 Okay, very good morning folks. It is Anthony Chung here at Amphibuy Trading. It's Tuesday the 7th of July and overall Quity markets finished higher on the close of Wall Street yesterday And we've had another gain in the Shanghai composite last night now up for a sixth day in a row bringing the this month's gain now to about 13% bearing in mind we're early on day 7 of July at the moment So question mark and what I'll cover in the briefing today is about how How sustainable is this rally that we're seeing an overall positive sentiment and in the midst of still ongoing Pandemic of course Otherwise as per usual, please make sure you like and subscribe to the YouTube channel if you're watching this on there Don't forget as well always feel free to leave a comment if you want to ask me any questions at all I'm always happy to help but let's have a look at the the charts this morning then to get a general feel for sentiment across the different asset classes and As you can see the equity index futures were Pushing up in toward the close in Wall Street and initially peaking then in the Asia-Pacific session before then we've kind of drifted south There were some reports overnight In regard to Chinese state media now pointing to the need for rational investing given that ramp that we've seen in their local markets Undependent recent days by the country state media which essentially was encouraging Retail trader base to buy into the rally and trading volumes overnight in the Asian session for the local domestic market in China We're about a hundred and thirty percent higher than their recent average so Yes, I guess whenever something rises that aggressively that quickly as they said in the course of seven days to Shanghai Composite is up Around 13 percent, which is which is phenomenal so a little bit coming off here and A call for rational investing being ushered overnight It's just got a few people wondering whether or not this is truly sustainable just given the overall Situation more globally. Of course, we're not out of the woods yet Although the marketers decided to relatively brush aside the COVID developments in the US There's still this outbreak in Australia as well So things remain precarious on that front So there's a bit of profit-taking perhaps on the run-up that we had yesterday I mean yesterday was particularly quiet. You can see in the S&P in the center right chart We were generally respecting a range until we saw the breakout which really didn't happen to the Asia-Pacific session So what's quite interesting in this European open? We're just breaking the lower bound of that range that really held the price activity in Monday session in the S&P future Similarly then in gold it's pretty flat I'll just be keeping on that overnight Asia-Pacific loads tested and bounced a few times already this morning as Europe has come in That'd be around the 1792 and a half level T-notes just edging up ever so slightly as equities weakened in the overnight sessions So the 10 years up five ticks oil in step with equities then down about 50 cents and just trading below what was The low print that we saw yesterday afternoon and around The kind of pickup in volume on the traditional 9x pit-hour timing with that daily pivot S1 level So a little bit extension of the loss just finding some support around the $40 handle But any further push to the downside behind 3984 Which was the low that we had going back to last Friday in the light electronic trading session for the US holiday FX markets the Dixie is up marginally Just given some of the moderate risk of tone developing So Dixie's up about zero point one four percent Exerting then some minor downside pressure and both major pairs, but very contained early around 10-pip losses At the moment. So that's the overall kind of feel of things. Let's go into some headlines then starting off with this What are we looking at here? Well, we're looking at the black line is the S&P 500 And we'll see the roller coaster we've been on pricing in the the pandemic on the March kind of route and then recovery and The bars are indicative of the CFTC CME e-mini S&P 500 net Non-commercial futures positions. So the commitment of traders report Otherwise known as the COT was released yesterday, which is an unusual timing but owning to the US holiday that we had at the end of last week and Looking at non-commercial future position. So non-commercial being that then of I guess speculators in the market Portfolio managers hedge fund managers people who are not using it for the purpose of commercial terms like to do with trade and agricultural goods For example, and so the more speculative side of this what you've been seeing is we were really heavily positioned short Only about two weeks ago, but obviously we've continued to see a Sustainable rally now you can see why people were short two weeks ago because we had run up ever so quickly to 3200 Which given how net short the market was perhaps then few people getting squeezed on those shorts And as we started to drop from thirty two hundred or in excess of that point down to three thousand people looking to Add to that position thinking that the market was looking quite heavy And in fact then this was that telling sign because this would be in in step with then The commencement of the second wave virus started to pick up in the likes of the Sun Belt States in America But then get they got that wrong and you know They were heavily short and the markets continue to come up and you know what the headline would suggest here is cover me So a lot of these shorts getting covered now and continuing to just bump the market back up in toward that 3200 again and as you can see Reflective in the overall non-commercial futures positioning is a significant reduction in shorts That we've had since where we were just two weeks ago So they're quite interesting on the underlying there with people