 Okay, very good morning in is Monday the 10th of May. I hope you had a fantastic weekend a couple things then to get you up To speed to start the week and really condensing the overnight weekend news flow, which was predominantly Dominated by the colonial pipeline Strategically important for gasoline in North America. So we'll have a look at that. What's happened? What does it mean? How is price reacted? We're also going to talk about the pound outperforming so far this morning We'd have had the results out of UK local elections very positive for the conservatives and also update on the Scottish elections As I said sterling this morning outperforming that of its European counterpart Otherwise updates elsewhere on the likes of COVID particularly in India And then having a look ahead for this week Particularly emphasis on the US economic data with inflation still at the forefront of investors attention You've got US CPI on Wednesday the US retail sales on Friday but look, let's get straight to it and talk about market sentiment for the open this morning and first of all, I guess we've got to start where we left off which was Somewhere I hid behind that screen I just had up which was a note that's come out of JP Morgan at the end of last week post payrolls and obviously If you were there, you will know payrolls was a shocker on Friday and it just Reignited that kind of trade Mentality of the Fed are not going to move quickly Given the fact of their job-centric focus Irrespective inflation concerns and what JP Morgan note was saying over the weekend was that the same thing that we have been seeing they think it's going to continue for the time being as Essentially the disappointing jobs print justifies the ultra easy policy that obviously some Investors have been questioning the Fed are they right particularly with CPI expected to rise up to 4% Later on this week to hold fire and continue to be cautious and accommodative and the jobs data really validated that stance if anything in the near term JP Morgan suggesting that tech cyclical stocks rally in tandem After April's jobs with and there's kind of talking about this idea that the stock Ball run will continue to just go on basically and they were looking at some of the breakdowns as well in terms of To JP Morgan strategists now is the time to not doubt equities as long as Powell and Biden are in charge of the economy And they were talking about the idea as well that any efforts to heal the economy are likely to drive up Inflation meaning that banks and airlines will also benefit so in a sense kind of uniform in a way We saw the nasdaq respond quite quickly after payrolls came out given the nasdaq 100 generally and and tech and grow stocks What underperforming for the majority of last week? So they kind of bolted higher but longer term here JP Noting about this kind of reflation view and that's obviously going to keep inflation up But also the Fed will make a commentative given the view of it being transit tree and all around and that kind of lifts The equity market so this morning. I mean Asia followed suit generally broader higher as a region The S&P 500 as you can see here is now tracking up at 42 32 in the futures market Having hit a high of 38 and a quarter overnight So you can see this move here that we had through The US non-farm parallel data breaking above the previous all-time high and on the daily chart You can see after we had what was last Tuesday that kind of wobble where Yellen came out started inferring about potential need for rate hikes Which obviously she walked back a few other things that are happening a technical breakdown in price through the range Support of 41 66 saw us move down and that 41 10 and a half still going forward is a really Strong area of support on the higher time frame But as you can see on Friday closing above that previous all-time high and we continue to have made fairly elevated this morning Or be it futures change It's moderate So in the sense just holding on to the gains that were seen into close on on Friday, and that's fairly uniform elsewhere Otherwise a quick look at the the other charts then and that will lead us into the the oil one Well, we'll bring them in one by one and let's look at oil Not so much oil our Bob gasoline It gapped up at the recommencement of trade on Sunday night about four percent Looking at the chart here, and it has settled since and we're up only You know about quarter to a third of that gain now from that initial price spike at the open Faded that pretty quickly, but still slightly elevated and it did feed through in sympathy to a certain degree But much lesser extent given that colonial pipelines are critical critical source of gasoline diesel and jet fuel To the East Coast and so therefore oil pops up about one and a half But if it repaired that fairly quickly, we're still trading up though from around a sub 65 to 65 27 The moment up 37 cents So what exactly is the colonial pipeline because I'm conscious of the fact that some traders Some of you watching this will have to have no idea what that is So let me walk you through a few different things and I'll show you some maps of the system and Give you some context to quantify its importance in the US. So the colonial The nation's biggest fuel pipeline was halted all operations On its system late Friday after suffering a cyber attack That affected some of its IT systems and the thing that made markets a little bit apprehensive last night It still is to a certain degree is the fact that they've said they're working to restore operations But I don't have a specific timeline as yet for when a restart is going to happen And the longer that goes on obviously the more impact underlying that it could have The US government as you can see from these headlines here enacted