 Okay, very good morning guys. It's Wednesday 22nd of April. Hope you are doing well before I begin just wanted to Address a few questions that I had yesterday Just given the kind of historic movement. We've been seeing in WTI crude futures I've had lots of questions about you know timing wise and what type of equities From an energy sector point of view could be good to look at and so on and so forth So what I did yesterday was this is our YouTube channel So if you are new to this channel and these briefings, please do subscribe to the channel for daily updates But one thing I did yesterday as I spoke to Eddie the chap you can see there And we've just released this new video last night Entitled US oil price crashed the winners and losers and he really gets into some detail And explains because he is much more focused on say a micro level than me on a macro level And he's kind of combined the two and identified a couple of potential Companies to just keep an eye on both from those who could be at risk from a further Potential tidal wave of bankruptcy to those who could be potential winners in this type of situation So yeah, check that out. It's on the YouTube channel Just go down to the second kind of playlist and you'll be able to see it there Otherwise the other thing that we've had Well a few things we also had our first fully online Interactive group that started on Monday and what a time to start learning about financial markets So for those interested to check out our website amplified trading.com We have basically an on-demand e-learning portal, which you can kind of pick up and go any time But the guys that started on Monday are doing an intensive online Training because obviously everyone's in lockdown at the moment So you can get more information on the website for those for those interested And then yeah, excuse the the shirt I wouldn't normally sit here wearing a freshly ironed shirt sat in Home, but I'm going to be with some of the grads at City Group and again We're going to be doing that fully virtually So joining their team and delivering a little bit of an update so I'm quite looking forward to that as well Given everything that's been going on But let's talk markets Let's get straight into things. This was the the clothes that we had on Wall Street last night And again and quite a negative day once again and most Asian equities overnight following suit on relatively low Volumes following the the general risk of finished to proceedings in North America Underperformance you can see a little bit It's only slight but the tech sector so some of the big big guns Microsoft down over for Google similar similar amount Amazon and Apple down about 3% margin remember yesterday there was That news in regard to the Trump Trump immigration ban And just generally the dependence of that sector has on that particular demographic to support its workforce And you know if you remember back to when 2016 when Trump actually won the election. There was some quite immediate Kind of sector movement on the back of that and tech was one that got hit but quickly recovered We did see a little bit of that kind of knee jerk reaction yesterday other things that that have come out Our White House and congressional leaders have basically passed 484 billion dollars of an interim economic stimulus package Again, this is more kind of aimed at small businesses really striking at the heart of what potentially could be The main issue from an employment situation And obviously looking to assist hospitals going through this challenging time that they are at the moment Trump also His administration said to be working on plans to make money available to the oil industry to prevent any further potential layoffs And you've got to think that those laughs are forthcoming just particularly now Almost accelerated by what we've seen in the last 24 48 hours But was already an issue given the massive demand shock we've had from the the lockdowns of course Being stringent and that kind of demand shock Or demand destruction that we're seeing at the moment is going to put some companies unfortunately out of business and lead to job layoffs Overnight as well if you're looking in the FX markets the Aussie had a little bit of a blip Overnight and it's starting to rise again Just as European traders have started come to their desks better than expected retail sales data Just triggering a bit of unwind of some short positioning and just helping us squeeze up to the R1 in Aussie futures this morning But overall quick quick glance at the charts not going to spend too much time on this One thing I did want to quickly mention because we were talking about this with some of those New traders that are with us just for the week worth of training and it was looking at this The way of which the S&P has been performing. So obviously we've been honest Pretty decent bounce in the US equity market. I think if we just put it back here We got up to that area that you can see from the October low The bounce and sharp bounce that we had at the end of February Before then we came kind of crashing down and a continuation of that fall from all-time highs now Where we're at at the moment You can see that 50 day moving average is the blue line, but then more so that area of Previous support now kind of turn resistance. It's really in fact failed to really get substantially above that point We've had quite a decent pullback back obviously through 2,800 and that 50% fib of that entire all-time highs March low that we that we saw now What we'll be looking at more short term then as the markets been coming back down is just generally its behavior And here you've had this kind of movement where you can see I put some ellipses here Really two points and that's this kind of price level around the 2800 handle and then a bit lower down around 2750 And just the way the market has been behaving in terms of support support then I've put a rectangle here the breach Comes back up to the tick of the same around point. That's been a reference for The previous week and a half or so before then you get more of a directional move as we come back down