 Okay, very good morning to everyone. It is Thursday 5th of September. I hope everyone is doing well. As you can see to the side of me, quite a significant headline overnight and a decent move in financial markets across asset because as we know despite all of the ongoings with Brexit, definitely from a global perspective, across asset, the China US trade talks are still the number one kind of story in town. Let me just quickly transition my chart so you can get a feel for what's been going on and obviously when the news broke You can see here on my centre charts. It's the Nasdaq future. So kind of like one o'clock I guess early Asia-Pacific session really strong move in global equity futures across the board However, we have started to fade already and I'll get into some thoughts about why I think that is occurring But quite an injection into the equity market overnight Let's just have a look actually. I've not looked at the S&P on a slightly longer time frame Where are we at the moment? So remember yesterday? We were looking at this S&P We're looking at that kind of range that had been containing a lot of the price action over the course of Much of August and we've now broken above that in fact finding a little bit of a flaw for a further push on so a meaningful technical break as well from some of the top side of the range that we had been in over the previous couple of weeks as We go back to the headline We could move back into the latest phase, which is that China and the US are to hold trade talks in October Despite the fact that this apparent mistrust is continuing. So if you remember, we've had quite a quite a breakdown in the dialogue of late Particularly given the fact that on the first of this month. We had those tariffs come into effect That was despite sources suggesting that China were looking to again delay that Trump not backing down Implementing those and as such then we've had a couple of days of some pessimism about what's going to happen next So quite a sharp relief, I would say but ultimately I do think going to be particularly Short-lived and the reason for that and why I think that is because this graph really It's like graph. It's more of kind of annotated with some of the latest trade headlines that we've had so You know moving from left to right tariff increase as talks start to slow China announces increased tariffs in response The market was depressed at that point. So then out comes the Trump G phone call markets rally G20 truce market rallies Market hits all-time highs and then Trump comes out and says okay more tariffs So this is that negative feedback loop that we've looked at before And then we've gone through this kind of different phases to the point where we are at the moment They agree now to have talks at a low level, but looking to just you know pick up the dialogue again in October so Point being I think markets are now Fully up to speed of what they think about this type of thing. It's likely to be short-lived It's likely to break down again before then going positive And so I think when you get these kind of relief rallies on the back of these Unscheduled headlines like we had last night not forgetting it comes out during the Asia-Pacific session So generally speaking volume liquidity is a little lower tends to exacerbate some of the price movement I mean that's a decent move of close to a hundred and Well, I was just having a look a hundred pips or so in the the NASDAQ hundred ticks. So it's pretty punchy But the idea being then after that fast money the speculators have booked their profits Reality kind of kicks in and it's not that this is going to be a Holy new development in finalizing a trade talk and We know that it's subject to change quite rapidly and so after that fast money moves being being handled Markets just pull back and reverse course. So I don't think this is really Something to get overtly excited about or anything to reinitiate more medium-term positioning It's just a you read the part of that move last night or you weren't and that's probably how I'd look at that So the big story this morning certainly is that Tea notes down nine ticks gold down three so moderate risk on on the back of that comment But as I said already starting to fade to some degree moving on then Brexit plenty of course going on from yesterday MPs took another step towards delaying Brexit Beyond this 31st of October Deadline to 31st of January of next year and they rejected Boris Johnson's call for a general election. So Put together couple of picked out some headlines from a research report I read this morning to try and summarized the situation As neatly as possible as to what's happened and where do we go next? so a couple things two points to start with first one and Parliament built on Tuesday's vote by deciding with a majority of 28 327 to 299 to pass the bill to delay Brexit until 31st of January 2020 to prevent this no-deal scenario happening at the end of next month The three-month delay must be used then and this is what this legislation means to try and pass the withdrawal agreement rather than a second referendum and this is what's Kind of set Twitter a light last night and Sam came in this morning and he was asking me So you're telling me Labour and opposition want Boris to go back with Theresa May's deal. So how does that make sense? But yeah, I mean that that's kind of exactly what they want They want to try and pass the withdrawal agreement and this is obviously something which they'll be talking about in terms of what concessions can Come of that as well in the negotiation point being then from here For it to be written into law In terms of the vote that happened yesterday The bill now needs to go through the House of Lords before Parliament is suspended sometime next week for prerogation so again the way the process works is it goes