an emergency power Ruling on Sunday in the bid to keep fuel supply lines open as fears of shortages rose flying the shutdown of that essential pipeline What that that means essentially from enacting the emergency powers is to circumvent then the use of the pipeline We'll talk about alternative pipeline routes that could be used But what it means then is they've lifted various limits on transportation of fuels by road to ease the fallout The colonial is a is a critical source of gasoline diesel and jet fuel to the east coast following the nation's Refining belt along the US Gulf Coast. So down here in the bottom left hand corner And you can see my mouse moving that is texas and you can see houston And her book and buimont lake charles baton rouge as we go through louisiana These are all the really key facilities that sit just within the gulf coast and actually the the distance from Let's say west to east go from texas up to all new jersey and linden in pennsylvania as well That total distance would be around 5500 miles So it transports more than two and a half million barrels of fuel every single day And that's about 45 percent of all fuel consumed on what is obviously one of the most Populous areas in north america, which is the east coast So going through likes of texas louisiana mississippi alabama georgia south north carolina virginia So on and so forth The line also supplies jet fuel Importantly to major airports across the u.s. And prolonged outage could lead to disruptions in air traffic If supplied disruptions become even more severe it's like to be aware of going forward An alternate here I haven't got the pipeline up, but it's something called the the plantation pipeline operated by kinder morgan It's smaller but serves some of the same regions that the colonial does and may act as a possible and potential alternative The plantation is is capable of delivering around 720,000 barrels per day of similar products through its approximately just over 3,000 mile pipeline network, which originates in louisiana essentially and ends up up in washington dc area um But again comparatively 720,000 against the colonial's two and a half million Will give you an idea of the proportion of the cover But that in combination then with the government Inacting its emergency powers to move greater amount of transportation via road That's how they're looking to address this and fill the gap in the short term The reason why this is quite important as well is we gasoline infantry's fairly ample the price of the pump wasn't actually expected to Tick much higher until memorial day memorial day happens at the end of may so a few weeks time That is traditionally viewed as the start of the us summer driving season And that's particularly important for consumption Given the fact that in north america a lot of domestic state-to-state travel and so the summer driving season is particularly key If the pipeline doesn't restart soon It's only going to accelerate and that move higher because we've already got that seasonal impact to come in In the short period ahead See that's what's going on at the moment. So overall Things that i'd look out for i mean definitely this is much more for our bob gasoline futures the oil move I would say is much to a lesser extent But somewhat a sympathy play So it could see some volatility upon headlines that we get updates on this Timing is key, you know, is it going to be a day? Is it going to be three days a week longer? The longer the more bullish it's going to be for gasoline prices and then also How quickly and how much are they using these alternate methods like the plantation pipeline by kinder morgan How much then do they quantify that it's going via road route? So on and so forth. That's how what i'd be doing to try and Judge the impact or longevity of that type of move that we've seen already from overnight And obviously if the company comes out and says all things are rectified And all systems are back up and running XYZ the pipeline is up and running functioning again Well, then you'd expect a pretty quick normalization of prices. I would say going forward all right a few other things then I mentioned the pound And the pound rises after the s&p misses out on outright majority in polls So let's have a let's have a look. I've kind of highlighted here The the bullet point which really summarizes that investor relief Felt from the s&p result wasn't more emphatic So actually the Scottish National Party who want to press as you well know for another referendum going back to that one that I saw in 2014 on independence Felt one seat short of an outright majority after the election and this comes in combination as well With labour just having a really poor performance in the uk on a local election front And so what we've seen is the pound is out performing this morning Cables up about 53 comparative to euro dollar up about 10 pips You can see here a big breakout in sterling going through the release of payrolls with the dollar weakness that we have now Surprisingly weak u.s jobs data If we put cable on a 90 minute and I'll shuffle this sterling chart along a little bit So you can see what I'm looking at you can see here On friday's move. We broke above a strategic point, which is really this 140 handle looking at sterling futures here And we broke above that on friday We've actually come back down close to a test in the asia pack session Really nice support area now in that zone for then the continuation of the push higher So that would be strategically important not just for the interdater for the week to keep price above that point We'll be Keeping the the balls kind of satisfied that sterling potentially could see further push on and Hard to see the dollar really staging a dramatic comeback with the jobs data. So weak