 Okay, very good morning everyone. It's Wednesday 21st of August Before actually I go on to introduce what we're going to cover just gonna quickly Transition over to the charts a little bit of an uptick just as I was about to press the the start button in the European and US equity futures Typically when I see a move like that I do like to just quickly pop it on a one minute to see the kind of composition of how the candlesticks are forming on a very short-term basis because That's quite telling to whether or not this is a news based kind of move like a headline catalyst And perhaps there's a tweet somewhere or a headlines come out But just looking at this price movement here looks a little bit more Gradual than what you would normally see if there was just a one and done explosive headline reaction Which of course would be much more The first candlestick just exploding higher which this is more of a bid coming in so yeah Doesn't look like it's anything fundamental based Break above pivot perhaps and if you look at the S&P here on the right That's also just broken above its age of Pacific session high, which was also the pivot level so maybe it just a Coordinated break of some technical levels overall from a news perspective this morning things are relatively quiet there's not really a great deal going on and perhaps then just a The technical breach enough of a cue to see a little bit of a push on higher Consequently a bit of mild risk on actually with the stock move gold a little lower Just coming in within close proximity of its S1 We're down around seven dollars at the moment and then the bottom chart here is the US 10 year That's also been drifting south as well We're now trading down about eight ticks this morning So yeah interesting in the fixed income space of course after everyone was panicking about this kind of recessionary threat and the inversion of the yield curve Well, everything's kind of flipped back over the last Day or two and so definitely alleviating some of those near-term fears that we were definitely kind of growing from last week So perhaps a little bit of renewed Not risk on so much But if anything maybe a bit of almost profit-taking on that that kind of negative build-up and those shorts and so a bit of reverse on that move Yields back a little higher dollar. Although it did move lower yesterday afternoon Generally speaking is still trading up at you know close to these multi month highs as we were discussing yesterday As the trade talks kind of going to a renewed phase of being a little bit more positive perhaps So yeah interesting start to the morning But again just to reaffirm not based on one singular headline So to speak just generally a little bit more upbeat on the sentiment to get things underway Going into the news then I'm going to discuss a couple of things Then I'll hand you over to Sam on the technical basis as a final reminder both Sam and I will be going Live on YouTube this evening at 6 p.m. London time All you need to do is click subscribe on our YouTube channel hit the bell icon which will then turn on the notifications and you'll be alerted on your phone or your desktop and so on as soon as we go live The format of that is going to be I'm going to cover a little bit about this inversion of the yield curve What my expectations are not only what does it mean? But what am I think going forward in the timings of what can happen next? Because I've had quite a lot of questions on that So we'll kick off on that and then we're going to take questions basically from our subscribers So anything you want to talk about we're going to hopefully try to address and answer And then what's going to be pretty cool is we're going to end the session with the FMC minutes So we're going to cover that as well Live as it happens and I'll give you a bit of a short preview as well ahead of that So without further ado, let's go into some of the headlines. This was a very interesting one I saw yesterday and this came out of JP Morgan's head of macro quantitative and derivatives research He is a fairly famous fellow in the marketplace But he was talking about quite an interesting piece of analysis that he's done where he said quote Portfolio rebalancing could drive equities up as much as 2% by the end of this month So he said that after treasuries rose and the S&P 500 index fell for three consecutive weeks The divergence has left fixed portfolios 2% underweight stocks essentially So this isn't to do with Underline fundamentals and the fact that you know corporates are becoming more positive or anything like that This is purely to do with funds looking to rebalance what has been a lot of downside in the equity space Which is basically left them underweight stocks and as we get into the end of the month They need to rebalance so they need to buy back back to their original kind of composition of what was the structure of the portfolio in the first place So more of a function of the latter means that potentially what he's suggesting is that we could see some decent upside In the equity space. I mean actually rather than look at it technically what's 2% look like in the S&P 500. Well, let's just have a quick look of what that would look like from the current price Let me just