 Okay, very good morning to you. Hope you are well. Wednesday, 26th of February, going to talk over what has been pretty dramatic two days in market, certainly from an equity perspective. I think the close down of 879 points from the close of what? 1031 or so that we had on Monday. So the continue dominant theme of course being the outbreak outside of China and the impact that this could have then on the potential to spread But also ramifications on the the extent on the global economy still right at the forefront of investors' attentions for this time being So looking at the asset classes this morning a little bit of stabilisation you could say But definitely will be interesting as we go in towards the rest of the session because from a calendar perspective It is relatively light today We've said this before when we've looked ahead right from the beginning of the week about how or what the Landscape is like in terms of scheduled events for this week And it certainly from a data perspective lots more speakers and stuff like that are coming out on Thursday and Friday So it does then leave a relatively clean slate for Traders still to very much focus in on the virus to be the defining factor to probably drive short-term sentiment Particularly so given the context of what's happened in the last two days So I'm not really going to look at the charts too much I'll leave Sam to do that, but I definitely want to recap exactly what is the current status and then probably more important for For you guys is what is it that I think that you need to look out for as for then What could be a trigger point for another extension of the moves we've been seeing if that were to materialize? What would the headline hypothetical news need to be? I think it's prudent to make that thinking now ahead of time so you can be more Proactive if you like if that scenario does unfold so And I must word of caution. I'm not trying to scare anyone when I talk through these scenarios but let's have a look then at the main kind of reason why and what's what's really kicked off this this Dramatic risk-off move that we've seen since the commencement of trading this week And this is looking at the cumulative confirmed cases outside of mainland China I'm going to show you the numbers in China in a moment and actually it's dropping off quite rapidly in China But that's not the issue of which markets are facing right now. It's this idea about you know actually this outbreak Particularly Italy because I'm going to run you through and you'll see that Italy is almost the epicenter now It's like the European version of Wuhan anyone who's been to Milan is then moving and causing issues elsewhere Is what's happening at the moment and it's hard remember when? Several weeks ago. It was really hard at the beginning to get any sense as to Qualify accurately what the potential impact could be Because we didn't know when China would have actually put the lock down on and so therefore Well, how many people actually had freedom of movement and that's kind of what's happened in Italy where? People in the Western European cities would have been aware of coronavirus But you know transportation links major airports infrastructure of that nature was by nowhere near on lock down So how much movement happened and where have they gone before now greater more stricter action has taken place? And that's what's causing a little bit of fear trade in the market Now when we're looking at these numbers obviously South Korea is and Japan within the region is much more distinct so sticking with South Korea South Korea in context is Asia's fourth largest economy, so it's particularly important in that region from a kind of implications on the on the the local but also global economy and its national total for coronavirus cases now is Actually the latest numbers are it's more than a thousand now and if you think about it. What's again? Being one of the main factors here is the speed of which it's picked up. I think about a week ago South Korea was about 51 cases. It's now north of 1,000 So it's this kind of nature of the compounding growth that you see in this this the way of which we have to human to human transmission of this virus Other areas in that region Japan has urged businesses Yesterday to have their staff work from home Now that is one thing where in a digital world for many jobs Obviously that doesn't have too much of a ramification. I mean if you're a trader you can trade from home I can do my job on an audio squawk from from wherever really realistically However for factory workers That's definitely not the case and that's where you've had in China in an area like Wuhan in Hubei province in China Such dramatic impact on their economy and and that bottleneck if you like of them Reverberating down the global supply chain as well as major issues come so yeah The more apprehensive people will come the more then significant the potential impact could be on on that side in Hong Kong overnight they've unveiled measures where they've basically Measures worth 15 billion US dollars. They've added into their annual budget overnight to bolster their economy Now, don't forget for Hong Kong. They've not it's kind of like a double whammy now They've had the implications on their economy from the anti-government protests that have been going on for many months And we're kind of escalating and now you've got this virus So, you know particularly difficult for the Hong Kong Monetary Authority as well at the moment And then a quick look through some of these other areas Italy Of course is the one that's really drawn attention this week, but you can see Iran and Singapore have stepped up Singapore have banned any Inbound tourists coming from Dago from South Korea and then Iran's coronavirus death tally now is at 16 Red sliply high proportion comparative to confirm cases there Rather than looking at other countries Algeria first confirmed case from an Italian man who had been traveling back in Germany The southern state of batten-vertenberg tested positive for