 Welcome to CMC Markets on Friday the 16th of October and this quick preview of the weekhead beginning the 19th of October. Before we get started, just a couple of disclaimers before we have a look at this week's price action, which I think we can all agree has been somewhat on the choppy side, shall we say? I think what's important about this week's price action as well, I think has been this a little bit of a wake-up call. I think for those investors who perceived or believed that a vaccine was really only a matter of time and that ultimately the rolling out of such vaccine would, I think, lay out a clear path, a clear path for a recovery, a recovery from the restrictions and the uncertainty that's been brought about by this coronavirus pandemic. I think more than anything, what we have seen is that it's the realization that the path to a vaccine is going to be a very, very bumpy one. We got an early indication of that with the AstraZeneca news a few weeks ago when they suffered a setback in one of their clinical trials when someone became ill. And now this week we've had Johnson and Johnson suspend trials, their own vaccine trials and Eli Lilly have also had their own trials suspended by the US regulator. So I think when you look at that, you look at the fact that in Europe and the UK and the US we're also seeing rising infection rates, potentially rising hospitalizations and the prospect that further restrictions will kill off whatever vestiges of a nascent economic recovery has been since April. We've already started to see early evidence of a slowdown in some of the economies in Europe with the most recent services PMIs out of France, Germany, Italy and Spain, all the way back in September. And obviously that is something that I will also be looking at as we look towards the upcoming week, which has gone an awful lot of macro data, but as well as an awful lot of very important company news as well. So to give you a flavor, I think of what I'm looking at this week, you can see it in this little watch list that I've constructed here. And as you can see, we've got UK bank earnings starting next week with the release of Barclays third quarter numbers on the 23rd of October. We've also got Netflix, Tesla and Amazon.com. All three of those I think will be closely monitored for any evidence that we may have seen a slowdown in Q3 or whether their current direction of travel when it comes to earnings and share price growth is at risk of coming unstuck. It's certainly been a game of two halves this week for European markets as well as US markets, even though US markets are still operating under the misapprehension that there'll be some form of stimulus deal between now and the November 3rd presidential election. I think there is, I think it's highly unlikely we will get any substantive deal between now and then we might get a skinny deal if comments by House Speaker Nancy Pelosi are any guide. When she when she spoke to House Democrats as recently as Thursday evening, she assured them that she would look to address the need for a stimulus plan if there was no deal with the Republicans and the White House soon. So, you know, that sounds all very positive. Unfortunately, how that how that how that deal is squared off without the support of Senate Republicans, she doesn't quite explain so working on the presumption that we will eventually get a stimulus deal in the next six months is probably a wiser assumption and working on the premise that will get a stimulus deal between now and November the third. Well, I think what is clear is that the UK, Europe and the US are only going to be in for a long, hard winter. You know, already this week we've seen very fragmented political responses when it comes to additional lockdown measures. The UK government's going for a tiered approach. Unfortunately, there are so many contradictions in that it's really hard to understand when you're doing something wrong, as opposed to when you're doing something right. It's no different. It's no different in France, where President Macron has implemented 9pm to 6am curfews in eight French cities, including Paris. Obviously, the French aren't too happy about it, but it's a very, very difficult situation to be in for a politician. I certainly wouldn't like to do their job at the moment, having to balance the economic risks of locking down too hard against the health risks of not locking down hard enough and overwhelming the health service. So, you know, I think it's very, very easy to sort of get drawn in to the fringes of either debate. And I think that really does frustrate me. I think when it comes to looking at this question, it's not about one or the other, it's trying to navigate a tightrope of both pretty poor options. I could use a much, I think I could probably use a much rather earthy superlative, but I won't. But what we've got here is I think we're going to have to get used to the fact that as the weather gets colder, hospital admission rates rise and potentially death rates rise, the noise from the pro lockdown crowd will get louder, while the prospect