 Okay, very good morning. It is Friday 12th of June. I'm Anthony Chum, the head of market analysis here at Amplify Trading I'm going to talk about really only one thing and that is what happened in the markets yesterday We had one of the biggest down days in 12 weeks in the US equity market The biggest downward fall in oil in one day in six weeks All of this predominantly coming on the back of renewed fears of a second wave for the COVID-19 Virus so the big question now is where do we go from here? there's a couple of news articles for me to get you up to speed on statistics as well about the new race or Case numbers pertaining to some of the biggest US states like California, Texas and Florida for example And then hopefully I can give you a bit of an outlook about what my thoughts are and what I'm watching for Not just today, but going forward on this particular topic. Don't forget to check out AmplifyTrading.com Should be some links down at the bottom of this video Happy for you to explore and see in more detail what we do and don't forget to subscribe to the channel Eddie is going to be releasing a new video and no doubt He'll be talking about things like the probability of a second wave and what size and what form and what speed might that take So that'll be a great video to for you guys to watch at the weekend But having a look then at the first chart and what we've got here is the S&P 500 Posting is worse loss of course since March after falling for a third day But obviously the size of the fall was much larger than what we had seen in the prior two sessions And this often is the case, you know when there is a kind of flashpoint a catalyst And yesterday certainly that was what I was talking about in the briefing yesterday, which was this renewed uptick in some of these key Geographic areas within America, which have more higher densely populated Kind of regions and it does kind of manifest itself, you know, and we've had some interesting things You know in regard to the amount of retail participation we've had in this continuous stock market rally I was looking at inflows into equity In the Bank of America weekly survey was up quite sharply So it's when everyone it always seems to be the case that when everyone gets quite one-dimensional in a view That it does mean that markets do remain then quite susceptible to an aggressive pullback If then markets start to come down to a certain point obviously for some people that becomes an offside position too much and Getting out of that then long means more shorts get gets kind of Get pushed in to exit the position and the market just goes down and down And it almost becomes self-fulfilling then people jumping on it or riding the coattails of that momentum And certainly it kind of felt a little bit like that yesterday It was kind of as a curve instead of it being just like a headline and the markets went down It was kind of a progressive move as we went through the the kind of session So, you know, I guess the question is then Where do we go from here? But you know a few things to have a look at in terms of a daylight yesterday the selling does tend to be quite broad, you know, if you're talking about something like a Virus, you know, don't forget. It's not just The virus and the sell-off that the reasoning behind this is is that you know, if the virus does pick up Then we're going to have to go back into lockdown and it's the lockdown in itself Which is going to have the harshest economic consequence And that would need to be factored in given the market's relative complacency in how it was positioned prior to yesterday Given the fact that we hadn't really seen What we are now seeing which is a pickup in some of these numbers in the key areas, particularly in the US So selling was quite broad-based I'd say some of the biggest losers in this respect were Airlines, crews and travel shares as you can imagine. They're the ones that are most kind of Sensitive and would be most fearful then as an investor that they're going to get hit once again should this virus start to Significantly increase Total numbers the US CDC reported a COVID-19 cases rose by 20,486 the previous figure was 17,376 so yeah quite a distinct pickup there in particular This is what we're looking at with the airline stocks and this is going to form part of my overall View I'll give towards the end of this this delivery, but this was looking at airline Stocks tumble after their best ten-day gain or record and for me. That's that actual sentence is quite telling because you know you last night I was getting a flurry of text the market was coming off and It's such a weird thing that kind of human psyche because if when we're in March That was the type of movement that we were seeing on a consecutive daily basis, but because it's been so calm people almost are so You know the human brain gets so Into a routine and we've been in this period of just quite a one-dimensional rally of sorts And we get one down there of six percent and everyone thinks the world's coming to an end and I do You know saying this to some of the guys yesterday human nature is to over interpret And you do see that very much in a behavioral pricing in markets quite a mirror image of that You know whenever there's talk of a vaccine markets just start rallying straight away Even though we know that that's very unlikely to be the case anytime soon. It doesn't matter You know and say in a similar case. I'm kind of feeling slightly similar and I see graphs like this and You know people talk about the airline stocks getting hammered and sure they did yesterday But you know it did come