 Good morning. Welcome to CMC Markets on Friday the 6th of November at the end of what has been a pretty lively week all around. Time to look at the week ahead beginning the 9th of November before we do that. We have the small matter of a US payrolls report to overcome. Obviously at the time of recording this particular video. I don't have side of those numbers so I'll give a little bit of a preview of them. But overall I really don't expect them to change the overall direction of the markets in terms of the price action that we've seen this week. Ultimately it's been a very weak week for the dollar and a very very strong week for global markets. And it's really followed the playbook pretty much that we saw particularly on equity markets in 2016. Because in 2016 we saw weakness into the elections and then we saw rebound post elections. And I think the fact that we've seen such good gains this week rather gives the lie I think to the concerns that an awful lot of people had about what an uncertain outcome the worst possible outcome we heard an awful lot about it in a lead up to the election that the last thing that markets wanted was an outcome that could be contested and that's precisely where we are as I'm recording this video. Both Joe Biden and President Trump remain shy of that 270 majority in the electoral college Joe Biden is around about 17 seat short at 253 with Arizona, Georgia, Pennsylvania and Nevada in the balance. And President Trump is on 214. So, I think in terms of challenging the narrative when it comes to what we've seen this week we're seeing a little bit of weakness in Friday trading not really a surprise when you consider. We're coming up to the weekend it's been a long weekend awful lot of us are probably feeling a little bit tired. The fact is that the outcome is still actually uncertain. President Trump once again reiterated his determination to challenge the outcome of the vote in the various states that they currently still seeing votes counted. He's doubled down on the claims that the election was being stolen, which is a fairly alarming claim to make. And it's a disturbing escalation and potentially. It's against him which I think that it will in the event that he does lose could have significant consequences for the overall political discourse in America over the course of the next four years. Now the most probable outcome still looks like a Democrat win with Joe Biden winning the presidency. There are still nagging doubts though between now and the fifth of January as to whether or not. The final outcome when the final votes accounted and that could come as late as the 12th of November next week particularly in Nevada. When when all is said and done. Still have until the 20th of January until the new US president is sworn in. Yet here we are with equity markets up strongly the NASDAQ up over 8% since the beginning of the week. With all of the concerns that we had leading up to the election and the contested outcome appear to have gone by the wayside now many reasons I think have been in have been espoused how resilient stock markets have been this week despite the current uncertainty. Now obviously central banks, it's one of my favorites that one central banks are more likely to step in with a greater monetary policy activism. Well, that's no surprise. That's just lazy thinking that we're going to be doing that anyway so irrespective of the outcome central banks are always going to be fairly loose in terms of monetary policy. So I don't really think that is a significant surprise to anybody. I think there are a couple of other theories that do make more sense however. First one is a lack of a blue wave, because the Senate is still up for grabs. And the lack of a blue wave is likely to mean steps by the Democrats to rein in the tech giants with more business regulation and higher taxes on the private sector in general is now much less likely. So that's, there's less of a business overhang there. That reasoning, you know, has some merit. The Democrats policy manifesto certainly had a higher Texans tax and spending component to it. So the fact that they could well miss out on gaining control of the Senate has to be construed as a as a plus the US business. The other theory is in the absence of an imminent fiscal plan. Due to the political deadlock across Washington DC and Capitol Hill is an easy win for a newly appointed President Biden. And this is again working on the assumption that he wins and will be for him to merely remove or lower the various tariffs that President Trump has imposed on China and the European Union. That could that could institute constitute a much less confrontational approach with respect to the EU in China and act as a significant modest fiscal boost to the US economy. So that I think there's those those two particular last two arguments certainly have some merit and could arguably arguably be used as a reasoning as to why we've seen a significant rebound and equity markets this week. That being said, we're still pretty much in the range that we've been in for several months now, particularly when we look at the FTSE 100 here we can see that it's bounced off the lower line of this channel that I've drawn in and now we're starting to run into a little bit of resistance near the upper line around about 5,935,940 so anywhere near 6000 likely to be a little bit toppy also coincides with coincides with the October highs. If we look consequently at the S&P 500. It's a similar sort of story and actually I've drawn a nice little line through the highs here, which we almost breached in the move up through Thursday, but since