 Good morning and welcome to CMC markets on Friday the 17th of July and this quick look at the week ahead beginning at the 20th of July before we get started just Worked through a couple of disclaimers As we look ahead to what is likely to be I wasn't expected to be Another fairly busy week the company earnings already come off the back of some interesting Numbers out of the US specifically US bank earnings Which I think have really highlighted a significant chasm between Between those organizations who have large investment banking divisions and those banks that don't and I think one of the things that really struck me about It was really struck me about the numbers that the likes of JP Morgan Bank of America Goldman Sachs and Wells Fargo Published and Citigroup published was the ever-widening chasm between Wall Street and Main Street, I think in the first quarter we saw that these US banks had a side $25 billion in respect of non-performing loans. Well, this week's this week's updates have really highlighted the fact that In Q2 they have surpassed that amount. They've surpassed it by quite some distance over 30 billion dollars have been set aside by various Wall Street banks in respect of non-performing loans and While JP Morgan and Goldman Sachs and Morgan Stanley have done particularly well That's been largely as a result of their investment banking divisions. They're trading divisions and Wells Fargo and posted its first loss since 2008 and looks increasingly likely that it will have to make significant job cuts job reductions to Try and turn itself around because of the fact that it doesn't have an investment banking division doesn't have a trading division is very much gear very much focused Towards the US economy and the likelihood that we're going to see an ever-increasing rise in non-performing loans That being said US economic data this week has been largely positive Retail sales again once showed a decent rebound, but I think once again that's been basically down to stimulus checks stimulus check Effect continuing to trickle down into the overall spending numbers unemployment still Remains very much on the high side weekly jobless claims came in at 1.3 million even though continuing claims dropped again But overall is it has actually been a fairly positive week For not only European markets, but US markets as well If we look at the footsie 100 we can see that it's trading towards the top end of its recent range around about 6300 still well above the support line that I've drawn in Through this this blue this blue line here. Just got some numbers coming out shortly EU CPI Obviously, we've had the European Central Bank rate meeting this week and that's helped push the euro back above 114 as well as optimism about this weekend's EU summit and some form of agreement on a pendent pandemic pandemic easy for me to say pandemic recovery program the argument still remains over the Distribution of grants relative to loans 500 billion euros An awful lot of disagreement about conditionality around the issuance of these loans and to be quite honest It's a view that I have an awful lot of sympathy with If you're a country like the Netherlands or Austria Finland Denmark or Sweden It's not unreasonable to insist on a quick pro quo When it comes to the distribution of any grant money particularly given the fact that it's those taxpayers That are likely to have to dip their hands in their pockets To fund these grants in the form of higher EU budget contributions and let's not forget as I indicated last week Mark Ruta Prime Minister of the Netherlands has an election to worry about in March next year So he won't want to be accused of giving way on the conditionality focus When it comes to this particular recovery fund So the weekend is likely to see some form of fudge That's what the EU is best at Fudging, kicking the can down the road, whatever you want to call it But what we've seen is euro-dollar as a result Edge back to the highest levels of the recent range that we've seen thus far this year Let me just close and we just close this Fussy 100 chart and direct you to euro-dollar and you can see the price performance this year alone It's been a fairly broad range of between 114 and 106 but over the last few weeks or so The top has really been in up and up in and around the 114 area With the bottom of the range over the past week around about 111 60 111 70 and really I think you know unless we get Some indication that there's been some movement over the weekend and a solution hasn't been kicked into the long grass Then I think the likelihood is that this range trade Will continue to be the prevailing trade as we go forward. Let's not forget. We've got the march highs here around about 114 95 So that is something that we do need to be aware of anywhere above 114 So far this year has proved to be fairly toppy for euro-dollar So I think it's going to take something fairly substantial to move it out of that particular range Now as we look ahead to next week, we've got a whole host of Earnings numbers due out, but it's been we're fairly light. I think it's safe to say in terms of the macro data Looking ahead. We've got France, Germany Flash PMIs for july along with a uk Flash PMIs for july and given the fact that we've seen further Relaxation of lockdowns Then I would expect to see further improvement in those PMI numbers now Let's start with the uk and let's start by looking at the