in context of the best 10-day game They've ever had in their entire lifetime, so you know if you look where it puts us it puts us right back to where I feel Is a more relevant pricing? Realistically for the threat of a second wave. I think I've been fairly consistent with my view that This was always the biggest It's kind of tangible risk for markets and it was always something which inevitably was going to happen a second wave It was just about when and how large and significant it's going to be and this is obviously the first glimmer that we've had of it Being potentially outside of what markets were were expecting so a pull back down You know in a simple technical way if you were just drawing a horizontal line through the March in April highs Retested again in late May then we're pretty much back to that point for me I'd say well, that's pretty fair game because you know, yes We're possibly off the lows, but we're no we're near Out of the out of the forest yet that is the the kind of COVID woods So yeah, still some way to go, but I yeah, I don't think I'm Quite ready to hit the red button yet and and panics about to break out and so Yeah, I think this this chart was quite telling given that was one of the sectors which was hardest hit yesterday of course who is Saying what well you can imagine Given the fact that we had the Federal Reserve meeting Which came just a few hours before then we had this run down into Asia and then the US selloff Unsurprisingly Donald Trump tweeting yesterday the reserve Federal Reserve is wrong so often I see the numbers also and do much better than they do We will have a very good third and a great force quarter one of the best years ever in 2021 We'll also soon have a vaccine therapeutics cure. That's my opinion watch So again very much tactical, you know, is this market moving? No, is this to be expected? Yes This is kind of Trump's way, you know, if it's not the Chinese virus then it's powerful So this is just one of those Political moves in order to pass accountability and cause a diversion away from Any responsibility of the US administration? So yeah, I'm afraid Jerome's got another tough weekend Under fire. He's in the crosshairs again of the US president for the time being Interestingly as we've said before You know the trade war Really has gone quite quiet and that is quite often the case when there's Other dramatic things that have been happening like the riots and now the move that we've had and and given the timing I think it was probably more appropriate To to Trump to try and connect that to the Fed. I'm sure that China will Also be in the spotlight this weekend and Trump will be will be banging that drum Interestingly, North Korea have come out overnight and they've said relations with the US have currently shifted to despair And the US is hell bent of exacerbating tensions Furthermore, it stated US policy proves the US remains a long-term threat And they see no improvement in relations in maintaining the trumpkin relationship so That that sounds pretty frightening if you're not really used to that kind of cometary and its impact on markets But it won't have any impact. You know, this is all kind of the verbal posturing of which these two nations typically do to one another The point that I thought was quite interesting was more to do with the fact that there's a recent deterioration in the trade war There's a Direct correlation between tensions in North Korea and the US That is quite a good barometer then of whereabouts the trade talks dialogue is between the US and China Because even though North Korea Kind of acts independently. We know that, you know, they're a they're a geographic neighbor of China They're heavily dependent on this relationship In particular and so it's almost like China likes to play out a bit of a proxy war via the verbal Kind of rhetoric coming out of North Korea has been quite a typical pattern But as I said, it hasn't really had any impacts and I wouldn't expect it to The other thing then is oil prices Oil dives the most in six weeks exposing fragile recovery again with oil You know, it's all about this kind of perception of supply and demand. It's all been supply focused of late really Quite recently Cristobal that tropical storm going through the Gulf of Mexico But more so the OPEC plus deal that they've managed to roll over for another month But this is more on the the demand side, of course, and this is what caused Was at the heart of some of the dramatic drop that we were seeing just a few months ago So, yeah, definitely oil also ripe for a bit of an extension of the profit taking having run up to around that gap fill from that March OPEC disappointment that we had and we got close to 40 dollars. So Yeah, down fairly heavy yesterday down about a dollar again today Maybe worth just keeping an eye on as we go through the the rest of the session Yeah, on the the covid front, there's a couple of things then to get you up to speed on First of all Let me talk. Let me talk about a couple of case rates For a second. I know this graphic is a bit small to see but To make this a bit more clear. You've got California Texas Florida and New York so There's a distinct pattern here and actually there's three largest population areas i.e the top three um, you can see on the seven day moving average has been Edging up and in the case of florida quite sharply over the course of since the beginning of the month now Quite a few people were asking the questions of you know, a lot of these nationwide outbreak of riots that we've had over recent weeks Is this the is this the the kind of culprit to blame