coronavirus After a trip to Milan and then you've probably seen quite a lot on the news At least in England that is about a large canary island hotel lockdown Austria have sealed off a grand hotel Europa And so, you know, this is what's causing a lot of this the big thing yesterday was this headline And I think this is then going down that discussion of what have we got to look for next if this is going to become Something more significant in terms of a market correction, particularly in the equity space and this was yesterday and was definitely an adding or Contributing factor to some of the moves that we saw and this is coming from the American CDC and saying Americans should prepare for coronavirus crisis in the US Quote it's not so much a question of is this or if this will happen anymore But rather a question of exactly when So again these types of comments coming out of the National Center for Immunisation Respiratory diseases so the Center for Disease Control, which is what the CDC stands for, you know This is again, it's gonna is gonna just spook investors And also the public in that extent and you know if you think about how an economy functions if the public do get spooked You know think about what this has on a knock-on domino effect people will be there'll be less travel So tourism related stocks airline firms things like that will get dramatically Hit on the back of this if consumers stop spending money because they're not going out onto the high street For example, this will hurt retailers in many different ways You know this is where that impact where markets are trading today tomorrow's Expectation of the future and hence we've had quite violent movements in markets so far this does rise then an important point and I'm going to flip over here to a look at North America and Total confirmed cases in America at the moment is 57. So considering the population size and also in certain geographic areas like California for example the kind of Ethnic mix, you know Chinatown in San Francisco is massive and actually San Francisco has already put Parts of that area onto a bit more of a formal lockdown Just given the size of that population and the likelihood of travel to and from China to that area But the number in the US is pretty small actually and the number has already grown very slowly But as per what the CDC was saying The ability for that then this number is the one I would say you've got a watch going forward that could cause Another severe shake-out in the market now is that going to happen today? It could do is it going to happen though over the coming days I'd say you've got to just be super vigilant on numbers Related to the US if it was say New York and then this leads us on to another key city of course particularly given How cosmopolitan London is you know London what I've always found quite uniquely different whenever I've had the luxury of being able to travel is that London is so ethnically diverse as a city You know you're kind of almost hard pressed to find an English person in London and that means then that the likelihood of Movement and travel I think is a lot more risk and particularly in a city Which has an underground infrastructure like the underground system, which is very old And compact and confined in its space I think the ability to spread a virus if it was to take hold in London Would be quite a dramatic turn for the ability of this to really flare up considerably And so yeah, so far in terms of the UK I mean, let's just have a quick look if we scroll down the list here in the UK There's only been 13 cases so far and if you actually zoom in there's a little hot spot here. You can see Right in the north of England So London though is the one you'd want to look out for perhaps Birmingham Manchester Manchester these other bigger cities as well, but specifically London I think if that happens you might get another run in that respect So just things to heads up to to be vigilant for As I said though on the Chinese side and as much as right now I think the last two days has been more of a fear trade from an actual Physical point of view. China has been slowly returning to some degree of normality This is looking at some of that alternative data. I've mentioned before this is looking at daily coal consumption of major electricity producers Now obviously being such a manufacturing hub the amount of coal consumption is quite a good kind of precursor Then of the rate of which they are returning to some degree of normality as they start to Loosen the kind of containment if you like of the lockdown on these various different cities. So that's been slowly edging higher this is something called the Baltic dry index and Those of you who are more experienced will probably have heard of this before it is something that traders do Monitor particularly in the commodity space, of course What this is is members of the exchange. So the Baltic dry They directly contacts shipping brokers that assess price levels for giving shipping paths a product to transport and time to delivery or speed So essentially it's a way of acting as a proxy for dry bulk shipping stocks and general shipping market Sentiment so if you think about it, if you're thinking about that production chain You've got the coal consumption rates right at the base in the factory to power those machines And then it's about the transportations of goods So then you can see if these things start to start to pick up That's a sign then of some degree of manufacturing activity to returning to some degree of normality So that that again slightly positive on the and probably to do with the pickup in Chinese on the loose Loosening then of the lockdown they've had since the lunar new year and then there's a look at the actual corona numbers Here you can see on the left-hand chart the number of cases And if you look here the new broader definition in Hubei in that main province in China has dropped the amount of new cases It is dropping quite rapidly And the rest of mainland China and the old definition is also dropping