 Welcome to this month's non-farm payrolls webinar with me, Michael Houston, where we'll be going over the numbers, trying to identify where the key chart levels are. I think that's pretty important in the context of the moves that we've seen this week. Obviously what I won't be doing is telling you when to buy or when to sell, I can't do that, but I can certainly identify where the key chart points are, the key levels are. And also potentially where we're likely to head to next. And obviously in the context of the moves that we've seen this week, I think that's fundamentally important because I think one of the things about this week's price action is we've seen pretty much a one-way move since Powell's comments at Jackson Hole last week. I think that's really what's driven the moves of the past few days. It provided a significant reset, if you like, which I more or less expected when it comes to the Fed's determination to drive down inflation. It's also reset market expectations, I think, about whether or not to expect rate cuts next year and not in a good way because I think there had been this rather naive expectation that once the Fed had done raising rates that they'd suddenly do a handbrake term and start to head lower again. And with inflation at current levels, to my mind, that's just a pipe dream. The Fed's inflation target is 2%. Headline CPI is 8.5%. So for the Fed to start cutting rates, you'd have to be absolutely certain that inflation was coming down at a sustainable enough rate to get back to target. And given what's happening with energy prices at the moment, even if they are coming down today and have been over the course of the past two or three months with respect to crude oil prices, natural gas prices are still susceptible to further upward pressure. With the best will in the world, I think it's highly unlikely that you're going to see a significant fall back in inflation. Now, I could be wrong, but given the supply chain considerations, the disruptions that we're seeing there and also the prospect that food supplies for next year could be fairly tight given the hot weather that we've seen this year, the impact on harvests, the droughts in some areas, the floods in others, you're probably going to find that demand for agricultural commodities, corn, wheat, soybean, oats, rice and what have you, is likely to remain fairly high. At the same time, supply could be constrained. So you've got to price that in. And I would suggest that inflation is going to prove to be an awful lot stickier than perhaps has been the case over the course of the past 10 or 15 years. And I think that's really why you have to look at this in the round. And that's why we've seen yield surge over the course of the past couple of days. We've seen a big surge in yields of markets have started to price in higher rates for longer. For the last 10 or 15 years, the market has been conditioned to lower for longer. Now, in last week's market update, I suggested they might have to get used to the idea of higher for longer. And this week's price action, I think, has signified that sort of repricing. We've seen a big surge, not only in US yields, we've seen a big surge in German yields, UK yields, Italian yields. And those higher borrowing costs are likely to be reflected in the sell-off that we're seeing in equity markets. The cost of living crisis, the impact on consumer discretionary incomes and spending patterns going forward. So our earnings expectations too high. We've got earnings season starting again at the end of this month, beginning of October. Our earnings expectations set to high. You look at the US economy and actually it's probably doing better than perhaps people think that it could have been at this case in point. I'm actually surprised at the resilience of the US economy. That's also feeding into the stronger dollar narrative because ultimately, the better the data is for the US, the more emboldened the Federal Reserve will be to tighten monetary policy more aggressively. So earlier this week, we got some fairly decent ISM manufacturing numbers. The headline number was decent. The employment component was decent. The JOLTS numbers saw 2 million extra jobs added, taking the total to 11.2 million vacancies in the US economy. An unemployment rate of 3.5%. So last month's payroll number was 528,000. We're expecting 275,280,000. This month, we're expecting 300,000. So when we look at today's number, we need to be aware that we could get a miss potentially to the downside. But will that change the calculus of a Fed rate hike later this month? No, it won't. It might change the calculus in terms of 50 or 75 basis points. But even there, I hesitate to suggest that a bad number will stop the Fed by doing 75. Why do I say that? Because when you look at the ADP payrolls report and you look at the wage growth numbers there, private sector wages are growing at 7.6% in the ADP. If you are moving jobs, the inflation pay growth rate was 16.2%. That's 16.2%. So there is wage inflation