 Good morning, welcome to CMC markets on Friday the 1st of May and this quick look at the week ahead beginning the 4th of May and before we get on to that, I think it's important to look back at the trading activity of the last few days. It's certainly been an interesting one given that we're starting to get an awful lot more visibility in terms of the overall outlook or the economic outlook in terms of the various economies, European economies, US economy, the UK economy when it comes to the economic damage caused by the lockdowns towards the middle and end of March and the likelihood of the significant economic damage that we're going to see when the April numbers come out and the Q2 estimates start to take shape. Despite all of the economic bad news, you would think that equity markets would have been a little bit held back by some of the data that's been hitting the wires over the past few days, but far from it. We've seen European stock markets finish April with their best month since October 2015, though they did finish April with a bit of a whimper falling sharply and I think this was largely down to the fact that the GDP numbers, the first quarter GDP estimates, the first ones from France, Italy, Spain and the US were much worse than expected. That still didn't stop the S&P 500, though, posting its best monthly gain since 1987, a gain of 10.7%, but I think a large part of the reason for the gains that we've seen in US markets, particularly the NASDAQ, was the fact that we've seen strong gains from the likes of Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft. An awful lot of these companies do well as a result of people working from home. Certainly, Amazons performed quite admirably, easy for me to say, despite the fact that they're setting aside around about $4 billion worth of future profits in various areas to mitigate some of the coronavirus related expenses. Apple's earnings were actually slightly better for this Q2 than they were the same time last year, but these earnings announcements or these earnings expectations were revised down quite substantially from where they were earlier this year. Having said that, we've started May pretty much on the back foot. Earlier this week, the FTSE 100 went above $6,200, or you can see in the last couple of days those gains have pretty much gone. There is a good chance that actually for all the gains that we might have seen this week, we could well find that we actually finish the week lower. Certainly, looking at this daily chart here, we can see that we posted a key reversal day on the FTSE 100. There's a fairly even chance in the absence of European markets today, because it's May Day, that when they return on Monday, we could see a big gap lower in European equity markets. It's not hard to see why when a lot of initial GDP estimates for France, Italy, and Spain were in the region around about 4% and actually came in around about 5.8%, 5.8% in the case of France, 5.2% in the case of Spain, and around about 5% in the case of Italy. Despite the fact that an awful lot of the first quarter was actually not spent in lockdown, and some of these lockdowns happened towards the middle and end of March, these are enormous contractions when you consider that the lockdown has only encompassed around about three or four weeks of the actual quarter. So that gives you an indication of the extent of the economic impact that we're going to see as we come out of Q2, given the fact that only now in the next week or so are these lockdowns even going to show any significant signs of being relaxed, and even then any economic activity is likely to be very, very muted indeed. So the ECB is estimated that the GDP hit is likely to be between, in the worst case scenario, around about 15% annualized over the course of the next few months. Well, that's an enormous tier, and that's before you even consider the fact that the European economy was in a fairly weakened state leading into the crisis, let alone what it's going to look like afterwards. Having said that, what we've seen over the past couple of days is a sharp correction lower, and we've rebounded off the 50% Fibonacci retracement level of this down move in the FTSE 100. We did break above this 38.2 that had capped the price action up until earlier this week. We spilled out very rapidly towards the 50% level, but we've now slipped back. So I think really over the course of the next few days, you're going to hear an awful lot of commentary about selling Mayan Galway. Personally, I think that's a little bit of a trope if you like. I don't think it really bears up to an awful lot of scrutiny. But that being said, May generally does tend to be a little bit more cautious in terms of stock market performance, even if in past years we have seen some modest gains. Given the current context, I think it's going to be very, very difficult to see the potential for significant further upside, even if you allow for continued central bank monetary stimulus and the fact that they're likely to keep their foot hard to the floor. The economic impact, the earnings impact, I still don't think has been suitably factored in to the overall earnings outlook. That being said, the trend from the lows in March still remains very much towards the upside. So for all my skepticism about the sustainability of this particular rally, we still very much remain in by the dip mode simply because the fact of the matter is if we look at the correlations between all the relationships between these lows and these highs, we are still making higher highs and we are still making higher lows. So until such times as we take out these lows here around about 5,600 on the FTSE 100, I think we're very much in a case of by the dip on any pullback. That being said, we have posted a key day reversal on the FTSE 100. So we could see a little bit of further weakness in the short to medium term. Looking at the DAX, that's currently not being traded