 Okay, very good morning to you. It is Wednesday the 15th of July. I hope you're doing well Much for me to discuss including this latest article here that came out after the close last night There's caused a gap up in prices in stock index futures after Moderna vaccine produces antibodies in an early trial So going to discuss that a little bit more detail going to talk about the coronavirus as a whole also going to have a quick Look at the chart some interesting moves and actually I'm feeling a little bit more bullish about things and I'll underline my reasoning why in this briefing Also going to update you on the latest in regard to the US and China trade wars a few developments there to be aware of You've got the OPEC JMMC meeting today. You've had the BOJ overnight. You've got the BOC coming Later on this afternoon. So plenty for me to discuss them for us to get through so Without further ado, let's have a look at the charts first this morning And what is most interesting is the speed of which we've recovered This time yesterday, obviously we were talking about the prior night's news where California had got into a new state of kind of closure in regards to Restaurants bars kind of dining indoor gathering essentially and that caused quite a severe sell-off into the market However, yesterday quite the opposite and that in itself. I think is quite a telling sign I'm going to have a look at the COVID numbers on a state level in a second, but for me the overall lack of Persistency in any downside pressure given that one of the biggest I thought Risks to markets in the near term would have been the closures on one of these major Significant states California, of course being one of those That if the market's not going to go down on the back of that type of news which others would assume then the other states potentially That Texas and Florida follow suit then what is going to knock this market down? I mean that is a big negative in terms of the speed of recovery of which then these localized areas can start to Get back to some sort of normal state of activity and that California news certainly is a bit of a hindrance to those reopening plans So that in itself in combination with what has been there a mild Moderate escalation in the trade war and still equities want to don't want to sell off Continuously so that for me is quite a telling sign and Does put me in the mindset over the short medium term of remaining fairly positive on things for the moment in terms of equity prices overnight, of course, though There's been a new piece of information Moderna has come out with the latest vaccine producing antibodies in an early trial And that's called that came after the market close Hence the reason why you've had a big gap up in the futures and you can see here then technically we've got the Initial opening price with a retest in the Asia-Pacific session and that also being a level of significant resistance as well in prior days session so quite a Strong near-term level of support on the upside. You've got the R1 just containing some of the price action at the moment So I'd say probably likely just given the European morning fairly quiet in regards to fixed events You're going to see potentially a range bound until the Americans come in between 3203 and 11 on the upside Looking elsewhere then a few other charts just quickly in the FX market We continue to see that kind of correlated move with the dollar IE whenever there is a bit of a bump in risk appetite the dollar typically weakens That is the case this morning. So Dixie's down about zero point one five percent So the currency pairs cables just managed to see a bit of a breach Then above what was restricting some of the price action yesterday Well, I should say in the overnight Asia-Pacific session and around the daily R1 level We've broken a little higher here on the the daily of course Who's still a little bit way off? Where we would be about a point to we get to the 200 DMA and certainly on the upside as we go through the next day Or so this week be keeping an eye on that kind of triple test that we've had Through the end of last week and beginning of this week So some decent upside levels of resistance here in sterling But as you can see here some clean air perhaps to get a little higher from where we are at the moment Particularly if the dollar continues to remain on the back foot here The euro as well looking quite interesting coming back up towards Where we were in the Asia-Pacific high in the overnight session because if we start looking on the weekly There's that really interesting area be watching longer term in the euro which dates back to around the summer of 2018 We've had multiple retests on this descending trend line and also what's been capping some of the recent price activity here And so if people will be continues to remain fairly positive Discounting a lot of the COVID developments nationwide in the US and we've got this positive drug news albeit I'm gonna give you some big caveats on that news we had last night But then you've got the EU leaders meeting happening on Friday and Saturday If they can formulate a real concrete action plan for delivery of their recovery fund Well, then this is that euro Positive moves that we've been looking and some technical breaches here could open up the door for a run up to 115 For sure over the the coming period ahead Oil markets Little bit of movement seen overnight You can see here with this ellipse just marking then a momentary break or albeit still in play. I'd say that 40 73 being a near-term level of technical resistance Going back to last week also the beginning of this week on Monday and last night That the pop here in price came after we had the API inventories last night pretty sizable drawdown 8.3 to 2 million analysts really anticipating a drawdown of 2.1 gasoline also slightly larger draw than anticipated Haven't managed to sustain though any price I think it was more of a short-term Traydable