 So hello and welcome to episode 46 of the market maker podcast where I'm joined by head of trading co-founder peers current and to kick things off a massive thank you. We have made it we've passed we smashed through 105 star ratings on Apple podcast we asked you guys responded we're now at 108 years. I mean that is that is a destruction of that 100 barrier and marching marching on what performance by listeners. I mean what's the one we need to set a new target here and they just smashed that one. But you know what look, we did this a month earlier than anticipated so I'm going to put it out there. Let's let's shoot for 250. I mean let's not mess around here I'm not talking 50 clips here talking 250. Let's up that's let's let's set up the size I always that reminds me of. Remember back on the trading floor back in the day when you're trading well. You'd get called in for a review then you'd get your size increased. You're talking about the clip size there, you'd get your clip size increase just meaning well done, you know we now trust you to trade more. And it was absolutely inevitable. The day after you've had your size increased, you'd have a disaster. And because you're trading like let's say double what you're used to a few losing trades always the PNL is massive and then the psychology comes in and the wheels would always come off after the clip size has been raised. So another challenge to the listeners there can you deal with a bigger clip size. There's a challenge right there and I'm not sure if you saw it appears but on Spotify. This week they released the year the year wrapped. It's like a feature for the end of the year, and it basically takes a user uses analytics and creates like a 20 slide deck of like your stats in a fun engaging way. There's a whole ton of people that were messaging me and sharing on social of our podcast was top, ahead of the FT head of the Wall Street Journal in terms of minutes clocked. Some people were clocking in 1400 minutes. Listen to this which is just amazing. Can you listen to me and you for 400 minutes. That sounds like some kind of punishment. But yeah, well look, this this was happening true story so yeah I mean again, honestly just thank you to everyone. You know as I've said before I'll say again, I think of all the things that that I do from a content perspective podcast are my favorite. I'm just happy that people like to listen to the micro career series as well which we still got a few more episodes to come people have been very well received in regards to that content as well so yeah just thank you and look we'll push on. And I'll see it 250 but the witness weekend review what's been going on so usual routine quick overview so Omicron has now spread globally. Lots of still unanswered questions we're going to tackle that as our first big kind of conversation piece, then you've got the Fed pivoting in a more hawkish direction. The transit rate throwing in a towel. Finally, some might have seen OPEC plus stuck to the plan, despite the emergence of the virus, perhaps a little sweet deal there behind closed doors from the US to get that over the line but again we're going to talk about that as our second major future. Then you have the dem controlled US Senate last night passed a bill to fund the government through to mid February. So it seems like they can only kick the can about two months down the line now rather than any longer than that but they've done it and actually I'd say I'm a little shocked that they got that deal done and didn't ruin everyone's Christmas and New Year's I'm a little bit surprised by the fact that they've managed to get that over the line and avert the risk of another potential shutdown. And then the final things, unsurprisingly, I think US and Iran both sounded very pessimistic after resuming talks after that five month hiatus that they had after the Iranian election of an anti Western hardliner as their president. I think just the fact that they're back to talking is a big step in itself I don't think you could have expected any more than that. Turkish lira. Yep, still going. Now, we're now 14. You must be last week. How high can it go. Yep, so we're now at 14. Erdogan is not, he's not flinching under the pressure. I think that last night downgraded the country to a negative outlook because of their policies at the moment. And then we've just had no fun payrolls come out. So obviously recording this on the third of December. And so, first Friday of the month latest payrolls came in at 210,000, quite a bit below the expected by 50 smallest monthly increase since December. It's shorter than this perception about the hawkish Fed pivot. We'll discuss in a moment, but let's kick it off with Omicron. That's the main thing and few different points here I listened to a really great podcast from Morgan Stanley. During the week and I wanted to just surmise a couple of key points to take away and perhaps you can comment on some of these as we go through. And they basically break this down into three key elements to look out for for the here and now as far as the markets are concerned. Number one is transmissibility. Number two, vaccine escape. And number three, a word I find incredibly hard to say, lethality. How lethal is the actual variant in itself and this is all just trying to determine whether or not it has a different makeup to that of Delta and so forth. I'm explaining this bit by bit through the three parts. Transmissibility. So, South Africa has sequenced a number of recent COVID patients, and the vast majority of those have this new variant