stretch my chart out a bit more 2% puts us back up at Basically 2900 pretty much bang on if you were looking at the current price movement So that would put us back above the kind of area of resistance that we had you can see here And we just make this bit bigger in the S&P 500 over the course of really August for the best part That would put us back up towards We just again stretch this chart out a bit more 2,900 obviously quite an interesting level as we get up to that mark a bit higher Well, excuse me, not 2,900. Let me correct myself. That would be the increment dollar gain From a nominal value if you were trading futures contracts of your your profit the actual value in the index would be 2969 three-quarters if that was a 2% gain from the current price of where we are so having a look that again 29 69 puts us in sight as well of some some fairly interesting technical points of interest So, you know, will this play out? Well, this is just one guy's Expectation sorry Mike's just reminded me of my switch over my chart. So here we are So this is where we are at the moment just to recap again And a 2% Appreciation of the S&P would put us up at around this level here on the right hand side 29 69 three-quarters that would take out that Area the double top of the resistance that we've had from the 8th and the 13th of August and push us back up towards an area That does look quite technically relevant From a resistance point of view having been pretty firm support in the previous setup through the month of July as well so Yeah, it'd be interesting to see Definitely we tend to see this. I mean if we look on the daily obviously on the S&P It's not uncommon to have these big kind of shakeouts in the market only then to rally back particularly aggressive In the in the second phase. I mean we had that back in the beginning February of 2018 We had that massive Q4 route and then the best S&P rally in 31 years in Q1 now we've had this Latest kind of pullback over the course of since late July and we've managed to already claw some of that back about 50% of the overall move but You know some further upside here. I don't think it could be Ruled out entirely. I don't think it'd be that surprising to be honest Near-term area of interest probably on any further continuation to the upside looking on the daily here That I would be looking at is probably two real levels And really that forms around a band of price action at 2944 and 61 that starts to encapsulate then Some of these levels from the peak of interest that we had in May that high previous all-time high in sep October of 2018 then you can see here That was quite a key level as well and not just resistance But a platform of support for the eventual push-up to the record highs that we had Only a couple of weeks ago in fact So yeah Interesting analysis and one that I'm sure will make the balls happy But let's see Timing wise obviously it's the 21st So you've only got really a week and a half for this guy's prediction to come to fruition So let's see if he will revisit this in a couple of days and see how that's playing out This was another thing. I just wanted to share this. I know the graphic is a bit squashed But this is a look at the activity of Trump the US president tweeting on the Fed and Fed policies so No surprise at all to see this little Period here in Q4 of 2018 of you can see Beginning to tweet about the Fed and its policies and then ramping it up almost doubling of the volume of tweets over that period If you remember if I was to map a chart of the S&P 500 the S&P 500 if you follow my mouse was basically going like this Heading south so the more south it goes the more pressure he puts on the Fed then we had fairly consistent pattern through March April May June, but then more recently really since the official campaigning for 2020 has commenced. He's really ramped it up And certainly since the Fed now have begun to cut whether or not this is a mid-cycle adjustment yet to be seen But you can see that it's gone up Sharply and as I've said before I would very much continue to foresee this to be the case now on the back of this the other interesting Graphic that I saw was one out of Bank of America and they were talking about this idea that the Fed is unintentionally Riding the trade war and what they're talking about is this adverse feedback loop between the Fed and trade policy So it's pretty self-explanatory But this is an interesting kind of way of just really shorthand summarizing what's going on at the moment which is that The more tariffs that are put into place Whether between the US and China or the US just generally globally given its protectionist stance equates to a weaker economy and Therefore as a net response market starts to weaken equity starts to fall and so on what does that prompt? If aggressive enough in its weakness Well, then the Fed has to change course and take action and ease monetary policy as a net result of that then what happens is by Creating more stimulus having a lower lending environment by cutting rates or restarting quantitative easing Confidence picks up Economy then starts to respond and market strengthens as a result of Fed action But the more the economy strengthens then that gives more room for