 Okay, very good morning to everyone. I hope you're well Thursday 29th of August Going to of course review what happened last night Seemingly whenever I'm off the desk. It's when all the fun stuff happens. Some things ever change But obviously the fairly sizable move in the pound yesterday, and it's moving to the downside again this morning still got another I'd say What 25 30 pips or so till we get to the extremity of the low point from yesterday? But we can have a little bit of a catch-up of what exactly happened and what are the thoughts going forward? And then one of the other big talking points from a news perspective is that in regards to Italy? We've seen Italian 10-year yields move to record lows We'll look at the reasons why and what my thoughts are on that going forward Not going to dwell too much on the charts. I'll leave that to Sam but to give you an overall flavor of just general Market sentiment at the open I wouldn't say it's overtly one way or the other if anything mild risk off Equity index futures US and Europe marginally lower. However The S&P's kind of been clawing back any late losses that were seen Towards the early part of the Asian session But the 10-year touch higher up 7 ticks gold up $7 at the moment The Dixie is trading up just shy of one tenth. So a little bit of downside pressure Let's say cable Worth keeping an arm for the aforementioned reasons about the latest news from yesterday So let's get straight into it. What are we looking at? And this is the kind of latest response behind the surprising move from Boris Johnson yesterday to suspend Parliament now the overall thinking here being a push to basically give MPs lesser time to block his Kind of pursuit of the threat being credible of having a no-deal Brexit on October 31st Now a couple points to cover here in theory Suspending Parliament is a fairly normal event However, the timing is of course particularly suspect given this very short timeline We've got until what could be a very severe economic situation if we have a no-deal no-transition disorderly Brexit so prorogation as it's called the shutting of a kind of parliamentary session or term Which is then kind of bookmarked and by the Queen giving her her go-ahead Now the Queen doesn't really have much of a say in this process It is really purely symbolic and what would normally happen and it has done for the last hundred years in our history Is that she goes off the The advice of the Prime Minister of what should happen the fact that Boris Johnson has gone to her and requested this is Essentially, then she just gives it the rubber stamp very rare if ever has happened as I said It's been basically a non-event for the last hundred years Shows how unprecedented this Brexit situation is that the Queen would ever consider getting involved on this kind of political level So not unsurprising that the Queen has backed that Then what does this mean going forward? Again the timing is key what's again more Controversial of course is the length of time involved because we're talking about a five week process Which means the MPs return from recess next Tuesday, so let me just flat flash over to a different graphic MPs return for recess next Tuesday And they will only sit for around a week before and Parliament closes down again until mid-October So this graphic is slightly chopped on the right-hand side here. So let me just see if I can Shrink it. There you go. So you got Parliament in session on this timeline Chronological from left to right going from now to the future Parliament in session is in orange So they come back in a few days time They then would technically break up and Parliament is suspended only then to come back for recess or from the recess and just in time for the Queen's speech again So as much as the Queen is The figure to end that session she then gives a speech to reopen the new Legislation under the government, which is what Boris wants. This then gives a very short turnaround into the European Council meeting Boris's strategy I think as we'll discuss I think is still to Secure a deal, but I also think that that obviously needs to come with an extension and then a general election So I don't think that and the reason why the pound isn't through the floor that this is just right The odds are on now for a no deal. I'd say they've gone up But I still don't think that that is the at least still at this point the end outcome of the situation And we'll discuss why in a second the other thing is What would normally happen is Parliament is suspended anyway in late September early October Why does that happen? That's because every year you have the Labour Party conference the end of September and you have the conservative one that follows a few days after So actually technically speaking although he's pushed this It only adds I think technically three more days to what otherwise would have been a suspension for the for the party conferences period anyway but obviously it's being dressed up and a lot in the press and What or who is going to be a very influential figure on this because he can use and adopt his discretion Is the house speaker burko, of course Of which has been an ardent kind of backer of having Parliament have it say very much remain Minded think he was quoted yesterday as saying it's a Constitutional outrage and and so on so I'm sure there's got a look gonna be a lot more twists in this story Before we get to the end point now the main implication of what's happened Basically in the last 24 hours as it will make the legislative path to blocking a no-deal Brexit more difficult But importantly not impossible So very important that last point if though the legislative attempts fail Opposition MPs are left with little choice But to back a motion of no confidence if they want to stop a no-deal Brexit now what that means No hang about she's got some new comments Just come down to news wires China's Commerce Ministry asked about trade dispute with the US says both trade teams have been in touch That's just come out stocks rallying So let me just put my Brexit discussion on ice for a moment Media upside just going through the equity space S&P just powering through The late Wall Street highs Bund and T note futures backing off gold seeing some downside. So just to repeat the Chinese Commerce Ministry has just come out US are in effective contact China will not crack down on foreign companies, but China think should discuss removing the new tariffs So remember we've had a complete almost catastrophic breakdown giving the Trump