 Okay, very good morning Thursday 25th of March. Hope you're doing well. Good morning to now for our live community And if you are watching this delayed on YouTube as ever It would be massively appreciated if you could hit the subscribe button more content coming in the coming days Even over the weekend as well So it'd be great to have you as part of our online community But let's get straight stuck into what's going on this morning and not going to spend too much time actually on the Chart, so I'll leave the guys on the live stream to go into that in more detail But just giving an overall flavor of market sentiment here at the European open I'm filming this just going into 7 a.m. London time this morning and markets, I'd say a little bit Indecisive I guess of how to take this latest new COVID wave idea Yesterday, we did see the NASDAQ then underperform down around 1.68% by the time We closed on Wall Street comparative to the Dow, which was flat Which is almost the opposite case of what we had in the prior day. So much more reflective than of Initially on Tuesday, it was kind of a move back into pandemic related plays Oil got hit airline stocks got battered Whereas yesterday was a little bit of reversal of that perhaps people just picking up Some of those particular sectors on the cheap and just riding them back up and and they the NASDAQ was an under performer oil bounced We'll have a little talk about the Suez some OPEC source comments as well in context of the Potentially threatened demand on the new lockdowns pertaining to the new COVID wave Or helping support price there But overall the other interesting thing is dollar strength and we pretty much have the Dixie trading at its highest levels of this year At the moment in terms of this morning. It hasn't been a great deal of fluctuation It's pretty much flat up to around one tenth of 1% As you can see then in the major pairs in the top left the euro dollar and cable still remain close to their relative lows I'll just have a quick look at cable here You know quite a nice breakdown in price that we've had through this week on initial tests Break comes back to the level and then moves lower We've had now a few recovery up to the same level in the futures market one thirty seven thirty six before the move lower And just this trend line here short term just keeping an eye on this morning on the daily chart Unaltered from what we were talking about yesterday really on the daily at thirty six eighty one was where the market found support yesterday And also so far today here at the open which was that coincident with the lower the eighth of Feb, but Continuation in the dollar move then downside. We'll be looking for potentially deeper moves here in cable towards really the one thirty six handle to keep an eye on Let's get straight to some of the headlines there and talk about the news and what is going on Gonna start off with an update on the the vaccine situation before I jump to Astra Let's just talk about this ongoing dispute between the EU and the UK over the distribution of ingredients and the expectation of Vaccines and Britain and the European Commission Last night issued a joint statement saying that they have been discussions on developing a reciprocal beneficial relationship To tackle COVID-19 However, they did caution not to over interpret and this was not a supplied deal rather the beginning of a negotiation The EU leaders they are meeting later on today. In fact, I'll get the timings of the exact Discussions that are happening later on today But they are going to be discussing the situation during a video conference summit on Thursday That summit over two days today and tomorrow for those European officials So a little bit of a of a softening of what was looking like an increasingly Tentious issue so want to watch still and potentially more comments coming out this afternoon but a bit of a step in a more Positive direction in that regard AstraZeneca was the other one obviously following on from the US criticism from that latest trial which Pointed to somewhat dubious data points in regard to the efficacy rate of their drug The company have come out and said that their vaccine is 76% effective in its US trial That came again after that independent monitoring board expressed concerns And is against comparable its previous disclosure of 79% efficacy but 79% 76% I Don't really think is reason for Concern in terms of the actual effectiveness of the vaccine. That's still a particularly high number in fact Understand that obviously comparative to some of the 95% readings we had seen it's it's not up in that region But comparatively as a vaccine, it's still, you know margin at the margin when we're talking about these few percentage points what's a bigger impact here potentially is the fact that The actual key component in any successful deployment of a vaccine is the public's belief and confidence in the in the I Guess not just the effectiveness of it, but the reliability of it And that's something that's been severely dented for astra just given Combination of different things not only a series of kind of data blunders that they've had Since this vaccine has been in development several months ago But also as well the type of eminent criticism has come up against from European politicians has seen the likelihood of The general public wanting to take the astra drug diminish rapidly comparative to others so yeah It's more of an issue for astra generally in the confidence within the firm We