 Good morning and welcome to CMC markets on Friday the 13th of March 2020 and this quick look at the week ahead beginning The 16th of March and what a week that's been Really difficult to know Where to start truly historic week worst week for equity markets worse one day falls since 1987 for the FTSE 100 and yet here we are today Looking at similarly impressive gains, but even though We look as if we're going to finish Friday higher on the day Doesn't change the fact that this has been a brutal week for global equities a globally a negative week a very negative week We finished the end of last week on the FTSE 100 around about 6460 and as you can see from our UK 100 chart here We are now 800 points below that so even though we've seen some decent rallies this week We saw a decent one on Tuesday and ultimately that did not stick this Friday one might Find itself able to stick a little bit more The measures by the Federal Reserve to inject trillions of US dollars into the US Treasury market in order to improve liquidity The decisions by Spanish and Italian regulators to impose short-selling bans on certain stocks and sectors within their markets and a Chinese Central Bank RRR cut has helped I think Sentiment a little bit ahead of the weekend, but I also think there may be Some expectation that while we've seen additional monetary policy measures this week is evidenced by The European Central Bank on Thursday in the Bank of England earlier this week There could be some additional fiscal measures Announced over the weekend, and I think that's helping to support markets in the short term as we head into next week It's also a big week coming up For central banks next week. We've got three very key Central Bank rate decisions. There's an expectation that the Federal Reserve may well cut by another 50 basis points Personally, I think that's completely unnecessary This isn't about this isn't about the level of rates. It never has been it's about It's about smoothing over cash flow problems for companies that are likely to Find life very very difficult as this coronavirus Crisis goes on to its next phase and certainly the indications from the UK government that Cases may not peak for another 10 to 14 weeks 10 to 12 weeks, which is three months It's likely to make things very very difficult for consumer discretionaries And in that context, I think it'll be very useful In light of what's coming up in the week ahead to look at pubs retailers and Obviously travel stocks have taken an absolute pasting travel unless you take an absolute pasting in the past In the past few weeks with British Airways stock I AG down over 40% easyjet down over 40% Even whip bread owner or a premier in their shares are down over 40% as well since the 21st of February Norwegian's laid off Norwegian airliners laid off half its staff That's they're seeing a decent rebound as well as Norwegian as the Norwegian government basically abolished air passenger duty and airport fees Until the middle to end of this year now there's a headline hanging the wires at the moment that I would have shorts the German finance ministers as Germany could implement a stimulus program if needed That's helping giving us helping to boost markets a little bit further But as everything with Germany I'll believe it when I see it because they do have a debt break and this is something that's been said on countless occasions At some point in the future it may well happen We'll just have to see whether or not they follow through with their rhetoric because since the eurozone debt crisis fled up in 2012 they've been long on talk and Short on action. So we'll see how that goes But let's look at the key chart points on the FTSE 100 and the various indices and it's been a brutal week for the FTSE last seen back in 2012 There's a series of lows in and around here 2011 2012 around about 5,240 Which is roughly where we were here as you can see from this chart I mean, this is just ugliness personified in terms of this fall here So we've held above 5,200. We're back above 5,600 as I said in my video last week These this these chart points come with a health warning The market can move very very quickly and as can be seen from this week's price action where we've we've fallen Peak to trough from last week's close over 1200 points, which is unprecedented So that's the FTSE 100 very key levels there trying to pick a chart point out of that is next to impossible So I'm not even going to try. Let's look at the Germany 30 or the DAX Slightly more modest slightly similarly decent Declines but if you actually look at where the DAX has come from it is a total return index or obviously it includes Dividends it's still Quite a bit higher from where it was even in 2014 2015. So while these declines have been big They're fairly modest when you look at it in the context of where we've come from but what we have done is we've spiked below the trend line from these lows all the way back here and Didn't take out the lows that we saw in 2016 so that's going to be a very key level going forward for the German DAX if we decide to Revisit those levels We look at the S&P 500. It's a similar sort of story If I take a long-term weekly chart here from the 2009 lows. Oh, this looks interesting to snap and then suddenly We've rebounded straight off it So as I said, we had I think I said this a few weeks ago We had certainly scoped fall an awful lot further in the S&P and we've done precisely that and we've rebounded off the trend line From the 2009 lows But also and didn't take out the lows that we saw in December 2018. So You know again, these have been brutal moves, but in the overall context of where we were even five years ago for US markets and German markets the declines are Bearable if you're able to stay in stocks for the long haul. So having a quick look at that now Let's look ahead to next week because there could be significant further action from the Federal Reserve But also from the Bank of Japan and the Swiss National Bank there's big there's big meetings for those central banks the Federal Reserve meets on the 18th of March and They caught markets on the hop early this month by cutting rates by 50 basis points in which was a rather botched attempt to try and support sentiment Didn't work particularly well Given the fact that we're now quite significantly below the levels that we were when they cut rates So the big I think the big change The big thing to look for this week is whether or not the Fed go again or whether they decide That injecting liquidity is a better Policy rather than using rates because rates is very blunt instrument central banks need to be much more creative, but more importantly Policymakers need to step up ultimately What we saw earlier this week from the UK government was exactly the sort of thing we want to see from European governments We want to see that from the US government