today because Germany, the German market is actually currently closed. So again here what we've seen was a big correction back from the highs that we saw on Wednesday this week of around about 11,200. We've reversed a good proportion of that. The likelihood is we are probably going to gap lower on Monday. You could argue that this is also an engulfing candle on the daily charts, so which would signal the potential for a test back to 10,190 on the German DAX when we come back next week. So I will be keeping an eye on that level on any move lower in the German DAX. The S&P is however open and despite the fact that the S&P 500 managed to post its best month since 1987, the gains that we saw in April still weren't enough to reverse the losses that we saw in March. We can see that born out if I change this particular chart here to a monthly chart and then we can display that thus here. So that was where, that's February, that's March. We haven't reversed all of them, but we've reversed a pretty good proportion of them. But if we go back to the daily chart we can also see a little bit of a reversal in the daily candle. It's certainly not conclusive in terms of the overall picture and actually you could argue that rather than being an engulfing candle, which it clearly is not, it could be construed as another variation on that dark cloud cover, which is the candle basically moves more than three quarters into the body of the previous day's candle. What's interesting is that we weren't able to take up 200-day moving average and as I've indicated on previous commentary, that was always going to be a key barrier going forward for US markets, notably the S&P and the Dow. So while we're below that, the upside barrier is going to be very significant I think in terms of any further gains over the course of the next few weeks and months. So while I've said we're very much in a by the dip mode, the upside is still going to be fairly limited in terms of where we're likely to go over the course of the next few months, unless or until we take out the 200-day moving average. That's going to be a very, very significant level for all equity markets as we look ahead. One of the notable takeaways from this week's key announcements has been the number of companies that have either cut the dividend or reduced the dividend or got rid of it completely, but also getting rid of their forward guidance as well. And I think it's entirely understandable the companies do that. I really don't understand why companies get punished for withdrawing guidance at the time when it's really difficult to really look more than three or four weeks ahead when it comes to the actual lockdown measures at the moment here in the UK. We don't know what the roadmap out of lockdown looks like. And against that backdrop, it's not perhaps surprising that companies feel that they can't give accurate guidance. And that's quite pragmatic, it's quite sensible. There have been some winners, Wreck-it-Ben-Kaiser earlier this week, actually raised their forward guidance for the rest of the year. But that's because they they came forward with a very good performance in their health and personal care divisions. There's Neurofen, Lemsip, Paracetamol generally, Detol and Lysol sales went through the roof. My only hope is that the people who stocked up on Detol, Lysol and everything else didn't take President Trump's advice to try and inject it. Otherwise, we would be having a different conversation. That being said, the employment, the data that we're looking at continues as we head into May. We've had UK manufacturing PMI today that came in at 32.6, slightly down from the 32.8 flash reading that we saw a couple of weeks ago. And as we head into Monday, we have the rest of the manufacturing PMIs from Europe. And while the slightly manufacturing activity has been slightly more manageable in terms of the European economies more broadly and the global economies more broadly, we've seen Japanese PMIs slipped to 41.9. The general manufacturing numbers that we're expecting out of Europe are probably going to be in the high 20s to low 30s. Still pretty horrible, but certainly nowhere near of the magnitude that we've seen from the services sector. And those numbers are due out on the 6th of May. Now, these numbers have been the complete train wreck. I mean, there's no sugarcoating it. We've seen record lows pretty much across the board, France, Italy, and Germany. And they point to sharp economic contractions as we head into Q2, extrapolating what we've seen in Q1 into Q2. And you're looking at 10, 15% contractions at the very least for Q2, when you have record lows of 10.2 in services for France and in the mid-teens for Italy, Germany, and the UK. I think the big data point for next week will be the US jobs data. US jobs data, we've also got a couple of rate decisions. We've seen the Fed earlier this week and the European Central Bank this week. The Fed painted a pretty dark picture of the economic outlook. But I think, encouragingly, they acknowledged that and they said that they would be monitoring the situation very, very closely and be ready to act further if economic conditions deteriorated further in the context of the stimulus that they've already undertaken to put into the global economy and the US economy more broadly. So let's start with the two rate decisions first. We've got the Bank of England. So in that context, let's have a look at the cable chart. The cable chart has actually been doing fairly well, largely as a result of a slightly weaker dollar. But what's quite interesting about this chart is, again, the 200-day moving average. I talked about that in the context of equity markets. It's equally as pertinent in terms of this cable chart here. The current rebound has stalled twice at the 200-day moving average, 1.2640.50. That's a very significant chart point. We did break above 1.25 earlier this week. We now need to hold above 1.25 to have