then we've come back off those highs there so there is a significant barrier up in and around recent range highs that we saw at the beginning of October. So I'll be paying particular attention to that up a line there to ascertain whether or not this market really has any legs for further gains going forward and I think in the absence of a significant fiscal response I'm going to think is I would argue that it's going to be very very difficult to make the case for a significant significant surge to new highs unless we get some sort of framework, if you like, for a potential fiscal response from a new US administration. If we look at the NASDAQ. It's a similar sort of story. Got the previous record highs up there. Let me just blow that out for you. Just turn that off and get rid of the clutter on the screen. Again, we've got these previous peaks 13th of October. That is likely to be a bit of a barrier going forward. But once again, pretty much since the beginning of September, we've been trading in a sideways range. And I'll likely to continue to do so over the course of the next few weeks and months. The NASDAQ has bounced back the DAX rather the DAX has bounced back very very strongly after falling through the 200 day moving average, but rebounded off this 11,360 area, which highlighted which I highlighted in October as a fairly key support area. If we look at the forum update for this on the 28th of October, I said DAX breaks to the downside below 200 day moving average with potential for a retest of the 11,360 area, which was the April peaks, which is right through here. So once again, resistance suddenly becomes support and also happened to coincide with the previous Fibonacci level of this entire up move here. So we retraced 38.2 from this entire up move from there to there. So again, pretty much in a range for the German DAX. Keep an eye on those chart forums because they are quite useful. If I've got any particular thoughts on a particular asset, I'll jot them down in there with respect to potential future direction for any and where the key levels are for a particular asset. Okay, so I mean that's pretty much where we are in terms of the markets seen a pretty decent rebound over the course of the past few days. I think the really big question that needs to be answered at this point in time is whether or not these gains are sustainable or whether or not we'll continue to chop within the ranges that we've been in over the course of the past few days. It's also been a very, very poor week for the US dollar. That's pretty much borne out by this the CMC markets dollar index. We broke in below the previous lows here, even though we haven't done so on the US dollar index. And the reason that we broke into the downside on the CMC dollar index is because we have a much higher Chinese one component within it. And the Chinese one has outperformed quite significantly. But what's notable about this particular move on the dollar index here is look at this candle here. And I've highlighted this candle for the simple reason is that on the Wednesday, the day of the vote, we saw a significant move higher in the US dollar. But we were not, we were not able to hang on to any of those gains and actually finish the day lower. That's very bearish that suggests to me that there is a potential for an awful lot more downside in the US dollar. Now how that comes about, come about against the euro could come about against the Chinese currency, the Remnambi or the one, whatever you want to call it. Or the pound, for that matter, both very key components of the CMC dollar index. If we look at the Remnambi or the offshore Remnambi, we can see that on this chart here that I've drawn. And that's broken out quite significantly from what looks like a double top. Now if we take this as a double top on the Remnambi and project it down, that brings us back to 648, 645. So taking this move here as a double top projecting it from the breakdown level gives us a move to 649, 648. So in terms of Remnambi strength or one strength, there's quite a bit further to go. So that suggests that we could well see further US dollar weakness over the course of the next few days and weeks. This is a weekly chart that I'm showing you here. I can quickly change it to a daily chart. But nonetheless what it shows us is that there's potential for an awful lot more dollar weakness against the Chinese currency than has been the case previously because of that key breakout point. And if we look at it over a longer time frame, we can see how much the dollar has gained against the one over the course of the Trump presidency. If we go back to 2016 here, we're starting to come back to the levels that we were at the beginning of when Trump took over the White House. So pretty much back to levels where we were in the beginning. It's been a quite a choppy ride. But overall, judging by this chart here, there is potential for further dollar weakness against the Chinese currency going forward. So I'll be keeping a close eye on that, certainly when it comes to the future direction of the US dollar. So now let's look forward to next week and next week is likely to be a little bit quieter. We've had a Fed decision this week, we've had a Bank of England meeting this week. We've had a presidential election this week. And the likelihood is that we may get a clearer idea of where we are next week in terms of the final Electoral College outcome. The big question then will be whether or not the Republicans can hang on to the Senate and that still remains fairly unclear. So at the moment, the president, the position for president is up for