have seen her in the week their stock price has been he's been underperforming To some respect on the back of that kind of idea But overall the actual drug, you know Standing out of the crosshairs for a moment You know, I think overall this is a generally a positive story in terms of the overall COVID Crisis that the globe is facing at the moment because obviously astra is a pivotal drug in the global solution to to getting on control inoculating the global population The other thing I quickly want to mention was was the Suez had a few questions about this yesterday And I'm gonna talk about the details gonna talk about the maritime routes and I'm gonna talk about a few tips about You know why this type of episode is really good for your for your learning on a fundamental basis Bloomberg Reuters the other media news agencies are talking about the rally we had in crude yesterday Being pinned on the Suez. I find that a bit of a stretch to be quite frank If that were true and at the moment the passage is still blocked and therefore The number of the size of disruption is getting worse Well, then on that theory the price would still be going higher and it's not so for me I think Brent on the not yesterday the prior day prior to that It was the biggest decline would seem in Brent since October of last year. So for me, it was a bit of buying off the lows I still think that there's a healthy degree of appetite to buy it strategically technically key points and Definitely, I think a Tuesday into Wednesday session offered that 5732 I mean these are again unaltered charts from the markups from Monday's briefing and Having discussion was one of the senior traders here yesterday. You know, both of us remain still relatively secure in the fact that Even if this price does come down, it will be supported because even if there's a COVID rave that Disrupts demand short-term More medium longer term Overall economic activity will boom in the period ahead. It's just a matter of timing And then your insurance policy on the back of that is the fact that OPEC plus Will do whatever is necessary in order to ensure then that the price is supported And in fact, we actually had sources yesterday saying exactly that They said that they were likely to keep output mostly steady at the April meeting due to the lockdowns So lockdowns that we're seeing like some mainland Europe and elsewhere as COVID cases start to rise again Also as well increasing all exports in Iran and that's watering down somewhat the actual Kind of strength if you like as the supply pack So all the more reason to roll it over and as you can see here technically a nice bounce off those loads that we were seeing Initial resistance support back in early early February. So could we get lower? Can we get below this point? Yeah, perhaps, but even if we come down to say it's 53 51 I do think you'll get strong buying From people in more medium-term positions that will step in and lift the price if we have to get there We already kind of seeing that at the moment some of the price activity So the Suez thing the reason why I'm saying it's not as As simple as the Suez problem price goes up not only because of the price fade that we're seeing at the moment But generally how a short-term market prices react in WTI crude is much more about You know, where is the production refinement of these products? Not so much the passage and the maritime route I guess it's kind of a timing issue if it was to be prolonged then then it could have impacts and Certainly then talking about the Suez. The Suez is strategically important globally So a bit of detail here as many as 10 crude tankers carrying around 13 million pounds of oil could be Affected by disrupted traffic in the Suez canal and obviously that number is going up all of the time The approximate rate of backlog is around 50 vessels per day and any delays leading to the rerouting Around the Suez would take around 15 days extra to voyage between the Middle East and Europe and I just wanted to give you a bit of you know a geography Kind of lesson in regards to what does that look like? So the Suez obviously is situated here an axe as a Conductor if you like to connect then the volumous amount of crude oil that comes out of So back this up a little bit that comes out of The Gulf of the Persian Gulf so here you've got Saudi Arabia Iraq Iran and Kuwait so which are the top four producers within OPEC and The predominant amount of the positive crude oil that's been extracted coming out of the the northern part of the Gulf of the Persian Gulf We then have two key straits that need to be navigated from a maritime perspective And obviously around the proximate third of the world's Transportation of all maritime crude at one point has to go through the strategic choke point of this of the straight of hummus And that in itself highly contested waters Because you've got the northern tip of a man in the southern location Iran here and obviously the ongoing friction historically between Saudi and Iran and how this gets expressed then through US Sanctions and then Iran's proxy war in Yemen down here at the bottom With predominant concentration in Western Yemen of Houthi militants, which then fire north Missile drone strikes and so on into Saudi and Ramco infrastructure Beyond then the passage of the straight of hummus where there is obviously large global predominantly US and Western military Support to ensure the passage of transportation of goods through this area You then have to this