suggests it will overtake Delta, but of course there's always a but it's a small size. There's a tiny amount of people that has been sequenced so far, albeit it's, I think it was a number was 74% had Omicron over Delta says overwhelming, but it's not a population sample. The one thing that MS pointed out which was quite interesting and I don't know all the mechanics of how this works but they were talking about a figure they look at is PCR testing. And a certain time of what they call deletion that you can pick up in the test has gone up basically from five to 50% suggesting that the new variant, then is very much dominant. And the PCR testing is much wider scale. So that's a better data point to look at considering where we're at at the moment, albeit the sequencing will pick up. To give you an idea of timelines, they said that trying to figure out this whole, how transmissible is it it's about a two week process, you take the virus. You grow it, you get a sample of it, you then take blood of people who have recovered, and who have been vaccinated, and you find out how much of the virus you kill. And it basically tells you how effective the serum from vaccinated or previously infected individuals are against the new variant. And so a lot of this is timing we'll talk about mortality in a moment that you can actually tell for over a month. So with this first part transmissibility it's still very early days and there's a lot of assumptions being made without really statistical supporting quality evidence at this point in time. Why are people concerned about vaccine evasion. So known mutations that they're saying so far are very similar to beta. I think we briefly touched on this last week, and beta was the original one that had. It wasn't very transmissible but it was it did have a much higher. In fact, it reduced the vaccine effectiveness six fold. The beta version, it just never really took off. Now the problem that you've got now is the mutations that are happening in this particular variant in its early signs have evolved in such a way that it could be highly transmissible, but also then carry the same properties as beta. And that's what's got people a little bit spooked about vaccine evasion potential. This is where a lot of this is coming from and to back this up overnight. There was a comment out of the NICD. I had never heard of them before today, but they're the South African National Institute of communicable diseases. And basically they had a study and it showed Omicron variant reinfection risk is three times greater than any of the prior COVID-19 variants as well. So it is looking like this is definitely something to monitor early doors and probably the swings in volatility. I mean, I was just looking at a stat for a newsletter I'm going to put out at the weekend and the VIX highest level since January. We hit on Wednesday we've got a roller coaster this week stocks down up down and everything in between. And then the final part just to wrap it up and I'll hand it over to you for your take is lethality takes about four to five weeks to understand the underlying impact on mortality or hospitalizations. One of the things is you probably would have seen a chart I'm sure in the press, South African hospitalizations have been ticking up a little bit, but that's not necessarily a flexion to current status of where we are because that won't materialize in those figures for another month or so. Another thing and I think a really important thing is a lot of people will say, Okay, let's say this is a really bad scenario. How economically damaging is it going to be. And a good point that MS make is look, we're in a different situation now we have other effective treatments. Antibody therapies and oral therapies, while some antibody therapies won't necessarily be effective. Some will is what data is suggesting and oral therapies give mechanisms that are delivered via different action that basically would not be impacted by mutations that exist. And so remember when you take that oral one I think it's the Merck one that got approved. This isn't about preventing you it's not a replacement for an injection. It just increases your ability to why it decreases the likelihood of mortality. So it's for people who've already got the variant. And not to die basically right in a rather crude way, but these exist and they obviously did not exist in March, April, May, June of 2020. Yeah, we're in the very worst part. The key thing about that in particular is about preventing that nightmare where the hospitals get overwhelmed and the ICU beds are full because then you're in trouble so the overall take here essentially is, it definitely is a moving target at the moment we need to wait for the updates, even if it is significant, the impact on vaccine efficacy. It shouldn't be as bad as what we saw in 2020, even in a let's say worst case not base case scenario, because base case the market seem relatively content to go with the flow at the moment that it's been fairly mild in terms of what we've seen deemed as the symptomatic issues. The final point so it's worth noting President Biden he had a speech last night, and he outlined his winter COVID strategy, and people were getting a bit nervous about lockdowns and things like that Europe's been very, very much severe in some cases Germany's the latest to stop unvaccinated people from basically doing anything. President Biden has said that the plan does not include shutdowns. I would suggest that obviously that can change very quickly. The New York Mayor commented as well last night and