 Good morning and welcome to Same-Same Markets on Friday the 5th of June and this quick look at the week ahead beginning Monday the 8th of June though some of the data that I will be talking about will actually be happening over the weekend. Before we get started just a couple of disclaims as we start to look back at the price action of the last week or so which has been yet another positive week for global equity markets and European markets in general. We've broken out through a number of key levels on the upside and in the case of the NASDAQ 100 we've actually seen new record highs. So equity markets continue to really only know one direction at this point in time and that's to go ever higher and when you look at the divergence between what the economic data is telling us and what the markets are telling us it's chalk and cheese. I mean if I'm honest I hate this rally because the rally runs completely counter-intuitive to what the economic data is telling us. The data is terrible and while you can make the argument that the worst is probably behind us in terms of the data but that doesn't necessarily mean that we're going to get into a v-shaped recovery and that's certainly what markets are pricing in. You're certainly seeing that on the FTSE 100 we've continued to push high. We've finally broken above that 50 per cent Fibonacci retracement level from the 6,230 level. We sort of flirted with it towards the end of last week and finally broke through it on the Wednesday. We are currently in the process of potentially trading all the way back up to 6,580 and if we look at the weekly chart we can see straight away again three positive weeks. The move off the lows that we saw all the way back in March has been nothing short of staggering back towards levels that we last saw all the way back at the beginning of March before lockdown. At the moment the FTSE is trying to fill this gap here between 6,200 and the lows on this candle of 6,400. We are around about there now but certainly if you look at the FTSE and you look at say for example the German Dax and a similar chart here we've broken above the 200 day moving average. We can actually draw a line through these lows and you can conceivably argue that there is certainly a lot more potential now that we've broken through a number of these key levels for further gains essentially back to the highs that we saw in February which is an absolutely mind-boggling turnaround and it's not because the economy is going to be in a much better place than Marcus were thinking at the beginning of the year it's simply because of the amount of money that's been thrown at the problem not only by central banks and central banks are throwing a mind-boggling amount of money at it only this week the European Central Bank upped its pandemic emergency purchase program by another 600 billion euros to 1.35 trillion euros. Now there's some who will argue that it wasn't necessary for them to do that given that they actually haven't even used the initial 750 billion euros but we've also had the German government this week undergoing a significant fiscal stimulus program another fiscal stimulus program this time 130 billion euros largely made up of loans to small businesses and targeted PAT and other tax cuts so when you tie that in with the fiscal stimulus that's coming out of the US there's talk now of another fiscal stimulus program in light of the unrest that you're seeing rippled out across US cities and a huge fiscal stimulus program undertaken by UK authorities there is an absolute wall of money a wall of money flowing into stock markets at the moment or flowing into the global economy and some of that is going into stock markets one thing I would say despite the gains that we've seen this week over the course of the past three weeks in equity markets gold is only a little bit weaker so while there is this expectation that central banks will remain in pretty much full-fledged easing mode for the foreseeable future I'm going to say the foreseeable future I mean the next four to five years at the very least um the prospect of gold falling sharply is probably fairly low given the risks that this could actually turn out to be inflationary two or three years down the line at the moment there's no risk of inflation very much concerns about deflation hence why the european central bank justified this extra 600 billion euros but there are still political considerations to think about in terms of the fiscal stimulus that the european commission have also said that they are looking to implement next year there is a significant chance the fiscal stimulus which is being driven by the european union european commission could actually get watered down and in fact could not happen at all so there is an element of hope over expectation when it comes to some of these measures but nonetheless it's been enough to help drive equity markets back above some very key um resistance levels and in this case it's the DAX above the 200 day moving average the 50 day moving average is starting to turn higher momentum it's nearly positive and we very much remain in by the dip mode um I talked to an awful lot about over the course of the past couple of weeks that while we are below these significant resistance levels I remain suspicious of this rally um simply because of the fact that there was significant resistance in and around um some very key um previous highs now these highs have given way you really do have to go um with the momentum and the momentum is you're getting higher lows getting higher highs so essentially we are now in a very much by the dip mode so the prospect of a retest of these peaks that we saw at the beginning of the year certainly remains very much on the cards while we're above for me I think the the support level apart from this line this blue line here is 11,568 which is essentially the 61.8 of an edge of a tracing level um of this entire down route it's a similar Solry 40 S&P 500 you can see that here it's also broken above it's 200 day moving average and as those of you who follow me will know when these indices and I look at the NIC I look at the DAX and I look at the S&P when they all confirm a break of a similar technical indicator that generally tends to tie into my policy of looking at DAO theory the histories with the the indicators basically need so the averages confirm each other so in this case I look at the S&P I look at the DAX they move in a fairly similar way the fact that both of these indicators have broken both of these