cable right and the fact that we are continuing to find The ceiling around about the 200 day moving average pretty tough nuts of crack as we Look ahead to this week's price action the the upcoming week's price action And my particular focus I think for this week And particularly with respect to the uk economy is not only on the flash PMI numbers But also on public sector borrowing Which is likely to explode even higher In june, but also retail sales because retail sales. I think it's going to be the important number when it comes When it comes to being published in june These numbers are out on the 24th of july the latest british retail consortium sales numbers Showed that the best that showed the best retail sales numbers in over two years With a like for like gain of around about 10.9% now. This was largely driven By a rising supermarket sales So obviously, I think that will continue to be a key driver as we go forward but With the fact that an awful lot of a lot more shops saw We saw an awful lot more shops reopen in june You would expect to also see a significant pickup in retail sales as well And I think that could well help underpin the rebound. We saw an 18.1% decline in retail sales in april We saw a solid 12% rebound in may We need to see more of the same Of the may rebound In june to really I think help reverse more of the 23.2 percent two month decline That we saw between the mark between the months of march and april more importantly the the flash PMIs for July We want to see a significant improvement in services activity because that has been particularly weak So we saw a june number of 47.1 for flash pmi for the uk Or sorry for total tmi for the pmi for the uk We need to see a flash number in excess of that and ideally well above 50 Manufacturing was slightly better at 50.1 for the uk But the uk numbers the uk pmi pmi numbers It's finding it very difficult to say PMI numbers really do need to reflect A rise in optimism amongst uk firms particularly those In the services sector and that's going to be very very hard. I think to Really Extrapolate across because of the number of job losses that we've seen announced over the course of the past two or three weeks That is likely to weigh on consumer confidence. It's likely to weigh on company confidence Going forward because even though The furlough is set to run until august We're already seeing signs that some companies aren't even waiting for the furlough to run out And a 1000 pound incentive to keep someone on the payroll until january Is neither here nor there when you're hemorrhaging money because your business is either closed down or suffering from lower footfall The costs of employing an individual person are much much greater than a 1000 pound incentive And I think we're starting to see the effects of that play out in some of The recent announcements Public sector borrowing on the 21st of july the last two months have seen the uk government borrow over 100 billion pounds Which is an exceptional post war intervention to support this economic shock So I think it's highly likely in june. We will see a further big jump in public sector borrowing Which would essentially probably bring it much closer to 150 billion pounds Over the quarter. I mean since since the last set of borrowing numbers We found that the uk government spent 15 billion pounds alone in respect of ppe um To deal with the crisis. I mean, that's an absolutely eye-watering number And more than it costs to run the home office than the foreign office for an entire year So it gives you an indication The total bill That this pandemic is likely to exert on the uk economy Unfortunately, uk guilt markets appear fairly relaxed about that two and five year yields Are very much in negative territory and tenure yields are below 0.2 percent So it costs next to nothing to borrow Long may that continue given the uk government's current rate of debt Trajectory, so those are the key uk numbers As I say, I mean the key resistance levels you can see that quite clearly on this chart here Around about 126 70 120 680 and then above that you've got the 200 day moving average And that's going to be a real tough nut to crack What I have noticed is that sterling weakness has been much more prevalent against the euro We can certainly see that here. Let's just rip this trend line out. We don't need it anymore. It's broken 50 day moving averages key at the moment We do appear By the by the looks of this to have found a little bit of a top But much will depend on whether or not we're able to take out this peak from tuesday the 14th of july Around about 91 15 91 20 Obviously the previous peak in june Was around about 91 80. So as long as we can maintain this trend very small trend Of lower peaks So that that peak is lower than that peak and take out the 50 day moving average in these lows here Then euro sterling Should continue to track lower after the highs that we saw Back in june But this could go either way We could go and break these highs here and head back towards the peaks in june or we could come lower at the moment We're in the middle of the range You know, it probably pays to Keep your powder dry with respect to this particular cross But I start on with the opinion That euro sterling is probably sell the rally until such times As we take out these peaks here EU CPI has just come out 0.3 June final number Not really too much of a surprise inflationary pressures