has said we should assume there is a community spread of the new variant in New York City. And then later later it was reported that New York has registered the most daily COVID-19 cases since January. And obviously this is, we've not even got into Christmas yet. And we're just probably coming off the back of Thanksgiving, probably the Thanksgiving bump that you're likely to get out of more transmission effects through that period of last weekend, haven't yet emerged so yes, there's a few moving parts here. How do you feel about where we're at at the moment and how people are perceiving the risk. We're in that we're obviously we're still in that sort of no man's land where the risk has materialized and yet we don't know enough about it to make any sound judgments on how big a risk that might be. So as you're saying it takes weeks and with that fatality rate can take weeks and weeks and months like even right so. There's so much conflict in terms of commentary about this. I mean you listed out some of those kind of I would say the more negative ones and alarmist ones where, you know, it's maybe the beta version, but in terms of evading the vaccines but it's so as transmissible as it's like the worst nightmare right but then I heard one of the South African specialists saying that actually it look early signs are showing that it is a lot milder as a disease now they did slightly undo the validity of their I then saying that actually that was one one risk around that assessment is that all we've really got is we're judging that based on a quite a relatively young pool of people so it was school kids and stuff so obviously the younger generations are, you know, don't get affected by this disease much and so anyway, look the point is that we don't know. And as we always talk about on this podcast, and everyone knows, you know, uncertainties the biggest force on markets the biggest negative force on things like stocks you know it's that it's the not knowing that's the worst. So, we're in that kind of phase at the moment I mean I'd say that I don't know. You know, okay, we I think it was the head of the Madonna vaccine rollout he was saying that he's worried that the current vaccines aren't going to be able to do the job but then on the other hand, you know, these, these companies are equipped now to, you know, roll out variations of the vaccines in a couple of months, so that kind of, you know, there's always these positives and negatives. What I'm interested in actually is, you know, from an economic perspective has this obviously we don't know yet how bad this will have an impact on economies because we don't know if lockdowns are coming or not, you know, broadly across the world but what I would say what I'm interested in, like, let's take China, for example, I mean one of the big risks I think is China from an economic point of view and how damaging, let's say another phase of lockdowns might be because China's kind of adopted this very much zero COVID policy where any hint of one case and then bang let's lock down the whole region. Okay, now obviously that policy is great from one respect where it means it dramatically reduces the number of people that get it. Great fine but of course it has a very negative impact on the economy, but the kind of medium to long term negative, you can call it that is that the herd immunity levels are super low. Right, so it just means that this up and down roller coaster of COVID, where it's, you know, new variant cases rise lockdown, fine cases drop reopen new variant cases rise lockdown. You know cases drop reopen that cycle is going to last a lot longer in countries with zero tolerance who have a lower herd immunity. I think this is where obviously there's a really heavy cost to having a high herd immunity. That means a lot more deaths, and obviously that's something this is the, you know, the work, you know that the ultimate kind of moral dilemma as a leader, and as a government, you know do which pathway do you choose in a couple of decades time, maybe we'll be able to look back at the data, and it might be that actually there's no real difference in the end in terms of fatality rate, it may be that countries like the UK where we've had a lot of deaths relatively. You know, maybe we've just got it out of the way early on our herd immunity now means we don't have to quite go through these severe ups and downs economically with full lockdowns because our herd immunity will will help us kind of deal with these variants because you know you might have that longer pathway the likes of China are taking where there is more economic disruption but actually in the end, maybe the kind of impact ends up being the same from a sort of death rate point of view but you know who knows the speculation right but my, my concern is the big giant kind of economic juggernaut like China. Because they're so important, obviously for Asia, massively important economic hub and you know, second biggest economy in the world, and I think at the moment their growth rates at 5%. That's the lowest rate basically apart from that one major spike lower spring 2020 when the first COVID first hit apart from that 5% growth rates the slowest China's grown for for 30 years so you know China's growth rate is a concern but look, from a markets point of view clearly stock markets have come off, you know we've had our biggest kind of downward phase that we've seen for a while. The S&P's kind of pulled back to test the high points that we were seeing. Well what but let's say the start of September highs were kind of tracking