for this new pick up in the transmission cases, but There's no real evidence that i've seen that would suggest that nothing really concrete Certainly as we were saying at the time it would make sense that potentially people would be more of risk And the nature of the virus then you know, once that r-value goes over one then it can Grow exponentially very quickly But you know, think about it these economies given that they're some of the largest Kind of regional-based economies within the united states It's very important then for trump to try and force through and get these areas open Reopened as quickly as possible and as we had known that was always going to come at a at a certain cost a risk and and certainly that's what the sign to see the first kind of Signs potentially of that because if you actually look we were generally i mean just taking California for an example California was was kind of flat lining up until the middle of may but it was in fact the middle of may of course when the Um delusional started to happen obviously in a very staggered and phased fashion But you can see here In the cases of these other areas particularly florida is really ramped up more aggressive And that's why it tends to kind of raise more eyebrows given the acceleration that it's had And in fact, it's over and above now the peak of what we were seeing right in the midst of the first Phase of the acceleration Back in kind of late march early april new york much more contained In that respect But new york has been kind of pushing back quite aggressively against the president whereas some of these other states Probably lesser extent and there is a consequence to that type of action To give you some some numbers florida reported 1069 cases up two and a half percent from a day earlier compared to an average increase of two percent over the previous seven days california rose two point three percent compared to an average of two point one over the seven days Arizona utah new mexico all posting a jump of 40 percent or more for the week New cases in florida arkansas south career north career all rose by more than 30 percent in the past week so Yeah, it was it's interesting how obviously markets work You know did some of those charts as you as you saw were already on the incline but it just takes that kind of Uh, a little bit of interest and enough market participants then to start turning their head and post then a big event like fed Uh, and what's going to be interested today is even though i've kind of insinuated that perhaps then i'm not yet in panic mode And foresee then by default a continuous aggressive sell-off The only thing that does concern me is that today is a friday and just given what happened yesterday I'm not sure how confident people would be to want to hold on to a position going into the weekend if that does Create a little bit of kind of clearing the deck into the weekend Then perhaps you could see just one more day is selling off and Perhaps monday then lies an opportunity for a bit more of a bounce and consolidation not full recovery Because I think now the markets have kind of woken up and smelt the coffee a little bit more about the risks associated with the second wave Um, so yeah, I do feel like potentially it could be a little bit more legs in it for today Before then things might start to stabilise and that purely being on the basis that I don't think people want to carry risk into the weekend This is one of the other final points on the kovat side Houston area officials, uh, I believe This area in the u.s. Is the fourth largest Area in terms of population. So obviously very important They're getting close to reimposing stay-at-home orders and they're prepared to reopen a kovat 19 hospital That was built into a football stadium, but was never actually used in the end so again you know in terms of markets sensitivity to this from a Kind of sequence point of view and to ascertain its economic impact, you know Houston being the fourth largest city in america then closing down and Kind of reversing some of the reopening that we've had And reissuing stay-at-home orders is going to have a detrimental effect to their economy And that's particularly important given the size and its contributions to the overall us output So, you know, these are sort of reasons underlying why the market was was so aggressively hit yesterday um quick look then elsewhere um Well, actually one thing I just quickly want to say as well the other thing I saw sam was was tweeting last night When the market was coming off Was the 200 day moving average? um You can see we we did break through it, but we closed what looks like right on the 200 dma So perhaps again, that's a pretty good marker from a technical point of view Beyond that point I don't really see too much in the way of any real technical area of firm support until we we would come back down to 2965 so I'd probably look at it that way for today The 200 dma will either be the line in the sand and will hold some price up for today But if we did retest the downside, then I do think we could see another heavy day of selling and that could push us back down You know another 60 points or so So not to the tune of what we had yesterday by any means, but that would be a kind of logical target there if we were to retest Yesterday's lows pushed you that 200 Daily moving average and then get down to that marker. I'd be keeping an eye there All right away from equities and away from covet. Let's just quickly talk about a few other things um brexit This isn't moving markets What is moving FX markets is the dollar Remember what we've been