starting to embed itself in the US economy. That is likely to keep the Fed very much on the front foot when it comes to timing policy. And there's only three Fed rate meetings between now and the end of the year, one of which is in September. We've heard a whole host of Fed policy makers say they want to see the Fed funds rate by the end of this year between 3.5% and 4%. It's currently 2.25% to 2.5%. So you're going to have to factor in another 100 to 150 basis points of rate hikes between now and the end of the year. Well, the only way you're going to be able to do that is if you go harder sooner rather than later. Front load, I think, is the term that's used. So essentially what we're talking about this month is at the very least 50, but probably 75. So a decent payrolls number today isn't going to basically diminish the argument for a 75 basis point rate hike. But I'm less concerned about the headline number than I am about wages. 5.3% is what we're expecting, but also the unemployment rate as well. The unemployment rate 3.5% could fall to 3.4%, but also the participation rate at the moment. We're not seeing any evidence that all of those people who dropped out of the workforce and post pandemic and retired early are starting to come back into the workforce. We're seeing it here in the UK. We're seeing a lot more people come back into the workforce as a result of the cost of living crisis because they need the extra money to pay the bills. We're not seeing that yet in the US. That's not to say that we won't, but certainly the evidence suggests we're seeing significant levels of headline inflation, food inflation, energy price inflation. Although in the past couple of months gasoline prices, petrol prices, as we know them, have come down quite a bit from the peaks that we saw a couple of months ago. So the question that you asked me, have we seen peak dollar? If you look at Eurodollar, and this is my Eurodollar chart, this is something that I talked about in April when I talked about the potential for parity on US dollar. You can find the article on the website. It's there in the news and analysis section in this section here. So just type in in the search box, parity, euro parity, and you can find it. And it's probably somewhere around euro parity anybody. So it's that one. So on 27th of April, I suggested that we could go towards parity. And we're pretty much there now. So the big question now is what happens next? Well, pure technical analysis, I've talked about this previously, so I won't dwell on it too much. If we've broken this triangular consolidation, we've ratcheted lower. We've hit my initial target of parity, but essentially we can go an awful lot lower to 96, 20 initially, and potentially even as low as 90 on over the course of the next 12 to 18 months. For the time being, we're finding a little bit of a base around parity. We're finding a little bit of resistance at 101.20, which is the highs of last week and also the highs of this week. But we've also got the downtrend line from the highs this year as well as the 50 day moving average. So it's important that even if we get a decent number from payrolls, I think the momentum at the moment suggests that we might have seen a bit of a short term base. We may see a spike lower, but overall I'm very much a seller of euros on rallies back into this trend line and 50 day moving average. We may find there are a few stops below 99, given the fact that we've held above it on three different days. So we could see a little bit of stop selling, but overall the direction of travel for euro dollar remains towards the downside. Cable, again, I mean, what a depressing state of affairs. This is we are just above the lows that we saw back in March 2020. That's a very, very big level now between 114 and 114 and a half. There is potential for us to get down there. The big question is, will we break below there at the moment? I'm hesitant to call a bottom on cable. But having said that, I'm also not prepared to sell it because sentiment around it is so bearish. Now, obviously, since that Jackson Hole speech last Friday, we've come down quite a bit. We've also got a new Prime Minister coming into position on Monday. And all of these doom laden predictions about inflation 18% by year in 22% by year in from Goldman Sachs, the city group are all predicated on the UK government doing nothing. Now, I don't think that's a likely scenario. So I think an awful lot of the doomsday scenarios that are being priced in are just that. And certainly I think what we're seeing at the moment with respect to UK guilt yields surging massively over the course of the past week or so. I think all their emblematic of is heightened inflation expectations and a bank of England that's likely to hike rates by 50 basis points when it meets in a couple of weeks time. There's certainly in a position whereby they need to probably be more aggressive in terms of how they reset interest rate expectations because there is a fiscal response from the government. We