Irrespective of the inflation data, which is going to be moving quite sharply higher going forward on a daily chart you can see here perhaps a different kind of Look on the same setup, which is that importance of the 140 handle you could see here It was really restrictive of price for the majority of of 2021 So through mid-feb up to the current date until we broke out on friday And as you can see here on the upside There really is not a great deal of meaningful resistance in the near term After we put in that initial year to date high at 140 to 45 There's a few stops on the way If you were looking at the chart here on the on the daily that low for the days range on the 23rd It's just about where we're trading some short term resistance at the moment after the move higher Move moving up. I'd say a good target there was the high on the 22nd and the low on the 24th That would come up at around 140 90 I'd say that's probably a nearer stronger area of resistance than that current one on the 23rd looking on the daily charts So sterling seeing a decent reaction to those political events, but also There is the matter of the Lockdown roadmap and the cabinet today in the UK Will sign off on the third stage of lifting the COVID-19 lockdown in England Most businesses in all but the highest risk Sectors will be able to reopen Including indoor servicing and pubs and restaurants hotels cinemas will reopen indoor sport and exercise will be able to resume Individuals can do one night stays things of that nature So that as well probably just underlying just helping support things that are so far in the UK touch wood all things going as planned and so I'm sure Boris will be banging the drum on that front when he speaks later on Quick run through some of the other things that have been going on over the weekend India still Really confronting a challenging situation. Of course with COVID India's capital extending its lockdown for another week and adopting stricter Restrictions to control the new wave of the COVID-19 outbreak India on Sunday Had just over 400,000 new virus cases reporting more than 4,000 deaths for a second consecutive day Moving on to something a little bit more light hearted Was dodge coin This was definitely garnering a lot of attention because it was just ramping aggressively higher last week And people were looking to Saturday night live of all things And the reason for that was that Elon Musk was going to appear and he's obviously being a big proponent of dodge coin right from the beginning And people were building up in anticipation that he was going to give it the classic pump Which he has done on so many times before via twitter and things like that But he was part of a sketch Essentially and he came out and he called it in in that sketch dodge coin hustle And dodge coin didn't like it didn't like it one bit Just looking at coin based look at the dodge coin price And this was the move that we saw when his appearance happened and dodge coin fell down to about 30 Which looking at sterling price here 30, which was a loss of about 30 plus percent. I think it was down about 33 35 percent at the worst However, we'd now by the end of Sunday. We'd pretty much reversed that to a loss of only around 12 or 13 percent So yeah, a lot of headlines pertaining to dodge coin at the weekend Probably there's a lot of people who are uneducated in the space feeling a bit of pain But ultimately Well with an asset I was kind of tweeting a few things about this yesterday when it was dumping And I was kind of of the view that you know when it comes to something like dodge coin It's heavily behavioral and it's one of those Kind of stick it to the man trades if you like given What it represents and as such All I thought was looking at twitter seeing the lights of dodge dodge coin to one dollar trending Dodge coin to the moon was trending. This was all as it was going down 20 25 30 The more aggressive those tweets were becoming And I was just thinking it's the perfect storm to kind of galvanize the troops to just start defending The dodge coin and this is Completely out of the realms of anything I've ever done in my career, which is trying to fundamentally analyze The value of an asset base it on rationale I'm just purely doing it on a behavioral perception of what I feel then these kind of dodge coin die hard crypto fans will be reacting To the haters as the price is going down and you know sure enough the price came back and trimmed the entire move by about two thirds And going forward, you know, is is is what that weekend kind of volatility does that mean anything for dodge coin? Who knows? I mean ultimately if dodge coin at the end of today in fact is printing up at new highs Wouldn't surprise me one bit to be quite honest, but Yeah, it was interesting to watch over the weekend final article back Back to planet earth for a second Is about the ECB And the reason why I just wanted to point this out is this chap is called ollie ren is the finish Council member at the ECB and he made some comments and ft interview at the weekend where essentially You know, he was just talking about the the ECB should follow the lead of the US federal reserve by accepting and overshooting Of its inflation target to make up of years of basically below target inflation And the ECB is widely expected To change its inflation target this autumn when it has its first strategy review come due for 18 years So it's just another idea here of moving to a more flexible Mandate when it comes to the subject matter of inflation I think the ECB are kind of rising up to what we're going to see this week, which is I you know, kind of really fast acceleration in inflation And the ECB Would you know one of the things I think the the fed were quite quick to do was adopt this average inflation