 Okay, very good morning. It's Tuesday 23rd of February. Just come out to 7 a.m. here in London and having a quick look around the markets. I want to get you up to speed in terms of some of the overnight moves and news that we've had and then also look ahead to the main event of the session which undoubtedly is Powell's semi-annual testimony. But let's just start with the charts and what's been going on. And first of all we had a lower close on Wall Street, a particular underperformance in the NASDAQ which was down about 2.6% comparative to the loss of around three quarters of 1% in the S&P. So big tech coming under a bit of pressure again on this idea about what potential then leaning towards higher yields might do to have the biggest consequence of some of those big outperformers that we saw during the pandemic if we start to head into a higher rate environment. So the S&P 500 index fell for its fifth day. It was the longest losing streak in a year and with the NASDAQ falling as I said just over two and a half percent that was a three week low it marked by the closing bell. In regard to the the overnight session things have recovered a little bit as you can see here in the center chart. So NASDAQ is treading up about 78 points, the S&P about 17 points respectively. So as what is typical of a fairly aggressive down day it tends to be followed by a little bit of kind of moderate dip buying at the low. Also in the Asia-Pacific session Chinese equities stabilised somewhat from one of the biggest sell-offs that we've seen since last summer. Again on the similar fear to what we've been seeing in the Western developed world which is that of tightening of policy in more broad terms. But the Hang Seng out performed in Hong Kong this came after HSBC had an update. So let me just quickly flash that on the screen and give you a brief summary. So HSBC has abandoned its long-term profitability target and unveiled a revised strategy focused mainly on wealth management in Asia. After the COVID-19 shock source annual profits dropped sharply the company also said it would resume its dividend. Their shares did jump as much as the 7% in overnight trade. So worth keeping an eye on them as well when we get underway on the footsie shortly in the cash market. Otherwise in the other charts to be aware of just a quick look at WTI crude you can see here we have broken out in the Asia-Pacific session above 62.29 in front month futures which was last Thursday's high that then does put us up. If I go here on to the daily chart to the highest levels now we have really traded since going back to this volatility and price action that was seen at the beginning of the year on the 8th of January. And you'll remember this was when we were seeing a lot of that geopolitical tension in regards to Iran and the Persian Gulf at that time. So definitely worth keeping an eye there upside level 6340 would be up and around that high that we had on the initial Saudi infrastructure shock that we had from the drone strike which dates back to September of 2019. That was also an air of support and resistance going through 2018-19 as well and then followed by 65 of course as the kind of psychological target and rough top of the price that we saw in 2020 pre-pandemic. So oil still remain remaining fairly bullish in mindset. Couple of things to be aware of there and again just to update you here are some of the headlines. So global oil market has been undersupplied by 2.8 million barrels a day so far. This was according to Morgan Stanley in a research note issued yesterday. They've boosted their Brent forecast for the third quarter to 70 bucks. This comes after we saw the same time period the estimate raised by Goldman Sachs to 75 bucks yesterday. So a lot of these big banks continue to be fairly bullish for price even at these elevated levels that we've seen with the recent resurgence in oil prices. Also as well the idea that the market to firm on the US freeze and the easing of lockdowns the latter of course being a global focus at the moment just given the general success and speed and acceleration of vaccination programs. We saw for one the UK outlining its four step process to the roadmap of unlocking if you like back to a degree of normality going up until summer on June 21st and the UK not the only one similar being seen elsewhere and this obviously a crucial component of the demand equilibrium for oil prices in addition to the latest freeze shock we've had in the states. On that point on the weather side much of US oil production has rebounded now from severe winter weather that struck much of the country starting the week of Feb 14th including large domestic oil plays in Texas and Oklahoma although an estimated as per the headline 15% of all crude output still remains offline. That means around 3.4 million browse per day have been restored of an estimated 4 million that were shut in at the early or the peak early last week so yeah relatively quick recovery being seen there on the moderation of temperatures that we saw towards the back end of last week and going into the weekend. Otherwise because quickly back on the charts the other thing here is the major currency pairs in the top left continue to remain relatively elevated I would say the greenback still the general key factor that's helping support these currency pairs cable as has been the case for recent weeks also being cushioned somewhat by the successful rollout of the vaccines which then lays its hand to at least this roadmap