 Hello and welcome to CMC Markets on Friday the 9th of April and this quick look at the week ahead beginning the 12th of April and we're coming off the back of another record week for global stock markets. We've seen record highs not only in the S&P 500, that just turns to be a fairly regular affair, but we've also seen more record highs in the German DAX. We've seen record highs in the stocks 600 and we've also seen record highs in the FTSE 250 as UK stocks finally start to get a little bit of love from investors and the markets more broadly. So you know what does that mean for markets in general? Well ultimately we're coming off the back of a fairly benign backdrop when it comes to central banks. There's been an awful lot of concerns in the past few days and weeks about rising inflation risk. Those risks haven't gone away and obviously last week's bumper payrolls report 916,000 new jobs with an upward revision to the previous month's number was very well received. More importantly the unemployment rate fell back as did the under-employment rate and both ISM reports for March were also broadly very very positive indeed. That being said this week's weekly jobless claims numbers appear to be going in the wrong direction. So what does that tell us about the overall risk profile of the markets? Well I think investors are fairly sanguine about inflation risks and while Fed officials notably Jay Powell after this week's Fed Minutes have gone on the record as saying that they're going to be very much focusing on the data as it happens and not what they expect to happen and I think that's very important. They're going to be evidence-based so they're going to wait for the data to improve, see that it's improved before acting on inflationary risk and as a result of that we've seen US Treasury yields, 10-year yields fall back down to around about 1.62%. However despite all of these warm words these dovish the dovish rhetoric and what have you I think one thing we can take away from the past week or so is that US economic data as we head into April is going to continue to be patchy it's going to continue to be lumpy and while the markets will eventually start to price in the possibility of a tapering of asset purchases we're not there yet. Having said that where we are a week from now could be a particularly different place to where we are as I'm talking to you this moment because in next week or so we're going to have a whole host of important economic data not only from the US but also from China and I think you know inflation risk invites an awful lot of debate it invites an awful lot of toying and frying as to whether or not it'll be transitory which I always find a rather confusing term because ultimately you know once prices go up they're not transitory they're permanent because unless consumers get a pay rise to offset the rise of inflationary pressures you generally don't find those prices come back down and if they do they take an awful lot longer to come down than they do in going up so is there an inflation risk out there absolutely there is you're seeing in supply chains higher costs there so companies have a choice as to whether or not they choose to absorb that increase in prices and narrow their profit margins or pass it on to the consumer and that's something that we may get a nice little insight in over the course of the next week because we've got US retail sales for March which are due on the 15th of April and we've also got the latest US CPI numbers now inflation expectations are rising Chinese PPI came in 4.4% in March up from 1.7% on an annualised basis in February that's a big jump and if there was a ripple effect in the global economy from that Chinese factory gate data then you could well see it in US inflation data over the course of the next few months so US CPI data will be particularly important as will US retail sales data we've also got the latest China trade China GDP first quarter GDP and Chinese retail sales numbers in the coming week as well as well as the latest UK monthly GDP numbers from February now in terms of the UK GDP numbers there's not really that much to see the UK economy has been locked down we saw a 2.9% contraction in January the number which was better than expected which means that the hope of a slowdown in Q1 is likely to be much less than the minus 4% which the Bank of England originally penciled in at the beginning of the year now obviously since then the Bank of England has revised its assessments of the UK economy slightly higher and with the with the with the recent PMI data that we've seen in the past couple of months there is certainly very much evidence of a sign of a recovery in the UK economy and you certainly seen that born out in the PMI data for March obviously this GDP number will not reflect that it is due out on the on the Monday nonetheless we've seen the pound start to exhibit a little bit of weakness in the past few days on the back of recent events well of what some people have been saying has been as a result of the towing and frying over the AstraZeneca vaccine I myself think that is nonsense I think the fact that we've seen the pound do so well over the course of the past few months we were well overdue about of profit taking and ultimately what we've seen here is a little bit of those longs basically scaling out of their long positions after the failure above 140 and the failure obviously to follow through on the downside on Euro sterling as well if you're seriously telling me that Europe is in a better state than the UK at the moment I'd ask you what you were smoking because you know for whatever faults the UK government has made with respect to the pandemic and there have been many the vaccine program the vaccination program hasn't been one of them and whatever your views on the AstraZeneca Rago whatever you want to call it ultimately there's probably more people alive now than would have been if the jab