continue to remain weak while demand Remains weak. So just get rid of that little alert there. So that's euro sterling. Keep an eye on those peaks up there And look to buy dips around the 50 day moving average of the 50 day moving average breaks Then we could we'll see a slow move lower We've also got french and german flash PMIs on the 24th of july as well French PMIs have been the leading Have sort of been leading the pack when it comes to a rebound in manufacturing and services in june Both coming in above 50 The comparative numbers for germany will weaker at 45.2 and 47.3 manufacturing and services Again, the trend here we want to see as a continued improvement in economic data So those are the key announcements coming up for the week in terms of the macro fund obviously apart from canada retail sales For may much more lagging indicator than the us numbers, which have seen a really solid rebound have a quick look at dollar cad For you as we can see here. There's solid support in and around the 134 area We've also got the 200 day moving average, but it does look to be A little bit of a sideways range at the moment with a consolidation perhaps The dollar cad to roll over and head back Towards this trend line support here on a break of the 200 day moving average keep an eye On this 50 day average here in the series of peaks through here For a weakening or a resumption rather of the trend that we've been in since march trend has very been very much towards the downside in the case of dollar cad That I would expect that to continue on a long-term basis until such times as we take out the 50 day Moving average so looking for a rebound in canada retail sales in line with the rebounds that we saw in the united states in terms Of earnings numbers. It's a fairly big week. We've got first half numbers from centric out on the 24th We got first quarter numbers from a vodafone On the 24th as well. So quite a busy day in terms of earnings Not been a particularly good year or to good two years for vodafone shareholders If you take this chart all the way out here It's been a very very slow move lower We have started to move slowly higher Over the course of the last few months But we're running into a bit of a resistance around about the 200 day moving average now When the company reported in may It's four year numbers the company announced that group group revenues rose by three percent To around about 45 billion euros operating profits 4.1 billion euros fairly solid, but unfortunately the company had to take a huge write down Due to its problems in india now has Acquired the cable assets from liberty global in germany and it's helped boost its revenue numbers It's also completed the deal to create europe's largest towers portfolio with islet's tim Which is yielded another 2.1 billion pounds Company's biggest problem in my opinion is It's continuing to face challenges from the likes of bt And telethonica in light of the latter's deal to buy the liberty global uk broadband and tv assets Now at a time of big consolidations and deals in the telecom sector Vodafone is still lagging behind. So I think these numbers need to show That the recent acquisitions they've embarked upon are betting in quite nicely And that they they're able to stop Hemorrhaging the losses Keep their costs under control and if they're able to do so then we could well see Um the support that we've seen come in in and around these series of lows through here Acts as fairly decent support going forward. So 122 120 on the downside Looking for a retest of the 200 day moving average on a decent set of earnings numbers of Vodafone okay, so Probably fairly mundane earnings report there I think the one that's really got me excited is this one here tesla because what we've seen over the last few months In terms of tesla's share price has been absolutely mind boggling When it comes to where we were in march when we were trading $350 And where we are now where we traded a shy Of 1800 dollars a share Which values tesla In terms of market capitalization There's more worth more Than toyota and volkswagen Collectively, I mean the electric car makers value is up over 200 percent year to date um And on a turnover of 24.6 billion euros Last year and it posted a loss last year of $862 million or 24.6 billion dollars. Sorry posting a loss of $862 million dollars though its last two quarters have actually been profitable. So that's a positive sign Momentum is starting to turn much more positive when it comes to tesla's profitability Unfortunately since then the company has had to deal with the pandemic the shutdowns in china and the us of its factories there It was hoping to hit Its delivery target of 500 000 cars in a year. It just failed to miss that target in 2009 So expectations were high Given the capacity to produce motor vehicles electric motor vehicles had gone up as a result of the new additional factory capacity However, the kovat 19 shutdowns. I think have really thrown a spanner in the works When it comes to that capability. So I think the big thing here while Elon musk has taken steps to cut costs by following staff cutting production and what have you Operations eventually restarted in may I think the guidance for 500 000 cars for 2020 may well need to be cut back And really I think it's just a question of how big Will this this particular loss for the second quarter be When it comes to publish its numbers and more importantly