indexes have broken above the 200 day suggests there's more to come given the fact that the NASDAQ has retested its previous all-time rise now that we're above the 200 day moving average now we're above the 3000 level on the S&P 500 then really we are very much in by the dip mode now does that mean that we're not going to see a second wave of coronavirus infections does that mean that we could well see further economic shocks absolutely it does mean there is a risk of that will that derail this equity market rally at the moment you've got to ask yourself um what the what you know what what can stop an equity market sell-off you've got the Fed buying corporate bonds you've got the Fed implementing policy in a way that's never been done before you've got the ECB you've got fiscal stimulus really with the amount of money that's being thrown at this until such times as you get a significant break below significant support levels you really have to look at what the price is doing and the price at the moment it's very much momentum is in favor of further gains and while and I'll say it again I hate this rally because it flies in the face of all the fundamentals ultimately you have to look at it in the context of what's being thrown at it and until such times as the current uptrend that we're in gives an indication that it's about to come unstuck you basically stay with the underlying trend so those the those are the key levels on the S&P 500 so just quickly just quickly recapping um the the the FTSE 100 um support now comes in around about these previous highs 6,200 so I think any dips in the FTSE should find decent support around about 6,200 so those are the key those those are the three key indicators that I've been looking at this week in terms of equity markets have a quick look at the NECO 225 and again we've broken the 200-day moving average so momentum is very much in equity markets favor it's very much in the case of look to buy dips until such times as the current uptrend shows signs of running out of steam at the moment it doesn't so looking ahead um you've really got to ask yourself whether any of the data that we're seeing come out really matters that much today we have non-farm payrolls obviously I'm giving the I'm recording this before the payrolls numbers are released they are likely to be bad but it's also very likely the markets just do not care um and really it's not about how bad the data is it is backward looking it's really what is being thrown at the economies across the world trying to mitigate the economic damage that's likely to result the high levels of unemployment um which are likely to get worse before they get better but the hope is and the expectation is that this wall of money and this fiscal stimulus will prompt the unemployment rates that are currently rising to be much much lower by the end of the year than they will be or than they are set to be in the next couple of months so in essence markets are pricing invest case scenario v-shaped recovery rising unemployment now with an expectation that unemployment rates will be much lower by the end of the year as furloughed and laid off workers returned to the workforce by the beginning by the end of q3 and the beginning of q4 so next week what are we looking at we've seen a big sell-off in the dollar this week and the euro's gone up significantly over the course of the past few days we can see that here in the last three weeks the euro's gone up along with pretty much equity markets very much risk on we can see that here back towards the previous highs you've got to think that the air is going to start to get a little bit thin anywhere near around about 114 and 115 in these these previous highs from a year ago June last year but also March this year whenever we've been above 114 the euro hasn't been able to sustain that momentum very very long so when we look ahead to the week ahead having come off watch is another positive week for equity markets and a poor week for the dollar we've got the latest head meeting on the 10th of June we've got the latest China trade numbers for May over the weekend they are due out Sunday night I believe we've got potentially an OPEC class meeting over the course of this weekend so which I've penciled it in my week ahead for the 9th of June unfortunately the date for that meeting is a little bit of a moving target it's like throwing a dart at a dartboard and hoping that you hit the bullseye but again that's driven a very decent rebound in oil prices this week so I'm going to talk about that we've got some UK data out this week on the 12th of June and that is likely to be ugly industrial production manufacturing production and GDP for one month GDP and rolling three months GDP we've also got German trade numbers EQ 1 GDP a couple of fairly low key earnings announcements which I probably won't bore you too much with I might mention in towards the end British American tobacco and telecom all your numbers but let's start let's start with the China trade numbers now obviously there's this continuing tension between the US and China but in terms of the current rebound in equity markets and expectations of V shaped rebound I think an awful lot of people are looking at China they're looking at the fact that China was locked down in February they're looking at the fact that this week we saw the Kaishin Services PMI in China post its best number in May since 2010 and that has prompted optimism that we could well see a significant rebound in some of the May economic numbers so we're going to start with China trade well the most recent China trade numbers for April showed little evidence of a recovery in economic activity despite the lifting of the lockdown that happened at the beginning of March exports did improve in April they rose 3.5 percent but I think this was largely as a result of the shipping of medical products like PPE to the rest of the world as the rest of the world was in pretty much lockdown as a result of rising coronavirus cases there were there were more worrying signs about internal demand within China because that different main week imports fell sharply by 14.2 percent so in terms of what we're expecting for China trade data for May if those Kaishin Services PMI numbers are going to be any sort of guide you would expect to see a little bit of a recovery in exports and a little bit of a recovery in imports now expectations for China trade imports and exports for May aren't expected to be that positive exports are expected to decline 6.5 percent