Trump to then in action and further tariffs to keep the pressure on to get more concession from his Opposition in regards to the trade negotiations and then the whole thing repeats itself So again, it's it's quite an interesting thing here and it does again go back to this idea that It definitely plays into the hands of the president this kind of win-win scenario where? That part passing of accountability of a lack of Fed action then can be blamed squarely at the At the hands of Jerome Powell and his colleagues But then if they respond it gives Trump more room to then enact more aggressively on trying to Appear being more strong domestically on his negotiations on the foreign front So quite quite a nice simple way of just looking at what's going on At the moment and really I think what plays true as to why Trump is pretty much locked in to win 2020 all else remaining equal up to this point in about 18 months time Moving away from that the other big thing the other big news in Italy Is that Tomasso's got his hair cut For the first time in a number of months he's gone from Rural let's say Rustic Italian freestyle hair and he's now I reckon he's lining up the position He's going to put his application in for the PM role in Italy And this is the this is the reason why the Italian president obviously Ready to give Salvini rivals time to seal a deal and this comes after the PM Conte resigned yesterday in protest basically of The the fact that he very much was critical of Salvini breaking up the existing coalition between the league and the five-star Timing-wise then what have you got to be aware of well the Italian president Mattarella begins intensive talks with political leaders today To determine whether a new ruling coalition is viable or the country must hold Fresh elections now what was quite interesting yesterday was you almost have quite a counterintuitive move to what you think might have happened Which was actually Italian yields fell The thinking here being that well actually this is going to delay the prospects of any type of snap election And so therefore consequently BTP is actually rallied so this is what I'm looking at here is the BTP That did hit a bit of a near-term point of resistance from a high that we printed back on the 15th earlier this month We tested that yesterday afternoon We've had a look at it this morning before then a rejection and a decent pushback to the downside in the BTP A few other things then to look out for in regards to Italy consultations with the Italian president Mattarella will start at 3 p.m. London time so 4 p.m. Local time in Rome So if you were anticipating any further updates to do with Italy most likely that's going to start coming late afternoon from a UK time perspective The other thing sticking with European politics We know that the G7 is happening in Barrett's in France at the weekend kicks off Friday and I think it goes through the weekend But ahead of that Boris Johnson the UK Prime Minister is doing a bit of a European road show And obviously this is the first time he's really getting out and about in mainland Europe Which is obviously critical for him trying to garner some kind of support around Attempting to get a new concession from Europe about striking some kind of Brexit deal ahead of his threat of that No deal scenario on October 31st So Boris is looking to meet Angela Merkel today, and then he's going to meet with the French president Macron on Thursday Before then heading to the G7 meeting now What's really interesting here of course is that if you think about Europe, you know Let's step away from Britain and Brexit for a second. Let's think about the eurozone The eurozone is under quite incredible economic pressure at the moment none other so than Germany which has been seeing quite a severe Contraction in its manufacturing sector very much evident in the PMI data Kind of suppressed readings in a lot of the soft indicators like iPhone and ZEW hitting multi-year lows And this is very telling because Germany is not just subject to risk from a fallout of a messy Brexit But also of course from being targeted as they have done from the Trump administration Now what's interesting then with these major European officials is that if they push back too much against Boris Well, then what could happen is that that could form an even tighter relationship between Boris and Trump Trump of which has already been quite a ardent backer of Boris's stance of playing into that same narrative of kind of taking back control and your sovereignty and and very much the similar type of rhetoric that Trump has been pushing at home So the interesting thing here is that Merkel and Macron are two of the staples of obviously European ideology and Being of the largest economies have the highest political influence over potentially shaping a Brexit deal with the UK can they maintain that firm stance though and Not be bullied by the kind of Boris bluff if you like if that is the case Because the risk for them is that not only are they in a politically weak situation in the eurozone is that they could then form a More distance themselves even further from Trump and a forming of a very strong alliance between Trump and Boris would be the last thing that Europe