still having a difficult time Trying to gauge then the market's perception having been two weeks ago Ultra sensitive to corona updates as we were right at the beginning of that second Re-acceleration phase of the virus in North America now. It's seemingly it doesn't really matter anymore at least for the time being With a number of those key states obviously halting their reopening, but it not Impacting really market psyche too much, but we're going to come back to that point We're going to discuss a few things in more detail Before I get to that I did mention a couple things about China overnight One thing I would say is that obviously that that infamous trade war loop that cycle about the kind of US getting tough and then markets start to panic and then all of a sudden you hear a Consider tree tone then it looks like they're going to progress then they don't and we go around and round well obviously the the latest kind of intensity of US China trade talks has been Slightly elevated a kind of classifier as moderate though in the context of what we've seen over the last two or three years But Chinese officials in the Wall Street Journal according to sources overnight Believe that if they keep ramping up agricultural purchases, it will help keep the deal alive the US trade secretary Robert Lighthizer and Chinese Vice Premier Liu are to lead a phone conversation in mid-August To assess the deal's progress and this follows earlier reports from pressure from US business groups We've called on China to uphold its purchases commitments under the deal So again, it's kind of almost like things have been a little bit tense and so it out comes the journal source which of course is Well-timed to suggest then that China will be commitment committed to ramping up those purchases And that has always been the kind of glue that's held the deal together no matter what you're saying Politically publicly from Donald Trump criticizing China at the end of the day as long as China are buying those goods You know the the relationship will continue at that point in time The other things well this morning before we we move further forward We have some German data industrial output from May month a month at seven point eight percent I was slightly below the expected ten percent just so you're aware The other thing overnight you had the Australian Central Bank decision So they kept the cash rate in three year yield target unchanged at zero point two five percent But absolutely as expected they did note the downturn has been less severe than earlier Expectations and conditions have recently stabilized However, don't forget that right now, of course Australia is trying to deal with a quite severe outbreak of new infections in Melbourne the second second largest city By population in Australia So New South Wales and Victoria the nation's most populous and economically powerful states Are set to close their borders tonight, of course And as we discussed yesterday, it's the first time that's happened in about a hundred years So yes things not as bad as perhaps expected in the rear view mirror But going forward kind of like the situation at the moment going into the US It's more what does the future hold now given the fact that a lot of the reopening has been halted and we're seeing the renewed cases of coronavirus On that front then this leads us into a bit of a narrative for the US side of things which of course is the focal point for markets and This was an exclusive in the Financial Times citing the Atlanta Fed president Bostick Now he said the rebound in the world's largest economy is in danger of stalling as a result of the recent spike in coronavirus infections across several large US Southern and Western States so the headline reading that he warns the US recovery may be leveling off. It's troubled by the data on business Reopening so let me run you through a few things that why this is quite interesting for one Whenever you hear a Federal Reserve official speak again, if you're if you're new to markets The key is the kind of table here that all traders will be aware of which is the current members who have voting rights as members of the Federal Reserve or the FOMC in this case and Every year this alternates You have then a rotation of some of the alternate reserve Districts and then you have a board and a chair the board and the chair remain fixed over a Period of time so you can see their constant ticks for the likes of Powell or Brainard for example However, you can see these these crosses and ticks Would would reflect the the rotation what you've got here then it's Bostick The next important thing then is after are they a voter or non-voter because that will dictate then Their ability to really sway the overall needle on the decisions that get made is where do they sit on the spectrum of being? Dubbish or hawkish and and Bostick you can see from Atlanta here kind of mid to slight mild hawk and so to hear Bostick saying these types of comments is quite interesting because Overall they're fairly downbeat which would be somewhat Uncharacteristic for someone of a more hawkish disposition, but just to remind you Bostick is a non-voter for this year But where does that leave us then well at the moment, you know what we've been seeing and what has been Kind of a difficult thing I think for a lot of people to get their heads round is that this is the the city group economic surprise Index and it's looking at the US in blue Eurozone And global and obviously these these economic data points that we've been seeing have been phenomenally strong outperforming market expectations But a lot of these economic data points when you look at them and how they're constructed a lot of them are what we would classify as soft More sentiment related forward-looking yet then for that future expectation to materialize Unlike hard data, which is the factual evidence then of how