grabs, but it looks increasingly like we're going to get President Biden. The bigger question for me over and above the president is the Senate. At the moment it's 4848. So the big question going forward is who gets those remaining two seats. If they go the Republicans way, then we could well see a Republican blocking a blocking strategy within the regulatory. Outlook for BC and capital health. So that is still unknown at the moment. The moment it doesn't look like we could get a blue wave. But at the moment, the outcome for the Senate still remains pretty murky. But at the moment the markets working on the basis working on the premise that a gridlocked government is probably a fairly decent outcome, because it means that politicians can't tinker and do any damage. OK, so let's look forward to the weekend. We've got UK data. We've got Chinese data over the weekend, China trade either Saturday or Sunday. Now, the most recent China trade data for September showed a big improvement. And I would expect that to continue. Finally, the Chinese economy appears to be getting up off the canvas. Obviously, we are now here in Europe in the UK heading into a four week lockdown. Not only here in the UK and England, but also in Germany and France. So economic activity going forward is likely to remain very, very difficult to sustain. That being said, we've seen the Bank of England this week announced another hundred and fifty billion pounds of quantitative easing. And the Chancellor of the Exchequer Issue Soonak has extended the furlough scheme into March next year. So that does offer a little bit of a cushion for the UK economy and more importantly to the UK consumer. And we're going to see how strongly the UK economy bounced back in Q3 in the coming week with the latest first iteration of third quarter GDP. Now, you can argue that this is a rear view mirror stuff and it doesn't really matter. I would argue that it does. OK, it's in the rear view mirror. And ultimately we are in the middle of another lockdown, but it certainly gives an indication as to whether or not there is any momentum behind the rebound that we saw in Q3. Now, we're also getting unemployment data and wages data as well for the UK economy. So it's a fairly, it's a fairly important week for UK data as well as industrial production, manufacturing production and trade data. But the key data, I think, for me is going to be the unemployment numbers away from the GDP numbers. So I'll start with the unemployment numbers, which are out on the 10th. Now, in the most recent set of numbers, we started to see the beginnings of a little bit of a rebound or a little bit of a push higher in the unemployment rate. In the three months to September, this saw a sharp jump from 4.1% to 4.5%. As more employers decided to squeeze down on costs as it became apparent that there would be no V shaped recovery. Now, obviously furloughs helped to disguise some of the harsher damage, I think, in terms of the rise in unemployment and the extension this week until March while welcome is unlikely to have come in time. For a lot of people in vulnerable jobs, given that a lot of a lot of employees had already started to cut back on their headcount. And I think this week's latest jobless numbers are expected to reflect that further with another increase. So I think the monthly jobless claims number is likely to see an increase from what we saw in the last month in September to 7.6 and potentially we could well see a further increase on that number. More importantly, the ILO unemployment rate is expected to push up from 4.5% to 4.8%. So we are slowly seeing the ILO number start to play catch up with the distinct possibility that the three month rate could actually hit 6% or 7% by the end of this year. The ILO unemployment rate that we're seeing in the coming week is up for the three months until September. So we've also already seen a whole host of job losses announced in October, which won't be included in that number. So the real rate is likely to be probably near the jobless claims rate around about 7.6 or even heading towards 8%. And obviously that's not particularly welcome, but certainly I think the extension of the furlough will help to cushion some of the economic shock that could be coming in the UK economy's way as we head into the end of the year. And it's also interesting actually that the furlough extension also covers the end of the Brexit transition period. So there may be a little bit of a longer term thinking going on in the UK government's mind when they decided to make that furlough extension. Maybe they also had the lack of a potential Brexit deal as we head into year end. And they're using the furlough extension to try and cushion some of the potential economic shock there. Doesn't appear to be affecting the pound however. Let's look at the CMC sterling index still looks very much a case of by the dip. So certainly there is an expectation that there will be some form of deal, an EU UK deal, and we're still getting an awful lot of mixed messages. And I think we're likely to continue to do so. The fact of the matter is neither side, given the fact that most of Europe is in a one month lockdown and the UK is also in a one month lockdown. Neither side can afford to walk away at the end of this year without some form of skinny deal. It would be irresponsible in the extreme for both sides not to arrive at some form of arrangement. And that is still my base case that they will fudge something to get to get something over the line at the moment the sticking points still remain fisheries. They still remain the level playing field state