flip-flop we had at the last week We have had overnight. Let me just quickly jump over to this You've had Manichin says China trade meeting will happen But won't say when but now a very positive update coming out of China who looked like they were being much more aggressive So you can see the reaction and sensitivity in markets to this headline Stocks just motoring on the back of that last piece of news currently markets the least Reactive yields gold stocks definitely buying into that headline So typically this is what you see where the fast money moving in markets the speculators jump in you can see in the center for go back to the The charts here you can see here in the center chart Nasdaq and to the right of that the S&P 500 futures Immediately then markets typically use these daily pivot levels as very near-term and clear Targets to run the price to in the kind of momentum-based trade In the initial reaction and then you can see quite Substantial pullbacks then set in as people just bail on that trade looking to book profit and maximize on that short-term volatility But definitely an interesting development there and obviously just fresh off the press just coming right now But quickly jumping back to Brexit obviously things are in flux. So I'll try to keep this as brief Concise as possible It's going back to this chart As I said then if legislative attempts fail which timing as a de essence and you would say potentially they're running out of time Then opposition MPs are left with little choice But to back a motion of no confidence if they want to stop a no-deal Brexit now This obviously starts to lead down the route of a potential then General election now I've read absolutely fantastic comment that I think really Summarizes what I feel is Boris Johnson strategy here from the chaps at ING who who made this graphic They said an election that is forced upon the government of which in this case as we're discussing would be and Coupled with a further Brexit delay because to hold a general election would require more time to basically set up the process So you'd have to delay Brexit would allow Boris Johnson to campaign on a tough Brexit stance Without risking the economic impact of a pre-election no deal This would be then I think Boris Johnson's move that he's done The more I think about it the more I think it's a stroke of genius Because actually what it means is that you're allowing less time. Yes What is going to happen is you're going to have constitutional? Kind of pushes where the legal courts will try to come in this has already happened yesterday Gina Miller and others have tried to table an urgent injunction Over Boris's ability to be able to do what he's done. The point being is though It's almost unheard of in the history of Britain for the for the Queen to come back for Boris to Go actually I was wrong. We're gonna. I'm gonna go back to see the Queen. I'm gonna reopen Parliament That's not gonna happen. So the point being these legal challenges. I think are fairly hopeless so if we go down this option of What's gonna happen is in the vote of no confidence leading to a general election just imagine the amount of support Boris Johnson will have by people who want the delivery of Brexit he now has been blocked by Parliament the Ramoners if you like If you're of that political stance He's failed to deliver and what he's been pursuing is the democratic will of the people blocked by Parliament This is only gonna fire up even more sentiment to back him and he averts then the worst economic situation Of not having a no deal. He gets a big majority in Parliament then on a new election He then goes to Brussels and then secures a deal and actually there you go There's no no deal. I still don't I still don't think that's gonna happen He then gets a deal over the line, which I still still think is the best Outcome for what the government even under Boris Johnson wants. He doesn't want to be the in the Premiership seat Given a dramatic economic Recession that we would head into So also not forgetting I think to further support this argument of what I believe is gonna play out Is the fact that Boris Johnson remember only a few days ago said? There's no way I would speak to Europe without them I would never even have a conversation with Europe without them dropping the terms on the backstop and there He was at the G7 Rubbing palms smiling joking and so on so I definitely think that there's more Strategy behind perhaps what looks like a an impulsive move perhaps to be interpreted that way I definitely think that this is actually quite a bold but quite a savvy one that he's made The one thing that this does mean if you're trading the pound. This is a picture of the pound dollar three month implied volatility and We're looking at levels that we haven't seen since the peak of really Q4 of 2018 and so the point being is you're gonna see much more Possible violent swings in the pound coming now obviously the downside level We've seen a pretty decent bounce in recent weeks off that 120 lower bound We're about two points above there at the moment but for sure I would say between now and October 31st and This is the timeline you need to be aware of so do check that out. I did share it on our amplify Twitter account There's gonna be loads more headlines to digest because even though I've talked about the end game of how I think this will play out and If we did get that extension and the general election if anything I think there's gonna be periods of relief followed by Stress and panic before that even happens because the increased risk has to be priced in for no deal So you're gonna see big swings in price action Importantly no one's going to be really wanting to sit in any type of medium long-term position So the people trading the market will be the speculators and momentum Chasers following these spikes in price movement, which almost exacerbates it So definitely you need to be quite agile and flexible to trade that product if you're gonna be looking at it All right enough of Brexit. Let's move on the other thing I wanted to talk about was Italy Because the Italian opposition PD and five-star say they want to form a coalition led by Conte now Tommaso amplifies Tommaso, which you know, well He wrote an excellent summary of what has been happening in Italy and I'll read it out to you He said the reshuffle will avoid an early call to the ballot boxes in October Remove concerns over the 2020 EU budget submission and avoid the increase of the VAT in September Moreover, the exclusion