after a 3.5 percent positive number in April and imports are expected to decline 7.9 now that will be an improvement on the 14.2 percent decline that we saw in April but nonetheless it's still a negative number so the if that trade data isn't better than expected then you have to really cast doubt on the fact that one month services PMI is any way indicative of a significant rebound in economic activity I will be paying particular interest to the May retail sales numbers from China which will be two out later in the month I think around about two weeks from now but certainly as the leading indicator China's economic data will be closely monitored for any signs that we're going to see a similar sort of rebrand economic activity as lockdowns were eased here in Europe looking at the Federal Reserve which is the other key benchmark economic announcement for the coming week not really sure that we can expect too many surprises from the Federal Reserve there's been about the speculation the prospect that the US could go down the negative rate route I really don't think that's an option and I don't really understand why mark is surprising the fact that the Fed could go negative I think we've seen a host of commentary from a number of different Fed policymakers about saying the Fed is not leaning in that direction there are so many other tools that the Federal Reserve can use and are using so I think we have to take our cues from the comments recent comments of Fed Chair Jay Powell now he suggested that the central bank was more minded to look at ways to control the yield curve by way of attempting to cap yields on certain timeframes for two's times in the 30 year in a manner that keeps a nice upward slope in the yield curve I think one of the main problems and the ECBs found this out to its cost is a fact yield curve or negative rates it's you know negative rates are absolutely toxic for your banking system and I think the less central bankers learn the lessons of what's come before them they will continue their own set of groupthink policies which will continue to fail I think it's encouraging that the Fed is not going down that route because I certainly don't think it's the answer there's no evidence that it works and despite the fact the Bank of England is flirting with the idea personally I think it's a bonkers idea and if it if it worked then I think Europe and Japan would be in a much better state than they currently are the fact that it hasn't suggests that it's a failed policy so I think one of the one of the key areas that the US Fed officials are worried about is the US banking system and if they're worried about the US banking system they're not going to go negative so I really don't think it's something that the federal reserve will consider but it's certainly one area that will continue to be probed by policy makers and no journos to see whether and the markets as well to see whether or not they're leading in that direction so what does that mean for the dollar well we've seen a very bad week for the dollar over the course of the last few um few sessions and we can see that in the CMC markets dollar index from here let me just change that font size so that you can all actually see the fonts that much clearer now on our dollar index we've broken quite a bit lower over the course of the last few sessions which suggests that we could well be in line for further declines but I you know I'm still of the opinion that despite the fact that we've broken lower yes we could potentially see a little bit more weakness but overall I would expect the dollar to sort of find a little bit of a base it's just a little bit below the current levels that we're currently trading out at the moment and you also got a factor in that this dollar index here has a much greater weighting than a much lower weighting much lower weighting for euro and a much higher weighting for the Chinese one so the Chinese rim limby so as a result it's certainly not as reactive to any moves in euro dollar as the ordinary dollar index is so looking at you can certainly see here that we've seen the significant move to the downside at some point we will probably find that we'll get a little bit of a rebound certainly if we look at a similar move here we had one two three four five six seven eight eight down candles before we got a strong rebound we're pretty much at that level now where we are probably vulnerable to a rebound in the US dollar we can certainly see that born out in the way the cable is behaving and has been behaving over the course of the past few days we are still there or thereabouts 200 day moving average still finding fairly solid support from this trend line here but again this this is a huge level between 126 50 and 126 70 80 which is where the 200 day moving averages that is proven to be a significant barrier and we've got some very big economic data coming out this week again it's backward looking again it's probably not really instructive in terms of where the economy is now and the the likely rebound as a result of the easing of lockdowns and we've also got the added wrinkle that EU UK Brexit talks aren't going particularly well so that's likely to cap the upside for the cable in the short to medium term but you can be absolutely certain that if we do break above this level here and start to reach higher I'm still of the opinion that at some point we will start to push back out towards these peaks that are around about 132 it's likely to be a bumpy ride don't get me wrong we could head back all the way back to this trend line here which is around about 123 124 but certainly while the lows the reaction lows are getting higher then we will eventually take out these highs here as long as we stay above this trend line yeah so the data that we're looking at for this week is UK industrial production and manufacturing production for April well the economy was locked down in April so the data is going to be ugly there's no getting away from that it's going to be awful so the question is whether you really pay that much attention to it we've already seen the measures that have been implemented by Chancellor of the Czech Republic and they are quite comprehensive in nature what we do know or what we are expecting is that the UK economy in April on a monthly basis is expected to contract by 18% that equates to a rolling quarter on quarter decline of minus 10% but with the 330 billion pound fiscal stimulus plan that's been rolled out the hope is that in the second half of this year some