everything is heard and comes from the lower house of Commons the MPs the parliamentarians It then needs to be ratified by the upper house the House of Lords for it then to go back down into the House of Commons Apparently that House of Lords sign-off Will come by 5 p.m. On Friday in terms of timing that could mean then that there could be political business happening over the weekend It's not wouldn't be unusual The second point because I said there's two Point two is the MPs voted against the Prime Minister's call for an election on the 15th of October 298 of MPs who voted for the election fell 136 short of two-thirds of MPs 434 is the magic kind of marker required to sanction an election two-thirds of Parliament They were 136 short so well short Mainly the Labour Party opposed it because it doesn't want to grant an election Before the law that was passed in the lower house yesterday that needs to be ratified by the upper house to come back to the lower house In the coming days gets written into law only then Corbyn has said that he would be willing To put the backing towards then an election Now that in itself is quite interesting Because the Prime Minister, you know the idea now that the press is making about Boris Johnson's had multiple defeats It's the first time our Prime Minister have had so many defeats so quickly and it's in his premiership His suffering serious strategy blows I Still don't I still think that's very sensation list because ultimately the Prime Minister here could try to force Using an amendment to the fixed-term parliamentary act or if someone puts forward a Motion of no confidence in the government not forgetting Boris doesn't have a majority at any more So realistically if it wasn't for the strategizing of the opposition this really should be a vote of no confidence at this point But either adjusting the fixed-term parliamentary act or a vote of no confidence Both of those require a lower bar of just a simple majority Half of MPs to grant them so half of the House of Parliament plus one Not two-thirds which has been the process of what we've had which failed yesterday What that would mean then is that basically based on the vote last night You would 20 you would need 28 MPs would need to change their minds so remember for the The sanction of an election yesterday. It fell short by 136 moving to a simple majority would mean then you only need to convince 28 of those to change their mind not a hundred and thirty six and then you've got your election. So for me personally, I don't think an Election now is completely off the table. I just think that it's just being delayed perhaps by a Period of time. I still think a general election is going to happen at this point a general election itself From a market reaction point of view It's a little bit Interesting as a topic to debate because it does have different opinions The one thing that you can see quite clearly from cable sterling dollar is that we've appreciated quite sharply Obviously this has been going on for two consecutive days now the more that parliament has wrestled back some control Now that you've had basically this Passage through the lower house. It's highly likely this will get passed by the upper house and get go into law I don't think there's really much to stop that from happening. So delaying Brexit or Reduction in the risk of no deal has happened. And so the pounds got appreciate Some people are looking at this as well and the fact that if there isn't an immediate general election Well, that lowers the risk of potentially a labor government a labor government Is seen as negative for the pound because they would be anti-business and high taxation Which would promote then weakness in the pound. So the fact that there's no immediate election the pounds actually rallying I actually think this is more down to the idea That it's just offsetting some of the immediacy of the looming Cliff edge of October 31st so Yeah, I mean, where do we go from here? Well, we've got to wait now for the the upper house to go through these these processes So actually I don't although we're gonna get a lot of Brexit coverage and comments. I don't actually think We're gonna get the big move in the pound now until possibly late Friday Weekend for the reopening of Sunday markets Because then if it's all goes as per how it's shaping up It should get approval what has been discussed and voted upon last night That should then get ratified into law, which then means that we go down to those two And suggestions a tweak an amendment to the fixed-term parliamentary act by the PM Which then goes down the route of looking to get over the line for a general election Or you have this vote of no confidence in the government either way an election still looming In that scenario Okay enough Brexit talk for the moment Moving on this is one of the other important headlines We looked at markets yesterday and we were talking about the fact that generally the economic environment has soured somewhat u.s. Economic activity epitomized by the Contraction for the first time in what three years in the ISM manufacturing space Was meaningful this of course comes after some big jobs data or comes ahead of some big job data We're gonna get today and and tomorrow on Friday for non-farm payrolls It's all coming as we had tried to position ourselves for how the Fed are gonna Communicate to us with the summary of economic projections in September 18th for the next big meeting the other interesting key part though that's helping general I guess stability in markets despite some of this very short-term volatility is that China Really have committed now to doing whatever it takes and more of that rhetoric coming out overnight In the form of China signalling further stimulus coming as economic headwinds rise their economic data Also continues to be fairly