of destitution and high unemployment will prompt an awful lot of pushback from those people in those sectors who run the risk who have the most to lose essentially from further lockdown restrictions, retail and leisure pubs, airlines, restaurants, retail, all of those sectors that rely so much on services. So as we look at this week's price action on the FTSE 100, we can see once again, we're still in this channel that I've been talking about for the past four to five weeks. We finding a little bit of a base around about 5,760 but what is a little bit concerning is that we are struggling to rally with any meaningful, any meaningful conviction and take out these highs above 6000. So until such time as we break below this very important 5770 area, 5760 area, I think it's still a case of by the dips. Certainly, I think it would be, it would be unexpected, shall we say, if equity markets fell significantly we still very we still remain very much in the dip territory, though we do look as if we're going to finish this week lower here in Europe. It's a similar sort of story for the Germany 30 or the DAX sideways consolidation 200 day moving average. Also, this this fib level here is acting as a fairly decent support along along with these lows down here, you know in August and September so very very much, we're very much range bound for the time being though it is notable we have come down quite aggressively. So that doesn't necessarily mean that we're going to, we're going to continue to break towards the downside at the moment is very little evidence that and while US markets continue to outperform. We look at the NASDAQ front for instance we're still within touching distance of those all time highs in September. Yeah, we are looking a little bit overbought, but we still remain very much in by the dip mode for the NASDAQ as we do for the 200 which again, like the NASDAQ is very close to its own record highs of around about 3,600 3,509. So, I'm still working on the premise that every sell off in equity markets is a very much by the dip opportunity. Until such times as we break it break below those key supports that I outlined in the DAX S&P and the FTSE 100 charts that will continue to be. I think the predominant strategy of choice. Let's look ahead to the events of the next seven days. And as I said earlier, there's quite a bit of data due out the most notable of which will obviously be the French, German and UK flash PMI numbers for October, which are due out on the 23rd of October, Friday, a week from the time of me recording this video. We also have UK retail sales for September on the same day. So, from a UK point of view, they're going to be pretty important. I've also got the likelihood, as I speak at the moment Boris Johnson UK Prime Minister hasn't said that he will extend beyond his 16th of October deadline for walking away from EU UK trade talks so I'm working on the premise that they will continue to talk about a potential deal. But certainly I think the battle lines are being drawn and there are differing, there are differing briefings coming out depending on who you talk to about the likelihood or otherwise of a deal. I think it would be very unwise for either side to walk away from talks at a time when Brexit I think is really the least of the problems facing the UK, France, Germany, Italy, and Spain. You've got European Central Bank still procrastinating about the need for further stimulus ahead of its December meeting, despite the fact that things look pretty diabolical in Italy and Spain when it comes to their economies and the rising infection rates. So one thing I would say and praise where it's to Italy does seem to have a much better handle at the moment on its rising infection rates than does the rest of Europe, Spain, France, and the UK. Maybe they learnt the lessons from their outbreak in March and April, more is the pity that the UK and France haven't done so yet. So be paying particular attention to those looking at the cable rates and the likelihood is that UK EU talks will continue, we continue to trade in what I would suggest is very much a range for cable. There's fairly decent support in and around these lows around here, which is around about 128.45, 128.40. I drilled down to a four hour chart. So that's basically these levels here. And then of course we've got these series of lows in September at the end of September in and around 127. But overall, you can see from this four hour chart that we're very much in a trading range. And yes, sometimes we see that entire trading range in a day in what we did today, like we did this week rather, if I could actually get my words out. Sometimes we see the entire days, the entire weeks trading range in a day, like we did earlier this week. Yeah, that's better. That sounds that sounds an awful lot better. But nonetheless, from this price action you can see there is a clearly definable range in place. So it's generally top anywhere above 130, 131 and usually fairly well supported around about 127 and a half on 28 short of both sides walking away. I can't see that changing. Euro