would want and hence the reason why Boris has been playing up to this and Trump has been tweeting in the last couple of days How he's had some great conversations with the Prime Minister all of these types of things are all definitely playing into the hands of Boris to go in pretty strong With a kind of looming threat for these negotiations, which I'm sure he'll be having with his European partners at the weekend So yeah, we'll be interested to see the outcome of this obviously from these three I'd say Salvini definitely much more trying to align himself with Trump given his more Kind of natural Nationalistic views that he has in the way he wants to govern So he definitely is the outlier of the three Merkel very much just given the sensitivity to the German economy more open to striking some kind of compromise and deal Macron's the kind of Mr. Europe and the biggest Kind of block I guess to that happening. So maybe perhaps the Thursday conversation between the UK Prime Minister and the French president will be particularly of interest for markets final thing to talk about is we had the API Crude all infantry's last night to start off. Let's just have a quick look at the the crude chart. I mean this was a Chart that I was looking at yesterday because we're drawn up quite a distinctive trend line from the price activity You can see highlighted from the ellipse here from the low point printed down at around a 5050 price point on the seventh Retested multiple times. We got to that point had almost like a false breakout and a rundown to that What was the s1 on yesterday's daily pivots before then launching back higher and then Consequently the other trend line coming from some further back price action on the upside just containing as well as the previous highs You can see here from the price action over the course of the last 48 hours So quite a nice technical setup in oil When it comes to the API infantry reaction as you can see it was basically zero market Didn't really react at all the numbers So you're aware was a crude drawdown of 3.45 million which was a deeper draw than expected Cushing a draw of 2.8 million the biggest draw since Feb of 2018 gasoline draw 400,000 distillate build 1.8 million but rather than dwell on Infantry situation. I mean the chart really says it all it didn't really move on the data And it's similar with the DOE's that will get later on this afternoon as much as they can move the market and WTI is sensitive in the intraday environment to that release I think the bigger play in town is still a demand story emanating out of the trade talks and this overall perception of global growth or recession fears That have come from this new obsession with the yield curve So I don't really see that being a game-changer the only time that that could really take hold is if Then if I extend this trend line out a little further if we were to get a break upon that Then what I'd be doing is then at that point if we were to get a bearish report big builds across the board Then just looking to target down at these previous areas of kind of relative significance As you can see following the trend lower Would be the approach All right, that is it though from me I'm gonna hand you over to Sam So let me just switch over my charts and then hopefully if I don't see in the chat room on Trading Live I'll see you on YouTube later on this evening For the event. Thanks very much Thanks, and and yeah might as well still talk start talking about oil here with the trend line getting squeezed in from The downside held well yesterday, and we're already back up towards that higher point and just to put this on to the daily as well Should that load up you can see we've we've got that really Strong Test happening now of this this trend that starting back on the the 15th of of July So certainly where we finish the the day in the weeks on on this trend line will be massively important I'm just gonna move this trend line down to where it would be and you can see just Really held up nicely yesterday morning the last test before that on the 13th and a Decent push from yesterday's S1 that trend line up towards 56 and a half where we're trading now So if you're you know probably with with the data out later There's no harm into the waiting for that but certainly if we can get a close above there Could well see a further push higher To the downside the same as yes They really just focusing on on can you get a close of of that? That trend line and below there will be obviously the main thing to focus on for The day and session ahead the euro relatively flat for for the day now just having a little bit of a Go at trying to claw back the the pivot after breaking through That area although found support pretty much the height of yes there We eventually got through there late into the session And it still remains and I'm just putting this on Longer time frame you can just see near those lows and it's Starting to do what it did a couple of well, I guess you could say yeah a couple of weeks ago We just get almost making a new range and See that Then we have that push down and we're looking like we're just about to do the same kind of thing So especially with the the minutes later Which you know eyes will be on no harm