are going to get a sterling rebound dolly in again, we're above 140. You know, the first time we've been there in the last 24 years. But, you know, if we go back, say, for example, to 1998, the highs in 1998 were 147. This is a Bloomberg chart. Our charts don't go back as far as 1990. Then we've got 150. So we've broken above 140. We've broken above the highs in 2015. We haven't really gone back. There's nothing much between where we are now and those peaks back in 1998 at 147. So when you ask me, are we at peak dollar? Absolutely not. Not even close. Certainly not on the basis of these charts. And you've also got to look at it in the context of, you know, if not the dollar, where would you put your money? The euro, you've got to be joking. There's a distinct likelihood that Putin will cut off the gas completely. So I think this is the thing, the big question we need to ask ourselves is, you know, if you don't put your money in the dollar, where else would you put it? And it's going to be a very difficult winter for Europe and the UK. And that's going to depress or keep a lid on your dollar. Now, is, you know, is your dollar oversold? Absolutely. Is the dollar again overbought? Absolutely. But this is where you throw away your oscillators, because ultimately it's about what the price action is doing. So this price trend here is very much towards the upside. And we can see that there and we can also see that here as well. So very much towards the upside. The trend is your friend and we are heading towards potentially stronger dollar. So, especially in dollar yen, as I know only two well, once dollar yen gets in its mind that it wants to go somewhere, it's not stopping. So let's look at the S&P very quickly. We've come off quite a bit over the course of the past few days. We could find support of this trend line here. So that's fairly well supported there. We could see a little bit of a pause to the set off that we've seen this week in the wake of today's payrolls number. Certainly, I would be surprised if we see much more downside unless we see a significant beat to the upside. Again, here with this NASDAQ chart, it's probably not as significant. But what is significant is the fact that we posted a little bit of a hammer on the downside on the dailies. And that would suggest that maybe for this week we've seen the lows and we could start to ratchet a little bit higher. So, as I say, the important numbers that I'm paying attention to are two numbers in particular. The wage growth numbers. If they continue to edge higher, then obviously that's going to add fuel to the fire in terms of a 75 basis point rate hike, but also the participation rate and the unemployment rate. Because I think for me it's important to understand that we've already seen the market start to price in a fairly decent number today already. So, and we are also close to some very significant lows for the DAX, but also the S&P and the NASDAQ. So I think there's potential for us to have seen the lows this week. That doesn't necessarily mean we're going to not go lower. I still think the trend is down. But I think to be to be to get an aggressive sell off the day after the declines that we've seen this week is probably stretching it a little bit. I think an awful lot will also depend on what yields do as well. I think that's also going to be significant. And we have seen a big jump in yields this week, you know, very much so. So I think an awful lot of the move in terms of yields, we've already seen the impact of. I mean, that's the UK two year guilt yield since the beginning of August. And at the beginning of August, we were just above 1.5%. Now we're at 3.16. You know, so that's a pretty significant move higher in the guilt yield. And ultimately that would suggest that the Bank of England or the markets think the Bank of England is going to be very aggressive when it comes to tightening rates or raising rates over the course of the next few months. We're going to get the markets pricing in a UK bank rate of 4.3% this time next year, which I think is probably a little bit excessive. But nonetheless, I think it gives you an indication of where we are now with respect to inflation. So a disappointing number is likely to see a little bit of dollar weakness. A little bit of a sell-off and euro dollars to go back above parity towards 1.101. Even a strong number will probably see a little bit of a push lower and euro dollar, a push lower, but I'll be surprised if we see new lows this week. So as I say, the key numbers for me wages, unemployment, but also the participation rate as well. So I'll be quiet now and I'll wait for the numbers to hit and I haven't forgotten about gold. I'll update that in a minute. So here we go. 315,000 on the headline number. That's pretty much in line with expectations. So that's not too bad. Unemployment rate was risen to 3.7%. So the markets are probably, it's going to be a slightly dollar negative to that. But the reason it's risen is because the participation rate has