sterling, looking at Euro sterling, there's a much more clearly defined trend taking place here. It's very much sell the rally from the peaks that we saw on Monday the 14th of September. I've drawn a line all the way through the peaks here. There's fairly decent support in and around the 90 level not point 9000. And as you can see what I was saying earlier about the volatility in sterling, seeing an entire weeks range in a single day. Well, that was no better born out earlier this week when we saw this move here in the space of hours, which was very much very much of the widow maker variety. Nonetheless, the trend is in place itself the rallies on Euro sterling until such times as this downtrend line here is taken out. And if we look at this peak here, which is around about 90, 120, 90, 130. So for me, I think, unless we break above 90, 130 on Euro sterling, then we remain very much and by the dip mode there. So, as I say, looking, looking, looking at looking at the main indices, we've clearly defined that while European markets are likely to finish the week lower, we're not expecting any significant thrusts to the downside. I think we're still very much in a range type of trading environment, and you just have to pick your moments to get in and out. Now in terms of the data, we talked a little bit about UK retail sales and PMIs. All that we've got some very fairly important Chinese economic data. And I think one of the things that we've been waiting an awful long time for, since China came out of lockdown at the end of February, was signs of an improvement in the Chinese economy and more importantly, signs of improvement in the Chinese consumer. And the latest Chinese trade numbers do appear to suggest that Chinese consumer is starting to make a comeback. Certainly imports showed, showed, showed some really solid numbers in data earlier this week. And that bodes well. It's taken an awful long time for the Chinese economy to get back on its feet. But confirmation of that should be with the retail sales numbers for September, which are due out on the 19th of October. Now we've also got Chinese third quarter GDP as well. And, you know, looking to one side about whether or not you believe the numbers are not, they are likely to be a significant improvement on the numbers in Q2. The big question is whether they're as good as the Chinese say they are. I mean, we looked at Chinese Q2, sorry, Q1. So when we looked at Chinese GDP numbers Q2, there was an 11 and a half percent rebound in its Q2 numbers. More than reversing the 10% decline seen in Q1. I was forgetting the fact that the Chinese economy locked down in February. I hadn't forgotten. I was forgetting the fact that China, the China slowdown happened in their Q1 and European and US slowdowns happened in Q2. So they're a little bit of displacement going on there when it comes to the pace of recovery. Anyway, back on track year to date, Chinese retail sales are down 8%. And last month in September, we saw a rise of 0.5, which was a pretty pathetic number when you consider that China came out of lockdown in March. It was also the first positive reading for Chinese retail sales this year in August. Now that in itself is encouraging because it suggests the September number should be much better than that. And the expectation is we'll see a September retail sales number of 1.9%, but given how good those trade numbers were in terms of the import data, there is a chance that actually China, the September retail sales that we saw that we're expecting could actually be much better. So keeping an eye on that, obviously industrial production manufacturing has actually returned to normal an awful lot quicker than the Chinese consumer. But nonetheless, I think as we look towards the end of Q3 for the Chinese economy, I think we're probably going to see the fairly decent numbers for Q3, though expectations are for a 3.3% expansion in Q3, which doesn't really ring right when you consider that there was an 11.5% rebound in Q2. Nonetheless, I think there is some elements of positivity if you look at the PMIs out of China, and we get a fairly decent retail sales number as well. Let's say that's to the 19th of October, so we're keeping a close eye on that. And hopefully that will give us a bit of a lift going forward. But unfortunately, if the data that we get in the interim with respect to the PMIs is poor, which is likely to be fair, then any optimism about China could well be replaced by pessimism about how well or otherwise the European US and UK economies are likely to do as restrictions continue to bite. So as I say, the services PMIs are the one I'm particularly interested in France, Germany and the UK. The UK has been outperforming particularly in September to the UK. We saw the UK economy slow to around about 56.1%, whereas France and Germany were in the high 40s. But again, the UK came out of lockdown later. So you could actually see a little bit of a sharp slowdown in the October numbers. Okay, so I've talked about the economy enough. We've got the US-based book on the 21st of October. And