 Hello and welcome to CMC markets on Friday the 15th of November and this quick look at the week ahead beginning the 18th of November It's been a fairly subdued week for European equity markets This week Seen a little bit of weakness in the early part of the week over concerns that the latest snag in US China trade talks Might delay any potential phase one deal Markets have started to rebound again on Comments from Larry Kudlow president Trump's chief economic advisor that the talks to use a golfing analogy We're down to the short strokes Well, if that's the case then most people in the markets will be hoping that both parties can put the ball in the cup because This constant prevarication that we've been hearing over the course of the past Few weeks about whether or not we're going to get a trade what a phase one deal Whether or not both sides can agree A common ground when it comes to agricultural purchases Whether or not China will drop its demand that tariff rollbacks are included in part of the phase one deal Then hopefully we can move the discussion on as it is US markets have continued to make new record highs Fairly positive upbeat comments from Fed chair J. Powell earlier this week Talking about the US consumer Remaining fairly resilient. Obviously we have US retail sales for October out later today So that should give us a good indication as to whether or not there's any weakness starting to creep in there But broadly this week's moves in equity markets have been probably More positive than negative But if anything US markets have continued to diverge away from broader European markets, which have more or less Trot water. So what are we looking at? Going forward over the course of the next few days. Well, there's a host of central bank Minutes due out over the course of the next week or so. We've got Fed minutes on the 20th of November We've got European central bank minutes on the 21st of November and we also have Germany in France flash PMIs For November before we get on to that. Let's look at some of the key levels on the key indices now Say we've seen some fairly decent gains over the course of the past few weeks predicated that we will see Some form of phase one deal agreed some time over the course of the next few weeks and hopefully before The end of the year We also need to remember that the prospect of new tariffs kicking on the 15th of December is still very much on the table after President Trump's comments earlier this week at the Economic Club of New York With respect to the DAX we can see that with respect to this daily candle chart that I've got up in front of me here We were getting a very much a sideways consolidation Above that 13,000 100 area that is that is identified by this horizontal Pinkish line here around about 13,000 one hundred fifty thirteen thousand one hundred and six feet So still on course for further gains while above these series of lows through here S&P 500 has continued to push on I still have an Interim medium term target on that of around about 3,100 and 15 so around about 10 points away from that as we speak and we're still well above the previous support area of the 30 30 area which we broke out above At the beginning the end of October the beginning of November So there's a significant breakout taking place not only in the S&P But also on the Dow as well as regards the FTSE that's under-performed quite significantly over the course Over the past few days, but it's still within the broad range that I identified In my commentary last week the upside of that range is around about 7,400 the bottom of the range Around about 7,100. I don't expect that range to change any time soon So looking ahead as I say we've got the Fed minutes and They are out on the 20th of November and there wasn't much in the way of a surprise When the Fed decided to cut interest rates for the third time this year at its last meeting Most in bed most investors had been expecting such a move despite the likelihood of some descent from Fed policy makers That's the George of the Kansas City Fed and the Boston feds Eric Rosengren For the last three meetings the hawkish descents have largely been dismissed But what we have noticed or what I've noticed is a significant change in tone from non voting members Certainly there appears to be an awful lot more discomfort about some of The more recent dovishness coming out of the Federal Reserve Atlanta Fed president Raphael Bostic was recently quoted as saying He would have also dissented to the most recent rate cut if he had had a vote this year And that would suggest that there's some Fed policy makers that enough has been done For now and we're not likely to get any more cuts this year. So I think the minutes On wednesday will be very instructive in terms of the level of debate that was had as to What the prospect for further cuts was likely to be We also have the latest european central bank minutes and mario dragui's last few meetings as ecb president Certainly have been more fractious than normal. Certainly. I think policy makers have been much more vocal about their disagreements with the ecb president over The recent restarting of the asset purchase program at his last meeting before being replaced by christine the guard The outgoing ecb president Reinforced the message that EU leaders needed to do more to complement ecb policy Well this week german gdp numbers came in at 0.1 percent now We were expecting a contraction of 0.1 percent if anything while those numbers were better than expected They make it much less likely That policy makers in the euro area Will do anything To implement some form of fiscal stimulus what that 0.1 percent Expansion does is it makes it much less likely that germany will be inclined to open the fiscal Taps and that I think in the short term will is likely to continue to be Euro negative Now we have had a little bit of a