No 810 - A change, which if it were to occur

　　磐石金融有限公司（ BANDS Financial Limited ）在香港注册成立，是一家持有香港证监会（SFC）2号牌照的期货经纪公司，业务涉及中国以外全球大部分活跃期货及期权市场。

　　Preempting the Non-Farm Payroll figures this evening expected up 400,000 Federal Reserve Bank of St. Louis President James Bullard presented at a meeting of the CFA Society in St. Louis last night a PDF entitled “The Initial Response to the Inflation Shock of 2021.” Interestingly it contained an admission that the Fed had been wrong. Bullard explained that the inflation forecast in the December 2020 Summary of Economic Projections indicated that the median FOMC participant thought that 2021 inflation would be 1.8% for both core and headline PCE inflation, which is below the FOMC‘s 2% target. However, “measured from a year ago, headline PCE inflation is currently 5.7% and core PCE inflation is 4.7%—well above the 2% target”, he said. “This is the highest inflation in more than 30 years for both measures”, he added. Bullard was then explicit on the Feds options. “The FOMC is in a good position to take additional steps as necessary to control inflation, including allowing passive balance sheet runoff, increasing the policy rate, and adjusting the timing and pace of subsequent policy rate increases.” So even though Bullard is a well-known inflation hawk the Fed is messaging that it is removing the punch bowl, the only thing he didn’t mention was selling assets.China printed its official PMI‘s for December yesterday and they show a modest improvement with services delivering a better than expected performance. However, compared to the US, Japan and the EU, China is the laggard for reasons we have discussed here many times. Not least, are that the issues in the property sector are far from resolution. At the street level, Beijing is encouraging local governments to assist in the completion of outstanding projects, however, at the boardroom level, the property companies continue to default. In a note sent to its investors by China Credit Trust Co. it outlined that Shimao Group has defaulted on a loan due 25th December. The trust firm had demanded early repayment after the developer failed to meet instalment requirements. Shimao is China’s 14th biggest developer by contracted sales and has around USD 2.5 billion in outstanding local and offshore bonds maturing in 2022.US equities are steadyish this morning having come seemingly come to terms with the new Fed messaging, elsewhere markets are a bit queasy. This weekend I will be following the progress of the Chinese shipping sector and emerging covid impacts. So Ill ask you. What do Shanghai, Singapore, Tianjin, Guangzhou, Ningbo, Rotterdam, Suzhou, Qingdao, Dalian, and Busan have in common？ Well, that is a list by order of cargo volume of the ten biggest ports in the world. Seven of them are in China, and therefore at risk to changes in covid transmission in China. A change, which if it were to occur, would seriously challenge Mr Bullards inflation expectations.Best regards