precarious and so Measures and and verbal intervention of this nature is I think warranted but the point being is as long as they continue to Really commit down this course of action. Well, then I don't really see any risk of a big sell-off in markets As long as trade talks are being managed of which we're now in a positive phase as long as China commits To doing whatever it takes and what they've been talking about here is more broad in addition to targeted Reserve ratio cuts triple our cuts, which I've done multiple over recent years The reason they say broad and targeted they can either do large or small firms and and so on Also, they're looking to accelerate the issuance of so-called special bonds in China By the local governments. These are specifically meant and geared towards paying for infrastructure spending So that's that kind of way of China looking to kind of prop up the market in a sense Continue their economic growth ambitions And so that in combination with all those other factors and the easing of monetary policy globally that's going to be happening That's why and why I've been saying in recent weeks. I'm not so Panicked about this inversion of the yield curve at this point certainly not in the near or medium term and So, yeah, this is still happening Goldman's just coming out research report this morning saying about how this meeting that the Chinese officials had yesterday was the strongest signal yet of easing to come The other positive thing happening at the moment as well is let's just eliminate that German headline for the moment But Italy announced their full cabinet team, obviously you've had this PD five-star hookup now Which is alleviated tensions and we've seen that response in the decline in Italian yields to record lows in a 10-year space so re-tightening of the BTP bun spread and Italy have done quite interesting thing in the appointment of their new finance minister and What the headline suggesting here is a peace offering to Europe? So Roberto Guelateri as far as Tomasso has told me is the correct way to say his name has been appointed to the new cabinet now Why is Guelateri so important? Well, he's a veteran European lawmaker He's more known in Brussels than he is in Italy, but that is the beauty of what this Italian appointment has meant appeasing the European bureaucrats when you've had a highly fractious relationship and You've got a very difficult budget to manage in the near term. That's a that's a good move I think by the the strategy team in a new government makeup during his second term in European Parliament Guelateri became the head of the Economic and Monetary Affairs Committee He actually played a leading role in steering the European Union's financial integration agenda. So he is an absolute You know kind of a linchpin of that kind of ideology of Eurozone integration and so on so perfect person to act as a bit of a middleman to appease Europe but also, you know, I am slightly surprised that they've gone that far with the politicians in In Italy, but perhaps this was the you know, this is the way forward but as far as markets are concerned This is a big positive development albeit No real meaningful impact right now this morning because it's been largely priced into markets All right other than that Bank of England. I just just a quick note on this They've basically Mark Carney spoke yesterday. You remember he was appearing in front of the Treasury Select Committee And he's basically scaled back Estimates for a worst-case Brexit GDP You can look at this I think two ways for one the the actual thing that he said was because of the Brexit planning That's happened. It's going to offset some of the negativity of the Ramification of a no-deal Brexit if that worst case was to materialize so instead of GDP in our country Decreasing by 8% it's now forecast to decrease by five and a half percent. So still a pretty catastrophic hit to GDP But not as bad as what was table before Politically, although this isn't what's intended. I do think it's quite interesting You know, it kind of lessens the ability for Boris if we go to general election campaigning to use this idea of Project fear if what Mark Carney is saying when actually is that it's not going to be as bad as what we thought he kind of Removes some of that power a little bit from Boris. I don't think that's the intention But that's the repercussion of what he's saying So I just thought that was quite an interesting headline The other thing we've had this morning is I've talked about positive China trade talks with the US I've talked about some positivity for the pound in the short term as parliament has gone through these Relevant procedures and at least in the short term has been positive positives in Italy. However, Germany. I'm afraid not so positive You've had German data this morning German factual a sink raising the risk of a recession It came in at minus 2.7% in July expectations were for minus 1.4 So almost twice as bad as expected manufacturing slump drags on trade tensions Brexit uncertainty Yeah, it's this is one of the big issues obviously facing the eurozone And this is one of the key reasons why economists if you remember yesterday in that Reuters survey Fully expect the ECB to cut rates I think they're meeting 13th of September or coming up in the in the next couple of days going to cut even even some Being priced in for 20 basis point cut and also the commitment to the recommence of QE to restart then in October in October so Yeah, is the market reacting to this? Well, this is a very important point I think your interpretation of news is that no the market has not reacted to this the euro is not sinking The DAX isn't falling through the floor The DAX is just pullback in kind with all the other Stock futures after some of the profit taking after the jump overnight on the