around those areas mean the US stock markets are still relatively high it's not like they've given back huge amounts here. And we talked about this last week, you know, some, you know, other like European stock markets given they've gone into full lockdown already in places like Austria are seeing a much heavier toll. I like stuff like and we'll talk about inflation in a minute because what we have seen is the yield curve has flattened. Because ultimately, you've got risk off buying of the long end, which suppresses long end yields but then the feds turn super massive the biggest hawk in the history of birds, which is keeping the short end rates higher right so you're getting a flattening of the yields curve, which is always a signal of economic stress. Yeah, from a markets point of view we've had that initial right we're in the uncertainty zone, what I would say is over the next week or two, we're going to start to get some proper information on this and then we go from there. And I don't want to say right here and now that we're definitely going to bounce and markets are going to make all time highs into year end. I mean that would be my odds on probable favorite scenario, but clearly, if the, if the COVID situation turns out to be more on the worst case scenario will then clearly, we're into a new, new situation. Well, by making that phrase, you wouldn't get a job at JP Morgan. They've been out called to arms by the dip middle of the week. They are. So on the street, you've basically got JP Morgan who are like perma balls, and on the complete polar end of this, you've then got Morgan Stanley, who are the most bearish. I'll talk about this battle Royale happening on Wall Street when we talk oil as a good one emerging. That's a huge golf in opinion of where oil is going to go. But yeah JP Morgan was saying this week that the recent turmoil caused by Omicron virus strain offers a chance to position for trend reversals in reopening and commodity trades. They were basically they've just gone full board. It's more transmissible but it's not deadly by that fact then this is an actual historical virus evolution and therefore it's positive risk. That's just reckless. You know what they're coming out and with their scientific opinion. This is not a risk by everything that this is what I want students to be aware of. If you go back through the last 12 months of the year of 2021, JP Morgan, I think, hopefully named the guy's name. Colovich I think is the strict the chief strategist and he basically he got a promotion. This is the thing was the beginning of the year right you got shifted up a few level buying the dip for 10 years and he's yet well yes. And basically he's been banging that drum, and he's been right all year. Yeah, every year. Yeah, every year for a decade. And now he's just he's committed now. Rightly or wrongly. He's like, no, not changing my mind. We're doing this. This reminds me of someone called Dr. Doom. It's kind of an opposite scenario but Rubini this analyst called Rubini who spent the whole of the naughties saying that the global economy is going to blow up. He was the best bear in town and markets went up and they went up and they went up and they went up and guess what no one had ever heard of Rubini because he was wrong every year, every year, every year, every year wrong wrong wrong wrong. And then all of a sudden he was exactly right as the financial crisis hit. And then Rubini became this massive like a rock star wasn't it. He's up in Norio Rubini and yacht and norio Rubini is not probably what you described as, you know, he's not he's not like the David Gandhi, like male model, Mr. Universe he's, you know, he's he's an economist, can't have it. And but he's on the back of a yacht with 20 incredible other looking women. And it's the most hilarious picture because he's just like the yeah, the shift that he's got. But do you know what he's one of the biggest. He's got one of the best nicknames though, Dr. Doom. Dr. Doom. Do you know what he's super bearish on and has been now for the last two years that he keeps he's really angry about it. Probably Bitcoin. Yeah, well crypto is it. He hates Bitcoin and crypto he's. How's that for you going. Well until he's right. Okay, let's let's let's flip it over to the Fed. And I just I was going to talk about power first but actually I've got my charts in front of me as we're doing this. And we're selling off at the moment. The US equities across the board. Now, it's fairly heavy but not spectacular but it's the reverse of what we initially had so just to explain. payrolls just came out an hour or so before we were recording this conversation and it came out headline change in non farm payrolls in the US 210,000 analysts were expecting 550,000 so there's a miss on expectations on the headline reading at actually equities spiked up. Now of course the rationale being there is, oh, the jobs market is not very good. And therefore, well the Fed can't go ahead and this acceleration super hawkish moves that they've done. Maybe it's a bit of relief. And now to me this feels more like a true interpretation of that move which is that the unemployment rate fell to 4.2%. Well, well below expectations of four and a half and previous 4.6 participation rate ticked up a tiny bit and employment population ratio has gone up to 59.2%. And to me what this looks like. I don't know about you Pierce but the Fed are going to now go ahead with, they go into their blackout period now, until the 15th when they have their next meeting, and they've made this flip purposefully with timing of