which was unveiled yesterday as I was saying in the briefing on Monday I think that just adds a further constructive view about giving an idea of when the economy is going to reopen that as well with you know further extensions that seem to be coming from from Chancellor Rishi Sunak to keep businesses alive until that latter point on the success of the fourth step in in June so at the moment cable remains quite elevated in the overnight Asia-Pacific session we have retested once and again early birds in Europe and last night or late afternoon London time so 14086 is a strong air resistance now a short-term intro day in the futures market and he pulled back here was just keeping an eye price was slightly dipping into the low of the close of Wall Street last night so 14059 we've just seen a bit of reversal there so at the moment we are trading a relative range bound trade here in cable and that that could well remain the case until Powell speaks because that will be the major catalyst probably for these major based dollar pairs in reaction that the greenback sees to what Powell says any downside here I'd say the next good level of support seen now at pivot which is around 14046 45 which would encapsulate some of the price activity that we saw during yesterday's session and then look much lower down sub 140 these kind of areas as marked up 139 82 and 53 but we'd have to see to get down at these lower levels we'd have to see a real kind of hawkish twist from Powell who would pay heed to the fact that he is going to get responsibility the recent yield move the reflation threat rising inflation expectations meaning that they might start having this tapering discussion must stress I do not see that happening today but that's what would need to happen in order to see the price challenge down at these lower levels but to give you a rough guide so it could be in for a bit of consolidation there until he speaks he's not speaking till 3pm so a bit later elsewhere in the precious metal space the the weaker dollar just helping out a little bit we had a nice break here of a level we were watching and talking about in the briefing yesterday which was around 1793 I know one of the traders got hold of that we had the break in the morning the pullback to that key level before around the US open and the open on comics and then a really nice push and they managed to get that trade in for you know a good 25 dollar gains so really well done and well executed on the exit I know they pretty much got out of it to the tick up around that zone that we'd marked up around 18 12 13 which was those areas of support that we had back going dated to the the kind of 12th and then the 16th of the month we have found now a bit of resistance around there even in the Asia Pacific sessions failed to really push on through there and so that could provide a bit of a cap now to price for the meantime until again I think power speaks it could well be a meaningful trigger for for price upside levels if we do continue this resurgent kind of trend in gold I'd be looking at next target probably other than the Asia pack highs around 15 then 1817 we start to bring in some of the price activity we were seeing from the 16th and then just a few days before that as well as the area of support but as you can see though price just backing off here as I'm talking back to flat now in the session and then the other one I just wanted a quick word on before we get stuck into what to expect from Powell was Bitcoin this was a chart I'd had up from from yesterday that I was sharing in the Amtify kind of discord room and you know as I wrote in my notes on Sunday that I shared I did feel like you know I'm no Bitcoin expert but the price activity I thought since we had gone above 50 just seemed awfully stable since we had we had that Tesla pop really and we went through this is going all the way back to here when Tesla invested in Bitcoin back on the 8th of the month you know price has gone from 40,000 up to 58,000 here looking at the futures and I just thought that given the acceleration of the lift that we had on Friday going into the gap up obviously having touched nearly 60,000 over the weekend and with the slightly more pessimistic tweet about the current price of Bitcoin from Elon Musk at the weekend just felt a bit inevitable that at some point we were going to see a fairly aggressive snap back again this is just the Bitcoin asset I don't think this is the beginning of the end by any means it's just a healthy pullback really when it comes to price movement for this this asset to sustain something more meaningful to the upside so yesterday we did come off about 16% at the low we've had another retest here down at the 49,000 and it's bounced off that early doors this morning European open I do think that's a very important level for the Bitcoin future today if that is broken then I think we trade pretty heavy pretty quick 48,000 would be that low here going back on the 16th and then I'd probably be looking down around 46,470 which starts to encapsulate some of the price activity from the first half of the month then anything lower 45,000 then 43,000 but again given the fact that we've already corrected in price here a good 15% or so it could be that 49,000 is the floor for the moment and we might consolidate for today between 49 and 51,000 but we'll see okay let's have a look then at the major event of the day and that undoubtedly is your main man Jay Powell coming out with his semi-annual testimony so