things performed like last month's retail sales or industrial production Rather than how do you feel about the economic conditions over the next six months? For example now the reason why that's quite tricky to Really analyze with accuracy that data or have full confidence in it is because if you were to ask someone What do you feel about the next six months? Of course, they're going to be more positive because you're coming from a such a low starting point given how Negative general confidence was back if we go to March April Even may when we're in the right midst of the lockdown when coronavirus is really taking hold and went into global kind of pandemic status So yeah, this is quite interesting and it leads us on to two different things obviously a Lot of people are still looking at certain states in America Predominantly those like Texas, California and Florida Being so important overall because they they they almost make up About 30% of the entire population of the United States of America So how they are performing how open or not their economies are is particularly key now one of the things here then that I've been looking at is the fact that You know if you were looking at the the data coming out you would think wow things are really positive Things are looking really great at this point in time however I saw an interesting note coming out of the US firm Jeffries and they said on Monday that its index of US economic activity Had clearly flatlined after two months of improvement So sure we've had this massive bounce, but what they're seeing now in the data Which is yet to materialize in the more standard. Let's say data sets is that things have started to stagnate it There's a loss of momentum in broad-based spanning small business activity discretionary footfall restaurant bookings traffic congestion and web traffic to state unemployment Portals so what they're saying then they're referring referring to data sources to update more greater frequency than official statistics To make that make more sense. You can look at if you just go on Google and you can look at the COVID-19 Community community Report and essentially what this looks at then is you can punch in different countries in the case of the US different states So what's quite interesting here is looking at these mobility changes to then try and get a greater sense of well Where are we now in order to predict then what the future data might look like? Because we're in an interesting phase. We've gone through the worst of the pandemic so far. That is touch wood We then had this quite steep recovery in Confidence and that's been reflected in markets But because of this second wave although markets aren't reacting now how is this going to alter the shape of the recovery going forward and What's quite interesting here is when you look at these mobility reports You can start to see then well look people are in this is looking at California for example people are still hitting the parks much more So the normal Grocery and pharmacy that are up slightly but retail and recreation are still massively lower this being Trends of places like restaurants cafes shopping centers theme parks libraries movie theaters these types of things You know if you look at transit stations places like public transport hubs subway bus train stations Workplaces, you know, you're still down 40 percent 58 percent So when you're looking at some of these data points and you're thinking well look things are even better than they were pre pandemic Well, actually if you look under the ground of these alternate data sets. We are nowhere near normality here And you know if you look at the other areas so Texas It's a very similar story Retail recreation down 15 percent transit down 29 percent workplaces down 56 percent if we look at Florida same case down 20 percent 42 and 53 so the point being here is I Just think we need to to be mindful of monitoring this type of information because I do think that ultimately this Graphic of these upside surprises will not last forever then at that point then does the market start to Come back a little bit why that I mean just rain in some of this kind of positivity That's been quite evident in particularly elevating the stock market for example I still stand by kind of what I said yesterday. I don't really personally read too much Into the Shanghai composite just absolutely Smashing it at the moment I don't think that translates immediately into the fact that yeah, you'd want to get long everything I think that's a little bit more isolated and particularly just given the moves from overnight You can see the market outside of ex-China starting to get a little bit fatigued by that story and China themselves looking to rain it in a little bit with a Secondary state media post to follow it up talking about the need for rational investing So yeah, they're all the main things that wanted to discuss this morning I hope that all made sense and was interesting But looking at the calendar for today We've already had the RBA and the German industrial output. So otherwise from a European perspective There's nothing really of great substance coming out today Going into the afternoon. I'm afraid it's the same case for the US not really too much going on the API weekly inventories coming up this This evening at the usual time 9 30 in London 3 30 in Chicago speaker wise You've got a couple of speakers, but none of them are really happening until later on if in London in the evening But you do have a guilt auction if you are looking at UK fixed income All right, that is it from me. I'm gonna leave it at that as I said Absolutely more than happy on this video and any of the videos that I do to answer questions and engage on the comment section So feel free to take advantage of that And I'll see you guys same time tomorrow. All right, take care and have a good session ahead. Thanks very much