dip below 109 110 this year to around about 109 80 The line of lease resistance for euro dollar despite the fact this chart is very oversold I think we're still very much in cell the rally mode So if we get any moves back to around 110 and a half or 111 They're likely to be the extent of any rebound and there's a good chance we'll retest the lows that we saw in September um christine legard earlier this week took Governing council members out for a little bit of a freebie To try and hammer out any differences. Well, good luck with that because ultimately politics Generally tends to trump economics when it comes to the euro area So I think the scope for further ecbe's ecbe easing While limited is still likely to keep the pressure on the euro And that's when we come to the german and france flash PMIs for november We saw a disappointing end to q3 German manufacturing numbers still remain very very weak And worse than was seen at the height of the european debt crisis And there's rising concern that the weakness is starting to infect the service sector So I will be paying particular attention not just to the manufacturing numbers But the services numbers as well france has been a little bit of a bright spot In the past couple of months, this has been outperforming germany But the big question is whether that will be enough even of itself to prevent further weakness in the euro Also got the latest canadian cpi and retail sales numbers for october on the 20th And the 22nd of november The canadian dollar has come under pressure recently rebounding off that trend line from the lows that we saw Back in 2017 and what's important here is this potentially a little bit of a bullish reversal on the weekly candle Which might suggest that we could well see further weakness in the canadian dollar if those cpi or retail sales numbers Um continue to remain on the weak side running into a little bit of a resistance around about the 200 day moving average A little bit of an uptrend in place here Which might suggest we could slip back to around about 132 or 131 80 um in terms of company announcements, there's two Of a particular note that i'm paying particular attention to The first one in light of this week's story about bt group and the labor party looking to Nationalize the open reach division Is royal mail because royal mail has been one of those targets identified by the labor party as a possible candidate for nationalization If they are able to form a majority government And i've been a long time critic of this particular stock when at ipo'd all those years ago at 330p I always felt that it was slightly overvalued. It didn't really price in the longer term problems That royal mail was likely to face In the end, we went all the way up to 600p and we are now back below that ipo price and have been back below that ipo price For quite some time the chickens appear to be coming home to roost I think investors have finally woken up to the reality of management trying to reform a business That has a highly unionized workforce You know the royal mail has to compete with the likes of ups fedex tnt And all of those other small Uh and all those other much more nimble private companies It also has the difficulties of having to support a letters division that is in decline And market market valuations of the business have always been on the optimistic side I mean obviously management haven't helped I've been very toned deaf with their attempts to make staff realize that reform isn't always a bad thing But unfortunately in May royal mail cut its dividend in order to free up 1.8 billion pounds over five years As management try and deal with the problems of higher costs on its profit margins in terms of revenues revenues have been growing Very very well The problem has always been costs And with the prospect that The may well have to deal with a pre christmas strike potentially around the corner all is not well at royal mail So this coming week on the 21st of november We'll get to see whether or not the company is on course to meet its profit target of 300 to 340 million pounds If not, we could well see further downgrades on royal mail Going to finish up with easy jet had a fairly decent run Of late obviously benefited from the demise of thomas cook And the pressure on margins that will have eased as a result of that In october easy jet said that they expected headline profits to come in between 420 million to 430 million pounds with passenger numbers increasing by 8.6 To 96 million and that's driven by an increase in capacity to 105 million seats now I think with respect to this obviously in october that that um That summary did prompt a little bit of a share price sell-off But ultimately ever since The middle of the summer easy jet share price has been in a nice little uptrend So the big question is can they continue that uptrend? Certainly, I think the previous highs for this year are going to be a bit of a barrier around about the 14 pounds a share level and I think there are also concerns about For me, I think the plans Of ceo yohan lungran now he used to work at tui travel and There has been some talk that easy jet intends to go down the package holiday route Well given the demise of thomas cook, I would suggest that's maybe some way you don't really want to go They've already paid 36 million pounds for thomas cooks takeoff and landing slots at gatwick and bristol And I think the big question for me is whether or not Yohan lungran thinks that it is a good idea to diversify out into that area my my view is That um stick with what you're good at and steer clear of what doesn't make an awful lot of money So thomas cook is essentially to remind you not to overstretch yourself and maybe easy jet needs to remember that Anyway, that's it for this week and today. Thanks very much for listening. It's michael hugheson talking to you from cmc markers