We've got us ism manufacturing PMI today. You've got ism services PMI ADP national employment and factory orders on wednesday weekly jobless on thursday So all of that then as the prelude to the labor report will get on friday Now the headline is expected to come in at 400k, which would put us back at the august type reading We've had generally a series of sluggish jobs numbers now 366 and then 194 the lowball that we had last time out And just having a look here to remind you that was the lowest so far this year and the 194,000 we printed in september Was against expectations of 500,000 so it was a considerable miss overall Evidence of further weakness in friday's report could temper expectations of Rate increases, but by then obviously the trigger is likely to have already been pulled on the lights of tapering on wednesday and midweek So yeah, it's more for the market's perception about rate hikes thereafter At this point in time, but quite honestly whether it comes in at 400 Whether it comes in at 600k whether it comes in at 100k I don't think it really makes too much of a big difference to that outlook specifically giving the time horizon Related with future rate hikes being quite far out irrespective of it being perhaps as soon as just several months away The other notable things happening is earnings continue to roll on Again, you can check this on my twitter account if it's a bit small to see and we've kind of had really the bulk of the major Index weighted companies report, particularly the mega cap week that we had the blockbuster week last week But there is 167 s and p 500 companies reporting only one of the dow Some highlights include the likes of fizer on tuesday conico phillips You got cvs health on wednesday coolcom as well after market on that day. You've got madonna pre-market thursday uber air bnb interest could Generate some interest as well as peloton after market on thursday And so on and then finally evergrammed can't go a briefing without mentioning the embattled Chinese developer They've got a unit which you're probably unfamiliar with called scenery journey limited And they have an 82 and a half million dollar in coupons on two dollar bonds that come due This weekend. Um, so I think it's on saturday Yep saturday, so again whenever this has occurred they generally Don't pay this they then go into the thursday grace period and then they pay it right at the last moment I would expect that to continue to happen All right, going to leave it there. It's obviously quite a lot to digest Again my full meeting notes if you like for this Again available from my twitter account. So I'll leave it at that wish you guys a great week ahead Don't forget as I said the fed the bank of england non-farm payrolls all be Three will be covered live on the youtube channel. So hopefully I'll see you on live and Look, um, excited to to get involved and take your questions on those events as they happen. All right. Take care