and then timings wise I Mean a little bit different in terms of the actual execution. This being an overnight Asian session This being more so around the midst of the US session But it's the technical setup and the way the market has responded Push and then we come back up and then we eventually grind it down lower We test we and you can see the the kind of The rationale behind the price reacting to around these levels at 2750 Then we push back down get close back to the lows of the 13th before then coming back up to that point To then push back down again, and then we're right back to that kind of level at the moment around pivot So there has been some opportunities definitely and you know rather than try to catch a bit of a falling knife with with tackling oil Which is insanely volatile at the moment, you know, I think it's more astute sometimes or prudent to be looking for other potential plays that could be less Associated risk of just seeing these big massive moves in in price The other thing has been gold and you know It's more of a word of warning that I was issuing yesterday than it is of anything else And that was we had this this kind of immediate blip kind of late European morning Where the price just dropped about 20 bucks pretty quickly With no rhyme or reason really I mean you could say perhaps a break of the Asian lows and so on but it was it was pretty rapid and Actually, I think one thing to be aware of here is you know remember when equity markets were getting hit during the period of March And that was leading to these massive shakeouts in the gold market where you know the kind of Necessity to free up some available cash to meet margin calls was the real thing, you know Don't forget there is going to be some definite casualties from this oil price route that we've had and so For sure you could be susceptible in gold although it would be counter-insuitive because you think generally risk off should support the price I think you're just going to be mindful of that type of price move from yesterday It was quite classic of what we saw in March and the more that oil price becomes a complication The more that I think a couple of funds might run into a few issues And therefore you could see some of that similar type price moving in gold So I guess from a practical point of view just going to be a little bit more Savvy about the duration if you're trading intraday of holding those open positions of risk if you're looking at the gold market Perhaps we want to be a little bit more short a time frame to not have over exposure To kind of headline risk in in that sense But look, let's get let's get stuck into a couple of headlines. There's a few things I want to go over for sure This is what the headlines in Bloomberg are saying so Brent futures for June delivery Lost 15% To trade near $16 a barrel while WTI fell 5%. This is looking at the overnight Movements. This is a course comes after the June contract WTI lost about half its value On Tuesday and again, we talked about this pretty much at length So I'm going to go into too much detail again, but we were talking about the idea of Why June was going to be no different really to what we've had in the last couple of days for the May contract And the only thing that happened is everyone came to that same conclusion We did yesterday and they were kind of front running it liquidating those due positions to try and just Offset what is going to happen in a few weeks time? So Again, the global demand being being hit severely by coronavirus the overwhelming kind of lack of storage facilities in Oklahoma in in cushing crude infertories. We had the API for trees last night. They were up for the 13th straight week We had a number of thirteen point two two six million. The cushing number was about five million the OPEC plus coalition did hold an Unscheduled call yesterday. However, the outcome of that basically through their discussions about this current price situation They signaled they didn't Have any new policy measures at this point and you know, that's something we talked about as well is the idea that there's nothing much really They can do the kind of rural pay off from the agreement that they made back on What the 9th of April? Isn't really going to start, you know kicking in until well into May So at the moment if they deepen that promise I don't really think it's going to have much in a way that immediate effect that they they would want And so therefore this isn't so much an OPEC thing is more of a storage issue Which is calling that specific WTI issue in the futures market So yeah, I mean that's that's the current current situation, but let's look at a couple of different things I mean this was you know, just a couple of graphics to to really summarize of what I've just been saying So here you can see Brent has been trailing WTI But it is kind of being dragged down in the noise with the move if you like albeit Obviously the the selling pressure definitely more evident in the WTI Oil product US total oil storage you can see here And this will be something which I'm going to talk about a couple of options potentially the US can deploy To help this situation. So this might be quite useful this graphic on the left But as you can see here in terms of the the US total It's about 57 percent at the moment But if you look at cushing which is obviously so critical that's about 70 percent full at the moment And on current rates would be due to hit maximum capacity in only a couple of weeks time The huge time spread on WTI so this is looking at the 12 months forward spread So again, we're looking at this this idea about these extreme contangos where You know normally the curve over time would be like this, but we're seeing this quite unusual period at the moment So this is something I know peers was trading this time spread yesterday So if there was any questions, you know, just drop a comment in the chat and I'm sure he can He can help but yeah that coupled with the the infantry build situation is just making matters somewhat worse But it does need to question then well, how can this guy help out in this current