 Good morning, welcome to CMC Markets on Friday the 13th of August, and this quick look at the week ahead beginning the 16th of August with me, Michael Houston. Well, we get started. Let's have a quick recap of this week's events, and I think this week's events can be summed up quite succinctly in the context of US dollar higher, stocks higher, and the yields higher, which ordinarily you wouldn't expect to be the case. But I think for now markets appear to be working on the baseline assumption that a taper is coming, getting comfortable with the idea, and as long as the discussion doesn't move on to the more sensitive topic of rate rises, then the current trend of higher highs and higher lows looks set to continue we've already seen this week, record new record highs for the DAX, the stock 600, the FTSE 250, the DAO and the S&P 500 FTSE 100 is lagged a little bit, largely due to the larger concentration of big blue chip stocks that went ex-dividend this week, but nonetheless, it's encouraging that it has managed to sustain some moves above 7200, more importantly, making a very strong move to the upside, the only concern that I have is that it could take a while to get to my end of year target 7400, but I am encouraged by the fact that we have finally appeared to have broken above this series of peaks through here. We've also seen new record highs for the DAX, it's now above 16000 for the first time ever, and continues to ratchet higher, the break of above 15800 was a key, I think was a key indicator, a key measure for the move higher as can be seen from that chart, that chart there. So the catalyst for the move higher, well, I think we can sort of look at it in the context of US 10 year treasury yields, we've seen them move higher. Now, obviously, the people are starting to talk about the reflation trade, and yet the reflation trade earlier this year caused widespread concern about stock market valuations, and certainly, I think that continues to be the case. But if you look at this yield chart, you can see that we're still very much in the downtrend that we've been in over the course of the past few months, and even though we've seen a decent rebound in yields, we're still in the overall downtrend. So I would theorize, and it is only a theory, that even if we were to go a little bit higher in US treasury yields, as long as we're able to hold above these two peaks here at around about 142, and this trend line here, the downtrend for yields is likely to remain intact, and as long as it is, and the bond market is not pricing in higher inflation, then stock markets should continue to slowly creep higher. That's despite some of the inflation data that we've seen this week point in different directions. If you look at CPI, US CPI, that flat line will soften just a little bit in July relative to June, and yet PPI continues to push higher to 7.2%. Well above market expectations, a big jump of 0.8% from the previous month, and core prices were also fairly high as well, coming in at 6.2%. So there is, there's appeared to be a little bit of divergence between CPI, PPI, and PCE as well. That's the Fed's preferred measure of inflation, PCE, which also dropped back in June. So the inflationary pressures in the US economy are there. The big question is how much of it is transitory and how much is it, how much of it is persistent? Certain part of it will be, certainly shipping costs are showing no signs of coming down and there are strains in the supply chain. So as we look ahead towards this week's Fed minutes, I don't think we're really going to get anything to add to the overall debate that's currently being had by US policymakers. It's also important to understand that the Fed minutes coming out this week predate the payrolls numbers earlier this month, which came in at 900,000 as well as the upward revision to the June numbers as well. So I don't think they're going to tell us that much more than we already know. And obviously we've got Jackson Hole later this month. I think the likelihood is that the Fed will start tapering in September and October. The market is pricing that in. And as long as the debate doesn't move towards the potential for rate hikes, I think as long as we hold below this trend line resistance here and bond yields remain fairly muted, then the line of lease resistance is likely to be for slow incremental gains higher. As I say, the dollar has also moved higher. Euro dollars hit slowest levels or matched its lowest levels in several months. More importantly, it hasn't broken below 117. And until it does so, then the potential for further downside is likely to be limited. But even if we do, then we're looking at these twin loads through here and about 116. So 117 could prompt to move back above 117. 80. If we move back to 117. 80, then we could see a move back towards these levels here. Why is this level important? Well, because it happens to coincide with a series of loads through here. And when loads break, they generally become resistance on any retest back. So this area between here and here are likely to be key for the future direction of Euro dollar. Cable. Surprising weakness here, despite the fact that we've seen some fairly decent GDP numbers over the course of the past few days, 4.8 percent. We have we have a raft of UK data out this coming week. Unemployment, CPI, retail sales, none of these are likely to move the market that much. The Bank of England is already suggesting that inflation is going to move to 4 percent over the course of the rest of this year. We're currently at two and a half. So it wouldn't be a surprise to see headline CPI in July move up to 2.8 2.7, 2.8 percent, given the July reopening and the fact that I've noticed anecdotally that some retailers have started to increase their prices already. I've noticed my local latte has cost around about 20 or 30 more on my local prep than it did pre lockdown. So there's some latte inflation for you, if you like. Retail sales could see a little bit of an uptick as well on the back of the reopening in July. Obviously summer holidays, schools break up, you could see some retailers basically pass on price increases as a consequence of that as well. That might impact that might impact retail sales. We did see a bit of a rebound in June of 0.5 percent, despite the fact that people were expecting a decline. So that would suggest that July retail sales could go either way, either plus 0.2 or minus 0.2. Who knows? It's difficult to say, but certainly consumer demand is picking up and hopefully will continue to do so. Cable could drift back to 1.37, 70, 80. That's 50 percent retracement of this entire up move from the lows here to the highs here, finding a bit of support around about 1.38. But as long as we hold above 1.37, 70, then we could well come back and retest the highs here. You know, the weakness in sterling is all the more surprising, I think, given the fact that while we are starting to see a little bit of softness overall, it still remains. The UK economy still looks if it's outperforming the rest of Europe, which makes this little bit of a short squeeze in euro sterling slightly more surprising. But nonetheless, euro sterling is a habit of doing that. Just when you think it's about to break lower, it squeezes higher. It