any confidence that we're going to move higher. Certainly, if I look at cable and I look at the rally in equity markets, you could actually say there's a decent correlation between the two. One of the things I would say is actually the pound isn't anywhere near as weak as the footsick has been today. And it's not expected to be as weak as US markets are expected to be today. So there's a little bit of divergence going on there. More broadly, the pound has moved pretty much in lockstep with the rebound in global markets. The fact that it's not moving down maybe is a little bit encouraging as we look into next week. But may generally tends to be a weak month for the pound. So unless we're able to move above this 1.2650 level, there's a good chance we could revisit the lows all the way back here at around about 1.22 and a half. So I'll be paying particular attention to the cable chart over the course of the next few days because on a seasonal basis may generally tends to be a little bit weak. But certainly looking at this chart, the price action does look fairly positive. So we'll have to wait and see. There's no signs of reversal here in the same way that there has been in the FTSE 100 and the German DAX where we've seen potential key day reversals or dark cloud cover. So keeping an eye on that, the services PMIs, the manufacturing PMIs for the UK are likely to be weak. They're not like, that's not like to be a surprise. I think much will depend on what the US dollar does going forward and how bad next week's ISMs and ADP and non-farm payrolls reports are. We also have the RBA due to meet on the 5th of May. Now in recent comments, RBA Governor Philip Lowe has warned that the economy would shrink 10% in the first half of 2020. Again, in line with the equity market rallies, we've seen Aussie dollar rebound as well. This will be the first recession that Australia has seen in 30 years. It expects unemployment, the RBA expects unemployment to hit 10% by June with the outlook set to remain gloomy for the rest of 2020. Or you could actually make that sentence apply to pretty much every economy around the world. They're targeting the worst economic outcome since the 1930s. Again, you could use that description for pretty much anywhere. But it's important to see from this, even though we're seeing a little bit of a pullback today, we are still very much in an uptrend here. So I think unless we take out the 64 level on the Aussie dollar, then the current uptrend could well remain intact. You certainly could see a rebound from these sorts of levels on any pushed lower. Obviously, if we go straight through that level, then the likelihood is we'll probably see a correction level. But again, I think that will be really depend on equity markets more broadly. Euro sterling, let's have a quick look at that because I think that's quite an interesting chart. Finding some really decent support around about 86, 70, 80. That for me, I think is the line in the sand. I'm still more of a euro bear than I am a bull, even though we've seen Euro dollar move up above 109, 70 and looking to test 110. I still think 110 is a bit of a barrier on Euro dollar and it could well limit the upside, which means that the risk here, the fact that we haven't taken out 86, 80, if we're able to take out these highs here around about 87, 80 on Euro sterling. As long as we stay below there and more broadly, I think this series of highs here, this is likely to continue to range trade. I think Euro sterling is likely to remain fairly well sidelined. I'm still very much of the opinion that there's more downside risk than upside risk. But it's a question of really getting short of the right level. It got resistance around about 87, 80 behind that at 88, 70. I would certainly still look to play that from the short side. In terms of non-farm payrolls, it's going to be a big week for the dollar. Let's have a look at the CMC markets US dollar index because I explained how this worked in last week's video. Again, we are getting lower highs and we are finding a little bit of a base on the CMC dollar index in and around this series of lows around here, around about the 1030 area. So you've got low there, low there and low there. So there is a little bit of a little bit of a base forming there. But what's interesting is the fact that the rebounds are getting progressively shallower. So that does suggest to me perhaps that we could start to see a little bit of dollar weakness over the course of the month of May. And the only way that I would revise that opinion is if we really take out these series of highs that we saw in April. So the dollar index, the CMC dollar index is pointing to gradual dollar weakness while below this series of highs through here, which should be positive in the longer term for Euro dollar and cable. So very much a case of buy the dips on cable, very much a case of buy the dips on Euro dollar based on what the price action has been doing. And certainly the CMC dollar index does appear to support that. As you can see from here, we've got a series of highs through here around about 109.90, 110. We're around about there now. We've also got the 200 day moving average here. And we've also got these series of highs here. But overall, we're in a bit of a range on Euro dollar. I don't really expect that to change any time soon. So let's look at let's look at expectations for the US employment report. Well, the rise in weekly jobless claims has really been eye watering. I mean, 30 million Americans in six weeks. Now, the April employment report is only going to apply not to the last two weeks, but the first four weeks. And that's going to be around about 20 million jobs. Though it's quite likely the world could come in, the number could come in well above that and be closer to 22 million. The unemployment rate is also set to surge. We've also got the ADP report that's likely to see two million job losses as an estimate from the