hadn't been administered and I think that's important to remember when people criticise the AstraZeneca vaccine of which I had my first jab on the 21st 24th of March so I'm looking in terms of where we are on the cable we finding a little bit of support and around 136 and a half and I think while we remain above 136 and a half then the upside remains intact and I think that's the important level to really keep an eye out for as we look towards next week this series of lows through here and a drawing a line along there there we go 136 70 136 and a half that's a really big level for the pound against the dollar now it is looking a little bit vulnerable at the moment and we really we really do need to see a move back above the 50 day moving average to stabilise the dollar does appear to be mounting a little bit of a comeback and that's one of the reasons why the pound has drifted lower the euro has also drifted lower as well and you can see that born out in the euro dollar chart as well if we look at euro dollar here we can see it's in a similar sort of down trend I put a nice little channel line in there we broke down below the bottom of that channel we've since moved back above it we've also moved back above the 200 day moving average that for me is probably less important now than it was so for example when we broke below it but what I would say is that with the 50 day rolling over the next big level on euro dollar at the moment is these two peaks here which is around about one nineteen eighty one eighteen one nineteen ninety so if we do squeeze up it's not going to be much above the 50 day moving average that's going to be a significant barrier in the shorts medium term so despite the fact that we've seen a little bit of dollar weakness particularly against the euro I think it's probably going to be fairly short lived and probably a direct consequence as well of a slight softening in US 10 years which is prompted a little bit of what I would call risk on which sometimes the euro tends to benefit from more than it usually does in a scenario such as again I think the rebound in the euro and the set off in the pound was a direct consequence of too many too many euro short positions in euro sterling because you can see this move play out in euro sterling right here very very strong rebound back above this breakout level of 85 40 we are we've we've we've risen three days in a row we really need to take out this peak here to signal that the short term base for euro sterling is in and at the moment that's my next key chart point on my on my written on my written notes of my daily notes which are which I send out every morning you can also look at it in the chart forum as well in terms of euro sterling when it comes to my daily musings on those currency pairs my daily musings can be found under forums on euro sterling euro dollar cable and dollar yen where I give daily updates along with my analysis and where I think these particular currency pairs might be going and where the key levels are so I mean that's basically that's basically what I'm looking at data wise over the course of the next week or so so we've got China trade let's have a quick look at the FTSE 100 we've seen finally finally I talked about it last week when is the FTSE gonna break higher and hey voila there we are we've broken higher we've made a new one year high highest levels since February last year still well below the previous peaks of 7689 which we saw in January last year in which I can basically take you back to their 17th of January 2020 so it's good news we've managed to push above the highs of this January a big question now is whether or not we can sustain these gains going forward so I think evidence of a decent first quarter Chinese GDP number could be the catalyst in terms of prompting a more robust rebound particularly in the FTSE 100 it's a big week for Chinese data I may have mentioned it before we got first quarter GDP from the Chinese economy and earlier this year there was a little bit of consternation about the fact that Chinese authorities set out their GDP target for this year around six percent now some people were arguing that's too optimistic I would argue it's too pessimistic I think if anything given the challenges faced by the global economy over the last 12 months one could argue it's a little on the conservative side and we with respect to a strong rebound in the US economy the huge amounts of fiscal stimulus that's likely to hit that economy we could get a much stronger economic rebound not only in the US economy but more broadly in Europe and in Asia as well so I think for me I would suggest that there's a good chance that this GDP number could actually come in slightly better than expected you know setting aside Chinese US trade tensions and the amount of stimulus the wall of stimulus that's about to ripple out across the global economy is likely to manifest itself and hopefully a big jump in the first half of this year the bigger question is whether or not sustainable over the second half and I think a lot of that will depend on progress in the vaccination program and obviously variants and the evolution of variants we also have Chinese retail sales and again here we've seen fairly strong evidence of a rebound in the Chinese economy over the course of the past six to nine months and that is likely to continue there was no shutdown over Chinese New Year like there was in 2020 so you'd like to think the momentum gained in the first two months of this year is likely to be sustained in two March so 16th of April is likely to be a very key day for Chinese economic data in the outlook going forward we also have China trade data which should give us a decent indication of how good or bad the Friday data will be so that's on the Tuesday China trade the Chinese economy finished 2020 on a strong note got off to a fairly decent start at the beginning of this year and very strong imports in