did it here. It looks like it's going to do it here. So as long as we hold below 10.15, which at the moment doesn't feel as if it will, we could well squeeze all the way back to 85.60. I'm still of the opinion that euro sterling still is likely to head towards these lows back here of 82.80. Of course, it's likely to be messy in terms of how it gets there. But overall, the direction of travel still looks broadly sterling positive, given the fact that the Bank of England is already starting to have a discussion about tapering its own bomb purchase program. But nonetheless, it's likely to be messy and we could slip back towards these levels down here. This key support on the CMC sterling index of around about 10.15. So I think that there are there about slightly to be a fairly, fairly key support level, that low there back on the 2nd of August. So the August lows or the sterling CMC sterling index. OK, brief pause. So we've got UK unemployment. Bank of England, again, is suggesting that's likely to head back towards around about 5.2 percent by the end of the year. At the moment, it's being disguised to a certain extent by furlough. So again, it's probably not a true reflection. But those numbers are due out on the 17th. CPI on the 18th of August and retail sales on the 20th of August. We've also got US retail sales as well. Markets of pricing in a 0.2 percent decline there. Again, higher prices there could actually crimp retail sales spending for the US economy. But let's not forget, but July retail sales also encompassed independence day celebrations, so you could see a pick up and spending there. And they've been very difficult to predict this year. So again, it's difficult to see how that's likely to be a significant driver of risk going forward, unless it's a big beat to the upside. But, you know, as I say, if we look at if we look at the US dollar more broadly, the line of least resistance appears to be for a slightly firmer dollar simply because the Federal Reserve and the Bank of England, to a lesser extent, are on a slightly different track in terms of monetary policy than the European Central Bank. Gold is flash-crashed earlier this week. It's slowly starting to claw back all of those losses. And it was a flash crash. Nothing more. Japan was off. It was thin liquidity and basically washed out a few stale longs. What was significant, though, was we didn't break below these series of loads through here. And I think if we can get back above 1760, 1770, then we could squeeze back towards 1800. Again, that was a course of the next few sessions. So those. Those are the key macro indicators. We also got Chinese retail sales. Again, I think the Japanese, the Chinese economy is struggling, the Japanese economy is struggling with rising infection rates, as is the South Korean economy. So Asia is the fly in the ointment when it comes to the global recovery story. And you can see that playing out in terms of the Nikkei. It's interesting that the Nikkei chart looks very similar to the US Treasury yield chart in that we've got lower lows, sorry, lower highs and twin lows in and around here. So I think, you know, putting that to one side, keep an eye on the Nikkei. But I don't think it's particularly instructive with respect to the overall risk story, apart from the fact that Asia appears to be diverging from Europe and the US. And I think it's no coincidence that's largely down to the fact that despite rising infection rates here in Europe and the US, the percentage of the population that's been double jabbed is much higher than has been single jabbed in Asia. And that could be a drag as we head into the winter. In terms of the earnings picture, there's three. There's three stocks I've got my eye on. Robin Hood Markets is one of them. It's had a rather mixed start to its trading journey. This is an early chart that we're looking at. As I say, it wasn't that long ago that at IPO'd. And it was a bit of a flop. Since then, things have livened up a bit. There's been some talk that some of the shareholders were looking to cash out of their shareholdings with up to 98 million shares. We could get some more information about that. That Robin Hood Markets Q2 earnings numbers, which are due on the 18th of August at its last set of numbers because the company posted a loss of one point four billion dollars. A large part of that was down to the fact that they had to raise three point four billion dollars of new debt, which it used in order to ensure the business met disposal thresholds required by the various clearinghouses that handle trading orders on its platform as a result of the GameStop volatility. Now, it would appear that some of these investors who helped out in this February fundraising want to take some profit and who can blame them. Robin Hood's monthly active users have more than doubled in the past 12 months. They could well rise to twenty two point five million towards the end of Q2 revenues have risen sharply. Q1 revenues of over five hundred million. The company is expected to see a profit of around about eight cents a share when it reports on Wednesday. We've also got UK House Builder, House Builder, easy for me to say, Persimmon. Share prices have come off the boil a bit in recent months. And I think that's largely down to the fact that the stamp duty holiday is slowly being phased out. Forward sales are still pretty good, though, around about one point eight two billion pounds, even though they're slightly lower from twenty twenty. Management appears optimistic about the long term strength of the housing market despite the slowdown. There's a slightly higher cost base because of covid. But nonetheless, they have re-started dividends. So the big question for me is this series of lows through here. Can it hold, given the fact that the highs are starting to get lower on every subsequent rebound? Again, those numbers are out on the eighteenth for Persimmon. And looking at Walmart, that's always a good indicator for the US consumer. We've also got Target as well this week, but I'm going to focus on Walmart on the seventeenth. Business costs, again, eaten into the top line. Extra staff hide to help clean stores, stack shelves, get online orders out the door. The company. Recruited in excess of an extra five hundred thousand people last year alone, so tougher comparatives from last year could also test shareholder confidence in light of the recent rise in the share price. But Walmart is also looking to diversify away from retail and into health care. It acquired MEMD earlier this year. Profits expected to come in around about a dollar fifty four cents. A share, which is slightly down from the dollar sixty nine cents a share that we saw in Q2. But it did upgrade its guidance in Q2. So it's coming, sorry, Q1. So it is going to be a bit of a high bar when it comes to not only its headline numbers, revenues, EPS, more importantly, what are they going to do with respect to their guidance? They upgrade their guidance in in Q1. Will they maintain that guidance as we look ahead towards Q3? OK, so that's pretty much it for this week. Once again, thank you very much for listening and for your time. I hope you all have a great weekend and speak to you all same time, same place next week. Thanks very much for listening.