again, that's likely to paint a very mixed picture for the US economy. It's still not particularly clear about how well or badly the US economy is doing because the jobs data is telling us one thing, but some of the underlying other data is telling us something completely different. And when you haven't replaced the stimulus checks that have expired at the end of July of $600 a week, you do have to wonder where the US consumer is getting its consumer confidence from, shall we say? Because we saw a big rebound in September consumer confidence in the most recent numbers. So moving on, let's have a quick look at euro-dollar. Because that, again, is still finding the air very, very thin anywhere above $119 or $120. I think the big level for me on euro-dollar is this series of lows through here on the end of September, around about the 116 area, 116, 15. As I say, I generally tend to do daily updates on the four major currency pairs, which you can find on the forum button on the chart. So you select forum and it displays the date and the time of the various bits of analysis. But again, you can also read that on the website as well in the Insights section under News and Analysis. But very much a case of sell the rally on euro-dollar. I think the dollar is still looking fairly well supported and that's borne out, I think, by the dollar index. Let's just get rid of that because that line is broken. Now we're covered back above that. But we can see there's fairly decent support on the dollar index around about $980. So, and it is starting to look a little bit better supported, which is likely to limit the upside on euro-dollar and cable of the light. But we already know that those two are pretty much in a range, pretty much in the same way that the CMC dollar index is alongside the CMC sterling index, which again, fairly decent support, $941. But again, fairly well resisted all the way up through $980 or anywhere close to that. Right. So let's move on to company earnings. And there's three that I really want to pay particular attention to. We've already seen the US bank earnings come out over the course of the past week or so. And by and large, they've been fairly good. JPMorgan, Citigroup, Morgan Stanley, Bank of America. By and large, loan loss provisions have been much lower than they were in Q1 and Q2. And all of those banks with fairly decent investment banking divisions have also done fairly well. And I think this is why I'm probably more optimistic about Barclays, latest numbers than I am for say, for example, the likes of Lloyds and Nat West, whose numbers come out the week after. One of the starker characteristics of UK banks second quarter earnings numbers was the impact the slowdown, the economic slowdown was having on their loan loss provision. If you take Barclays, for example, they set aside 3.7 billion pounds in respect of non performing loans in the first half of this year. To offset that, fortunately, they saw their investment banking revenue improve by 6.9 billion pounds, up 31% from the previous year. We fixed income seeing an 83% improvement on the same period last year. So profits came in at 695 million pounds, which is still pretty much on the low side, but that's basically because of the large loan loss provisions. When we look at UK banks in particular, and all banks are suffering at the moment, it's not just UK banks, European banks, US banks less so, but they're still down year to date. They're all suffering on the low interest rate environment. The Bank of England is not helping UK banks with its incessant speculation and chatter about the prospect of implementing negative rates. Banks aren't performing particularly well at the best of times. Negative rates are unlikely to improve matters, but that's a discussion for another day. So we can see from this that there's fairly decent support in and around 90p on the Barclays share price. We're starting to roll over a little bit now. If there's any disappointment over the numbers from Barclays, which are due out on the 23rd of October, it's going to be a busy day on the 23rd of October. Then we could well see Barclays shares head back towards the bottom end of that range. So that's Barclays very much toppy in and around 110. If any decline back towards 90p, I think it's likely to remain fairly well supported because of potential decent performance from its investment banking division. Right. So let's look at three stocks that really interest me out of the US. Let's start with Netflix because Netflix for me, I think, has been one of the big winners from the pandemic. I mean, when you think about where Netflix was at the beginning of the year, the biggest concern, I think, was that the entry of the likes of Apple and Disney would eat Netflix lunch, basically. And with the lowest price SDS subscription, still more expensive than Apple TV Plus and Disney Plus, there was a concern, I think, that Netflix would lose subscribers to these two newbie platforms. These two newbie platforms, incidentally, you have much deeper pockets when it comes to add new content. But I would argue