 Okay, it is Monday the 11th of July. I hope you're doing well and had a great weekend plenty for me to update you on So I'm going to do my best to try and keep this under 10 minutes Get you up to speed of everything you need to know before the week ahead in markets We're going to talk a little bit about Russian gas and the reason why of course there is that Nord Stream 1 pipeline 10-day Maintenance period got a lot of people nervous last week We saw a meteoric rise in German energy prices on the back of the risk step Perhaps those taps don't come back on so we'll discuss that and why natural gas has actually declined sharply this morning on a development of a new piece of information We're also going to talk a little bit about the prospects of a eurozone Recession DCB going to their blackout period later on this week and we'll look at what can we expect from them going forward We're also going to talk about the Chinese COVID situation a new variant of an outbreak has now prompted some concerns about renewed risk of a lockdown Chinese shares were down quite heavily in the overnight session We're going to talk about earning season that kicks off this week big US banks on Thursday and Friday really formalized things And what can we expect not just from them but from all of the different equity sectors going forward? Elon pulls out for a change and yes pretty much as we've been sat here on the channel for a while He's pulled out of his bid for Twitter So we'll look at the ramifications of that and then we've got US CPI coming out this week amongst other Also important economic data points and of course a quick word on the conservative UK party leadership race So let's get straight into it as I promised I'll try and keep it as on point as possible and this is a map you're probably quite familiar with now This is the one of the main conduit of Russian gas Nord Stream Nord Stream 2 obviously the one that's been At least part for the time being as all of these geopolitical developments play out But what's happening is Nord Stream which is the key conduit Russian gas going basically from Russia to Germany is going into a 10-day scheduled maintenance period And that's what was really a focal point of a lot of the issues for the energy market last week apprehension anxieties very much so about what happens if Putin starts to play games with turning those taps back on with the limited resources and high Dependency the Germany has on Russia what's happened here though in the overnight session is Nat gas prices have actually in Europe fallen over 10% so double-digit loss and the reason for that is not only where prices particularly high last week But Canada has said it would return a stranded Turbine for a key Russian pipeline to Germany and that's raised optimism then the tensions and Moscow will ease again Russia haven't said anything to the wording of we're going to potentially not reopen a Nord Stream They were blaming that on a lack of goods Let's say coming from Canada that was being problematic on the infrastructure side But Canada has nipped that in the bud so it'd be easy It'll be interested to see what Putin comes up with next on the back of that But at the moment that gas prices have come off a little bit in terms of the eurozone The reason why we're talking about eurozone recession obviously a big talking point last week was Euro hit a fresh 20-year low we are very much on course towards parity at the moment You're a dollar this morning training a 101 handle haven't quite tested that that level just yet But the end of last week got awfully close to it So there's a sense of inevitability around it particularly with some of the other currency movements We're seeing in the Swiss franc in the Japanese yen someone and so forth now The main rationale here of course is about really what I've just been talking about the engine room of the eurozone really Facing real challenges economically at the moment We heard Uniper the major energy provider in Germany having to be bailed out EDF in France So record high inflation euro zones like to go higher and don't forget interest rates have not moved at all at this point in the euro area and so The probability according to a Bloomberg survey economists is that an economic Contraction has increased to 45% probability from 30% and that was only tracking at around 20% before the actual Russian invasion of Ukraine As a footnote European central bankers Have until Wednesday essentially to hit the airwaves to communicate their intentions for the looming rate decision Which we're going to get on July 21st 21st because that's then when we go into our blackout period and there's no more words to be said As per their usual process So keep an eye out on that I did briefly mentioned and definitely worth covering that Chinese Chinese stocks dropped on the thread of renewed COVID lockdown This one's being called the highly infectious BA 5 omicron sub variant Identified on Sundays is coming through Shanghai and they've been warning of very high risks and that stoked fears of renewed lockdowns And so consequently their share price is down in in China quite sharply Overnight actually stocks having their worst performance on an intraday basis for about a month On the flip side those staying in that geographic region. Japan was a slight bright spot They were buoyed by the prospect of an administrative stability after the ruling coalition expanded its majority in the upper house election This comes of course after those tragic events that we saw with the performer prime minister Shinza Abe last week Moving on earning season as I briefly mentioned kicks off this week We've got to wait a little bit is really Thursday when we start which is when we get the likes of JP Morgan Morgan Stanley And then we get city Wells Fargo BlackRock coming out on Friday. What can we expect from this overall? Well Q2 2022 the estimated earnings growth rate for the S&P 500 is 4.3% If you're not used to looking at these things you might think well, okay Everyone's talking about recession, but earnings growth have gone up 4.3 percent. That's a good thing Well, not so much because that level would mark the lowest earnings growth rate reported by the index since Q4 of 2020 which was that that time 4% when really we're in the doldrums of the most severe lockdown that we had on initial outbreak of Covid now who are going to be the winners and losers well Obviously energy is is definitely one expected to be the standout sector oil producers as well as miners Benefiting from the surgeon prices on the war in Ukraine as a rough estimation We're kind of looking at about a three-to-one out performance energy over other equity sectors in the S&P Guidance though from these energy giants will be particularly key So the likes of Exxon mobile and Shell there will be critical to see what they think now The oil has actually reverted back down and obviously traded sub 100 if we were looking at US or Brent towards those regions What do they think now going forward now? Perhaps we've seen the peak of prices at least for the time being All right, so some of the other things that we are looking at is this one. This is then US CPI is coming out later on this week and obviously