affair if you were in the market last night, which I know some of you were Otherwise, we've just faded that move and we're sitting back now waiting for the details coming over that OPEC technical Gathering in particular interest, of course about their decision-making about whether to taper down on those supply cuts at the end of this Month going into August So that that's pretty much the overall picture on the charts this morning, but certainly some headlines I need to run you through so let's get on to those and start with that main news Madonna's potential COVID-19 vaccine Reported in the FT last night. I mean I did tweet this a couple minutes after it came out surely after 10 p.m. So Yeah, I'm looking at this stuff all the time. So feel free to follow me on Twitter But the vaccine produced immune responses in patients in early stage trials. So look, whatever we see this type of information There is always nearly or has been whether it's Gilead Sciences or Moderna being a knee-jerk reaction over estimating the positivity to some of the headline information that we see in relation to medical trials particularly therapies and vaccines for COVID-19 Obviously, there's this innate human response where we really jump on it because of the nature of the the pandemic and the Subject matter in itself evokes quite an emotive response The one thing I would say and I've said this before in many of the other briefings is whenever you're looking at medical news The devil really isn't a detail Because anyone who's semi-familiar with the process would show that you know the clinical trial process goes through many Multiple steps before it then becomes a proven and tried and tested method or Vaccine whatever the case might be and typically this is why in order to get these things approved into market It takes it can take years And so hence the expectation that you know markets really you know gap up and we jump on this positive thing as look I Would all I would say is that in previous occasions? We've gapped up and faded the move nearly every single time. So Let's let's just wait and see but there's a potential for that to repeat again Now I wouldn't be looking for a massive sell-off. We just fill the gap to where we were and all things remaining neutral It's just a very short live knee-jerk reaction The biotech is a US biotech company their vaccine candidate produced antibodies in all 45 Participants in the first cohort of phase one trial run by the National Institute of Health While the paper also said there were no safety problems that could fertile or curtail further testing So that was all positive The trial showed that after 15 days of the first dose all participants had produced antibodies after 57 days The participants had on average more antibodies than a group of 38 recovered patients. So again some positive indications there However, a couple of things to be aware of more than half of the participants experienced side effects Including fatigue chills headaches and muscle pains the adverse effects became even worse after the second Injection so look, there's still a long way to go here With this and the vaccine now will move to a larger Late-stage trial later this month decided to determine whether or not it can get approval from US regulators Nonetheless, Moderna shares they were up around 13 plus percent overnight. However, as I said from a broader overall risk perspective Personally, I wouldn't buy too much into that headline in isolation on its own And if anything, there's some key levels there We just discussed in the S&P pretty similar to the other charts I'd keep an eye on and retesting that overnight Asia-Pacific low You can see the DAX just testing close to it at the moment. Let me just quickly show you And that coinciding with close proximity to some reference points from yesterday's session here You can see here and also you've got that the low that we saw just before the urex close And that was the Asia-Pacific low. So, yeah, some some areas of support to keep an eye on But yeah, I wouldn't be looking for that to be the silver bullet to really define the data activities In terms of the Moderna news Talking of though COVID and a couple of important things I just wanted to show you just looking here at the CDC's COVID data tracker overall numbers I think we're fairly Up to speed on in terms of total cases now north of 3.3 million death count at higher than 135,000 a couple of interesting things that I've been reading from some of the banks and I'm going to start off with The recent surge that we've had in new cases across the Sun Belt states So that being here, California, Arizona, Texas, Florida These areas here with the slightly deeper kind of tan color that you can see on this this graphic Indicating of more total number of COVID-19 cases Now a few things here to be aware of The recent surge in new cases across the Sun Belt states Worn that there could result then and another spike in deaths That would be the illogical assumption would be as that figure continues to go higher than well Then naturally there's going to be more deaths That as well as a reduction in mobility and overall consumption It would would suggest then a potential threat of a fresh hit to the economy as a new round of Shutdowns either mandatory or voluntary getting acted hence like what we saw in california and that knee jerk negative reaction We had just the other night That would be the more pessimistic view of looking what's going on. However If we look at this chart, this is then looking at the more optimistic view of what's going on And this is looking at an increase in testing and looking at u.s. Daily tests on a seven day Average going all the way back to mid-march to where we are today So the optimists meanwhile, they're more inclined to look at the case that you know higher cases Are merely a function of widespread and successful testing strategies Now what we have seen as this case number has continued to accelerate chiefly