situation? This obviously president trump and he was somewhat the dealmaker to get the the OPEC deal over the line At the beginning of the month and there's a couple of things here, which I thought were quite interesting that Nothing particularly new But I think just to summarize all the points in one place the FT did a pretty good job this morning So the options that trump basically has because you know think about his overall objective Which is basically to save the industry Which in the end is about saving jobs so that the economic fallout is not so devastating as to impact them the probability of him securing a second term That's basically the uh, the the the summary of what his goals are now trump Will be pushing on the likes of Saudi Arabia to be cutting again. And don't forget the way that kind of Um geographical relationship works between the us and Saudi Arabia is that it's almost a You know dependency on one another in some respect but particularly Saudi needing the us from an arms point of view from a military protection in the gulf region point of view and so um You know at the end of the day what trump wants trump tends to push Uh put the pressure on and it would be interesting to see whether or not he can do so to get Saudi to do a little more. I'd say at this point Probably not and for the reasons as well. I don't think Saudi had really respond given the The fact that what they would do now really is not going to have too much of an impact because as I said It's not so much on the supply side. It's more The demand and then when the supply side kicks in in a few weeks The other part here is the federal government They've already talked about this a little bit Which is they could buy oil to store in their strategic petroleum reserves of the SPR In theory the SPR has capacity for almost 800 million but could go up to a billion According to some analysts if needed A third point would be government to buy oil that producers leave in the ground until prices recover Now at that point Producers extract and sell the oil for a higher price than the government paid them and they repaid the government and so that could be another um kind of Another way of dealing with this issue and then supported by the api and other u.s Super majors so exon chevron and so on one thing they've talked about is basically just letting market forces take their toll That's going to then basically lead to a whole Slua bankruptcies of these smaller firms in the energy space Um and therefore naturally production is going to come immediately offline now the last one I think it's probably the the last option that trump would ever want to entertain because obviously that leads to massive job losses You can understand why the likes of exon chevron want a piece of that action Because then they can be like the vultures picking at the carcass of all these other firms um kind of like the financial crisis you know one of the One of the negatives that actually came out of that in in the long run was that a lot of these smaller regional type u.s banks Went bankrupt and what that meant was that these really big banks your jp morgans and so on started gobbling up Consolidating the banking sector which then inevitably leads to the issue of now if they were too big to fail before Well, they're definitely too big to fail now Because ultimately they've just accumulated all the assets of these other banks and what was a big bank is even bigger Even more systemically important So kind of a little bit Same but different in in ways to think about the energy sector Would be obviously, you know from a competition point of view as well You don't want certain companies having too much power and monopoly on markets than Particularly in one specific Country, but that's probably the last thing on the list But yeah, I thought I'd summarize a couple of things and I think one thing from a trading point of view I want to stress is that um when this first happened 48 hours ago I think everyone was scratching their heads a little bit in generally if you're in the retail market probably more so Thinking, you know, how can you have negative oil prices? What is going on? What's the problem? The price is tanking You know, you're seeing headlines like oils drop 300 percent. You're thinking this is insane um You know this for us that amplifies bread and butter because you know, we have guys who trade this type of um product Spread, you know, and and for them, we you know, we'll manage to put out an excellent video at the time it was happening so One thing I would say though from a practical point of view is that Markets generally Will become probably more Desensitized to this problem as time goes on and that could be pretty quick over the next day I would anticipate that you know equities, which were coming under some pressure yesterday Is this june contract was getting somewhat liquidated? I think look if june goes to zero today, which could happen um, is that going to be that kind of Massive signal to just start shorting equities. I think that that gets less and less over time Because now it's you know, people have rationalized the situation more. There's less panic And I think if it does happen, it's not a massive surprise anymore like it was Two days ago. So with that being said now equities have stabilized If that june contract does see and it has done already today, it's shifted It's gone from 14 overnight to 10 at the moment. So these are still massive moves But if it goes to zero, I don't think that's necessarily right. I want short equity straight away Obviously, it depends how severe these moves are but you did see a little bit of risk off yesterday emanating from the oil price movement But I think that now Markets will start to get over that a little bit And I think you're seeing that this morning the dollar is coming off a little bit that flight to quite a quality bid to the reserve Currencies dissipating both major pairs in urine cable and moving up a touch Gold's not really doing a great deal. Just sitting around the 1700 and t-notes of flat So it's a little bit different setup this morning, even from the sentiment