Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com BECAUSE AND DESPITE OF OMICRON (1320 GMT) This one is tough to call but for now, money markets are leaning towards the view that the Bank of England will pull the trigger and raise interest rates to keep a lid on inflation, now raging at a decade high above 5%. However, many economists still believe that policy makers will hold fire when confronted by the risks triggered by the spread of the Omicron variant. read more But among the flurry of research notes looking into the pros and cons of hiking rates, an interesting idea stands out: Omicron will probably make inflation worse. So while many think Omicron is a valid argument to put rates on hold, it"s could also actually be seen a pretty good reason to hike. "If Omicron is as disruptive as feared, this could in fact push prices up further", writes Ellie Henderson at Investec, who argues that "one driver of the current price pressures are supply chain disruptions which are resulting in goods shortages". "Although there are early signs of these peaking, if a new wave of infections leads to further labour shortages from self-isolation rules, or stricter social restrictions result in a bump in demand for goods, this could strain supply further, resulting in even higher prices", he points out. That said, Henderson"s base case is that the BoE will keep the rate on hold on Thursday. (Julien Ponthus) BLACKROCK STILL POSITIVE ON EQUITIES, BUT... (1227 GMT) The world"s biggest asset manager BlackRock is positive on stocks despite equity indexes being at or close to their all-time highs and rates ready to rise as central banks unwind their stimulus. “Stock market valuations may de-rate slightly as interest rates and bond yields gradually rise. But we expect strong corporate earnings to more than makeup for this and push market levels higher,” BlackRock analysts say in a research note. They see global stock markets making “high single-digit returns in 2022.” “Supply chain disruptions may ease gradually throughout 2022, yet inflation concerns will persist,” they argue. Picking the right stocks will be tricky as it won’t be simply a case of allocating money to cyclical sectors or betting on energy and banks that already outperformed in 2021. Energy companies will have “to wrestle with the costs of the carbon transition,” while banks “face competition from digital rivals and the ability of central banks to raise rates is limited by the level of outstanding government debt.” Pricing power and sustainability are key company differentiators, they say. (Stefano Rebaudo) ***** EUROPEAN INSIDER BUYING DOUBLES IN 2021 (1047 GMT) 2021 has been a remarkable year including for insider stock buying activity in Europe. BofA Global Research has dug out the details and it turns out that listed companies in the old continued saw 14 billion euros ($15.8 billion) in net stock purchases by company executives this year, double the value seen in 2020. Communication Services and Dutch companies saw the largest increase, while Financials and Spain recorded the largest drop, according to the U.S. investment bank. BofA also ranked the top 25 companies for insider purchases (see snapshot below), with Vivendi (VIV.PA), AB Inbev (ABI.BR), Alstom (ALSO.PA), Sampo (SAMPO.HE), Unibail (URW.AS) and LVMH (LVMH.PA) leading with net buys north of 1 billion euros. On the other side of the spectrum, B&M European Value Retail (BMEB.L), Aena (AENA.MC) and EQT (EQTAB.ST) saw the largest insider outflows with net selling above 1 billion euros. snapshot snapshot (Danilo Masoni) ***** STOXX 600 EARNINGS: END-2022 DOUBTS? (1012 GMT) The latest Refinitiv I/B/E/S data for STOXX 600 earnings confirm what was pleasantly obvious to many investors: the Q3 earnings season was as solid as can be with an estimated 61.3% jump year-on-year. Now, while optimism is still present for the next few quarters, there seems to be some doubts creeping in for the end of 2022. Here below is a compilation of the latest four weekly notes from Refinitiv and as you can see, analysts" expectations for the last two quarters of 2022 have faded somewhat STOXX 600 earnings y-o-y growth expectations 21Q3 21Q4 22Q1 22Q2 22Q3 22Q4 Dec 14 61.3% 50.2% 16.5% 8.9% 9.1% 10.4% Dec 7 58.9% 51.0% 15.6% 8.8% 13.8% 13.2% Nov 30 58.6% 52.1% 15.4% 8.4% 12.7% 11.3% Nov 23 58.8% 52.3% 15.8% 9.0% 12.6% 11.1% Latest expectations for Q3 2022 are now in single digit while a 10.4% is seen for the last three month of next year, down from 13.2% last week. Here"s the latest data: sd sd (Julien Ponthus) ***** M&A WATCHLIST (0945 GMT) According to Oddo strategist Sylvain Goyon, the spread of the Omicron variant doesn"t threaten this cycle"s buoyant M&A build-up as we get set for 2022. If the macro rebound persists, corporates will be encouraged to go ahead with their expansion plans and if the pandemic delivers another setback, then some defensive M&A is likely, Goyon argued. Oddo asked its analysts which companies were the most likely M&A targets and they came up with a list of 6 for which they have both a high degree of conviction and an outperform rating. That short list is comprised of Fugro, Lundin Energy, CFE Getlink, Neoen and Care Property Invest. Among stocks with a lesser degree of M&A conviction, were Software AG, Groupe Open, BE