of the widely announced flat tax from Salvini and the citizenship income from the five-star as part of the previous government mandate Releases investors by their worries on the costly implications of these measures on the Italian fiscal budget net net Europe happy again, and so what has happened here is this The Italian 10-year bond yield This hit a record low now You remember I was sharing your graphics about this quite monumental rise the spread widening between the BTP boom spread as Italian yields were rocketing Given the uncertainty that was triggered a few weeks ago by the breakup of the existing coalition when Salvini Port the trigger on that kind of clerk collaboration if you like and that brought about the risk of new elections the risk of the league getting into power and so on that now has dissipated Fantastically and so yields have dropped dramatically and let me just bring in to shot here What that looks like on a chart and I'm going to show you the BTP future So we're looking at the yield This is the price as you can see here quite It's been quite a technical product to trade actually you've had that area of really a double top Which has defined some of the price action of July and the early part of August you then came back for a nice little test Here as sorry, let me just remove that box there nice test for coming back as what was resistance to then support On the 22nd so about a week ago before then a real breakout on the upside as things have got more positive Towards and again resistance support on the pullback and in a really aggressive push higher, but check out BTPs on the long term This is the weekly now that we've rallied very aggressively in the yields fall into these record levels I would say we've come into a fairly significant obstacle on the upside. It's looking at BTPs here This is a weekly Continuation chart you can see this is the high of 2016 we pretty much come bang up there to the tick So I'd say for now That is the the limitation of that move as I see it for the moment So if you had a part if you got hold of it over the last couple of days particularly yesterday Exceptionally large moved and well done. I think now you've kind of seen the end game for that One thing actually that I did tweet and just to give you what my end assessment is of what this means going forward Was this? If I quickly switch over Personally, I think this Italian bond yield move we've had in recent days is overdone My reason in being I think a five-star PD combination Still isn't yet a complete done deal They still need to appoint the various different people if Conti who's more Favorable and leaning towards the five-star that would mean you need to have a deputy from the PD of which no one yet Has been announced as well as other senior appointments So there's still lots to be done but underpinning everything Even if they can get and obviously the move that's happened in Italian assets is if anything I'd classify as a relief that the worst case under Salvini is not materialized the problem I have is to fight star on the PD I mean the only thing in common that they have as political parties and agendas is the fact that they hate the league That is no basis to form a coherent long-lasting and effective relationship in my opinion So now that this relief has happened I ultimately do think that even if they do come together and able to form a Relationship of some substance. I do think that it's a fractious relationship that will come undone in time And we will arrive In due course back at where we are right now with Italy and I do not think that that relationship will last particularly long Whether one year whether two years It's a stop clock. I would say in my opinion All right other than that I'm actually gonna just wrap up the calendar and then hands you to Sam because we've talked for long enough We've had a couple of the German state CPI is coming out this morning Saxony's already been released about half an hour ago The month-to-month minus zero point two percent previous was plus point four your near decreases by point two to one point four percent So a bit of a pullback there I'd say unsurprisingly though in the first German state CPI will get the others to follow Otherwise for the morning What else have we got it's pretty quiet again the biggest development actually from a news perspective this morning is the Chinese comment and It's a positive tone that's been struck Otherwise it looked like almost China had washed their hands with doing any dealing with Trump But seemingly they're looking to come back to the table and that's being translated into positive stocks unwinding of that risk premium pullback and T notes and gold for the rest of the session Focusing predominantly on the US you've got the second reading of US GDP looking for it to be relatively unaltered As two percent print against the advanced reading of two point one that will course come alongside things like core PC prices You also get the advanced goods trade balance number and a weekly jobless claims And then that's about it for the moment So given what China has said I do think a new element to add to your calendar and your awareness to any trades is You've got to wait till Donald Trump wakes up. What does he say and I think Personally, he's gonna come back and say something fairly fairly Concillatory let's say towards he'll like these comments from China. He'll say yep Let's get a deal done because he wants to just reinstill a little bit of positivity back into the market So look out for those Trump tweets Of course, he tends to have a pattern of waking up and tweeting from a London time from around 11 I'd say about 11 a.m. You should really start being prudent for any tweets that he that he does But typically they come around 11 30 11 40 the first ones, but given the context He definitely will be saying something on trade, you know in a couple of hours time All right, how'd you have the Sam and I wish you a good day. Thanks very much guys Hi guys, good morning Yeah, let's have a quick look at equities those comments obviously helping pushing price higher there across the board not just in the U.S. But Europe as well as always always worth keeping just a And ear to the ground on the reversal of these comments that didn't die on from the other side And now we are just in a bit of a pullback I guess if you were looking for this continuation and certainly u.s. Equities You've got to take that 29 a hundred where we're trading now the the hide that we had back on The 27 which would be Tuesday