the second straight, which is over here then Over towards the tip Western southern tip of Yemen when we're talking about El Mendab Straight which then goes into the Red Sea and that ultimately then goes up into Egypt and into the Suez As I just mentioned if the Suez is blocked then the alternate is Going around the African continent and the Cape of Good Hope in South Africa To go all the way around and you know, this is a historical kind of trade route if you like and to in order to Circumvent if you like going through the Suez and around Africa it would add Approximately 15 days to transportation and obviously when you're talking about the cost of goods the cost is going to become more expensive for lots of different reasons and so Bit of context and then moving back then some of 12% of global crude and about 9% of total seaborne traded petroleum Including crude oil and refined petroleum products do pass through the Suez Canal and Sumet pipeline According to the EI estimates So 12% of global trade is going through the Suez You might have read about there aren't about Two Suez canals nowadays. There's actually a new and an old one The problem is is that this graphic doesn't quite go into The greatest amount of detail but where evergreen the ship is grounded is right at the pretty much the entrance There's actually kind of like a reservoir pool if you like a little bit further in which would then split off the old and the new Suez Which then could have created then alternate kind of route that traffic could have taken But the problem is it's just this is right bottlenecked at the bottom. So it's blocking everything else coming through The Sumet pipeline as you can see here is the other the transportation area aside from the Suez You know one of the things here as well, I guess while we're talking about it from educational point of view now this this type of Passage and voluminous passage of crude oil, of course is one of the key reasons why there is strong Western particularly US military interest in this particular region and and alliance with Egypt in particular as well as Saudi Arabia if you think about the alliance with those nations although Islamic terrorism you could suggest from a Locational point of view from the where where these people come from is predominantly Saudi Arabian and Egyptian in fact in terms of Western terrorist activity on US soil over the last 50 years, but actually when you think about it from a Strategic point of view Saudi Arabia is the key predominant producer of crude oil in the Middle East and then Egypt is Ultimately very key as I said Contributing to 12% of global trade of crude going through the Suez or the Sumet pipeline as well at the same time So makes sense then from a strategic point of view to have US military presence and a political alignment with these nations for those reasons irrespective of other things that might come in the back of that The final things then to mention What when can we expect this to be rectified and what would that look like and how would it happen? The things that I've read is the best chance of freeing a massive Container ship as much as there's been reports about they're trying to dig out a little bit They've tried tugboats things like that probably the most likelihood here is freeing up this tanker Might not come until Sunday through to Monday and the reason that that is you've got to start timing then just just natural Flow of tidal waves And tide will reach its peak So spring tide peak is it is between Sunday and Monday and that's going to add Approximately 18 inches which will allow for the potential for more maneuvering for the ship So it might be that we need to let nature take its course In that respect rather than trying to intervene in any other way So it could be that we don't actually see any movement on this until the next couple of days until beginning of next week To give you a visual idea of what the actual Suez looks like my wife says she's actually swam and In the Suez when she was younger my wife's Egyptian And she was she couldn't believe it when she saw some of the photos because she said I don't remember it being that narrow And as much as I was saying well, I'm sure it's all not that narrow The idea here being that at its most narrow point. It's only about 205 meters wide So, you know, if you think of you saying bolt running 100 meters times that by two And that's about the size that you can visually think of this is very narrow And one of the problems that it encounters is that if there is ever poor visibility from a weather perspective There's obviously just very little room for error when you're trying to pass through The other I think good point to be aware of here is the top three exporters of crude and all products who use the Suez in 2021 so far the Russians 546,000 brows per day Saudi Arabia 410,000 pounds per day in Iraq 400,000 barrels per day so The end kind of point that I wanted to have with this discussion I know I've gone into it in quite a bit of detail when arguably it's not really I Know a product that a lot of you might look at or the price isn't spectacularly swinging around The reason why I've gone into quite a bit of detail here and might be worth just re-watching Again and making some notes is that I'd say one of the one of the things that I've learned in my career being working in what I do which is to Understand and interpret news and information It's not the sort of thing that you can just kind of read and then it's like right