and again for this just being a bit patient till maybe we come into the afternoon And evening before really getting too involved certainly to the upside I would be focusing on on on any of those breakdown points should we we break above this range Which I would say now comes in and just put this on to 60 minute You can see the R1 and that the higher point from Friday Friday from sorry the 19th Monday is is pretty much bang in line and the double bottom from Friday and Yesterday as well for the lower part of that range. So just keeping an eye on that. Yes The pivot is is pretty important and this area is such 111 11 has been you know influential really go back to the 16th and then the ninth the morning of the Monday High of yesterday morning before we broke through and then find the sport now So it's a key midpoint and I'd almost put it down to that level Today's are one of the top end of that range and and that double bottom waiting for the price to come to those Looking back at the similar price action You can see from that week where we were stuck in it from the 6th to when we finally broke through eight days later On the 14th so for euro those to be the levels I focus on the pound had a bit of a push Didn't it yesterday before just drifting lower and we're continuing to do that now below the pivot For both the euro and the pound they were coming to that lower point of those those trends and we we got a decent Upbreak through and then the obviously the S1 came in the story about Merkel really ignited price to the top end of its range However, we have come back down since I still have that trend line on from yesterday Despite what looks now like a bit of a false break. It was respected well before and then after on the breakthrough So I'd still have that on as a pretty key level And likewise to the upside if we can get back above that range today's are one And the high of the sick looks pretty important the pivot obviously is an area to focus on But should we get back down to back up? I should say to any of those previous lows around 121 69 I also quite like look the look of that intraday levels. You can see 28 and 19 we had some good Resistance slash support yesterday. So they would be important before we got down to that trend line quick look over at gold which With equities having just pushed higher and reaching their highs of the day in the States You've got gold coming under pressure and finally Breaking through 15 11 and a half which held so well yesterday and then 6 a.m. Before that break down you can see S1 providing a bit of support key level below there the double bottom from yesterday and Monday Also in the picture and then the duck double top as well So similar to the euro in that you're perhaps getting this new range coming in that you would like to to be focused on As well for for gold and again with the Fed Minutes later no harm and just sort of being a bit patient Today as the market will of course be be waiting around for that as well The S&P has mentioned as I did push higher and the Nasdaq actually is the one that is really pushed on already Reaching that R1 the Dow Jones and the S&P much more Relaxed in terms of not quite making that that level the S&P is putting this on to that daily chart And we talked in the briefing about the the trend line yesterday Let's bring this in now Let's have that drawn on you can see just how well that was respected and we were talking about as well How how it was so similar to October November December last year and not saying that's the high That's just very important to keep an eye on what happens around that trend line Certainly should we get up there again? Bulls and bears will want to be Protecting or the bears protecting the bulls looking to get through that so intraday Where's that trend line looking like it's gonna come in if we were to come up now anywhere between I guess 29 28 and 30 would be the level of interest and that for me is that the key level For the week really to the downside if we were to get another push below 2900 obviously the low of the day which was the high we had back on the the afternoon of Friday So that's pretty important and also back down towards 28 78 is pretty key from a price action point of view But for me all about that trend line and certainly the way that the market started today Looks pretty strong Euro stocks and that's already above there Well, you're stocks above the R1 and the Dax just testing that now and that key level in the decks from yesterday's high And also Monday's high so that higher the week been tested a couple of times Can we get a third test of that and again just like a couple of these other markets? We're in this little range on you where you've got a clear to find double bottom and double top euro gold the Dax all very similar trend lines important S&P and oil and they Not too far away from from being tested obviously some interesting Could be an interesting evening Depending on what comes out to notes also down with gold and the bund following suit there as well Any questions usual, please do let us know I'm looking forward to catching up with you all guys Later on on YouTube, so please do make sure you join him. I hope you'll have a Good good morning and catch you later