What will its guidance be if they do publish any as we look towards the year ahead? So I think very very difficult to predict Where this share price is likely to go to next because I thought it was top of here And it's more than doubled in price since then which suggests It's probably got more room to fall than it has to rise The problem is that you know unless you have very very deep pockets You could get squeezed out of your short position in a matter of days I mean we saw a move from 1200 to 1800 Dollars in the space of about two weeks and gives you an indication of how volatile Tesla's share price is but there's certainly scope for it to come back At least another three or four hundred dollars and still be very overvalued Um, we've also got twitter Twitter got egg on its face earlier this week um over the fact that um it was hacked Or it's Verified a lot of verified persons were hacked with a bitcoin scam and As a result So it's a share price take a little bit of a dive. It's since bounced back It's since bounced back a touch But it's due to publish its second quarter earnings on the 23rd of july and looking a little bit of resistance if up in and around this 36 dollars a share area. So that's going to be a very very big Resistance level going forward. I will be surprised if twitter is able to Beat expectations expecting to see a loss For around about 0.02 cents a share So modest loss probably break even if they're lucky And there are significant concerns about the governance of the company in the wake of obviously what happened with respect to the bitcoin scan and the hacking of the accounts of barack obama um Elon musk Warren buffet and a whole host of other You know key us political and business figures um last but not least We have microsoft fourth quarter earnings on the 22nd of july and another trillion dollar company here um There's four of them now microsoft apple amazon and alphabet And in the space of three years You know microsoft has gone from turning over over over around about 100 billion dollars to turning over nearly 150 billion dollars a year Been in a very decent uptrend pretty much since the march lows Just above 200 dollars a share um, it's had a very good um Pandemic crisis largely as a result of the fact of an awful lot of people working remotely a sharp rise in pc demand um A rise in remote working due to coronavirus um likely to have boosted its income again um microsoft teams usage has seen a big increase cloud-based revenues Now takes up the biggest percentage wise biggest chunk percentage wise of its overall quarterly revenues and that's not Before we look at xbox one sales game pass subscriptions as well so Expecting to see some decent profits here, but as with every other company. It's all about the guidance and You know will will microsoft be able to deliver in the new year because this is its fourth quarter Will microsoft be able to deliver the same sort of performance that it's delivered in the past 12 months over the next 12 months, but certainly decent support in and around This area of around about 195 um, and that's likely to be a key support level in the event of any disappointment with respect to those numbers. Let's have a quick look at gold before we sign off um managing to hold above 1790 1780 1790 I think if we get a further sell-off in equity markets, that's continuing to grind higher Got a little bit of a sideways consolidation at the moment fairly tight range as I say if we drop below 1780 dollars I'm going to call that around about 1780. We could get a deeper correction back to the 50 day moving average, but overall gold still remains very much a case of buying the dip Looking at the germany 30 haven't been able to break through 13 000 so for me Anywhere between this horizontal line across here in the 13 000 level is likely to be a key barrier For a significant move higher, but it does look as if that's the way we're going We're looking at these peaks here. It's proved to be a very stubborn resistance level But if we look at the lows The lows are getting progressively higher which suggests that momentum is building up for a push through these highs Towards 14 000 so we need to pay careful attention to the price interaction in and around the current levels that we're Trading out at the moment. It's a similar story for the s&p 500 We've matched the june peaks. We haven't as yet really been able to push significantly through them But again, we do have obviously the all-time highs back in february as the next key level in the event The market is able to get a significant foothold above 32 30 So in around 32 30 32 40 big resistance level again here We're getting higher lows which suggests momentum is starting to build for a push higher So keep a close eye on that as well brent crude very very briefly Not really much to see here Still a big resistance on the brent contract at around about 44 dollars a barrel Which is a 50 retracement of this move here Keep an eye on that, but it does appear to be starting to show signs of rolling over It's been knocking on the ceiling at 44 for quite some time If it doesn't break it soon Then the line of next resistance is likely to be for a move towards the downside so That really I think concludes This week's weekly market update All that's left for me to say is to wish you all a very Nice weekend and See you all same time same place Next week. 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