targeting a it strategy quite early on Given the idea that they knew upon reopening that prices were going to surge I guess the question point at this point is that As the reopening has happened kind of supply if you like can't quite keep up at the moment with demand And so we're seeing a lot of bottlenecks, particularly a lot of natural resources like we were seeing last week from everything from Platinum to copper to lumber and so on and so forth and the idea then on how transit tree or not inflation is going to be and if you didn't get a chance to listen to it Strongly encourage you to check out the market watch podcast Just search for a Spotify app order Is a conversation at me and peers the head of trading had on Friday Where we go through that conversation is transit tree argument and I'll fed right or is the market right in regards to the standoff between inflation is going to be a more long lasting or temporary of nature and so I'll leave that to the podcast but taking us to the calendar then that really takes us to to to Key releases coming out of America and this week overall is is fairly quiet comparative terms to last week from a set economic data point of view So we're going to jump us over to wednesday And wednesday reason why i'm jumping there is because we get us cpi now core cpi Which I do think is it is of the two even though the preferred metric at the ecb at the fed is the pce number Is the core to extrapolate out then the fact that a lot of the inflation pressures has been Exassivated by energy prices. So xing that out the core reading Irrespective of taking out the energy component for april in the u.s. And wednesday that's coming out is expected to rise To 2.3 percent year-on-year. That's a meaningful impact Or pick up from 1.6 percent last month But the overall take with that is as much as there's going to be a lot of media fanfare around the inflation The year-on-year figure could be up at 4 percent. Let's say people are going to be Really pumping that drum Of you know inflation concerns and so on but ultimately with the job situation as per friday in the labor report being so bad I just can't see the fed moving off their their seat of accommodative policy as yet And I think that irrespective of a very high pick up in inflation I think this is all part of the perceived plan that they foresee in this transitory journey of inflation going forward It might be more long-lasting because of the bottlenecks we're seeing But it's not going to stay up at those levels going forward over the medium term. So Yeah, that that's good. That was how I'd read it as a week as a whole but don't don't get me wrong I'm sure that wednesday 130 release of uscpi will be a meaningful event for any day trader Also on wednesday just sticking with wednesday. You do get the march GDP figures out in the uk That is expected to come in at 1.3 per cent month or month That's a pick up from the previous 0.4 percent partly as a result of a boost from the education sector as scores have reopened Quarterly data. However, it's forecast to show a decline of 1.6 percent As a reminder, we obviously had the bank of england meeting quite recently Last week in fact to be upgraded its growth forecast for 2021 If you remember those growth forecasts what they said Bringing forward to the point of which it expects the economy to recover to its pre pandemic state By the final quarter of this year So we're really researching the uk economy through the next two quarters into year end and so What does the inflation reading what does the GDP meeting reading mean for the one coming up on wednesday for march? It's an improvement against previous But it's going to get way better in the uk all things remaining equal and on the political side Obviously with the covid situation at the moment the roadmap remains on track And so therefore do those growth forecasts as well. So I don't really think that's going to be a massive Isolated factor, but it certainly helps that sterling bid keep a floor on that price of 140 to carry us higher In the context of the the germany softer dollar at the moment The other two things I just wanted to mention were on tuesday when we come in in the morning We do have a chinese cpi for april A particular emphasis might be on ppi data As that's forecast to climb six and a half percent That would be the fastest pace of growth since 2017 if that happens So on the manufacturing side again talking about this kind of bottleneck idea Ppi prices up at six and a half percent consumer price inflation china are by the one percent And then going ahead to friday You've got university michigan sentiment, but you've also got us retail sales for april The other kind of major set event from the data perspective Um expected to post a decent gain after jumping nine point eight percent month a month if you remember for march This is the april report and that was because of the back of the 1400 dollar stimulus checks that were coming out Importantly analysts at i and g say the cash deposits from those stimulus checks were made in the second half Of the month of the month of march And this could mean that there's a bit of a carryover of that spending into april And the reopening of the economy also means there's lots more options to be able to spend that money as well So we could see another robust print for for that reading All right guys, it's going to leave it at that And let you get on with the session. So hopefully that was useful. If you're watching this on youtube Remember to like and subscribe and don't forget to go to amplify live com because you can now access this briefing For free by using the free subscription There's other subscription levels to get your access to other premium content So do check that out and i wish you a great week ahead. Take care guys