that. For whatever reason that you know whether it's inflation whether it's misunderstanding of transitory we can talk about in a moment so here, you've got a labor market that's perhaps not firing quite as consistently as they might have thought after you had the half a million print last month, but they're going to go ahead nonetheless I mean this payroll now doesn't change that. So if equities is just another little, it could be a little bit better economically, at least and then you've obviously got the variant thrown in the mix which is a kind of a weighted factor. Yeah, it's not a great. It's not a great cocktail I mean I think with those that non fun payrolls or the labor market report more generally it's one of those classic reports where the headline number it's like, oh, that's bad, you know that's a that's a that's a much worse than expected situation but then you look at everything else and you go wow actually that's really strong. There's two things, I certainly on that headline one. There's been a real pattern in recent months where the first time that months job creation figure is announced. It's artificially very low. Then when we go to the next month that that last month gets revised up. And when we go to the month after that it gets revised up again. So we're in this trend where you're getting constant upward revisions to previous months. So the point is about this month being such a low figure. The idea is well actually you'll probably get revised up in the next one and two months time so actually in reality is probably not as bad as as it looks. Everything else is pretty strong. One thing that is a real outlier really strong is actually something called the household survey, which found that employment rose, employment rose by 1.136 million, which is a massive figure we've been talking in weeks gone back about this. This there's a whole load of people sat on the sidelines as millions of people. You know, not yet working who were working before COVID and it looks like some of these are coming back to to markets that was really strong. The one thing that was a bit weaker though, well, worse lower than expected was the average our earnings figure. So we'll talk about inflation in a minute but the inflationary element of the report that wage growth figure came in at 4.8% which was lower than the 5% that was expected but yeah I mean, but I think even though the headlines are missed there's nothing in this report that's saying to the Fed. Wait, wait, wait. You know the economy is not as strong as you think stop don't go. Don't don't push the foot on the accelerator the tapering accelerator. I don't think this report is going to change the feds direction. The only thing that will change it is if we get information about this virus variant and whether it is the worst case scenario where current vaccines aren't going to work that then but I want to talk about this, because really that the reason why the Fed have turned hawkish and then more hawkish and then more hawkish is like every week they just keep getting more hawkish. It's like I literally I've never seen anything like it from I've never seen the Fed pivot and move stance so quickly. So they're obviously panicking. And I personally think they've actually they've now gone too far the other way. I mean sure maybe they were too dovish. Yes, maybe and I was guilty as well of being in camp transitory probably for too long. And so I think they were too dovish but that's their natural stance right now they're swinging and I think they've just gone too far on the hawkish scale but to defend them. People obviously think well if we have to go back into lockdown, then obviously actually won't this inflationary problem go away because won't won't consumption collapse and therefore inflation is going to vanish. And there's a real problem with that argument. And actually there's there's definite arguments that you could put forward to say that actually more lockdowns would just increase inflation even more. And here's the rationale for that. So obviously in the first lockdown or more than one but consumers have gone into this huge buy everything online, right, demand for goods that you buy online. And these are goods that are typically manufactured, let's say in places like China or Vietnam, for example, these emerging markets that are the mass manufacturing engine is a planet. So we buy a lot of stuff online gets made in Vietnam, it gets shipped, right. That's what happened and that's where the inflation spike has come from we got all these supply bottlenecks and shortages and microchips and whatever else right. Now the lockdown, all of those goods that have created this inflation spike in the first place, they're the goods that's going to see an increase in demand. So you're going to get an increase in demand in the goods where prices are already elevated. So you can couple that with, if you do get more zero tolerance lockdowns in China or Vietnam, well then there's your kind of supply bottleneck getting even worse, right. So there is an argument to say the way that inflation is going to drop is actually opening up. And I know that sounds a bit counterintuitive because if the economy is open up then we're hey, everyone spends all their money and actually, we spend our money on other stuff like we go to a restaurant. You know we're not we're not buying a good that's manufactured in Vietnam, we're buying something on a plate that's physical that we eat, right. So we're buying stuff where the inflationary pressures aren't there and actually that then alleviates