jumped to 62.4%. So people are returning to the workforce. And that's the first evidence that I think that people are now starting to come back because they need to change, because they essentially need to earn more money. Revised up to 526. So it's a minor, a fairly minor revision higher, sorry, lower on the headline number. So, you know, nothing much to see there. So it's a pretty, pretty neutral number when it comes to the actual headline number. There's an awful lot to unpack. But what I would say is that overall it's a fairly neutral number. The unemployment rate going up is a little bit disappointing. But that can be explained away by the fact that the participation rate has jumped by 0.3%. So unemployment may be higher, but so is the participation rate. God, that's easy for me to say. You know, and I think that for me is the key takeaway there. Up from 62.1 from up to 62.4 from 62.1. So that sort of explains to a certain extent why the unemployment rate. So it's not as negative as it first comes across. So as I say, we've got a little bit of a disappointment on the back of that disappointing unemployment number. But that can that can be explained away fairly easily by the rise in the participation rate. And if we look at the way dolly again has behaved, you know, there's not really much of a dollar move in this as the market absorbs the impact of those numbers. Now, talking about gold, because I was asked about gold beforehand. Let's look at the trend line here. This is a trend line that I drew in a few weeks ago. We've pretty much held that trend line. We've reached it ever so slightly. So, you know, that's a little bit disappointing, but it by and large has held the 1685, 1690 area. And that's likely to be the key support area going forward. I mean, particularly if we look at the way gold is traded over the course of the past few weeks and months, there's been a fairly steady stream of buyers anywhere in and around 1685, 1675, 1680 over the course of the past few months. And there's no reason to suppose that that will be any different going forward. If we draw a line in through there, we can draw it. We can draw that in there. And there you have it. So you've got fairly decent support in at around 1675, 1680. And that would that would suggest to me that at current levels, we could certainly see a rebounding gold prices back to this trend line that I drew in drawn in from the highs here in the 50 day moving average. So I think as we head into I think as we head into the end of the week, we're probably going to see a little bit of a consolidation. At these current levels, not only for gold prices, but for the dollar in general. In fact, I think as we head into the weekend, we could probably see your dollar head back towards these peaks that we talked about earlier today. You had a strong move down yesterday. We didn't take out 99, which would suggest we're probably going to get more chop now between those lows and those highs. If anyone's got any questions about what to expect next week. And I think that is part and parcel of why I think people are reluctant to sell off your dollar is we've got the ECB rate meeting next week as well. And there's been an awful lot of what I would call speculation that the ECB may well do 75 basis points next week, as opposed to the widely expected up until last week, the widely expected 50 basis points, which would push the headline rate into positive territory for the first time since 2014. So forget the headline rate for the ECB is at zero. So, you know, there's still, there's still quite a lot of catching up that the ECB needs to do. And I think that's something that we do really need to be aware of. As we look ahead to next week, some reason I've lost the, I've lost the questions section of. Oh, there you are. So just just found you. Okay, let's just do that. Okay. So talked about gold. Hopefully, hopefully you're happy with that. Looking dollar CAD and the Canada. Yeah, I mean, dollar CAD is another important rate meeting next week. But before I come on to the CAD, I want to sort of stop, stop finishing talking about the ECB. Now, in July, obviously the ECB raised rates by 50 taking headline rate back to zero. But we also heard an awful lot about the new transmission protection instrument or the anti fragmentation tool. Now, we already know that according to Lagarde, they are going to be fairly opaque, I think is the best word on deciding on the eligibility of each member country on an individual basis for those that would qualify the TPI. We did manage to establish that the country must comply with the fiscal rules as well on fiscal and debt sustainability and sound and sustainable macro policies. I'm not being funny. Italy doesn't qualify on any of those. And if they did, then they wouldn't need to use the TPI. So it remains very difficult to establish what the, what the criteria are for the TPI. And if we look at what Italian bond yields have been doing over the course of the past few weeks, they are starting to move into the danger zone of 4%. 