just a pretty key area in general So definitely worth keeping a close watch on here and you can also see the from this morning And you know the the break above this trend as well That's along with the previous higher the mornings is not very you keep an eye on so a couple of key points Just below where we're trading most notably now yesterday's high let me just make this a bit bigger for you and Obviously the trend line and high of the day break which came on that story That just came through While Anthony was was running through that briefing above where we're trading obviously we had a big spike to that higher the day and you can see You know the really key resistance zone and to me what is is stopping any push to all-time high We have to get above This area here those highs that we had back on from the 8th The 13th and then obviously struggling to get there the back end of last week before Friday's Trump meltdown that we saw so key level now, but obviously for the main part of the week It really has to get up there and just to go over again The it's just clear this up The the image of of how we're trading now you can just see how similar albeit squeezed down This price action is compared to The one that we had October November December last time so certainly medium term trade wise I was keeping an eye on that top end of that range and I do like the idea of a long above there However, I just don't think that's going to materialize as of as of yet quick look over in Currency spaces and said no real reaction from there the pattern Euro Yes, they really start into break what did start to break that mini range of the low Yes, then it's worked as a good resistance. It's a very small Range that we're now in but definitely worth having on one eleven pretty much to the tick as your top end now And yesterday's lows coming in at one ten ninety So small range there in the Eurokeeper and a watch on what happens at both those extremities a break of that Considering how small that range has been Whether you could get a big push down to the low that we had on the 23rd or not will remain to be seen You know, we're worth worth seeing what happens there trend line wise. You can see yesterday We we did have one but not as well respected. So I had this on Earlier in the day yesterday I mean actually I'd still have it I'd still have it's failure to really close above that Maybe it's a bit of a guide, but you can see today anyway the 111 handle on the futures just above the pivot remains pretty key as does obviously Yesterday's higher point as well, which came on the pivot with the pound with headlines yesterday It's starting to get into that that moment where You know, we've had the pound not necessarily comes untradable, but you just really need to be careful just in the last week Obviously got those Merkel comments. You've got the the Parliament Suspending oh, yeah, I'm not even an attempt to say that word What ants need to set and you can see we came love so you've got to be careful certainly trade in the The pound for now So yesterday's lows as I said not too far away from from where we're trading worth. I guess, you know, whenever there's Couple of lows in the mix starting to to get trend lines on what potential trend lines on shall we say so that low that we Had back on the 20th to yesterday's low That's could be a potential point just to consider if you get a bit of support on That trend line well later on in the day or week the opportunity to get short on the breaker That is is always not a not a bad idea as you can see probably worth having on a trend from the last couple of highs As well certainly on the 30-minute chart waiting for a break either way should it be respected gold and T-notes came down off those headlines Understandably so worth again to sort of keeping a close on where those lines in the sand may be and with gold You can see as well similar to those other markets just starting to trend or this morning It's just starting to be trending higher so work having that trend line on and I need a break with that is a break of the Certainly the intraday trend shall we say so that's something I would would have marked up and as we get higher As I say we get lower below there. You can see a really well-respected trend from this week so far We've got those free tests already So we know the market is looking at that and maybe even by the time it comes to it It's in line with the lower the day at the moment or even the pivot So certainly one to have an eye on going forward there above the the level we're trading You can see the high was that point we've talked about from the 26th Asian session And if it was to get above there cleanly Well, you get the that high that we had from last week as well silver. We talked about yesterday Keep as it is keep on on pushing on and on and as I mentioned a couple of my friends are in this trade And they're very happy to see we or they I should say reach one of their targets Which was that high that we had back from January 2018 Bit of resistance found there before breaking through again today It's on really is on a tear and you can see this move really starting once we had broken out this pattern here Really good opportunity back on the 23rd and it has not looked back since Have a quick look over at oil here just to finish things up. We can still see this line may well have been on from Yesterday certainly an important one today. You could argue. It's a bit more of a zone around the S1 of 55 27 Yesterday's low the high that we had back on the 26th as well and a bit of a lower point from yesterday really key zone if you like of Support below there to ensure it can start to drift down to the upside pivot 56 some nice price action as Resistance there last night as well. I got that mini range if you like so above 56 You know really be looking for a push maybe to the upside If it can get strongly above 56 20 if it goes below s1 Then I'll be looking for a drift lower to towards 54 83 and then the s2 as the next sort of target So some interesting points in oil also, I guess going into this morning It'll just be a case of whether we can get a continuation of this move That 2900 as you see the first real level support below has acted well and we've had a Four four and a bit point bounce from there. So decent enough So far obviously just be careful of the opposite comments coming through In that in this market any questions as usual. Obviously, please, please do let us know To be on the mic throughout the day, but I hope you will have a good session ahead