the, the, the over demand and the under supply on goods that come from places like Vietnam. So, that's one thing to kind of think about obviously you can think about the demand side though. And this is the unknown right, it could be that if it is full on lockdown well then the counter argument is well hang on a minute, can government support people through another full on lockdown like they did last time. You know, can there be another furlough scheme, can it be afforded, if not, well then maybe the economic impact to individuals will be much greater in which case they won't be able to buy their Peloton or they won't be able to buy their stuff from Vietnam. And so there's obviously uncertainties around that demand side as well, but yeah so I don't know. I think the federal right that I think they're right to be more hawkish I think they've gone too far I get that they had this time period where the lockout is coming and we need like we're going to go the next meeting we need to tell them now. So it really I think pal found himself squeezed into a corner where he felt he had to properly get more hawkish to give us at least a couple of weeks warning before they push the button. So it's definitely not an ideal situation for pal. I think the one of the key winners. That of all of this is the dollar, and that's the other kind of third kind of uncertainty around all of this by the way it's the dollars impact on emerging markets. And we talked about this with Turkey, particularly last week but this goes across the spectrum right if you get dollar strength, then think about inflation. If you're getting dollar strength because of a super hawkish fed, then that's actually inflationary for emerging markets because their currencies drop in value, meaning their imports, the prices go up. And so, you've got a whole cocktail of different angles to think about this which is why it's so hard not the moment the default responses that stocks are down but not. They're not, you know, they're not down down, but certainly the dollar is kind of an obviously all we'll talk about all in a minute but the dollar. Yeah, it is a big beneficiary here and that's probably going to continue because it looks like the Fed are going to. Looks like they're on. Well, if we have a, if we do have a demand collapse and governments need to step in and we start, they start handing out the stimmy checks again. I'll share with you my spreadsheet of pump and dump mean stocks and we'll. Yeah, let's go. Okay, well just to round off this, this segment, there's one thing that I read this morning I thought it's quite interesting which I just wanted to kind of cover with you before we then move on to OPEC to go into the final point. And so, there was an interview basically in the New York Times, with a Democratic pollster Brian striker is his name this week, and following the recent Republican victory in that governor race we had a few months back in Virginia, which was a US state, when Biden won easily, striker conducted a series of focus groups of voters who had voted for Biden last year, and then now to Republican candidate who won Virginia Glenn young in this autumn. Highlight from the findings essentially was as follows, voters believe the economy is bad, and no amount of stats can change their mind, at least in short term. The number of wage numbers and a number of people they've put back to work don't matter anymore. The numbers will have will have a limited impact when people are seeing help wanted signs all over Main Street restaurant sections closed for lack of workers, rising prices supply disruptions, even where things are getting better. Biden doesn't get credit. ABB. Anything but Biden. Too late. He's he's the damage is done, and people's attitudes are very much the mindset is this guy's not who we wanted. He's not it. And as you say, it doesn't matter now all they see is the bad. Yes, you know, it's all there is a little have a bias nice confirmation bias right when that's your opinion and then right anything you see okay bad easy yet see it told you he's just rubbish. Anything that's good. Well they, you know they either don't see it or they try and spin an argument that actually is good but nothing, nothing to do to Biden. And do you know you had a exclusive TV interview. I think it was yesterday with Nigel Farage. Oh, God, Donald Trump obviously not see that. I didn't know. Farage, you know, Farage is, you know, he's punching above his weight he had a two hour special with the former president. On what on what channel. I think it was GB news. He's now the anchor. I was wondering, I hadn't heard about him for a lot while since he was last on in Trump Tower, in fact, and when Trump one. So Trump, you know, I was just looking at some of the comments Trump was saying I mean, of all the criticisms. He definitely does know how to like tap in to middle America middle UK psyche. You talking about Farage or Trump right Trump, right. He laid into Meghan Markle. And look, I'm not here to judge, but I would say on balance that probably is in keeping with what a lot of British people feel. And he was like criticizing Prince Harry, and so on and so forth. Farage asked him, are you going to run in the election. Yeah, and he says, I quote, if you love your country, you have no choice. Donalds. He's coming back. That's it. He's just the way he's just announced. Why is that not news to hang on that was last night. Why is that why is that why is that not in the mainstream press today, or if I just missed it and it is. Maybe you're stuck in a different a different political