quite dramatically the other thing that people look at obviously not Google in China, but Baidu or Baidu their search index coronavirus and mask tracking For search searches, you can see spiked right at the end of Jan and then it's been decreasing really ever since So again when you're trying to monitor people's general Confidence in those localized areas, you know, these can be quite telling signs So the long story short here is that at the moment the market is fearful of what's happening outside of China And as I've just described in those various different cities whether it has been some cases in Algeria in the Canary Islands in Germany. These are all people coming to and from Italy the northern part in Milan And so it just goes to show where you have an explosion like you did over the weekend in the numbers in that area And how then it's like dropping these little time bombs out into different geographic regions Which then flare up of course, so this is the risk and why the markets have moved. I think now Given we've had a near 2000 point move in the Dow obviously Technicals are key that was quite I saw Charlie doing some trades yesterday Really nice short on the Dow on a break and you had a simultaneous move and oil and the S&P was all moving in Sink, but now I think the technicals are quite important to just reassess things But you know from a fundamental point of view I think unless you start to see that breakout in the lights of Germany, France Perhaps the UK and London and also US numbers I think that's the next episode of a violent move like what we've just seen From a headline perspective the other thing that's happening Of course is that as stocks get hit naturally people flock to safe havens and so gold Obviously has been a clear player over the last few weeks But an interesting thing here is US 10-year yields are down around record lows You can see here what they printed down in 2016 and I've been reading a couple of bank comments this morning in my way into work and Quite a lot of big financial institutions Bank of America being one are calling for US yields down at 1.25 percent Some banks are saying that if coronavirus does indeed spread and we have a full blown pandemic Then actually 10-year yields have been heading towards 1% and if not lower And so that does bring about a really interesting concept because in the world of negative yielding debt You know where most German bonds out to maturity is quite far out a negative yielding You've got zero negative interest rates in many different countries The US has been one area where yields have offered some type of return But if the US yield comes to join the club zero or then where where do investors where the portfolio managers look to put their cash? And you know the most kind of I guess clear play would be in gold And that probably Emphasizes the reason why gold's been you know a decent performer in the last week or so But the difference between gold and bonds of course is that there's no there's no there's no yield There's no coupon with gold you don't get a regular payout So definitely an interesting scenario here if the old stew start to dramatically come under further pressure and and the key here Then is well, what are the Fed saying because if you think about it now The pressure on the Federal Reserve to cut rates is only increasing at this present point in time Now this was a comment and I think I think Federal Reserve rhetoric now Speeches is really key to try and factor in then what happens next and the Fed vice chair Richard Clarita spoke yesterday, but gave no hint of a rate cut despite the coronavirus turmoil He said the central bank is keeping closed tabs on the disease spread now This hearts back to an interesting comment that I saw someone mention which is this sounds awfully familiar To when the US China trade war was first happening Do you remember when they were first going blow to blow with the escalation of you do tariffs? I'll meet you in the US would be the aggressor and this was having then a building up of a negative Implication for the global economy as time went on through 2018 2019 now What happened there was at the time Federal Reserve Communication was saying it's too early to tell the impact of the trade war However, it started as time went on and the tariffs started to increase It became clearly evident this was having an impact on the economy and subsequently we saw the Fed cut rates three times Of course as to where they are now in the holding pattern Now it's almost like a copy repeat of that process We're at the beginning of the virus and rightly so it's hard to really Yet understand how far reaching this becomes But in my mind the Fed are gonna have to start at some point It's almost feels like it's inevitable the Fed are probably likely to start cutting again The problem is of course rates are already quite low and there's only a limited room of ammunition left in the box So, you know the most dramatic scenario us yield start You know collapsing down to zero All of a sudden then the Fed we start looking at this idea of Fed rates at zero again back to post financial crisis era And they've got to start warming up those printers again to start firing up the QE machine. So So it does happen. Well, remember Alex and I have been looking at the Dixie going up to these levels Kind of way up at around the hundred with a long-term kind of trend channel on the upside Where we've had some key levels to look out for technically But you know if we start talking about those most dramatic scenarios, which aren't my base case But you know if it did happen then obviously that would have repercussions as well on the on the dollar What is the expectations in markets at the moment? Well, the next Fed meeting is only in a few weeks Actually, it's on the 18th of March and this was a bit of a a non-event where it was very much expected That hold rates but obviously as things have started kicking off in the last few days And the virus has really taken hold and captured traders imagination the the prospect of