 Okay, very good morning to you. It is Friday the 10th of December. I hope you're doing well and Going to talk about US CPI will do a short preview to kick things off first And then we're going to talk a little bit about Boris Johnson and a parent Tory rebellion on the table Then China ever grand moving into a restricted default. What does that mean? Is it important or not? Bloomberg economists survey update from the ECB in the timing going into their final rate decision about what they're going to do with hinting towards then the QE program their pandemic emergency purchase program and the APP and then a quick word on Tesla because Elon Musk has continued telling his shares for a fifth straight week fulfilling his pledge to Get rid of 10% of that holding that he has in the EV maker. So that's what's on the agenda very quick look at the charts and Not going to spend too much time here Overall, we've had a lower close on Wall Street losses of point seven in the S&P The most severe loss in the Nasdaq down one point seven But that again reflection of the outperformance that it's seen following a three-day consecutive winning streak So a bit of a pullback after those moves this morning You've got the dollar index just picking up a little bit as Europe has stepped into the market yields also Likewise, so the US 10 year down here in the bottom right's down nine and a half ticks this morning Equities also a little bit softer through the APAC session following that lower close on Wall Street If anything you could say perhaps a little bit of pre positioning then ahead of what is of course anticipated to be a super hot inflation reading coming out of the states at 130 this afternoon Why the big attention on this figure? Well, remember for the Fed it really comes down to two major forces to determine their Decision-making from an economic point of view and that is inflation and the labor market The other thing of course is going to be Omicron as we go forward But following the Fed Fed chair pals comments We saw just last week where he no longer viewed inflation as quote transitory eyes Then firmly on this it's the final piece of kind of intel that we get before next week's on the 15th Final FMC meeting of the year and a lot of the hints have been laid down around the acceleration of tapering of course in January And then that would mean the commencement of that Winding up by March at the end of Q1 of next year This is the look at where CPI stands at the moment on a year-on-year basis And you can see the previous reading came in at six point two percent year-on-year And in fact that was the highest reading we've had in 31 years If today's number comes in as expected So expected is six point eight percent the top end of the streets actually looking for a figure north of seven percent But even at consensus that would mean the highest figure since 1982 if the core comes in in line it'd be the highest reading since June of 1991 now one of the things then Well a couple of things to be aware of here One is the fact that inflation obviously has become more Acute of problem than what the Fed had previously foresaw in previous months and hence the reason why for this hawkish pivot That we've had from them and you can see here the actual CPI prints and then what's expected So today's one up right up here Expected to be generally the peak and then fading as we go further through into 2022 To cool off a little bit and move somewhere back towards the target value of around two percent or thereabouts The concern of course has been that just generally speaking that the movement has gone from being kind of in the idiosyncratic result of the pains of reopening after the bottlenecks we had experienced due to the pandemic to a more broadening out of inflationary pressures one of the biggest ones You can see here of a shift in components that we saw that that led to the height and figure last time as this yellow bar and The yellow bar being then energy and energy had been if you remember on an absolute tear for a number of weeks On that point then if then energy is becoming a more larger component of this remember the data we're going to see For this reading is November and actually the the actual kind of survey period of what that data Captures doesn't really then take hold of some of the pullback. We've seen quite aggressively in oil So one of the things that we had yesterday in attempt to kind of front-run what's expected to be an incredibly high figure Which obviously is going to be kind of sensationalized in the mainstream media is US President Joe Biden and his team have all been out looking to front-run today's figure and control kind of the Optics by suggesting then that the US inflation data due out today Does not reflect the recent decline in some prices Including energy and just to give you an idea energy prices obviously have come off as much as 15 20 percent And that won't be reflected in this report. We'll have to wait until obviously the next one that comes out So that's quite quite usual practice Obviously tries to try to get ahead of the game and to offset and mitigate any negativity of What then the public perception would be on the economic kind of handling of the administration being a failure if Then prices start to really impede people's lifestyle on the street. I if it severely outpaces wages now Couple of other things then to finish off I'd say this figure overall is not that surprising the inflation figure Is expected to go up? really, I guess what could really disturb then this idea of tapering being accelerated and so forth, which is the general market consensus at this point of time is going to be Omicron at the moment it does appear that Omicron is highly transmissible But of a more kind of mild nature to that comparative to say the previous strain of Delta Which is still much more prevalent on the global level if that were to change between now and next week's meeting on next Wednesday That being that it becomes proven more lethal perhaps than what we generally believe at this point in time That's really the only thing that could disrupt I think right now the overall process of just a faster tightening process going forward. So yeah today's figure It really depends. There's going to be a lot of knee jerk volatility. Of course the intraday session How much does it really change things? Well? I don't think a great deal at this point because it's very much expected to come in on the high side So yeah, it's going to be interesting to watch nonetheless All right Before I move on to talk about some of the other stories Do not forget that we have a new podcast episode if you just jump on to