Here are this mornings headlines:

​​​IMF leader Christine Lagarde is expected to alleviate concerns of inflation remaining high in the medium term, her forecast following a leap in the coming months is that it will return back below the 2% mark that has previously been coveted. Her belief is that any kind of tightening approach to the current situation could do more harm than good. This contrarian view could spark investor confusion with many major institutions predicting a large inflation surge that needs to be addressed with interest rates in the near future. The weakening Euro has been spurred by high UK inflation numbers that suggest an interest rate rise by the BOE on 16th December must be coming. Interestingly, the probability of this by forecasters remains below 60% as the disappointment of the November promises still linger.

UK & Northern Ireland 
Today European Commission Vice-President Maros Sefcovic and UK Brexit Minister David Frost meet in Brussels to re-establish the UK’s stance over Northern Ireland, and also to do a deal on medicines. This is following weeks of intense negotiations, with the UK on the precipice of walking away from the talks all together. It is anticipated that should a deal on medicines crossing the border be done, then this ought to go some way to soothing tempers, giving fresh hope that further agreements can be met, specifically around Northern Ireland. The medicine deal would be a significant breakthrough, as both Europe and the UK have seemingly reached an impasse in their relationship, whereby nothing is being agreed. The EU have telegraphed their version of the narrative, that the UK has negotiated in bad faith, biding time until they could tigger Article 16 of the protocol. Article 16 allows either side to unilaterally suspend parts of the agreement for a variety of reasons, such as diversion of trade or economic difficulties. In any event, the meeting today, and subsequent news will provide a strong snapshot of the state of the relationship between the EU an the UK, and what chances there will be to achieve anything material over the coming negotiations.


Looking Ahead
Two years ago, the notion of a lockdown was an unfamiliar concept reserved only for Orwellian reading. However, the Covid-19 pandemic has made the vast majority of the world’s population intimately familiar with the process. Notwithstanding the fact that last week saw the Netherlands enter another partial lockdown and Austria introducing a full lockdown for the unvaccinated, over in India the capital city is considering a full weekend lockdown for a very different reason. Delhi’s pollution levels have long been the subject of considerable discourse, with WHO suggesting that the capitals pollution levels are twenty times higher than ‘healthy’ levels. The pre-existing state of toxic exhaust fumes, pollutant inducing construction and industrial process and stubble-burning, combined with the seasonal onset of low temperatures and changing air pressure have created a dangerous dilemma. For example, in recent days the Air Quality Index (AQI) has reached 1,000 in some areas of the city, which is particularly alarming given that this is the highest level that the AQI metric can actually measure. Moreover, a recent scientific study suggested that one third of deaths in India were correlated to air pollution. Hence, the municipal government have already introduced work from home orders and have closed some educational facilities. However, as the City’s pollution reaches crisis point, and the municipal government have come under increasing pressure from the central government to confront the issue, they are exploring a full lockdown this weekend. The coronavirus lockdowns experienced in Delhi demonstrated that complete shutdowns alleviated some of the air pollution in the city. As COP26 brings the issue of climate change and air quality into the public conscience, states and municipal governments will have to explore all possible solutions – including lockdowns – to tackle the crisis. Hence, it is quite possible that the notion of a lockdown will become an increasingly familiar phenomenon.


Have a great weekend.
This Morning Report was brought to you by Alex Ayoub


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