and in particular Donald Trump President Trump needs to get his head around the fact that if he mishandles this any more than he already has done He's not going to get reelected and that may well concentrate his policy response going forward the travel ban Was a ridiculous overreaction the big problem is not people coming into the US and spreading the virus The big problem at the moment is the US don't have a decent way of actually monitoring Cases that they already have Now the pound has taken a little bit of a hit in the past few weeks And it's broken below the 200-day moving average which rather blows my case for a Bullish sterling out of the water. So when the facts change a change in my mind We've broken below the 200-day moving average Which means that any rallies are likely to find significant resistance around the 200-day moving average But more importantly through these lows here, which is around about 127.20 so In the short to medium term it looks like we could well see further sterling weakness Back towards these series of lows around about 120 to 80 123 If we are able to move back above the 200-day moving average in 127.20 Then obviously there is a case that we could see a little bit of a short squeeze So at the moment the dollar appears to be trumping No pun intended The pound and pushing it lower and while we're below the 200-day moving average Momentum has now shifted towards the downside and your mentality has to change as well. So you're looking to you're looking to sell the rally While below the 200-day moving average and this series of lows around about 127.20 to 127.40 On here similar sort of story. I think with euro dollar even though the euro is looking slightly more positive Talk of a fiscal stimulus is obviously helping to boost the euro At the expense of the dollar, but I'm still very very nervous about really being long of euros given the extent of This sell-off that we've seen this week Significantly bearish reversal there We have found a little bit of support above the 50 in the 200-day moving averages But the oscillator of the the market is starting to roll over and I think while we're below 112 30 112.40 Then I think you still have to sell the rally on euro dollar unless of course we break above this January high here And then that could squeeze us back to the highs that we saw earlier this month But I think it's very much a case of sell the rally in euro dollar and cable at the moment Having seen the moves that we've seen in the past week or so looking ahead to Other pieces of data. We've got Chinese retail sales which are due out over the weekend or Monday morning And these are likely to be ugly. These are likely to be pretty bad Chinese retail sales for February most of China was shut down for most of February And with the Chinese consumer now making up more than 50% of the Chinese economy a Nasty number this week could well give us an early insight into the potential of in pension potential impact of What to come here in the UK Europe and more broadly With respect to how consumer spending was affected as a result of the shutdowns that we saw in China And if they are as ugly as I suspected that we they could be then that doesn't bode well for company earnings in The retail sector the leisure sector more broadly going forward and that means that then they will definitely need more fiscal measures more Forbearance from banks going forward We've also got UK wages and unemployment numbers from the 17th on the 17th of March and these are numbers to January and Obviously these will be very dated the unemployment numbers Close to 40 year lows wage growth around 3% Consumers do appear to have cut back as evidenced by a slowdown in retail sales They'll obviously toilet roll sales could have boosted retail sales numbers going forward but this week's numbers are Likely to show the UK economy was resilient in January, but they've got a lag So I'm not really sure how constructive they are or instructive. They are likely to be And we've also got German ZEW sentiment that was improving towards the beginning of this year But that's going to that's that's going to take a dive And we'll take a dive I would imagine given the volatility that we've seen this week again I'm not sure how instructive that that will be but certainly in terms of company earnings this week we've got JD weather spoon which is due out on the 20th and While the traditional British pub has been struggling and the Chancellor did take measures earlier this week to freeze beer duty Spirit's duty and what have you pubs are going to feel the brunt of any slowdown in consumer spending so for all Tim Martin's bullishness about the British pub post-Brexit The suspension of the Premier League season the fact that if the coronavirus Crisis goes on to the next level and large gatherings are banned by the UK government The pub will be one of the first to fill the draft So it'll be interesting to find out what the outlook will be or how JD with a spoon view the outlook Going forward Cine World shares taken an absolute pasting this week They released their numbers this week and this week they suggested that a prolonged slowdown Could actually Mean that they were at risk of breaching their banking covenants and that is a real problem So these sorts of industries and businesses will need some forbearance over the course Bridging loans bridging finance what have you over the course of the next three to six months given the fact the UK Government has suggested that the coronavirus here in the UK may not peak for the next until Another 10 or 12 weeks Also got numbers from Okado Now depending on whether or not you view Okado as a technology solutions provider or retailer They are still feeling the costs of the fires from last year. They came in at well over a hundred million pound Last month the company said it expected to grow retail revenue for the upcoming year by 10 to 15 percent Despite posting a loss of 214 and a half million pounds Big question is how it sees the outlook going forward as more consumers start to take home deliveries They could well feel the benefit of that in the US. We've got FedEx on the 17th How's the delivery market holding up? Against what's going to be a potential slowdown in the US and as well as a global slowdown as well And we've also got Darden restaurants who if you've ever been to the US own Olive Garden and the Longhorn Steakhouse How are they likely to do if US consumers start to find themselves? Quarantine going forward so That's it for this week Thank you very much for listening big points for the week of the Fed meeting Bank of Japan Swiss National Bank and obviously look for any fiscal measures over the weekend that might or might not get announced as we head back for Monday morning in the meantime have a great weekend and I'll see you all again next week either working remotely or working from my desk