aid that sort of thing. We look at cable cable again similar to the sterling rate index very much by the dips on cable. It's a brave trade. I lose count of the number of people who tell me sterling should be large sterling should be at 120 should be at 110. I don't care where it should be. What I care about is what the price action is telling me price action is telling me by the dips by the dips. By the dips until the price action tells you not to. So you basically trade what you see. And what do I see here? I see a succession of higher loads. Now potentially we need to see a break above 132 to take this move that we've been seeing over the course of the past few weeks higher. Good support or 125 and a half 128 and a half even a good support around about 128 and a half. You've got a whole series of loads through here. If we can sustain a move through 132 then we could we'll see a move through to 135. Now what could drive that? It might not be sterling strength. It could be dollar weakness. What we're seeing in terms of euro sterling I think is fairly instructive. If we look at this trend line here. I'm still very much of the opinion that you trade what you see. So at the moment sell rallies on euro sterling. Nice down move here until such times as we break above the 50 and the 100 day moving averages in this trend line here. Then there is significant mileage in basically adopting a sell the rally strategy. There is also resistance through 91. You can see it born out through this peak here and this peak here where I'm drawing where I'm drawing the mouse here. So at the moment euro sterling very much sell the rally until such times as we break above 91. And then we could we'll see a retest of the highs of around 92 20 and the peaks that we saw back in September very much trade what you see. Okay, so what else have we got coming up we've got UK GDP. That's expected to rebound 15.7% so it's not going to reverse all of the damage done in Q2 we saw a contraction of 19.8% in Q2. So to reverse all of that damage you'd need to see at the very least 21 or 22% rebound to undo all of that. So we've seen a modest rebound in Q3. That's unlikely to be replicated in Q4 in Q4 it's going to be damaged limitation. As a result of the lockdown I was seeing in November we've also got German ZEW. Now the German ZEW survey that came out in the October reading with a sharp fall to 56.1. So from from hitting a 20 year peak of 77.4 in September the ZEW fell to a five month low of 56.1. And in November because German economy is pretty much shut down in November we're likely to see another sharp fall with some estimates in the region of around about 40. I wouldn't be surprised it wouldn't surprise me at all to see a much sharper fall than that but that's on the 10th of November German ZEW survey for November investor expectations. They're likely to be bearish even though the DAX has rebounded. EUR a dollar once again heading back towards these peaks here. We look as if we could edge a little bit higher over the course of the next few days on the premise basically that the dollar is likely to remain weak for quite some time to come. And that's borne out by my CMC dollar index chart that does appear to have broken to the downside. Further dollar weakness is likely to prompt a little bit of nervousness amongst ECB policymakers about a stronger euro. And that would presuppose it will probably get further jaw boning from ECB officials about about about the perils of a stronger euro and their ability to hit their inflation target, which is currently at 2% and which they're currently missing by a country mile. So if we get a move back towards 1.19.1.20 expected an awful lot more chitchat from European policymakers about talking the euro lower. One thing we have also seen this week is a big jump higher in the gold price. And that's likely to continue to be the case as we head into Q4 we broken towards the upside. That suggests we're probably going to head back towards $2,000 an ounce. We can see that on these two daily candles here we've broken high we broken above the 50 day moving average. We're currently trading around the highs we've tried to go lower on this daily candle. We haven't been able to sustain that move lower currently back where we opened. Obviously the payrolls numbers later later today could well have a big part to play and whether or not we continue to push higher. But overall given the fact that we've broken above this, this series of peaks through here around about 1935 1940, then it's likely that as long as we stay above the 50 day moving average, we could well head back towards the $2,000 an ounce area that we saw all the way back in August. So certainly dollar weakness does appear to be the predominant theme here in the aftermath of the presidential election. Looking ahead, then a while close that let's just open that up again this week, pull that back looking ahead. There are also a number of key earnings announcements that I'm going to be paying particular attention to this week. First of which is house builders person and decided to restore part of the dividend in its numbers earlier this month. The record highs back in February saw the share price half in the lead up to the March lockdown. We have since rebounded and pull back some of that we've seen a number of house builders report over the course of the past couple of weeks looking to restore their dividends. They've got strong order books and they look fairly resilient. More importantly, the construction sector has remained open in this lockdown. So the likelihood is that we could well see further gains for house builders