point of view And if anything equities are ticking back higher and the one thing I would say is that from an equity perspective, I'm actually You know the size of to sell off in the s&p I think it's been relatively small all things considered when we talked a lot in recent weeks about Could oil be if it got down to these lower prices? You know the kind of straw that breaks the camels back in the equity rally that we've had but it hasn't and so I think that's quite interesting actually because we've gone through the early phase of earning season. It hasn't really Shook the market too much albeit some of the numbers have not been pleasant by any means But the market even with this oil route hasn't sold off a great deal in my mind So on that point one thing I'm not I'm not saying that they're absolutely right with this But it's an interesting point nonetheless Bank of America they've been out with a research note overnight They said the s&p 500 is to hit fresh loads of volatility pattern holds I'm going to show you two charts that they're using. This is one They basically said and I know it's a bit small here But basically they're looking at the vix and they're looking at the different paths of their market rallies in 1987 2008 2002 and the current past Current path being this one here and they said the last three major equity market sell-offs saw bear market rallies of 15 to 25 percent over one and a half to four months Since the peak vol The s&p has been tracking the 2008 rally since the 16th march of vix peak Which suggests upside up to 29 60 about 5 up from where we are at the moment before a potentially lower bottom So again this idea that we are then they're suggesting. Yes, we can go up a little bit more We can in fact get above the highs we were training just a few days ago But ultimately this is still a bear market rally if these historic price patterns were to repeat themselves Now what they're looking at here and I have tweeted these my handles here If you want to look at them in more detail But this is looking at the story of volatility spikes and the subsequent mean reversion Visualizing historical primary and secondary vix spikes and exponential Decays over the last three decades. So the point being here is that you know You get these big ramp-ups like you had in obviously in the global financial crisis when lemur went bust And then you get this big spike and then this fade back to just generally Where the vix tends to sit which is more kind of just up the 20 level and we've had this big pop According to a similar type level and now it's fading in that respect. So, yeah, a couple of interesting points. Obviously Bank of America suggesting we're still currently in a bear market rally does fly in contrast to the likes of jp Morene and Goldman Sachs who've basically said, you know, we bottomed out now and this is it We're kind of going to move higher or stabilize at these levels Um, so yeah always think about what everyone's saying Not what one bank is saying is my advice in this respect But quite an interesting observation here from from bank of america this morning Um, one of the earnings I just want to talk about just very briefly last night was netflix Not done netflix. Well, I usually say not that netflix is a big company I think it's market caps probably near a 200 billion probably over that now given the earnings report last night because their shares Shot up about 12 percent after market last night. I actually added About 16 I think it's 15.8 million Subscribers that was against a street estimate of 8.47 million a company estimate of 7 million again. The number was it's almost 16 so Phenomenal numbers and obviously this all coming amid the the lockdown and People being at home and so on and obviously this guy making a big difference Then being able to tap into the reality show kind of market more successfully Joe exotic getting it done for for netflix Um, but what is there to come as far as earnings are concerned today? This is kind of the list divided into two divisions pre and post market The highlights pre market. You've got the lights of at and t biogen After market No one huge for a market cap point of view csx and sphagus sands. These were all kind of around 30 40 million billion market cap From a from a calendar point of view, we've already had the inflation metrics come out of the uk These are Well, haven't really yielded it anyway of the surprise I think just given some of the movement that we've seen in the energy markets more more broadly the year on year core figure was in line at 1.6 percent the actual year on year A month a month cpi in the uk was zero that was in line the year on year 1.5 Which was in line. So nothing really surprising at all when that data and as we go through the rest of the us session It is pretty quiet. I mean, you've got the all inventory numbers. We're looking out for another Pretty sizeable build for oil, which is just another headwind for price on the intraday Just given the already fragility we're seeing And volatility in that market. So expectations are for 16.1, but obviously last night Um, we came in at what 13 on the crude infantry. So I think it was Yeah, 13.226 million cushing was just shy out of five gasoline 3.4 to still at 3.7.4 The top end of the range here though Is a is a 21 build Just to to make that apparent So yeah, that that's pretty much it. So not going to talk for any longer Again, any questions? Just let me know On the the comment section on the video And then hopefully you'll Subscribe to the channel check out some of the other videos the one from eddie. I think is particularly relevant for the current market conditions, particularly if you're an equity trader So do check that out as well because he also talks about the potential Not-com ramifications for some specific us banks who obviously are loaning this debt to the shell industry And if some of these companies start going bankrupt, that's going to be problematic for them as well So definitely worth seeing his explanation that he goes through. All right guys, that is it I wish you a good day and I'll see you tomorrow. Thanks very much