led by Just a handful of the Sun Belt states death count rate really hasn't moved So the optimistic scenario would be look look testing is just getting more Effective in that respect now isolating out these things to look at it the world in a slightly different Composition some people prefer to look at the number of hospital hospitalized people That although is a bit lagged if you look back on the data to around the march april period The peak in number of hospitalized came 17 days after the peak in newly infected According to certain models that a few banks like Bank of America have been running This is less dependent on testing strategy, but if you look at these three colored lines here They're quite interesting. The black line is the estimated daily u.s. Covid 19 infections then you're looking at the X florida would be the orange line and then x arizona california florida texas Which are some of those hardest hit states And so actually when you start to x out then a number of the those Those big four things are relatively flat lining the outbreak Definitely somewhat driven by those areas But if you extrapolate that out and look at the nationwide picture Perhaps then this is a little bit more controlled Then people may have feared and then if we are focusing on the four I know it's a slightly difficult to see on this chart, but arizona cases Appear now to be easing Over the course of the last two days or so It's almost like we're seeing the first emergence of hitting that peak Starting to come out on the other side in what was arizona The leader of the acceleration of this initial second wave spike that we've seen in north america So have we got to that point now where these cases here start to moderate and hit their plateau? And all the meanwhile more effective more successful testing strategies are leading to more contained deaths That in in in combination with the fact that the market has not managed to remain beaten down for long as per The the kind of litmus test of california the other night. I think means for me Disequity market if for whatever reason does come down I don't think it's going to come down hard and fast In a persistent manner meaning then I just think people are going to come in lower down and just bid the market back up So any selling of an aggressive nature Sam's going to be very happy for me to hear me say this But I'll be looking to be a buyer at that point all things remaining equal as I see it this morning at least All right, a few other things and reasons that support that argument even further is the federal reserve Some comments out of brainard last night. The fmc member gave a speech And she painted a pretty dark picture about the us economic outlook She was using the words that downside risks are the predominant theme Uncertainty is as thick as fog. She was saying Where does Brainard sit on the kind of hawk dove spectrum. She's kind of center leaning dove So it's not massively surprising that she's said this sort of thing But certainly she's ramped up the dovish rhetoric quite a bit She said the central bank should pivot its forward guidance and asset purchases towards providing Longer run accommodation now. What does that mean? Well when they're talking in this type of Um language when she's talking about the longer run She's usually inferring about the dot-plot matrix and the fact that when these fmc members are Requested to update their summary of economic projections about where they see interest rates At the end of this year and subsequent years thereafter. They only map out in detail the next two years Then they have what's called the longer run Which is kind of this unknown period of just further into the future And what she's indicating essentially is that it's this longer run which was Just highly inaccurate really because it's a bit pine the sky thinking with this dot-plot We're basically flatlining zero for the next through 2022 Which is current fed stance and then at some point in time undefined We're going to normalize at around two and a half percent. What she's saying is this has got to be way lower Which I agree with so That being said that's another supportive factor. You could argue not her alone But if other Fed officials share that theme So you've got a lower longer looser cognitive policy Coupled with perhaps some emerging signs that the covid situation in the u.s starting to Get to a degree of peaking in some of those hot spot areas in the market not being phased by the likes of A reversal of the pace of reopening With then the idea that the Fed have got ample Sources of liquidity that they can turn to which really haven't been picked up in a number of these Main street lending programs other facilities are highly underutilized at this point but are ready to fire Yeah, it's just really it's hard to see Um, what's going to what's going to weigh on this market at the moment? And I'm not indicating that let's just get long today But what I'm saying is that I find it hard to see how this market's going to go down Over the medium term Because on that front we've even got china kicking off at the moment and still no real tangible impact What is happening here? Well, president trump has issued an order to end hong kong's special status With the u.s and signed legislation yesterday that would sanction chinese officials Responsible for cracking down on political dissent in in hong kong This is as expected. So hence the fairly Kind of muted reaction in markets However, china have come out overnight and the foreign ministry said That beijing will impose retaliatory sanctions against u.s individuals and entities in response to the law Targeting their banks What has trump said? Well, he's basically come out and said he's not interested in trade talks with china Um, I quote he said we've made a great trade deal In phase one agreement in january, but as soon as the deal was done the ink wasn't even dry and they hit us with the plague So continued Uh, kind of framing