the premium price that you pay for Netflix is a price worth paying. You look at the limited content available to Disney Plus, Apple TV Plus, you know, it's not a patch on Netflix. And one of the things that we did see in the first two quarters was a huge increase in subscribers for Netflix. Already the market leader in Q1 and Q2, Netflix added 25.8 million new subscribers, almost as many as the whole of 2019 when it added 27.8 million. So first half revenues came in at 11.92 billion. Profits were slightly disappointing due to a one-off charge. Estimates for new subscribers were set very low, but it was a little bit surprising at 2.5 million new subscribers for Q3. So I think if Netflix is able to get anywhere near close to 2.5 million new subscribers for Q3, and let's not forget Q3 covers the summertime when people are probably going to be less inclined to stay in on what streaming platforms are more inclined to go out and enjoy the summer, rather than being cooped up at home after lockdown, there is a chance that Netflix could disappoint in terms of subscriber numbers. They've got a fairly decent content slate coming up over the course of Q4. Revenue estimates are still set at a fairly solid 6.33 billion for Q3. So that would be another record. So again here, any potential disappointment on the revenue front could see a little bit of profit-taking. Given how many times we've tried to push through 560 and failed, which would suggest the element of risk is probably tilted back towards the downside. But it has a whole host of really good content coming up. A host of new offerings like Season 3 of Star Trek Discovery and Season 4 of The Crown. So that is likely to potentially provide an uplift as we head into Q4. So we've also got Tesla, our favourite that polarises opinion. If you're not a Tesla fanboy or girl, then it's very hard to make a case for Tesla's share price being as high as it is. That being said. And I don't want to get into an argument about the rights and wrongs of why Tesla is where it is. The company has managed to post a profit in four successive quarters. Now you can debate all you like about how it's arrived at that profit. It hasn't made money from selling cars. It's made money from selling credits. And that's why it's made a profit four quarters in a row. Now Elon Musk has continued to maintain that the company will be able to hit its 500,000 delivery target for 2020, particularly with the help of the new Chinese factory. Certainly I think there is evidence, anecdotal evidence out of China that demand is picking up and has been picking up over the past quarter. Certainly in terms of motor vehicles, Daimler's latest results showed that Chinese demand picked up quite a bit in Q3. So who's to say that the same won't apply to Tesla and its electric cars. And I think Mr Musk will be hoping that Tesla is able to repeat his trick of last year. Where a disappointing first half was followed by a bump a second half of the year. Obviously the pandemic may have other ideas, but I still think that there's a good chance that we could well see Tesla pull off another profit, quarterly profit of 57 cents a share. Now whether that will be as a result of the sale of cars is another matter. Certainly I think in terms of the overall outlook, the bullish case for Tesla remains very much intact as evidenced by this chart here that we are struggling to get much above this 460 $470 level, which has managed to cap it so far but the fact that the lows are getting higher suggests that we could have another crack at $500. And as a course of the next few days. I'm finishing off with Amazon speaks for itself really done very well. This year another big winner of the pandemic costs have gone up staggeringly. $4 billion in Q2 costs with another $2 billion of costs expected in Q3. So I think the big question here is how much of how much of well are they expected to do in terms of sales. They're expected to come in around about $90 billion sales between anywhere between $87 billion and $93 billion so I think anything along those lines should be fairly positive for Amazon. And again, very much in an uptrend could well continue to go higher on any dip lower. Let's quickly finish off with gold because that's a perennial favorite for you guys, and we can see once again that we're not really getting any sort of clear steer on gold. Here look to be in around about 1848 1840 the highs are getting a little bit low which suggests that maybe the strong dollar or the rebound in the dollar is hurting the gold price we're below the 50 day moving average now, which suggests that we may struggle to get much above 1840 $1940 or the highs that we saw earlier this month on the 12th of October. But overall, the bullish case for gold remains intact. I just think we're in a little bit of a consolidation pattern at this point in time. So, as I say, that's that's pretty much it for me for this week. Once again, thank you very much for listening. And I hope you all have a good week, good weekend, and I'll speak to you same time, same place next week. Thanks for listening.