Chinese headline as we discussed The point being is that this is a continuation of a trend It isn't anything particularly new Albeit granted it was worse than expected But if you feed a negative headline into an already the negative setup then basically you've met expectations So yes, this plays a bigger part in the mechanics of the overall decision-making of monetary policy to come But as a near-term trade decision I wouldn't be taking this as a as a sign that you need to be really changing positions at this point Calendar-wise today Very much a US centric session. Obviously the Americans have not seen the latest US China headline Because that came out about 1 a.m. London time So do be mindful of that when we get into the US North American crossover kind of 11 11 30 few hours time this afternoon Then you've got ADP employment Change this of course the precursor to non-farm payrolls tomorrow This is what ADP has looked like over the course of the last couple of readings and actually after a depressed number Back in May it's been recovering the last print at 156,000 of which is pretty close proximity for what non-farm payrolls Is expected to come in at as a headline tomorrow. I think it's 160 What is ADP expected at today? 149 got a range of 110 to 175 so do look out for that at 115 always important We then get the final readings for the services PMIs US factory orders durable good revisions So the factory orders definitely more important as is the ISM non-manufacturer PMI and also looking out for the employment constituent of that report The ISM non-manufacturing PMI has been decreasing Obviously not near to contraction and not expecting a contraction in the consumer the more service led sector Remember the consumer part of and consumption in that respect in America has been holding up its manufacturing activity That's been decreasing But the employment constituent will be quite key as well to look out for Other than that weekly all infantry numbers just a reminder because of the Labor Day holiday on Monday in the US The oil infantry data is not at 330 as usual be at four o'clock so I'll get Sam I'll pop the API numbers in the chat and Sam can go over when I swap with him in a second and he can go through those But speakers couple Bank of England member Tim Rayro speaking at an ECB research conference later this afternoon a couple of BOC members after the right decision they had yesterday You've also got the Brexit Minister Stephen Barclay taking questions in Parliament this morning Could be quite interesting if he says any specific updates But I wouldn't be expecting too much to be honest in the way of market moving headlines coming out of Barclay and that's it so Going to head you over to Sam. I wish you a good day ahead hopefully That was as clear as I can make it with the Brexit situation. I know it's not completely straightforward what I will do is Pop all of that summary that I went through Onto the chat so you can review it in your own time if that helps. Okay guys. Thanks very much All right, so everyone's doing well start off Some a quick look over the currency pairs and the euro actually just Strengthening a touch as the dollar weakening across the board the pound as well just enjoying a bit of movement here Let's have a bring in of the euro to start and you can see this how important that the level is we test up at this Area one two three times in the last Well, how are we talking there since seven o'clock last night? And was also a key point at the back end of August before we broke down As you can see on that last trading day of the month So key level multiple tests could be your line in the sand as good as now really So keep a close watch on that above there, then you really just looking towards the the higher point of that day of the 30th I see Find my longer term euro charts. We'll have a quick look on This one here and you can see when we were talking about the That trend channel coming in the retest of that obviously would be still a fair bit to go But certainly the the break I don't know if I've got this absolutely perfect, but the breaker that happened on the 30th So retest of that whole area 105 110 53, sorry, I should say 105 I wish We'll be keeping a close eye on that certainly over the coming days if we can come towards it I think will be An interesting reaction all around that area and you can see of course was the the low of the first of august as well, so the euro Perhaps going to be interesting over the coming days euro pounds as well before we come on to Cable market you can see just knocking on the door of another interesting level So the euro across the board had some really interesting points the Euro pound you can see was until we broke down late last night was the low of one two three sessions Going back to the 27th of august and we're retesting that now So the the bears will obviously want to defend that and the bulls above Well, I wouldn't see anything really stopping a decent move towards the r1 there What's the pound going to have to say about it? Well, you can see as well with the dollar weakness shall we call it? We are Now up on the day after making a new low Guess when we we lower this time frame down and you can start to see we're perhaps does You know while the trend won't be absolutely perfect. You can see from the the high that we made yesterday We're just almost well with your are testing that that level now the third test of it So again like the euro at a pretty key junction Not just from the top end of the trend, but also this one here Which you can see after the break down around seven Just this whole area where we're testing. Let's call it 122 46 on the futures An important point So close watch on that the euro obviously with that key resistance point as well What happens in these markets will Pretty much be Determined by what happens