February as well we saw strong rises of exports and imports in February that's likely to be sustained in two March so FTSE 100 broken above 6900 I'm hoping for that to be sustained going forward and head back and head towards 7000 which remains still remains my interim target for the FTSE 100 in the short to medium term DAX again very positive week for the DAX new record highs earlier this week and not really doing an awful lot but the direction of travel is quite clear here higher lows higher highs if you want to basically draw in a line to plot the direction of travel when it comes to the lows I normally just draw in a little line like that just to give a nicer indication we've also got the 50-day moving average which could well act as a decent support level and obviously the initial breakout point of 14200 but again you know the trend is your friend and don't try and pick the top the the line of least resistance at the moment for equity markets is to buy the dip and we've got the FTSE the S&P 500 back above another record level 4100 at the moment NASDAQ is looking to retest its previous record highs on the NASDAQ 100 hasn't quite got there yet and the Dow is lagging behind this does worry me a bit the fact that not all US markets are making new record highs you would like to see all US markets doing exactly the same thing you want the averages the US averages to confirm each other now so I'm paying particular attention to this NASDAQ chart can we take out the previous record highs on the NASDAQ if we can then I think the S&P 500 rally has legs if it doesn't I'd be a little bit concerned about potentially a fake out and it's a similar sort of story I think when we look at the US 30 or the Dow again we've made new record highs so we're making new record highs on the Dow and the S&P but we're not really doing it at the moment on the NASDAQ and I would like to see that on the NASDAQ and the Russell 2000 as well particularly the Russell given the fact that it's probably the most it's the it's the index that's most closely attuned to the fortunes of the US economy and we can see that born out here there's a nice little sideways consolidation here and actually there is a risk here that we could be forming a little bit of a head and shoulders so I will be paying particular attention to that over the course of the next few days to make sure that we don't break this blue support and resistance line here on the Russell because if we do that could be an early warning that perhaps the upward momentum that we're seeing in US markets is starting to falter a little bit okay so that's so that's US markets so paying particular attention to US retail sales as well they're important and I'll tell you why the reason they're important is March is the month that the stimulus checks the new Biden stimulus checks will have hit the mats and consumer confidence or a big big jump in March and ISM reports were also very strong in March the payrolls report was very very strong in March so what we saw in February was a fall of 3% in US retail sales big fall so you would like to think that maybe that pairing back of spending in February could have been a little bit of uncertainty about what sort of stimulus package would hit the mat in March the fact that stimulus package has now been delivered could unlock quite a lot of US consumer spending so at the moment expectations around that US consumer spending that rebound could be anything in the region of 3, 4, 5 percent something like that we saw January retail sales rebound by 5.3 percent as a result of the 900 billion dollar stimulus that was passed at the beginning of January in the in the in the twilight zone or the closing the closing days of the Trump administration so if a 900 billion dollar stimulus package can prompt a 5.3 percent rise in January retail sales followed by a 3% slump in February so it stands to reason you'll probably get a fairly decent rebound in US retail sales in March and I think that's really the big question is how big a rebound can we expect to see in terms of US retail sales as we look ahead to the March numbers the estimates are anything in the region of 5.2 5.3 percent could come in higher than that we'll have to wait and see it's a much bigger stimulus package but that could certainly push up US yields particularly if CPI is a strong number and retail sales is a strong number so keep an eye on that it's also a big week for earnings we've got a we've got Tesco's full year numbers and they've done particularly well this year even though the shares are down one percent as I look at at the moment we've also got the beginning of earning season JP Morgan Chase Morgan Stanley Goldman Sachs are all posting their first quarter earnings for 2021 Goldman Sachs and JP Morgan on the 14th of April Morgan Stanley on the 16th of April and we've all heard about the fallout from the archegos capital and the fact that Morgan Stanley was front-running the sell-off in those particular positions so I'll be particularly interested in the Morgan Stanley numbers in light of the fact that they had such a really good Q4 and a fairly good 2020 a strong Q4 helped drive record numbers with revenues coming in at 13.64 billion as well but well you know nearly two billion dollars above estimates for Morgan Stanley the outperformance was driven by investment banking as well as the equities trading division now it's the equities trading division that caused all of these problems with archegos so the big question for me is how much did this archegos thing cost them and did it impact revenues in their equities trading division in Q1 how much does it cost a bank how much does it cost Goldman Sachs JP Morgan as far as I can see wasn't involved but an awful lot of the growth that we've seen in revenues over the course of the past 12 months has been as a result of an improvement in these US investment banks equities trading divisions so the recent turmoil could