 Good morning and welcome to CMC Markets on Friday the 8th of November and this quick look at the week ahead beginning the 11th of November It's been a fairly solid week against the global equity markets against a backdrop of a vast improvement in investor sentiment, risk appetite and the prospects that we could well see a resolution and a thaw in US-China trade relations Now I would add a caveat here there is we have been here before certainly in the course of the past few months We've been there's been talk of 90% there on a deal only for talks to break down and both sides retreat to the sidelines And I think this is one of the major imponderables as we head towards year end There is the prospect that we could see the rolling back of tariffs do I think that's likely in the short term If I'm honest I've got to say I don't but what we could see is a delay to the December tariffs that are due to kick in on December the 15th And that would be a start and I think more than anything if we don't get a significant escalation from where we are now And we do get a suspension of the tariffs that are due to kick on the 15th of December I think that will be a start And that's helped push the S&P 500 and the Dow to new record highs this week We've pushed the DAX even higher to multi-month highs its highest levels since the summer of 2018 With the prospect that we could actually see more gains to come now why do I say that Well essentially it's all about price action what the price action is doing We talked about last week the break above 3,030 in the S&P 500 and the prospect that that could signal further gains And it's certainly done that we can see that from this chart here The break of these highs was an arbiter potential arbiter further gains we did come back and retest that We have since broken higher and continued to push higher So even though the market continues to look very overbought that doesn't necessarily mean that it can't go even higher It depends on how the daton that appears to be currently encouraging markets to push higher continues into the new week If we look at the Germany 30 or the DAX last week I talked about the prospect that we could well see further gains Because of the breakout of this consolidation pattern here we've tested and broken through the 61.8 projection higher With the prospect that really we could actually go to 13,680 over the course of the next few days and weeks Here again it's all about momentum, momentum is positive Until such times as we get a move back below 12,800 this level here which is where you've got this very long shadow Let me just zoom it in for you on this candle here then the likelihood is we'll probably continue to see further Very incremental gains I don't think we're going to go surging higher But certainly unless the risk environment deteriorates markedly the prospect of further equity market gains Certainly does appear to be leaning towards a slow grind higher We've certainly seen that reflected in bond markets, bond yields have shot higher As people have sold out of government bonds and rotated capital back into equity markets And we've seen it in gold prices as well let's look at gold because we've seen a significant breakdown here What we haven't as yet seen is a significant break below these previous lows from the beginning of the month And this is really I think the next key level when it comes to the gold price If we get a significant thrust below the lows that we saw at the beginning of the month around about 1460, 1459 Then the likelihood is we could well extend down towards this series of lows around about the 1410 area 1420 area where we also have the 200-day moving average It's also notable that the 50-day moving average is starting to roll over and go slightly negative So momentum is certainly fading on gold the dollar is getting stronger And the reason the dollar is getting stronger is because the prospect of further Fed easing has retreated It's likely that the Fed will be on pause for quite some time to come Unless obviously the data deteriorates markedly over the course of the next few days and weeks And more importantly when it comes to looking at the outlook for risk The prospect of auto tariffs on EU exports to the US has also retreated As talk that Wilbur Ross suggested that President Trump wasn't minded to start implementing tariffs on EU automotive vehicles quite And I think there's an element of politics going on here at the moment Trump is now approaching the final leg towards potential re-election in November next year And I think it's in his interests that he doesn't do anything to derail the resilience of the US economy And certainly extra tariffs on EU goods and services will definitely do that So slightly more positive, the outlook is much more positive as we head into year end The year end generally tends to be fairly positive last year notwithstanding for stock markets And certainly in terms of the price action that we've seen here ladies and gentlemen At the moment the trend is your friend and when you're looking at the trend and you're looking at the FTSE 100 The FTSE 100 is significantly under performed The DAX, the CAC 40, the S&P and the Dow But we do still have to make particular a note of this particular peak around about here, 74.30 If we're able to break through that 74.30 area on the FTSE 100 we could also extend higher here But at the moment we're playing the range on that with a slightly upward bias We can draw a trend line through these lows here We can draw that in there and that roughly comes in around the bout Where we have the confluence of the 50 and the 200 day moving average there So all told what are we looking forward to next week? Well we've got a host of UK data coming out next week We've got third quarter GDP, economic activity is unlikely to have picked up significantly Since the 0.2% contraction we saw in Q2 We've got a slightly more dovish Bank of England, we've had James Haskell, Michael