Semiconductors, Just Eat TakeAway, Subsea 7, SBM Offshore, Euronav, Kaufman & Broad , EDP and Qiagen. Among the extended list of 27 stocks, energy, utilities and tech were the most represented sectors: sd sd (Julien Ponthus) ***** A CINEWORLD SHOW AT THE OPEN (0836 GMT) Quite a dramatic move on Cineworld shares which dropped a whopping 37% shortly after the opening bell. "Could be ugly for Cineworld on the open", CMC analyst Michael Hewson commented earlier on twitter as news emerged that Cineworld was ruled by a Canadian court to pay C$1.23 billion to rival Cineplex as damages for scrapping a takeover deal. (It will appeal) Ugly it was indeed. There"s more action still among UK midcaps -- electricals retailer Currys is down about 7% after it cautioned that consumer demand has softened in the run-up to Christmas. Among British blue chips, DCC jumped 5.5% after announcing the acquisition of Almo Corporation and JP Morgan raised its target price on the stock. While DCC was the biggest gainer across the pan-European STOXX 600, Belgium"s Colruyt was the biggest loser, down close to 10% after publishing its results. While there"s a lot of action among individual stocks, the general mood is surprisingly upbeat with the STOXX 600 up 0.5%; barely an hour earlier, futures had been in the red. The mood has also improved on Wall Street, which at the moment seems set to open in positive territory. Perhaps as a sign that traders are not putting all their money on a hawkish Fed later today, the tech sector, which typically suffers when interest rates move up, is the best performing this morning with a 1.6% rise. Miners, oil and gas, often seen as good inflation hedges, are losing about 0.5%. (Julien Ponthus) ***** OKAY FED, SHOW US YOUR HAND (0758 GMT) A fortnight ago, Federal Reserve chief Jerome Powell offered a glimpse of what was to come at the December Fed meeting by suggesting a tapering of asset purchases would be speeded up. Now it"s time for Powell to reveal his full hand. With inflation running at almost four-decade highs, the Fed is expected to end its two-day meeting on Wednesday by accelerating its taper of asset purchases from the current $15 billion monthly pace. Some reckon that pace will be doubled. That would mean the taper could possibly end earlier, which in turn would mean interest rates start rising sooner than anticipated. The spotlight falls now on the Fed"s "dot plot" of where policymakers see rates headed. A minimum of two hikes in the dots for next year seems a given. Anything more than that would be considered a hawkish surprise, and would possibly upend the calm in world markets, just before Thursday"s central bank meetings in the euro area, Britain, Switzerland and Turkey. For the Bank of England at least, the dilemma is heating up -- money market have virtually priced out a rate hike this week after the Omicron outbreak, yet Tuesday"s jobs data and inflation figures just out will make for uncomfortable reading for the bank, with the November price print at a 10-year high of 5.1%. read more The Fed"s policy statement and updated economic projections are out at 1900 GMT, followed by a news conference 30 minutes later. With that on the horizon, stock markets are virtually flat. European and U.S. equity futures are little moved, while the dollar is holding firm . U.S. 10-year Treasury yields are at 1.43%, well below a recent 1.693% top. The yield curve continued its flattening trend, as investors wager an earlier start to Fed tightening will lead to slower inflation in the long run. Key developments that should provide more direction to markets on Wednesday: - China"s factories speed up but new COVID pain hits retailers read more - Under pressure": China property market hit by more headwinds read more - Japan admits overstating some government economic data for years read more - U.S. Congress approved raising government debt limit to about $31.4 trillion - U.S. retail sales/inventories data out later - Emerging markets: Central bank meeting in Croatia (Dhara Ranasinghe) ***** ON THE BACKFOOT WAITING FOR THE FED (0719 GMT) European stock markets are set to open in negative territory this morning with futures for the main benchmarks trading down between 0.1% and 0.4%. Of course, all eyes are on the Fed which is expected to announce that it is speeding its tapering plans and set to hike interest rates next year to keep inflation in check. Talking about inflation, data just showed British consumer price inflation jumped to an annual rate of 5.1% in November, its highest since September 2011. This means the pressure for the BoE to act tomorrow despite the spread of the Omicron variant will be high. Anyhow, in the meantime investors are keeping a cautious positioning and in Asia, MSCI"s broadest index of Asia-Pacific shares outside Japan eased 0.6%. Prudence is also palpable for the U.S. market with Wall Street futures trading just slightly in the red. There are also a few interesting corporate developments in Europe this morning: - Veolia and Suez gain EU green light for $14.7 bln deal read more - Generali to return up to 6.1 bln euros to investors under new plan read more - Inditex 9-Month net profit more than triples to 2.5 billion euros read more (Julien Ponthus) ***** Our Standards: The Thomson Reuters Trust Principles.