he speaks twice so just to get everyone up to speed if you're new to markets he speaks to the Senate today and the House tomorrow and they are basically a copy repeat just to the two different chambers of Congress so Tuesday is ultimately much more important because it's the first time we get to truly see what he has to say Wednesday is a non-event so here as the bullet points are kind of suggesting it's the main event of the week because recently we've had a bout of optimism and that's been reflected in this obvious trade that we've had in this reflation view which is based on the notion of an acceleration in vaccinations in tandem with more fiscal stimulus coming for example late last night the U.S. House of Representatives Budget Committee approved legislation for the 1.9 trillion new coronavirus relief plan the full House could well then look to push that bill through later this week and we're still yet to hear the details about the infrastructure plan of course even more stimulus that's due to come from the U.S. administration and this of course all comes amid loose monetary policy which the Fed have committed to thus far and I guess therein lies the key because all of these aforementioned reasons have resulted in rising yields which essentially is reflection of an improved view over growth prospects in the future now at this point I would say my view and I would say on the balance probably the one shared as a consensus view on street by majority is that power will reiterate that the Fed will commit to its existing course of action and what does that sound like or look like in terms of the text the Fed might adopt well the Fed are not contemplating any immediate shift in their policy and the stick with the guidance that they will continue to buy 80 billion dollars of treasuries and 40 billion of mortgage-backed securities per month quote until substantial further progress has been made toward the committee's maximum employment and price stability goals again by referring to those metrics we're still a long way from having that discussion about tapering down their bond buying program the Fed's preferred measure the core PC price index is coming on Friday that's still going to be well below two percent in terms of the employment situation as we know that is still kind of readjusting in the post pandemic environment at this point in time a lot has been written about the parallels for the for those who are in markets that will remember 2013 being the kind of infamous taper tantrum and there is a little bit of inevitability that at some point the Fed will create a degree of tantrum in the market because ultimately they need to signal at a point in future whether now or in the coming several months that ultimately the speed of the bond buying that they've been doing as a reactionary effect to kind of save the economy in the pandemic environment needs to slow down and it needs to slow down for good reason because the economy is starting to function again and respond to a lot of these stimulus from the fiscal and monetary policy side of things I guess then they're they're lies in a couple of things now it's a really good note written by the guys at ing I did share that in the community last night but I also tweeted a few main nuggets of information for my Twitter account which are definitely worse reading but essentially they said that although tapering doesn't mean the Fed simply stops buying bonds again it's a really important thing here not to misinterpret tapering doesn't mean bomb buying 120 billion one month to then zero it means they just start to scale it back they taper it back but remember markets are forward looking as soon as you start to taper it back the markets conclude then what you're saying it's going to finish in the future and then you're going to start normalizing rates and that's what spooks the markets essentially and it's this idea that the faster that happens the worse the mood in the bomb market and the more intense the tantrum and there's a really good analogy that they used about you know I for one I've got a two and a half year old toddler at home she's probably just getting up by now and the idea that you know to teach that toddler a lesson sometimes it's going to come with a tantrum and you have to manage that it's inevitable at some point and you know I do think then that this is the type of rope that essentially pal needs to walk and do I see that being a major moment for markets yes do I think that that's going to come as soon as today in a testimony no I think it's just a little bit too early for that at the moment so interestingly even though that this is a real talking point more much so for the Fed than any other central bank Christine Lagarde obviously came out yesterday and we did see a quite a dramatic drop in German yields firing up the 10-year bund in the futures market yesterday now as much as I didn't see too much really new in her comments some have said that the fact that she said the ECB is closely monitoring the market for government bonds is a sign that she might act to prevent rising yields so this idea of further tweaking using the all all kind of powers that be at her disposal to try and maximize the envelope of that that pandemic emergency purchase program so again paying heed to the idea that look we're not at the point yet of taking the foot off the gas in order to instill then and ensure an economic recovery post pandemic I say post pandemic we're in the pandemic still so there's still