Spotify or Apple podcasts and search Amplify me market maker. You better find this and we release episodes every Friday Myself and the head of trading have a bit of a conversation Informally about some of the major themes of the week And so we'll give you our take of the CPI number when we record that after the report comes out later today So don't forget to check that out. All right. The other news stories of note Not that I think this is particularly pound sensitive in the in the very immediate intraday environment But it certainly does have ramifications in the more medium term is Boris Johnson said to be braced for a big Tory rebellion over COVID measures and amid discontent over his handling Of course on the row of Christmas parties in Downing Street last year I've just actually seen a tweet come out from a UK journalist who was saying Along the lines of they were planning through WhatsApp messaging Three weeks sending out invitations to all the politicians from number 10 Whilst of course the UK was in full lockdown. So this really going down like a sack of coal at the moment for Boris Johnson and it comes ahead of Conservative unrest playing out ahead of a highly problematic Parliamentary by-election if you watch local news or BBC news and the news at 10 10 o'clock and so on you probably read about this a lot If you're not in the UK, you probably won't even be on your radar But an area in North Shropshire where the Liberal Democrats hope to overturn around a 23,000 Tory election the Lib Dems actually finished third the last time there was by-election there in 2019 Conservative MPs already Agreed by the way the Prime Minister dealt with the sleaze scandal that culminated with Owen Patterson Quitting as the Tory MP for North Shropshire. Hence this new by-election Now is that area particularly specific? Well, no it just generally acts as a bit of a litmus test of overall national sentiment at the moment as Boris has become Under-increasing pressure on multiple fronts and what this has led to is the UK Labour Party according to latest You gov times Westminster survey is now ahead of the Conservatives with a four-point lead Wouldn't read too much into that at the moment, but it just goes to kind of show the general sentiment At this present point in time All right, the other things to quickly comment on Evergrande is defaulted sounds pretty scary as a headline. It really doesn't matter a great deal Evergrande's stock price overnight. I think it was down about 2% but remember this company was seeing monster moves a few months ago And the main rationale there is basically that everyone's expecting this to happen. They're going to go into restructuring So a lot of the headlines you're seeing at the moment have a somewhat degree of inevitability about them Fitch ratings cut Evergrande to a restricted default over its failure to make two coupon payments by the end of a grace period on Monday And hence what's triggered this latest action Fitch applied the same default label to Kaiser group holdings which also failed to make some dollar denominated Payments earlier this week The main kind of reason there that not only because it's expected but also dual fold given the fact of course as well The Chinese authorities have been fairly active to look to cushion some of this expected Proceedings that are going to go forward in time The other thing then is Elon Musk. I mentioned briefly at the beginning that he's offloaded further shares So he actually sold another 934,000 shares for some just over 960 million US dollars to pay for taxes on the exercise of 2.2 million Options according to regulatory filings that came out last night So for context that brings the total amount offloaded so far since he did that Twitter poll a couple of weeks To go to 11 million leaving 6 million more to hit that target so likelihood is this isn't going to stop any time Soon also overnight you might have seen Musk did tweet that he's thinking about quitting his jobs and becoming an influencer full-time How much seriousness you should read into that? I think very little how What often have peers and I talked about? Elon Musk eventually stepping down from Tesla. I think that is going to happen at some point in time I don't think this tweet is necessarily a real telling sign that that's going to happen imminently It's just must being musk and causing more drama on Twitter Then the final thing just a quick word is the ECB And the latest economist poll conducted by Bloomberg these happens Typically on the week running into a major interest rate decision. We get them for the Fed the Bank of England This is the ECB and the findings are sometimes quite interesting This one suggests the ECB will seek to cushion the exit for an emergency bond buying Next year before a stronger inflation outlook allows for an end of all quantitative easing in 2023 It's a timeline. They're looking for In terms of what to expect Policy makers will decide on Thursday So next week to stop purchases under their 1.85 trillion euro pandemic plan in March Remember, this was the top up one of that pretty huge envelope commitment to buy bonds as a response to pandemic on top of their more standardized asset purchase APP program And what they're going to do to smooth the transition of ending the bigger one is increase the smaller Existing one and expectations are from economists that that's going to basically double from 20 to 40 billion purchases per month in under the APP for Three months and then tail that down incrementally to then come back to the The original level by the end of next year. So a smoothing out effect of the withdrawal stimulus Essentially, this isn't new information. This is very much what the markets are expecting more more broadly speaking terms of the data what we've had, sorry, this is Thursday, so I'm going to jump to Friday, which is here So we've already had UK GDP come out everything in line. No more great surprises there and no reaction to pounds I'm not going to waste my time Talking there US CPI really is the main event for the day for the week really from a data perspective Again, the headline expected at six point eight percent the core reading four point nine top end of expectations on the street seven point one percent The University of Michigan sentiment premium number for deck comes out thereafter at three o'clock Speaker wise Panetta speaking off topic on digital currencies at 10 a.m. And then that is it So with that, I wish you a good day ahead a fantastic weekend Stay safe wherever you are and don't forget to check out the podcast episode which will come out later today All right, take care guys. Have a good one