color echo chamber. BJT back in the house. All right, well let's let's talk a little bit about oil and OPEC. And the group agreed yesterday on Thursday to add 400,000 barrels a day of crude to global markets in January. However, they did make a nod to fast changing conditions they said they stood ready to reconvene quote pending further developments of the pandemic, and to continue to monitor the market closely and make immediate adjustments if required, according to the group communique. The officials, the all ministers said they remain in session is the words that they used, according to the statement. Though the next meeting to decide on February output. That's not scheduled till the fourth of Jan now. So that was the main kind of take away all prices actually dipped quite aggressively we went from around a 67 handled to a 62 and a half mark. And then you tune in three hours later, you're like, what, because, who put that trampoline that the communique details didn't really weren't that explicit talking about this kind of open ended this to continue to be responsive. What the news wise snapped, which created the initial selling pressure was purely, they've gone ahead, they've not halted and markets were a little bit on the fence whether or not they were going to hold. And so reaction against market positioning was this is more supply and spec traders just hit it, but then the reversal came. Now one detail that I saw, which I thought was interesting is that OPEC plus delegates said the output hike will be partially offset by so called compensation cuts owed by members that had exceeded their quotas in the prior months. So countries will have until June to implement those extra cuts to make good on their overproduction, but obviously that can be maneuvered around as they see fit to use as and when they want. But do you how big are these compensation cuts. Well I was looking at the, I haven't got the breakdown to hand but I think the overall compliance at the moment is tracking somewhere just under 120%. So there's room to maneuver in that in that respect but. And that's 120. Yeah, okay fine. Interesting. I mean, so they, and so just to be clear that hiking production at 400,000 barrels each month. And the idea was that they would cut that increase to 200,000. Right. No, I think the market. Exactly. The market was expecting. So how they're doing this is they've gone from pre pandemic six months meetings to monthly, just given how fluid the dynamic on supply and demand pandemic wise is. Yeah, they've talked about then a strategic plan to return 400,000 barrels a day of crude oil and increasing the supply amount by 400k every month. And they talk about this one month ahead of time. The expectation was they were just going to leave it stamp at no change this month, chiefly because of one, the SPR tap of 50 million from the states in coordination with China, India, the rest. Looking to flood the market to tame higher price and the feed through on energy based inflation, then into the Omicron uncertainties about the impact on demand. No, I think the reason my oils banks in my opinion so as you said almost got down to 62 looking at WTI crew we're now trading almost 69. Which seems like a really big rebank and it is, but it actually only gets us back to Wednesday's high. The reason for that is I think is because even though they have announced they're continuing to increase production by 400,000 bowels a month, I think that will not continue for much longer and apparently the sources were saying internally that the banks own forecasts are predicting that supply could well overwhelm demand by as early as, you know, next year and obviously with the corona variant uncertainty, it could, you know supply could overwhelm demand overwhelm demand, you know, in a few weeks time So, you know, I think that they're gearing up to wind down that supply increase. And I think weirdly, it's just, it's a temporary, you know, nod to Biden, you know what you know what this is. OPEC, the Biden situation is so bad. They actually just feel sorry for him. Oh, poor old Joe. You know, just throw your bone just for just for a month. But then we'll have it back. Because what happened was apparently a Washington delegation has been over in Riyadh, showering them with praise and, I don't know, taking lots of and basically kneeling down and just at their feet, just praying, please give us something. And so yes, context, Biden since his administration came in has basically said he doesn't want to talk to MBS. I talked to King Salman on no one. So it's been quite a back step and deterioration of that relationship. You know, there's ongoing Iran sanctions going on and there's a lot. One of his key one of his key policies around Saudi Biden, this is in his when he was running for election was look, we're going to definitely play differently to Trump. Trump was very much big mates with MBS and, you know, getting loads of arms deals signed off and you know, America's great and we're back blah blah blah and Biden's like I'm taking the opposite stance. Hang on, have you heard this Khashoggi scandal. Have you seen their human rights abuses. We are very much going to take a different stance against Saudi Arabia than Donald Trump. And yet here we are, a couple of years later, and Biden's groveling at MBS is feet. Please don't cut. Please carry on with your oil production increases because my polling is shocking. And I need petrol prices to come down at the petrol pump in America now. Otherwise, I'm dead. Well, one bank that Joe's not going to like is JP Morgan I