a rate cut has crept higher now to 28 So still very much expected to hold if we go out to the april meeting though that has now shifted And a few weeks ago market pricing for a fed rate cut was tipped on the balance towards november December time that's been brought all the way up now to april Where the markets are pricing in the 25 basis point rate cut So definitely this warrants monitoring at the moment Final thing I wanted to mention was oil. These are the oil infantry numbers from yesterday However, I am going to make a bit of a brash bold statement I don't care about these infantry numbers. It doesn't matter because what matters is the virus That is the dominant theme right now. And if you look at oil yesterday Oil is playing the same narrative as the global Asset reaction to the virus that being stocks down oil down This is about a loss of consumption. This is about bad economic future for the global economy And if actually then if I remove my camera, let's go back to that technical chart We've been looking at for many occasions over the last few weeks. Look where we're at We're right back down to some key Interesting levels again. Remember we had that verbal intervention on behalf of opec plus They were talking up the prospects of a 600k cut potentially emergency meeting They didn't need to do that because markets bounced dramatically last week. However, here we are again Right down at these key levels around the $50 price point, which in the futures we trade below at the moment I would say keep an eye on those lows that we printed back in early feb because we do get through there And we start to push lower through 49 then This could spell further weight and quite a dramatic technical move then much lower down And so that could be something for sure to keep an eye on as we go through the the days ahead So in terms of the infantry data the things like the api the does, of course, we've got coming later on I mean, it's more of a short-term distraction To the other otherwise more broader bigger Um situation that's going on and which is a much stronger influence beyond just the short term Volatility you'll see on the the infantry release Okay, sam's going to come over but while he makes his way over are just going to Quickly run through the calendar as I said It's pretty quiet for this morning. There's not really a great deal at all going on. So I would say pretty much a us centric session And again, it's about markets taking a little bit of a stock of where are we at the moment? Keep an eye on those numbers. Keep an eye on those other significant cities in the western world I think the markets somewhat acclimatize now to the acceleration in numbers in the areas of like career and Japan it's all about mainland europe and america now if we are to see further outbreak Um, okay speakers final thing Uh, a couple people ecbs panetta coming out shortly Uh, christine legard is speaking but there's no expected text That's at 130 EU chief brexit negotiator michelle barnier talking at two again expect tough talk But nothing really market moving for the pound would be my base case expectation feds kaplan feds kashkari Both of which are voting members one neutral one dovish are speaking afternoon and later This evening any fixed income traders. You got the five-year note 41 billion dollars from the us treasury as well All right. Good luck out there Listen up to sam. I think the the level picking now is quite key to have good strategic kind of frameworks around any trade considerations Because then it's not that I I don't feel like fundamentally that the market's just going to rebound aggressively I think the best case like with yesterday I think you should plan accordingly for either scenario perhaps a little bit of consolidation And then when the us come in decision time then from the americans when the volume picks up Do we see a repeat or do we see? Um a little bit of a push back to pull back some of the losses we've had of late. All right guys. Good luck out there See you in the chat room Hi guys. Yeah, I'd absolutely go there. I don't think there's a really a need to To get Too involved in a in a bias as such where if we just bring in oil here because this has captured my attention I think this is a good guide if you're after 150 bucks Perhaps can sort of be that for a bit of sentiment for for the day and You know below there and fine There's still a bit of pressure on and we drip lower and maybe you know looking for stocks to to continue to go short Then you know, that's that's fine. I think there's some big levels coming up here in in oil I'm just going to put this onto the weekly chart I mean other than the yearly lows you can see why this area is just so important bringing on the Rectangle here just to some levels that we had back in the beginning of 2019 then december 2018 You've got to feel if it clears this then, you know, there's there's room for it to to push down towards 47 As well if we put the trend line here on the weekly chart You can just see how important this as a zone is It's feel was at the moment like opac are going to have to save the day for this to to go higher We did have a good bounce, but obviously these fears and The rejection of of a previous area. I mean, what a short that would have been Incredible to look back at that should have could have would have of course, but yeah, keep an eye I think on these lows here just this trend line for the oil and then Intra date $50 handle as a good guide as you'd like bringing on the the Dow here got the daily continuation Trend line It's a good guide as well. I'd say you can see we broke through last night We came back to to test the 27 000 hand or some support from october last year And we pushed higher off that and then we're just finding resistance on what was the previous low from december and also the The retest of this trend line. I know smp had a similar Trend line, which I think has actually held. It's just bring that in Is it around here? Maybe it's a bit further down actually I have to to check where that's from