have impacted these first quarter numbers so certainly keeping an eye on the profit numbers and certainly the revenue numbers because the previous and the previous results for all of these banks revenues were very very strong pretty much across the board so be very interested to see JP Morgan and the 14th Goldman Sachs on the 14th and Morgan Stanley let's have a quick look at their respective charts we can see with JP Morgan we've had a nice little break to the upside breaking through 140 dollars um peaking out around about 160 direction of travel again looks fairly positive but it does feel a little bit overextended so maybe we do a little bit of a pull back there having said that if yields differential starts to widen out again then they can certainly continue to push ever higher same thing with Morgan Stanley here a nice little uptrend started to tick higher pretty much shrugged off any concerns that they may have had about the archegos capital so again similar story last but not least Goldman Sachs here we go you could argue there's potentially a little bit of a top forming here perhaps a potential top we won't know that until such times as we get a little bit of a break below that support level there so keeping an eye on that for any evidence of a weakening in the overall trend but overall bank earnings could be a fairly decent arbiter of how well this particular move higher in US stocks is likely to play out then of course we've got Tescos Tescos supermarkets in general have had a fairly decent pandemic though you wouldn't know it to look at their share prices and the reason for that has really predominantly been because of the higher costs um supermarkets have incurred as a result of employing extra staff and enforcing additional safety measures to safeguard their staff having said that they've returned all of the all of the government government help when it comes to job retention scheme and what have you and by and large they've pretty much outperformed particularly in the online space where online orders for Tescos have risen 80 percent over the 19-week period so seven million 19-week period over Christmas with seven million orders delivered over the Christmas period so it is still involved in a very much a price war with Aldi, Little, Sainsbury's, Waitrose, M&S Food, ASDA but nonetheless you know it's a it's a it's a supermarket titan and not only does it do well in terms of its online it's supermarket but also it's Booker it's Booker division as well its bank Tesco Bank is its main drag losses in the bank are expected to come in between 175 and 200 million but in terms of expectations for your profit management expect them to be around about the same level as a year ago pre-pandemic so that's not too shabby when you consider the associated extra costs of taking on new staff and implementing various COVID-19 mitigation measures to protect its staff so profit a year ago operating profit a year ago was 2.5 billion pounds which after operating cost came down to more modest just under a billion so the fact that they they're looking at profits around about a similar sort of amount that's pretty impressive I'm going to finish off now with Bitcoin it's not something that I normally cover but next week is not a normal week because when we look at Bitcoin and when we look at cryptos cryptos become ever more popular when it comes to trading in financial markets and next week on the 14th of April Coinbase is IPOing or not so much IPOing it's basically issuing shares it's it's it's it's instituting a direct listing and that is one particular IPO that's likely to generate an awful lot of interest given how much we've seen with respect to Bitcoin, Ethereum, but also decent growth in all of the other small cryptocurrencies like Stellalumans, Monero, Neo, Cardano, Dash you look at our all crypto index or emerging crypto index on CMC markets we can see that we've hit record highs on that index so crypto is becoming ever more popular you can either get exposure to it by way of the various crypto indexes the major crypto index is here on the front-end platform for professional clients only or by virtue of Bitcoin itself which appears to be looking for a move above $60,000 so in terms of Bitcoin base that's expecting to float on the NASDAQ 14th of April looking at the numbers it's got 56 million verified users its latest results showed the company turned over $1.8 billion in the first three months of its fiscal year that's more than the company generated over the whole of 2020 when it generated revenue of $1.3 billion in terms of trading volumes the last quarter saw turnover of $335 billion with assets on its platform rising to $223 billion with $122 billion of that coming from what they called institutional users now obviously there's an awful lot of hype when it comes to cryptos bitcoin and what have you there are significant risks when it comes to cryptocurrencies regulation being one of them so as a result of that coin base didn't provide any guidance when it came to its outlook for the year calling or citing the inherent unpredictability of its business and I think that's at the real core of it that's the real crux of it the company outlined three separate scenarios for the year for the year with the most optimistic scenario predicting around seven million monthly users it currently has around about 6.1 so that's a slight increase so as I say just to finish up Coinbase IPO on the 14th of April it's going to be a fairly busy day on the 14th of April because obviously we've also got um Goldman Sachs and JP Morgan's earnings um as well as a whole host of other interesting items to wade through for next week as well but that's it I think I've probably gone on for way too way longer than I expected to so I'd like to thank you very much for listening and wish you all a very pleasant weekend and I will speak to you all same time same place next week thanks a lot and have a nice weekend