4% was basically the highs that we saw back in 2018. And that's also these levels all the way back here. More importantly, it's the spread differential that people are very probably more concerned about when it comes to Italian yields with German 10 year bonds or 10 year bonds. And that's around about 250, 250 basis points, which is currently where we are at the moment. On a number of occasions, try and get above 4%. If we start to sustain a move above 4%, that's going to present the ECB with significant problems. And if you're talking 75 basis points next week, they're going to really struggle to keep a lid on Italian rates if they move by another 75 basis points or even 50 basis points at subsequent meetings as an awful lot of people are predicting. How do you manage that? How do you keep a lid on Italian borrowing costs when there's an election coming in September and you don't know what type of government you're going to get. So there's huge challenges for the ECB going forward, unlike the Bank of Canada, where we've got the potential for a 75 basis point rate hike coming this coming week. Now we had a jumbo rate hike at the last one of 100 basis points that caught an awful lot of people out. And it didn't really help the Canadian dollar because the Canadian dollar is even weaker now than it was then. But there is some sign that perhaps we're near a top in the dollar CAD. We're getting a little bit of a reversal here depending on where we close today. This looks like a bearish engulfing day. So it'll be interesting to see where we close today. And the last time we were at 132 we came all the way back. So next week's Bank of Canada rate meeting likely to be fairly hawkish. We've gone from 1.5 to 2.5% in July. We're probably going to go to 3.25 next week. Bank of Canada Governor Tiff Macklin has also indicated that more rate increases are coming. Well, we know we're going to get one this week, this coming week. Markets are pricing in 75 basis points. Why? Because the Fed is likely to do the same thing. So really it's a question of the Bank of Canada can't outfit the Fed. So the real question is how sustainable is a weaker Canada at current levels? And I would argue that when you look at this chart, this is a nice little top of 132. If we do break 132, then obviously you're looking at these peaks back here at 134. But for the moment, we could well have seen a short-term peak on dollar CAD. We've also got the RBA, Aussie Dollar. And again, Aussie Dollar. We're probably going to get another 50 basis points from the RBA. This is a four hour chart that we're looking at. Let's look at a daily chart. We are getting a little bit of a sideways consolidation on the Aussie Dollar. There is potential for us to build up. We look as if we could be building up a little bit of a base in the short to medium term. So we could see a little bit of Aussie strength. But it's going to be very difficult, I think, for the Aussie to rally significantly, unless we get a significant change from events in China. China this week announced another lockdown. This time in Chengdu, 21 and a half million people in indefinite lockdown. What's it going to do for the GDP outlook for the Chinese economy for the rest of this quarter in Q4? Whether it's getting colder, they're already locking down entire cities and we're not even in the winter yet. So unless China changes its zero COVID policy, then we're not going to get a huge amount of help from the Chinese economy. And to be quite honest, it's probably a good thing if you consider what that does demand for crude oil. Because I think the last thing the global economy needs is the most higher oil prices. So the fact that demand out of China is still fairly subdued should keep a fairly decent lid on oil prices. But also the fact that inventory levels are still at very, very low levels will mean that probably the bottom of oil prices in the short term is $85 a barrel. I can't really see us moving much below that, simply on the basis of the fact if we look at a Brent crude chart and look at over the course of the past few weeks, we found fairly decent support in and around these sorts of lows through here. So if I go and draw that line in there and then extend that backwards like that, we're probably going to see low nineties to be a fairly decent support area. But we've also got this uptrend line in coming in from the lows that we saw all the way back in 2020. So the downside I think is probably going to be fairly limited when it comes to crude oil prices, even with concerns about demand destruction and what have you. I think we're going to continue to chop for a while yet. Does anyone else have any other questions on anything that I haven't already covered? We've also got next week, apart from the macro stuff, China trade numbers. So China trade numbers are going to be interesting in the context of how strong is internal demand. Imports have been struggling pretty much all year. In June, we saw 1% rise in imports. Then we rose by 