quite key metric That alongside then what we have with the jobs us the unemployment rate and non-farm payrolls on Friday, which very much was Yeah, it caused a little bit of price reaction on the intraday But overall not really changing the needle for what markets are very much expecting Which is a follow-up 75 basis point rate height to come later on this month So the CPI is kind of looked at as just cementing that view more than anything So we are expecting headline consumer prices of forecast to rise by a hefty 1% Month on month matching a sharp rise in May while that annual measure is seen picking up about one tenth of 1% With Wall Street consensus sitting around 8.7% at the moment. So not expecting too much shock here Obviously, we're all aware of prices going higher and we're all aware of the Fed's intention to raise by another hefty 75 clip So although this is a big data point and we'll be watched very closely I guess we've got a look to outer extremes to really shape the narrative a little bit more But all things being equal it's likely to cement then that course of action Which is kind of baked into price for markets The other things then that I'm watching and this is US President Joe Biden. He's poised to meet Saudi Arabian officials at the back end of the week So I think this is through Friday and Saturday. He's gonna be meeting the de facto leader Muhammad bin Salman MBS Terms of their talks. Obviously, there's a real pressure on Biden at the moment The timeline is reducing quite rapidly between the midterms and he needs to kind of change the optics around his management of The ever-surging prices at the pump, which is really damaging Consumer around the US and thus then his ability to really convey his economic control of of their economy So he's trying to do that at the same time Saudi Arabia, they do have according to IEA estimates short-order capacity that they could tap into And able to add in less than 90 days around 1.2 million brows per day on a longer term capacity basis In excess of 2 million, but it's whether or not they have the appetite to do that this meeting with Joe Biden's not going to result in that this is more about quite radical U-turn actually for the Biden's shift towards MBS to be a little bit more Friendly in more softer terms and from where he was just a few months ago And so needs must in terms of trying to tackle this raging inflation situation at the moment So this is more about just rekindling those conversations with the main powers that be between the US and and Saudi Arabia And positioning there's a lot of other parts to what's going on geopolitically in that area with the likes of Israel Iraq and Iran at the moment and with other Gulf Corporation Council discussions But overall material outcomes of this is probably going to be quite low It's more about one of those things where they'll continue to continue talking if that makes sense The other things then are you've had the UK Prime Minister leadership race well underway, and you've had this now ready for Rishi. He's definitely been speaking to by the looks of things the American Strategists in terms of how he's trying to position himself from at least the aesthetics point of view So yeah, the former Chancellor is in the running. There are in fact 11 leadership hopefuls now looking to become next Tory leader One of the main things that you'd like to hear a lot of them talking about the moment Just given economic conditions and the fact of a high probability of recession in the UK is about what are they going to do with corporate? Taxes and this obviously is quite sensitive one given given that Rishi was the former UK Chancellor Ben Wallace who you remember from a lot of snap polls that were done Following Boris's resignation last week was seen as the favorite. However, he has said he's not running So in terms of all the names that are running there's a very big field so you've got Familiar names to G Javid Jeremy Hunt Grant Schnapps Penny Morden Liz trust They're all in the runnings now, but this is all very much as you would have expected One thing that I can do actually is just quickly jump on Twitter for those interested in my Twitter hand Or you can find here and I've been tweeting about this stuff all the time and have done over the weekend But here's the kind of how this that works out And so it's going to take a bit of time and the likelihood is as we heard from Boris It might not be until really early September before we have a new appointed prime minister and all of the candidates now put forward Each candidate has to require a minimum amount of MPs to be back to then go forward into the first round Which then goes through then an elimination process to sort of get down to the final two candidates So if you want to see that process you can check out my my Twitter handle Otherwise let's just have a look back towards the odds At the moment Rishi is kind of the the main favorite Followed by Penny Morden and endless trust at this point of view Point in time everyone else is kind of less than 10 percent of that That pool at the moment So definitely a three horse race as it stands at this present point in time The other thing I mentioned was Twitter so You can see here a regulatory filing After the official closing markets on Friday Musk announced he's going to walk away from that $54 20 cents a shared deal That he had originally put up to buy Twitter And his main thing is about the company's misrepresentation of user data i.e. box And the Twitter chairman Brett Taylor responded by Varen to enforce the deal and what he promises will be an arduous Court brawl Twitter is likely to file its suit as early as this week against Elon Musk And there's some pretty heavyweight law firms that these two sides have got involved To give you an idea Twitter shares were trading around 35 bucks post market after this news came out at the end of last week Remember Elon offered 54 20 at this point and typical Elon Musk Literally a few hours ago overnight. He tweeted a meme of himself saying basically trolling Twitter On Twitter. He can't make this stuff up. But quite funny nonetheless Um, and then that is it really so in terms of other things to look out for quick run through of the the week You've got uh, bank of England governor Andrew Bailey and the new york fed president john williams. They're speaking today Bailey speaks again tomorrow on tuesday usc pi on wednesday as i mentioned you also get the release of the fed's beige book You've also got chinese trade data More inflation metrics come out of the us on thursday with ppi numbers and your regular weekly jobless claims Then looking out for chinese gross figures Um, so quite a big week for chinese overall economic data points In combination with that new outbreak of that omicron variant that i mentioned before to keep an eye on And then g20 finance ministers and central bankers do meet at the back end of the week And that will run through the weekend which is also coinciding with the biden talks with Saudi Arabia And you've also got us retail sales as well to finish off the week That is it. Don't forget to like and subscribe to the channel if this was useful and i'll see you next time Thanks very much