but that's uh, yeah, here we go I was thinking because it broken through it. It hasn't uh, that's the december 2018 low You can just see there in the camera. It's going to move that now the way Bring that in that's a good guide here I think the for stocks later on if we get below there then it could well be a quicker move down to It's a 3100 I think today is is a day not to necessarily go in with with a bias I think let's get that trend line on let's get your pivots on it's mark up Important highs and lows and you know areas just to to be aware of are there any other trend lines to to maybe get on I mean possibly get it on a little 15 minute today and and see are we getting squeezed from those lows So have a quick look Really worth having on and then the highs as well as a bit of a guide but you know here now you've got some key levels to uh to have marked up and it's kind of These are your areas you can trade from I think anywhere now in between these two points is you know not going to be The highest probability in predicting what's happened You can see we're just coming to a bit of support now, which was a key level But is this really going to be the low then we push all the way up or if we break does that mean we're guaranteed to To make fresh new loads of them. I'm not too sure. So just be a bit careful out there I think and you know trade what you see I think one of the the trades I would prefer is if we do break all of these lows and you get that continuation Or to the upside we break 31 60 and you can get a push towards 31 75 Which becomes you know, then a very key resistance level. So Do I think we're going to go down or up today to be honest? I don't really have a bias on it I just trade as it as it comes out the decks this morning just on its low from yesterday almost So keep a watch a key View on that if we put this on the daily I mean a lot of these these markets are on incredible areas of support if there wasn't the coronavirus Drama floating about you'd be saying well, what a place to get long However, of course if we were down here in another scenario, there's probably another reason for it But technically I mean have look at here. They got the Nikkei You know hit some incredible support the the low that we had from october and has bounced incredibly well from there The nasdaq obviously reliable stocks have come down and tested previous areas of support however, likewise for the dowel and The s&p which have found resistance here. You've got the nasdaq If you want to line in the sand, how about the the low that you've got from the 27th of jan Broke through came back fan resistance will be at relatively choppy But we failed to close above there and now Drifting back lower and that's the way I would look at all of these these levels here Just those key points at least a 60 minute to define your levels and then trade off that if you feel There's the opportunity to do so moving over to currencies Said yesterday is probably better things Or easier moves perhaps elsewhere and The euro you can see there's having decent pops and then slow moves down decent pops and it's uh I think looking at this if we just draw up a bit of support again Do I necessarily think we're going to go higher or lower? Not too sure for the euro, but this is another area where I would have that guide I think if we can get below 108 75 then we can start to drift lower as a bit of Intra day support for this move that's gone up. I'd say 108 91 on the futures. This is on the 15 minute previous resistance there as long as we're above there I think you know 109 can can come in and then we put this onto the 240 you can just see how important Just above where we're trading is as an area of resistance You can see what's the high that we had back on the 13th also the low the 11th just around there 109 It's say to the top 14 8 to the bottom As well as as a level where perhaps Resistance wise people might start to to get a bit more excited I know I'm patiently waiting for some of these previous lows to come in just a bit above that as well 109 37 You can see that triple bottom here on the daily chart from september Last year 2019 so keep up watching that decent recovery so far for the euro But it had been on a massive move lower And I think gold surprised a lot of people yesterday had been on a massive move higher But we did drift lower yesterday. I know we're just Recovering a bit, but we just couldn't break that area here. You see marked up 16 60 and and this is just the importance of having The the market tell you what's going on if someone explained what happened yesterday It's well gold's got to be through the roof, isn't it? Well, it just couldn't break through this resistance So that's you know, absolutely important level that I'm marking up today the r1 The highest from yesterday let that be the guide for what's really going to be be happening there You could argue a trending a bit from those lows So let's get a bit of a trend line on here just as again a guide for for price below there fine We can start to push back but for me, it's all about that 16 61 to the upside We just could not break above there yesterday Let's keep a watch what happens on that through there. Then you can see price would potentially find resistance on all these points here 16 66.6 Naughty number that 1672 just a bit above As well. So keep a watch on on that going forward Quick look over just how stocks have progressed in the last Few minutes while I've been doing this the DAX still just testing that area Keep a watch on that. I think a close below there in on the hour. We could start to to push lower But like I was saying a lot of support levels Just where we are on stocks and a lot of big term resistance levels just a bit above as well So be patient out there. Let the market tell you what's Going on and again, don't feel like you have to even be in a trade today It's not one to go chasing Have patience and trade what you see. I hope you all have a good trading day any questions Please do let us know And I'll catch you all later on