2.3% in July. We're still below expectations and we're expecting a 1.1% rise in August exports are still probably going to be fairly resilient, but they're still on the lower end of expectations. I think gone are the days at the moment when Chinese exports are going to be up in the mid 20s, 25, 25%, simply on the basis of the fact that obviously the Chinese economy is being hobbled by rolling lockdown. Stop start lockdowns, which is going to hamper the country's output, but also supply chain disruptions are likely to remain a constant over the course of the next three to six months. So China trade is likely to be disappointing, probably likely to see another increase in the surplus Chinese governments already thrown in the towel on its 5.5% GDP target for this year. It's now saying we should be considered a guide. Well, you know, in reality, you know, the target has been wishful thinking since April, when Shanghai was locked down along with the rest of the country, and we still haven't really recovered significantly from that. So what do I make of US indices? Quickly, we talked about the trend line support and we talked about the hammer on the daily charts. I think we could have seen a little bit of a short term base there. So I think we could we'll see markets hedge, hedge, hedge higher heading into the close. We certainly we're certainly seeing a slightly more big tone after the week that we've had, which is not altogether surprising. I think you're getting a little bit of buying heading into the weekend. Certainly, certainly noticeable on the NASDAQ. As I say, just before we went into the numbers, I noted this doji here or this hammer here, which suggested that we could see a little bit of a squeeze higher heading into the weekend. But see 100 talked about that a little bit. You know, we're very much in we're very much in a range on that. So I don't expect to see that dropping sharply. If you look at the way that it's traded over the past two or three years or the last year or so, you know, it's been a range and I expect that to continue going forward. The DAX, again, I talked about those lows and the trend. The trend is down. But while these lows are intact, it's interesting to know that every rebound off these lows has got shallower. So, you know, I think in the short term, we'll probably see another rebound. But unless we take out and break this downtrend line, then we're probably going to see a retest and a break lower heading into the autumn. Okay, so ladies and gents, that I think is my summing up. One thing also to keep an eye out for next week is that there's Apple are holding a product launch event. So let's have a quick look at Apple, because I think that'll be interesting in the context of what they're looking to roll out. Let's not forget the pre Christmas and Thanksgiving is normally their most lucrative quarter for earnings. You know, we're talking $120 billion in a quarter for revenues. So, you know, it's, it is a very important quarter when it comes to Apple's overall fiscal year. We are expecting the unveiling of the new iPhone 14. What upgrades are coming on board? We're also expecting a new watch, some new iPad models in the form of a new iPad Mini and an iPad Pro. What are these new products going to come with? Are we going to get a new chipset? Are we going to get longer lasting batteries? Are we going to get more powerful cameras? What else have they got in mind in terms of accessories? So, so, yeah, I mean, basically, Apple, still a cash machine. Are we going to get a decent rebound on in the wake of that event, which is due on the 7th of September? Other items to keep, we've got dark trace for your numbers, Barrett developments, the housing market, we've got downgrade to that from HSBC. Those, the share price for Barrett is down at 2020 lows, March 2020 lows, you know, how much of that is already priced in. And we've also got GameStop second quarter numbers, which I expect to be an absolute horror show on the basis of the fact that they were talking about launching an NFT marketplace by the end of the current quarter. And that market has completely collapsed in the last two or three months. So, those are the things to keep an eye out for. Hopefully, that's answered all your questions and you've enjoyed the payrolls number. In the next 24 to 48 hours, you should get an email asking for any feedback on the webinar. Always grateful for feedback, positive and negative, because ultimately these webinars are about you, essentially, you know, what can we do different, what can we do better? Because ultimately, the more people I can get to tune into these things, hopefully, the better they can become. Otherwise, thanks very much for dropping in and have a great weekend and there won't be a payrolls webinar next month, October. I'm away for the week. I'm taking my other half away to Iceland for her birthday. So the next non-farm payrolls webinar will be in November. So I will see you all then have a great weekend. Thank you very much for listening.