going forward, which you've also got a factor in the prospect that an awful lot of the good news could well already be priced in. What else have we got? We've also got JD Witherspoon's latest numbers as well. And JD Witherspoon nice little pincer movement going on here with respect to this particular chart. Pubs are closed this month apart from takeaways. Obviously been one of the biggest casualties of the pandemic as the hospitality sector. In October, the pub chain posted four year pretext losses of 34.1 million pounds. Now eat out to help out. This is his Q1 numbers. Eat out to help out is likely to have mitigated some of the damage that we've seen in Q1. But we're already seeing job losses being announced even here in the case of JD Witherspoon only last month. Witherspoon announced they'll be cutting 450 jobs from its locations in the various airports around the country. So I think last week's start of new restrictions for this month suggests they won't be the last. So be prepared for more pain here. But keep an eye on those peaks in and around October here. And obviously the lows down here or the line through the lows down here or JD Witherspoon. We've also got ITV. ITVs had a bit of a rough ride of it recently but does appear to have enjoyed a decent rebound from the lows that we saw all the way back in March. Really does need to consolidate this move higher above those peaks that we saw in September. When the company reported its first half numbers in August, total advertising revenue for the period saw a decline of 21% to 671 million. Broadcast revenue also saw a decline of 17% as well with ITV studios. Normally an outperformer seeing a 17% decline to 630 million due to having to pause its production capabilities due to various lockdown restrictions. Now, I think production has restarted but obviously within the confines of the restrictions of the day. We could well see a little bit of a pickup in advertising revenue. We've seen the return of sport to our screens, which will have helped boost ITVs advertising revenues in this quarter. And we'll also be paying particular attention to Britbox revenues there. Hopefully you'll see an improvement there. But I still maintain it's likely to be an uphill struggle for ITV and less advertising revenue shows evidence of a sustained pickup. So you can draw a nice little line through these lows here to try and get an indication of where you could look to pick up any shares on a dip back down towards the downside and certainly in terms of that particular stock. One other thing is Disney. We've also got Disney's fourth quarter numbers. Now, I think Disney is going to be very interesting in terms of Disney Plus. When if we cast your mind back to just over a year ago, when Disney was gearing up for the launch of Disney Plus at the end of last year, they must have had high hopes. I mean, who wouldn't, you know, with the Star Wars franchise and that library of Disney content that you have going back, you know, going back decades. So let's have a quick look at Disney. It's already there. Just pop that in there. Hold that back. Drop that in there. So we're looking at Disney shares recovered. They've recovered a smidgen. But I think the big question is uncutting on it's undercutting on price is one thing I think, you know, in terms of trying to attract subscriptions and it certainly is cheaper. It is the cheaper of Netflix and Amazon Prime and 60 and a half subscriptions would suggest when the company reported in August would suggest that it's still some way to go to compete with Netflix in terms of content depth. And I think that's where it's likely to fall short because while it is some really good content, it doesn't have the depth of content that say Netflix has got and Netflix has just increased its prices. Now, furthermore, I think the decision to charge up to $30 to view its Mulan film may well have been a bit of an own goal as well because $30 is an awful lot unless you're a family to watch a single film you wouldn't even pay that much if you went to the cinema. So it's ability to compete has also taken a huge blow because of the closure of its theme parks, its theme parks or a huge revenue earner. And the fact that they've had to close pretty much most of them for the last six to nine months has blown a massive great big hole in its finance. So companies already announced a loss of 28,000 jobs beginning of October losses are expected to come in around about 72 cents a share. Looking at this particular stock here, have a look at the trend line through the highs here. Draw a line through that. So running into a bit of resistance around about 130, decent support around about 115. If Disney disappoint on the subscriptions front, we could well see a little bit of a tick back down over the course of the next few days. So keep an eye out for beyond meets Q3 numbers Vroom online sale of cars Q3 on the 11th of November Cisco Cisco systems on the 12th of November and Palantir technologies another IPO on the 12th of November. So there is certainly a rich vein of earnings announcements out there. I think the big question I think as we look ahead to the upcoming week is whether or not we get any more clarity on the US presidential election. And if so that should give us a much clearer idea of what the US political landscape is likely to look like over the course of the next four years but I think one thing is certain. It's likely to be a choppy ride it's likely to be a volatile ride. So until next week, I'd like to wish you all a very nice weekend. Thank you very much for listening. It's Michael Houston talking to you from CMC Markets.