right now Perhaps for the the rest of the morning. Obviously, we've got that us Data set in the afternoon which could drive things But certainly in the morning you imagine the euro and the pound to to drive The the dollar elsewhere Oil just to start off with I've got a nice Trend line I think to to be aware of and just the way oil can move Regardless, whether you think, you know, it's going to go higher or lower from this Again, it's that line in the sand. You've got the Nice top end of this trend here going back for 13th the 21st 29th I'll be keeping a close watch on on that should we come back up to to test it Around what be then the the high of the day as well Which is also nice resistance from the last day of august So really keeping a close watch on what happens around 56 50 56 64 To to the upside and then to the downside of us if we were to break the low of the day, which has Been tested a few times the pivot and just below you've got again It's more of a zone from the lows of the 28th and 29th to the highs that we had back on that the first trading Day of the month so the second Coming in around 55 17 to 42. It is a big zone But certainly, you know with the the DOE as it's a point that I would Be aware of for that for that coming in today and of course Thursday The DOE not as usual Wednesday slot because of Labor Day back on Monday And just having a look if we just drop that down to 15 minute You can see the 930 candle was to the downside. However, we did recover The crude number was a build of 400 000 so We actually had an expected draw of two so it explains the the move to the downside however Cushing and gasoline and distillates were all draws and in some cases like distillates was You know better for for price than not as we had expected A build there so bit of a mixed reading I guess For the move to the downside can understand that as the last few apis have seen price push on On that Tuesday and confirmed Wednesday, so be interested to see what happens. I mean, are we going to break out the the range of you know, 56 to 56 64 before the the four o'clock slot Time will tell but certainly that trend line and the zone below something to to keep a close watch on S&P as and mentioned in the early hours breaking higher and you can just see the importance of The the level we've been talking about for what seems like The the whole of august we're above there now So keeping a watch what happens if we can come back to to retest it 2945 is really that that That level which was the higher the 30th and also the Resistance point that we had back on the second of last month So it's certainly somewhere I would be be keeping a watch on and again thinking about the The close of the the date as well We have a quick look at the percentage away from all-time highs where we're trading right now We are 2.5 percent, which is nothing which is nothing. I mean literally could make that this week. I wouldn't expect it to As you'll remember I said I would not want to be long s&p unless we are above this level We are above this level now. So I'll be keeping a close watch on 2945 for sure Gold you would have expected to have come under a bit of pressure from that move and and it did To an extent but still relatively elevated nowhere near the the move That s&p saw for This market to the downside. Yes, we drifted lower overnight but nothing too concrete However, we are just making and this would have been just recently You can see here the third test of that trend and like oil the way we can move here and gold On brakes of these trends is is very very Well can be very aggressive So keeping a close watch on that starting on the low of the date and the low from half six And now just now as well coming in on the futures around 1555 No, 1552 don't know where I got that fight from so keeping a watch on that a break to the downside I'll be targeting 1548.4 if it holds and you know why not gold is still attractive It seems you know, I'll be looking for for price to get to work towards the pivot But arguably the more important level you can see here Is 1559 on the dot was the higher the third morning of the fourth Resistance later that day and then you can see again twice already On this morning. So really key points. I would say there 1548 1552 1559 as well to to keep a close watch on quick. Look over the Dax You can see it breaking out of the top end of that range We've already had the the retest of a level and it's acted pretty well as a as a point of support So especially if we can hold there An s&p managers just to drift a bit lower for Those that that lie that area that would be That would be a good pointer to get in but certainly it may be as a guide for this morning We're keeping a watch on what happens there for the Dax and like the gold with Its resistance point you can see another well respected technical area on the Dax here Was the low that we had around Five o'clock retested that as well. So the Dax being relatively technical which can't always be said For that market as usual any questions, please do let us know some interesting points where we're trading right now Most notably in in the main currency pairs the euro and the pound and then the euro against the pound using that pivot level and retest of those lows s&p Now we're above that that key resistance point What is going to stop us getting to those all-time highs the high that we had was the low that we had Back on the 19th so understandably people taking profit there Are we about to go into this new range just 2.5 away from all-time highs oil? Of course keep an eye On those levels mentioned ahead of the 4 p.m Data release and we'll see some nice us numbers to come out should be a decent session ahead Of course ear to the ground for any brexit related comments. Hope you all have a good trading date And any questions, please do Let us know