ADP. So you're looking in a region of around about 35 million Americans losing their job in the last six weeks. I mean, that's just eye watering really high. That's going to push the unemployment rate up to 20% over the course of the next month or so. We could certainly see it test that in the Non-Farm Playrolls report on Friday, which incidentally is also a UK bank holiday. I will be hosting a webinar to cover those numbers on that Friday, because I happen to draw the short straw, sadly. So what else do we have here? Bank of England rate decision, not really expecting too much from that. It will be Governor Andrew Bailey's first in the hot seat as he casts his as well as the NPC's eye over the wreckage of the UK economy in the wake of this coronavirus crisis. I'm not really expecting too much. Obviously, I think the economic outlook and inflation report is likely to pay into a very dark picture of the UK economy. But the UK central bank has already said that it remains ready to act to support the UK economy in conjunction with the UK Treasury. So they could actually go further in the range of assets that it might look to purchase. It's already buying corporate bonds, commercial paper. It might actually go a little bit further in its commitment to buy company assets to support businesses through this particular crisis. In terms of earnings, we've got numbers from BT Group, Intercontinental Hotels, ITV, Walt Disney and Uber. Uber, well, obviously the cab business is not doing particularly well. But in terms of Uber Eats, you would expect that business to do quite well. Unfortunately, it only makes up a very small amount of Uber's overall incomes. The rally that we've seen in Uber shares thus far has stalled at the 200-day moving average. So keep an eye on that in the context of the numbers that are due to come out for Uber. I'm just going to change the colour of that so it pops a little bit more. Because that light blue is not particularly eye-catching. So I'm just about to change that. There we go. That's slightly better. So 200-day moving average around about $32. Keep an eye on that for Uber. Not really expecting anything eye-watering from there. Walt Disney. Now that's going to be an interesting stop because of the success of Disney Plus that we've seen over the course of the last few weeks. That launched here in the UK on the 24th of March, pretty much just a few days after the lockdown took place. Now we've seen a decent rebound in Disney shares. The problem that Disney has is that it's having to contend with the closure of its theme parks, movie production, and the length of time they may have to wait until they can open and restart. So even then, footfall is likely to be much lower as consumers avoid large-scale events in crowded places. So while a new streaming service Disney Plus is likely to do well, it's unlikely to fill the gap given the small margins and the fact it's also one of the cheapest and the content is quite limited in its scope. Netflix have already said that any subscription boost is likely to be fairly short-lived. So I think from that point of view, the upside in Disney shares could well be fairly limited even if they were to be earning expectations into continental hotels. They're pretty much in the same boat, they own Holiday Inn and Crown Plaza. They're going to be in the same boat as the airlines in terms of how they do. They've posted some decent rebound, but here we've seen a very bearish reversal on the daily chart. Having said that, we saw one of those here and it didn't really amount to much. So again, it's in a nice little uptrend. Draw a line through those lows if we break below this key support in and around 3,300, which is around about these lows last Friday, then we could see a bit of a correction lower. But certainly in terms of intercontinental hotels, they've already said they expect to report the first quarter revenue per room will fall 25%, with 55% of that decline taking place in March. So you could argue that an awful lot of that is already priced in and the greater China region is expected to show continued improvement as China recovers from its own lockdown. We've also got BT Group. Obviously, BT Sport just shelled out a huge amount of money for Champions League. Well, there's no football, so they're not really going to see the benefit of that. And there is speculation that they could well see a cut to their dividend. We've already seen Shell surprisingly cut their dividend and BP not cut their dividend in the past week or so. So certainly wouldn't want a dividend cut on the part of BT Group, given the fact that they have underlying net debt on the up and they'll need to do something to try and offset that. It's at a record £18.2 billion. So it could become the latest company to cut its payout in the face of the uncertainty around coronavirus. So that's it for this week. Oh, just have a quick look at Brent, seen a decent rebound over the past week or so. Is there further to go? I think it's very difficult to say with Brent at the moment. It's becoming very, very difficult to trade. What we have seen, I think, is if we do get a rebound, we could retest the highs, sorry, we saw in the middle of April, given the fact that production cuts that were agreed last month, kick in today. So keep an eye on that. And Gold has not been able to sustain that move above $1,700 an ounce. Not overly concerned by that, as long as we're able to hold above these lows here, rather, from the 21st of April, then the likelihood is we'll continue to see a move higher than the Gold price. So that's it for this week. Ladies and gentlemen, thank you very much for listening. Before I sign off, just quickly bring back the disclaimer so that I can keep my good people in compliance happy. Thank you very much for listening. Hopefully, you will all have a very nice weekend. And I will talk to you all this time next week when we cover the non-farm payrolls report. Thank you.