Squawk Box Europe Express

U.S. Fed chair Jerome Powell testifies in front of the Senate Banking Committee and warns law makers that inflation remains a severe threat. However, Powell insisted that the U.S. economy is now robust enough not to require additional pandemic-level monetary stimulus. Powell’s main task would be to keep inflation in check, as U.S. markets look ahead to a CPI print today which could hit a high not seen for 40 years. Tech stocks rally in Wall Street and Hong Kong. Chinese factory and consumer price growth has softened after Beijing moves to curb rising raw material costs. In the UK, Prime Minister Boris Johnson’s tenure looks increasingly fragile following fresh Covid rule-breaking allegations by his government. And we take you to St. Moritz, Switzerland with the latest from the Crypto Finance Conference.   

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The Nasdaq dips in to correction territory but wins back losses of more than 2 per cent. We hear exclusively from Goldman Sachs’s David Kostin who says the tech disconnect is the largest issue for clients. U.S. Federal Reserve chairman Jerome Powell is set to testify in the Senate where he will address the effect inflation is having on the American economy while JPMorgan CEO Jamie Dimon predicts the U.S. is headed for its best growth phase in decades, even in the face of rate hikes. Investment fund Cerberus sells off more than $500m of Deutsche Bank and Commerzbank stocks. And in Covid news, Pfizer CEO Albert Bourla announces that the pharma giant will have a new Omicron vaccine this winter.   

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U.S. Secretary of State Antony Blinken says high-stakes talks between Washington and Moscow are unlikely to progress over Ukraine, as Russian troops gather on the border. In China, 14 million people are being tested for Covid over 2 days in the north-eastern port city of Tianjin – less than an hour from the capital. December payrolls in the U.S. come in weaker than expected but unemployment falls. And in banking news, Italy’s BPER reportedly improves its offer for Carige in a bid to fend off rival interest from French lender Credit Agricole.

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U.S. treasury yields continue to surge with investors bracing for an accelerated winding down of monetary support, while billionaire investor Ray Dalio tells CNBC the Fed is in a ‘delicate’ position. The WHO warns of an Omicron tsunami as global health systems struggle, but it says vaccine equity could end the pandemic this year. Oil prices pop as the violence continues in Kazakhstan’s largest city, Almaty, with scores killed and up to 3,000 detained. Russian troops have been called in to restore order. And in the U.S., President Biden marks the one-year anniversary of the deadly storming of Capitol Hill.  

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U.S. tech majors slide and the 10-year yield touches 1.7% after the Fed minutes hint at efforts to shrink the balance sheet together with rate hikes. At least seven EU countries report record daily Covid cases – while the UK eases testing rules. And French supermarket giant Auchan eyes a second bid for rival Carrefour after initial takeover talks were suspended in October.  

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The Dow hits a new record high as investor confidence picks up, but tech stocks slump on a rotation out of the sector. Opec nations hold their nerve against the Omicron outbreak and agree to boost output for the seventh consecutive month. China Mobile lists in Shanghai in the country’s biggest domestic IPO in a decade. Meanwhile in Europe, Covid cases continue to surge with new daily highs recorded in France and the UK.

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The Dow and the S&P 500 begin 2022 with fresh records, as Apple becomes the first U.S. company to achieve a $3 tn market cap. Troubled Chinese property giant Evergrande’s shares resume trading after authorities order it to demolish 39 developments on the tropical island of Hainan. Chinese manufacturing beats expectations in December as input prices fall to their lowest level since May 2020. And Daimler unveils an EV concept car with a 1000km range, but CTO Markus Schäfer tells CNBC exclusively that the chip crunch is likely to continue into the new year.

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U.S. futures begin 2022 pointing high but Asian equities are softer with the Hang Seng under pressure, as Evergrande is halted, pending the release of inside information. Turkish inflation rockets, with CPI up 13% on the month. France becomes the sixth country in the world to record 10mn covid cases, as it eases restrictions. Tesla beats its own delivery and production records in Q4, delivering almost 1mn units in 2021. And U.S. President Joe Biden reassures his Ukrainian counterpart that America would respond decisively should Moscow invade.

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Chinese manufacturing activity beats expectations for December, in spite of continuing Covid restrictions. U.S. markets are set to end 2021 strongly with Wall Street eyeing its best three-year run since the late 1990s. The WHO warns of a ‘tsunami’ of global Covid cases as the Omicron variant peaks in at least 20 countries. And Presidents Biden and Putin hold talks about de-escalating tensions over Ukraine but find no resolution as they trade warnings and threats.

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The S&P 500 hits a 70th record high this year, with U.S. markets set to finish a volatile year on a high. NIAID director Anthony Fauci tells CNBC that the Omicron variant surge is likely to peak in the U.S. by the end of January. In China, troubled property giant Evergrande reportedly misses another bond payment, causing shares to slide. In IPO news, Chinese AI firm Sensetime sees a stellar Hong Kong debut. And President Biden accepts President Putin’s request for talks later this afternoon, as tensions over the Ukrainian border continue to simmer.

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