Saunders vote for a rate cut What's possessed them to change their position on that is anybody's guess Because we've certainly seen an improvement on what we've seen in Q2 They have suggested that perhaps the unemployment rate could be on the cusp of ticking up And certainly I think when we look at the unemployment numbers on the 12th We could well see a slide up tick there but I don't think that suggests that we're on the turning point of a significant increase In the unemployment rate I'm more interested in the wages numbers which still are fairly resilient Around about just under 4% on a rolling three month basis And unemployment let's not forget even if it has ticked up a little it's still near 40 year lows So I think when you look at an inflation rate that is still below the general average of 2% The Bank of England target rate and an economy that has actually shown signs of picking up in Q3 I think those two Bank of England policy makers are being a little bit premature And let's face it when rates are as low as they are What does a 25 basis point rate cut do to change the overall risk outlook and boost consumer sentiment I would argue not that much given the fact that we're in the middle of a UK election campaign Which is likely to get nastier and nastier as we head up to polling day And it's certainly going to dominate the news cycle We've had the incredible spectacle this week of former Labour MPs publicly lambasting Labour leader Jeremy Corbyn Has been completely unsuitable to be UK Prime Minister So the big question there will be whether or not that gets any cut through in Labour's polling numbers Because if Labour's polling numbers start to decline from where they already are Then obviously that could be construed as sterling positive as it makes a Labour administration that much less likely But again with opinion polls you've still got to be very very careful about over interpreting them Looking at the pound we've seen a bit of a decline this week A large part of that has been down to a stronger dollar against the euro It's largely traded sideways, haven't really seen too much of a decline there But what we have seen on this chart here is we're seeing slowly weaker highs And if we break below the lows of around about 127.80 We could actually see a move back towards 126 over the course of the next few days and weeks And I think that's largely going to be as a result of a stronger dollar as opposed to a weaker pound We've also got German third quarter GDP coming out on the 14th of November Certainly the recent glide path for economic data in Germany has been disappointing Recent trade data shows that there was a bit of an improvement in September But I would still expect to see a contraction in the German economy in Q3 And that's certainly been reflected in the way the euros performed over the course of the past few days Couldn't get back through the 200 day moving average Starting to trend back lower and could well see a move back towards 110 And the previous lows over around about 108.80 over the course of the next few days and weeks Certainly projecting a slightly stronger dollar on the back of that We've also got China retail sales and industrial production on the 14th of September as well Certainly recent data from China appears to be showing early signs of a pickup in economic activity The recent trade data was slightly better than expected Though the Chinese economy certainly not ripping up any trees at the moment But the recent Kaishin manufacturing PMI numbers showed their best reading since March 2017 And it was also the third monthly expansion in succession So we may see an improvement now which could also help boost risk appetite In terms of the earnings picture, we've got third quarter earnings from ITV They've in the process of launching a brand new streaming service alongside the BBC called Britbox I really don't buy into this Britbox thing I think it's really going to get any cat through as we can see here from this particular chart If you look at these series of highs for ITV, we've got big, big resistance at 140 I certainly won't be buying Britbox Most of the content that you can get on this Britbox service is all really freely available On any sky subscription, virgin subscription or anything like that Or even to some extent in preview, so why pay for something twice? I just don't get it So I certainly think there's limited scope further gains in ITV shares We've also got the latest numbers from Burberry Where we could find out how much of effect the Burberry's sales numbers have been affected By the recent unrest in Hong Kong If I can actually get my charts to actually work And for some reason I can't get them to work So let me just open a completely separate chart And then hopefully we can see something which is slightly more informative And yet here we are Burberry shares rebounded from lows of around about 18, 1 pound 18, 1854 At the moment finding a little bit of resistance just below 2200 Certainly the luxury sector has been one of those sectors that's been hit by concerns about US-China trade As well as the unrest in Hong Kong There is some optimism that the new Chief Creative Officer, Ricardo Tisci's Easy for me to say, debut at London Fashion Week last year Could well translate into some improved sales numbers But certainly Burberry has been one of the underperformer when it comes to luxury It's underperformed, it's peers LVMH and the like in terms of share price gains this year So it has some serious catching up to do And certainly the price action that we've seen today would appear to suggest that maybe We could well see a revisit of those lows that we saw earlier this month Other numbers to keep an eye out for Cisco Systems, first quarter, NVIDIA, third quarter And if you like your beer, JD Weatherspoon, first quarter numbers on the 13th of November So that's it for this week, thank you very much for listening It's Michael Houston talking to you from CMC Markets