You're set now go off in the world and you're able to do your job I would say being good at global macro from a news perspective It's just about picking up these little nuggets of information at the time they arise You know go into some of the details You know, what is the canal? How big is it? What type of ships go through it? How often? What are the risks? What's the time to pass through the Suez? What particular countries are moving products through there if you can actually just spend one afternoon? Going into that type of detail make some notes put it in your head You can kind of compartmentalize it for later But it's this idea of building up your repertoire your building blocks of knowledge That ultimately becomes a very powerful tool for memory recall when a headline breaks on Twitter Or you hear a squawk box and they say something about one of these strategic areas of significance And you can just make a decision on the spot instantaneously, so you know hence the reason why trading the news is such a Difficult thing to do because ultimately it requires a very deep and a large breadth of knowledge about a number of different things if you're really going to be agile enough So to trade within the interday environment reacting to news as it's really happening So hopefully that was a good exercise to sort of talk through the Suez and give a bit of perspective If you go on my Twitter account You'll be able to find my morning note where I've got all the details But I've just discussed as well if you want to check it out. Otherwise final things to have a great look at North Korea I think I've discussed this enough really about Our expectancy of further activity from North Korea for the reasons between the proxy of US and China Interestingly from a symbolic point of view this latest two ballistic missiles that North Korea have shot it was actually into the sea near Japan and Yesterday in Japan was the commencement of the Olympic torch relay ahead of the summer games that were delayed So somewhat symbolic there against one of the allied nations of the US So again, we're actually up the pressure on a geopolitical level Markets unfazed as you would expect because this sort of thing you can expect more of it to happen in future as well Toes of the calendar for today. It's pretty quiet UK European morning US data is a bit more interesting. You've got the Q4 final GDP So that's probably not the most exciting thing you're going to see today Expected to be unrevised at 4.1% You do have weekly jobless claims which obviously bumped up a little bit in in recent weeks Expected to decelerate slightly to 730 from 777,000 to keep an eye out for that You've also got Joe Biden is actually giving his first formal press conference I know we hear from Biden it seems quite a lot, but he hasn't given one of his keynote speeches yet And I did distribute a full primer in the Amphi live community yesterday So have a read of that definitely worth getting getting yourself up to up to speed But all in all it might be short on specific details, particularly on the infrastructure kind of new stimulus package plans Little bit more broad brush, of course But nonetheless, it's going to be something potentially of interest and certainly something I'll cover in the briefing tomorrow morning He's speaking just after 5 p.m. London time Really busy though on the speaker slate. I mean It's jam-packed Everything from the Bank of England's Governor Bailey who's already been on a tape this morning And also going to be followed by I think there's another BOE member Potentially later as well, but what is Bailey going to say to be honest? I don't think a great deal again He's speaking at the unveiling of a new 50 pound bank note and Also the proximity yes, baby. So it's Bailey twice but also The Bank of England rate decision was not that long ago. So said before not expecting much overall from these guys Lagarde Again same case but from a Fed perspective potentially a little bit more interesting and they're speaking throughout the day So Feds Williams is a voter Feds Clarida voter Bostic voter Evans voter Daily voter now the reason why this these are a little bit more interesting is not all of them But most of them Clarida speaking on US economic outlook and monetary policy Feds Bostic Speaking on measuring the economy during COVID-19 Feds Evans current economic conditions and monetary policy Daily monetary policy and fiscal policy said so unlike Lagarde and Bailey A lot of the Fed guys are speaking Absolutely on point of what the markets could be sensitive to if they were to say something out of line of what we've heard Generally from Powell of late. So I would definitely have all of those marked up On your on your calendar for today Then the final thing I wanted to mention signed to be aware of it around five o'clock Later on late afternoon. His traders will be kind of very much Aware of the fact that the seven-year note auction coming out of the US Just given what a disaster it was back in February so far I think we've had two twos and fives coming out in the US Treasury and they've been okay fine No disasters the seven-year was previously if it goes through okay today Now I think put to bed any idea of disruptions after that initial failed or not closed To failed auction we had before all right That is it gonna leave you to it let you get on with the day any questions at all Feel free to just drop me a comment or I'll see you in there. Yeah, if I live discord room Thanks very much