of that economic output should be recovered not all the jobs that have been lost will come back but the downside impact will hopefully have been mitigated in the second half of this year as we slowly ease the lockdowns in Q2 in May Q so industrial production is expected to climb to 13.9% manufacturing production minus 15.5 that is all out on the second half of this year so what does that mean for euro sterling well you can see again we've got a nice little rebound here we are starting to run out of steam in around the 90 level we had had to go at it at the end of May we've come back down we've retested it we haven't been able to recover back above it so at the moment 90 looks a decent area potentially goes short with the stop loss above the previous high and for a move back towards these issues again we tend to be we seem to be in a little bit of a range for euro sterling certainly decent support at 8870 so certainly I think any weakness is likely to be confined to the 8870 area until such times as we break a line but at the moment it appears to be a range trade between 8870 and just above 0.9 area but the latest German trade Germany trade numbers as with China in March the picture of a trade in Germany is likely to be similarly true and that we're going to see big drops in both imports and exports so not really expecting too much in the way of the German data let's have a quick look up Brent crude because we do have an OPEC meeting and we've finally broken above that very big resistance line that I talked about in last week's week ahead that the $32 and a $33 a barrel level we've now broken above that we can see that there when we did break above it it then actually just support for the move back above $40 a barrel and there is certainly scope for further gains in the oil price to try and refill this gap in and around here which is currently between the lows of $45 a barrel and that peak there is around about $39 so there's a $6 gap in the cash contract from Brent crude which needs to be filled at some point which means that there's certainly potential for at least another $5 move higher in Brent crude towards $45 a barrel before we start to now and that really I think will depend on the upcoming OPEC plus meeting where the hope is amongst OPEC plus members that there will be an agreement to extend the production cuts that came out in May into the month of June now there has been an agreement between the Saudi Arabia between Saudi Arabia and the Russians to do just that but there is a rising irritation amongst those two members about the lack of compliance from countries like Iraq and Nigeria who haven't lived up to their part of the bargain now the upcoming meeting is likely to determine how much longer these agreed cuts will last there is consensus for another month but they want them but it's conditional on the non-compliers like Iraq and Nigeria and selling up to them so there's a number of moving parts I think there's certainly potential for the cuts to be agreed for another month but I think there's a little bit of a reluctance for them to extend much beyond the end of June because that certainly doesn't suggest that we can't see further upside in price so that's Brent Crude quickly have a look at gold finding support just above the 50-day moving average at the moment there is evidence perhaps that we're starting to carve out a little bit of what could be the head and shoulders reversal yeah you've got a left shoulder here potential head here with a right shoulder forming here if we do break below this line then certainly we could see a very sharp move back down to around about 1650-1640 but we need to break below the 50-day moving average and we need to break the neckline of what could be the start of the construction of a potential head and shoulders reversal on the gold price so keep an eye on that because that could be an interesting trading pattern going forward some earnings announcements we've got talk talk telecom coming out on the 11th of 11th of June that's their four-year numbers they they're sort of the one of the one of the minnows in the UK telecoms space been punching well below their weight that time they started to punch slightly above their weight seen a decent rebound over the course of the past few weeks could well run into a little bit of resistance around about the 100p level so I think any expectation that the numbers the numbers might come in better than expected is probably largely priced in we've also got us cinema chain amc entertainment holdings and they're in big trouble um they took a two billion dollar impairment charge in a pre-results announcement earlier this week and they have said that there's a good chance that it's unless cinema is reopened very very soon they may not be able to continue trading certainly the share price doesn't reflect that if you look at a share price on a daily basis but if you look at it on so for example a weekly basis it's just slightly better indication of how far they've fallen and how difficult the cinemas cinema industry which relies on thoughtful is finding the current shutdown so at the moment they're they look to be on borrowed time and the cinemas are able to reopen certainly soon we also have British-American tobacco and again that's trading in a little bit of rage has appeared to have found a little bit of a base suffering on the back of um um pushback now against um tobacco products but also there's been problems with vaping in these cigarettes and the health problems surrounding that so they've been hit from both sides of the equation when it comes to their revenues tobacco revenues are suffering because of concerns about um smoking but there's also concerns about e-cigarettes and vaping and health problems in a much younger cohort 18 to 35 where people have been smoking e-cigarettes and reported lung and respiratory problems so um it's not particularly um a positive figure for BAT but they do appear to be heading back towards the recent highs of the recent ranges so um so that's it I think for this week's look at the week ahead thank you very much for listening by this time next week we'll know what the US payrolls numbers are likely to have been and whether or not there's some evidence that maybe the US unemployment rate is starting to plateau and there's evidence that US furloughed workers are starting to go back to work otherwise I'd like to thank you all for listening um I wish you all a nice weekend and um I'll speak to you all same time same place uh next week thank you