saying of late from a sentiment point of view the dollar has kind of taken that that reserve currency status And so whenever you get a real run on equities like we had yesterday and you get a kind of flight to quality bid and things like Gold and t-notes the dollar is strengthening at this point in time so people aren't you know reading into it as a as a kind of Pressure on the Fed to do some sort of monetary easing response. They're looking at it as in right it's just a clear case of risk and When there's risk off the dollar strengthens and it's strong strength and aggressively yesterday And it's it's kind of held on to a bulk of that's come off a little bit from the highs But it's basically flat and addixy, but that means that both uradar and cable are still slightly depressed at the moment if you Look at cable Just before I get into some of the headlines I guess there's a couple of areas if we start to move back higher That could be quite interesting Probably here and then these these kind of pushback higher. So if I just put my lips You've got the Kind of areas here from the out from the morning high that we had and rejection And you've got these previous highs and if we continue to push up higher the pivot level as well Does encapsulate some of that price activity, although be a bit choppy around where we were trading yesterday afternoon That would be contingent though on the recovery of course in terms of general market sentiment And if the dollar was to push back down Then you'd be looking for those types of levels, but from the brexit side of things nothing really new But definitely a few things to be aware of Given there's a european ecofin meeting today UK government this is in the ft reportedly will formally roll out a brexit deadline extension today So they're going to stick to their guns and as what we've been saying before it's probably too early for them to start Really compromising to its degree of bending over to get a deal done right now That's just not how negotiations are done as we know they're going to push it right to the end So that's not too surprising But what they did say is that they plan a temporary Light touch customs checks with the EU next year according to sources And customs regime is expected to be detailed by cabinet member Michael Gove later But if you think about it Michael Gove, this is a complete U-turn Of what Gove said back in february when he announced the goods coming from the EU would face the full range of checks now What is that is that Gove being bad not really because if you think about what's happened between february and now There's a small thing called a global pandemic. And so the idea then that they can implement such rigid customs checks Is not realistic in terms of the amount of preparation that's needed in order to deliver. So yes, um They're going to have to move on that But that does then kind of watered down a little bit of what the government was originally outlying Which was kind of taking back control and all this sorts of thing That's that's definitely not going to be what happens on day one In that respect. So Yeah, that's the current current status with that on The european side the uk and eu high level talks are to take place on june 15th So next week between johnson and the eu commission president And also the eu council president Other reports have noted that the uk in the eu are reportedly agreed to hold intensified timetable for negotiations Now they were previously meeting every three weeks. The talk now is they're going to meet every week So there's definitely some political will to make Movement on the negotiations. I guess the question is whether or not they can and What does that look like and when does it come and it's probably not going to be for another week or two This time next week, it should be a little bit more interesting Because obviously we're getting close proximity then to some key deadlines And that would have encompassed quite a few of the key discussions at the beginning of next week on monday To have some uk day throughout this morning. So just a quick summary um the gdp month-on-month came in at Minus 20.4 percent slightly worse than expected 18.4 Dushel production minus 20.3 percent worse expected minus 15 manufacturing production minus 24.3 First expected 15.8. So all these figures worse than expected. However markets don't care And they don't care because it's april and it's and that's too far gone now Markets are not going to get spooked by this type of situation And what markets are more concerned about right now Is it is the second wave virus as far as today is concerned, but as far as the data is concerned Now it's going to be okay. We're in june now And it's about well. What does those May figures look like? What does the more recent looking figures look like? What does the forward looking soft indicators look like to get to ascertain people's confidence levels? Because that's going to define the type of shape of recovery we're going to have in future So yeah, the data's come out. It's not important Looking further forward then into the session You down to the EU industrial production coming out at 10 o'clock You then got us import export prices at 130 university in michigan the preliminary number At 3 p.m. London time. So nine in chicago And that's it So any questions feel free to leave a comment remember to subscribe to the youtube channel if you're watching us on there And eddie will be dropping a video on saturday and then sam his technical outlook for the week on sunday But with that, I wish you a very good weekend and a good session ahead. Thanks guys