said earlier, so they see oil overshooting 125 bucks a barrel 2022. They see it going to $150 a barrel in 2023. So this is one guy I'm quoting here is called Christian Malik JP Morgan he's a managing director at the firm. He said shale is in a straight jacket. When has spare capacity been in single digits as a percentage of total capacity. That's when the risk premium shoots up. Yeah, right. I think he's talking. Yeah, he's talking about the capacity side. Right. Well, he's talking about shale, but I think it's one of the things first thing I did when I saw this comment, I'll walk you through my rationale. Check his Instagram. Not far off. So I when I hear a comment like that, I'm like, who the heck is this guy? I mean 150 oil. Give me a break. He might be right. You know, I might have egg on my face, but I was like, right, LinkedIn. If he's an MD at JP Morgan, what, who's this guy? What's his background? Yeah, profile picture. He must be hanging out with Rubini again. He's on the back of the yacht. No. He's got black shirt, white jeans. He's even got the little white collar thread coming through the collars like on his black shirt. Like, it's pretty special. And I thought, yeah, you can go for 150. And then the other this is the other thing was Deutsche Bank came out with a report this week, and they said, we see oil next year. 60 bucks. 60 to 125 is your spread, Pierce. Yeah, where are you shooting? In the middle. I think while 60, I mean, we pretty much hit 60. Yes, let me give you the 60. They're rationale says it would be misguided to think of an OPEC pools on Thursday as bullish, since we have assumed that our model and still end up with a surplus of in Q1. We would be sellers are rallying crude on the back of any OPEC pools. Yeah, I mean, I think obviously the biggest influence, it does all you'll get to 150 or 60 obviously Corona is the biggest influence. OPEC can mess about with supply. It's really hard for that group because it's such a big group to make decisions certainly radical decisions where they're going to change their supply, positively or negatively by a lot hardly ever happens right. You know, Biden tapping the his reserves by 50 million barrels, but look, they're going to release 32 million barrels over the next several months. By the way to put into context 50 million barrels. That's two and a half days of US consumption. This isn't a lot of barrels, and they're going to spread it over a few months anyway so I don't think, to be honest, I don't think that makes too much of an impact so I personally I think you've got a lot of uncertainty right but in the end, we've had a decade or well. We've had seven eight years of chronic underinvestment in oil production infrastructure. And in the end medium term, that's the big, that's the big one, and I don't know your, your mate from JP Morgan may well be using that as an argument I don't know but or maybe just wants to grab the headlines but you know I think in the end. The supply who's going to win the demand and supply game. Well, it's going to be demand will overweigh supply. Because of this chronic lack of investment for a period but then as the world is transitioning away from fossil fuels into the greener realm then obviously that demand side will start to calm down as people switch to green but that's going to take a long time as you're right so thinking about the medium to long term, I think you're going to get prices rising because of the lack of investment in supply, before then that demand curve starts to properly permanently trend lower because of a transition to green I'd, I'd, I'd favor prices being closer to. I'm going to say, you talked about by the end of 2020 now these predictions are they. Maybe, maybe we'll put the conversation and pause and I'll check out what you're wearing in your LinkedIn profile. I'm going to say by the end of next year that be prices will be closer to 100 than they will to 60. I'm going to be 80, I'm going to be 90, I'm going to go $90 in 12 months. You heard it here first. Yeah, $90. Yeah. I mean, as you were rightly saying it was the, the chap at JP said OPEC plus is not immune to the impacts of underinvestment so it's very much like kind of talking about but let's wrap it up there. And yeah, once again, not only thank you to peers for going sticking with me through 46 episodes. What are we going to have a party for 50 we need to have a live on air party. Well, do you know what I saw the one of the most popular podcasts in the UK that was a husband and wife and they were on the Graham Norton show last week. Oh yeah, I think it was called it's something like shag marry or argue or something like that is there like podcast. And do you know what they would so the guy was a comedian before. So we can't compete with that because we're, you know, we're not that good. But essentially, they're now selling out the O2 podcast. Wow. All right. Come on peers. Let's forget 250. I want to sell out the oh no. Okay, so the hundredth episode, we're going to sell out the O2 to start with. I had that for the 50th episode. Why don't we invite on some a listener or two or three. Oh yeah, that's nice. Do you think about that? Maybe we do a little comp. Yeah, someone who's got a good view and they come in like, yeah, bring it to bring it to us. Dragon's Den style. And yeah, let's do that. We'll arrange it give you the details next week of how you can apply. But let's get some listeners on. Yeah. Cool. All right, all right. With that, thank you peers and thank you everyone for listening. And we'll see you next week. See you guys. Bye.