of the situation here blaming then the outbreak of the pandemic of corona virus solely at the door of china Nothing's really changed there. And so at the moment it's kind of just the usual rhetoric I would say the chinese thing overnight symbolic, of course And actually there is some underlying implications here and some argument that actually By not treating hong kong Differently to the rest of the mainland in china that actually this is somewhat self-harming to u.s interests in itself But I think a lot of this now has been in being priced in at least in the the intraday perspective Um, one country, of course, which is suffering is hong kong And you know, it's hard to forget, you know, I've got half my family out there and and certainly they've had A bad run of it of late from protests a global pandemic a collapsing economy a crackdown on individual freedom Um, the end now of the city's special status in relationship with the united states Uh, it continues to see then quite Out, uh, distinct underperformance of the hengseng index Comparative to the overall msei all country world index Uh, you can see here if anything a further divergence been materializing as we've gone through the last Few weeks and with this latest Um status change that we've seen Over the the course of the last two weeks or so Elsewhere then the opec Is going to be a key talking point for today Opec is seeking extra production cuts from its members That haven't missed or that haven't missed their targets again in june potentially tapering the impact of supply Resumption planned by the wider coalition in august. So essentially what this means is is that within opec There are countries like saudi who are nearly always compliant or over compliant and then they're always those That typically iraq, nigeria, kazakhstan that tend to be very loose in their compliance And what opec have been very stringent to try to enforce or I should say Encourage is to try and get them to be more compliant and that in itself picks up a degree of slack then for Um, how effective the overall supply pact has become So at the moment it is looking still The opec are going to push ahead and they're going to drop this kind of Around a an impact of 10 of global supply of crude down from Supply cut of 9.4 million to 7.7 million That looks like it will go ahead But they're going to try and offset that by looking to get greater compliance out of some of these other names Who need to pick up and over comply to compensate for their lack of compliancy I know that sounds a bit odd to say in that way, but hopefully that makes sense So a technical committee will meet They've already spoken yesterday. They've outlined for countries including some of those names I mentioned to make an additional 842,000 bowels a day of Compensatory cuts in august and september According to delegates to make up for some of the inaction that they've done Uh, a technical committee then is going to be meeting later on today And this is where we're going to look out for ministers to confirm the overall cut to be tapered in august Boj not going to talk too much about this kept short-term interest rates on hold at 0.1 percent They left its asset purchases unchanged everything as expected They they got a little bit more gloomy about their economic prospects on the economy for this year But I don't think that's particularly New information or exciting in that respect. So not really a market mover very much a recurring theme at the moment You're going to see from the boj from the boc and the ecb. They've already done quite a lot in terms of their strategic response to the pandemic and now it's about just waiting and see And potential next big decisions points will come in the months ahead And so at the moment it's kind of just assessing conditions for the time being For the calendar for today, we've already had some uk data the cpi numbers came out this morning In combination with the slightly weaker dollar the uk cpi numbers year and year 0.6 percent above the expected 0.4 I'm not going to say that that's a major thing But certainly just helps the directional play of sterling this morning amid the dollar softness Otherwise in the the morning relatively quiet We then get the us sessions a little bit more interesting new op fed manufacturing import export prices industrial production And then you've got the doe all infantry numbers and the feds beige but later on this evening Bank of canada not expecting any rate change there But of course anyone looking at the loonie it will be responsive as it always is And then speaker wise ten raro at the bank of england And worth keeping an arm again kind of center leaning dove to be speaking on covet 19 in the economy lessons learned so far Could be quite interesting at 9 a.m They've got governor Macklem the new governor at the bank of canada speaking 4 15 this afternoon harker as well at 5 p.m And supply coming out of the uk in germany earnings wise The third of the next big banks as we were discussing since the macro menu at the weekend that I that I issued disparity between the kind of investment banks And the lending oriented financial institutions that was brought to the forefront yesterday Whilst far go out under performance j.p. Morgan our performance. So goldman's probably like to follow suit Of the former in that respect And yeah, that is it as I speak Just as we were discussing Several minutes ago you can see now we've broken that Asia pacific range And the market now is looking to just back off What I feel is an inappropriately large bounce that we have on the madonna news This kind of reality hits home and people get over that a motive knee jerk reaction So yeah, I'd anticipate a gap fill. Would we trade any any heavier than that? Possibly not then we consolidate wait for the u.s. To come in on that note I wish you all good day ahead any questions as usual feel free to reach out Leave a comment on the on the video. Happy to help as always. Take care guys