quite a bit to play for so in summary I think Powell generally is going to reiterate the the ongoing federal reserve stance and I think the important thing for market reactions afternoon when we see these comments is that the market has seen quite a distinct shift higher in yields equities of as I've mentioned have had some of their longest losing streaks we've seen in a while so I do think the market is a bit susceptible if Powell just comes out and reiterates a more dovish accommodative stance the equities might have a bit of room to just recover a little bit you know are we going to fire up and move immediately to all-time highs no we're a little bit far from that in current price but I do think that given market positioning I think T-notes potentially could get a bit of a kick not so much again by what Powell says more so than what he doesn't say I don't think he's going to allude to this idea of runaway optimism over vaccinations and growth prospects improving he will want to strike a cautious tone and that will then lend its hand to the idea that the Fed are going to stand put for now and just given you know this is the US 10 year over the course of the last five or six trading sessions and we've moved meaningfully lower under the pressure of rising yields and it'd be quite interesting to have a look at how we react around this 35-17 if we can break above there you've got that low which is kind of coinciding around the R1 today at 135-20 and then perhaps even a further push-up could be on the cards up towards the 136 handle which obviously then starts to be quite key as the level on the upside only price recovery around 02 which is those lows and highs you can see there so yeah it's going to be an interesting day as I said I think the Powell situation could well see a bit of a short-term reversal of some of the activity we've had of late given the fact that I think markets are just a little bit ahead of themselves and the timing of looking for Powell to change it from a policy communication perspective if he does go as expected then that should in a sense then keep the dollar fairly depressed and the Dixie's trading around 90 and just a quick word on the Dixie I do think this is a key level we're trading at at the moment and so let me just zoom this in a little bit if you're talking about the year-to-date price action that we've had just going to put my cursor here although we have broken through this it was a little bit choppy at the beginning of the year really going back to the 14th of January 90 has been a relatively solid line here to keep price above that point and we're just flirting with it at the moment having briefly dropped to around 89.93 in the overnight Asia pack session so there is room here if Powell again just reiterates that that kind of accommodative stance if the dollar starts to break lower that could get a bit of a run well then remember these major pairs could see some further break out to the upside in euro dollar and cable I'd also probably see that supportive keeping an eye on those upside resistance points in gold and also potentially to keep a further flaw on oil prices as well as the the weaker dollar will probably lend its hand to another supportive factor there so kind of then it's kind of a perfect storm for something like oil where you've got an OPEC plus committed to generally in action in their supply packs you've had this temperature freeze in in Texas in the US and we're still trying to get over that you've then got the general recovery prospects improving with vaccinations of fiscal programs which helps demand and then you've got the Fed sitting there keeping the dollar on the back foot so it's kind of like a perfect storm if you were looking at a few of these commodity price particularly in WTI crude otherwise just to wrap up what have we got on the session in terms of calendar events so a few different things we can just have a quick look at the UK jobs data has already come out the unemployment rate 5.1% as expected the UK average weekly earnings 4.7% as expected 4.1 as you can see not really any reaction in sterling and I wouldn't expect it because ultimately difficult to really read too much into particularly unemployment days are coming out of the UK I believe Rishi Sunak is expected to roll over things like furlough even further to accommodate then the the four-step procedure reopening the economy and so looking to just buy time until that unfolds so not to read too much into to that data as I said I think the dollar is going to really dictate the the cable currency pair the HICP final numbers their final so we'll place two higher priority on those so then really you get into the afternoon there's no major 130s coming out of the US and then the main event POW is at three comes alongside US consumer confidence which will be absolutely overshadowed by the power comments for sure API inventories later on in the evening and then you've got some fixed income supply longer dated out of the DMO in the UK 60 billion dollars in a two-year-note auction in the short end coming out the US Treasury as well so that is it so yeah a bit longer for the briefing so hopefully you you managed to stick with me until the end obviously if you did then any questions let me know just hit me up in the discord chat or just drop a comment if you're watching this on YouTube absolutely happy to help and yeah good luck for power this afternoon let's hope it's uh let's hope it was an interesting event all right take care guys