 Okay, very good morning. Hope everyone is well. It's Thursday the 8th of August. Gonna have a quick review of what's been going on So talking about China the Yuan fix of course is absolutely critical at the moment to watch and monitor and really dictates all the market sentiment They're present so as per these headlines here. We'll review that and what's the current status What's going to talk about the inversion of the US yield curve? Not only that but crude hit a seven-month low yesterday Golds at a multi-year or record high Having gone north of 1500 hedge funds have become basically the most bearish on stocks in a long while as well, so we're going to talk about what does that mean? But a lot of things happening at the moment But that's all broader context if we actually just start the briefing with the actual charts this morning equities recovered So much like on the sell-off that we had on Monday with the original episode of Concerns about potential mass capital outflows out of China as they allowed that currency to weaken We recovered quite sharply the following day and then we had kind of similar yesterday miniature kind of route in equity markets only for then a pretty solid recovery to take hold into the close so At the moment losses remain contained Gold albeit still elevated somewhat just given this the magnitude of the move yesterday And we were talking in the briefing about how we you know could see further upside in gold and that materialized pretty quickly even before Really America came into the market was already on the ascent Up here looking on the top right-hand corner So a little bit of backing off from that run-up of a decent kind of 24 $23 move I think is warranted the point being is we're still a Clear distance above the 1500 level for the moment the pivot providing a little bit of near-term support And as I said oil price is going to be the other one we're going to look at With some significance because it's prompting a lot of new OPEC rhetoric apparently behind the scenes Saudi having lots of conversations now about potential intervention in order to prop up prices Given the fact that we've hit a fresh seven month low So let's get straight into the headlines and then Sam will look at the charts in more detail starting off with this China Sets you and fixing stronger than expected helping soothe nerve. So not allowing the currency to Continue to weaken too much The one thing that they did do though is they did set the daily fixing at 7.00 0.039 so if there was that key psychological or symbolic level of seven is the first time since 2008 That the fixing was weaker than seven again the point being here is although it's got to that mark that was actually stronger than what markets were expecting Looking at this then Couple things to be aware of Really interesting comment from Goldman Sachs their Asia Pacific head And I think this was really important what he was saying. He said basically right now He suspects that China they want to Desensitize the market to this magic number of seven and make sure that they are not going to have capital outflow problems And I think that's that's exactly right. I think that strategy from China Is absolutely what their their intention is, you know seven why seven? Well again, it's one of those technical almost analysis Indicators where it becomes self-fulfilling if enough people believe in it and yes in previous years seven has been that barrier And the market has bounced in terms of the weakening of the yuan But seven is just a number and seven could become seven and a half No problem as long as this is done in a managed way Which resets us the market and our behavior that now seven is seven and a half seven and a half can become eight And so on kind of like the whole 2019 issue where the global economy is Heavily indebted and yet that's just a new norm. No one talks about sovereign issues so much now But a few years ago that was the big issue downgrading of sovereign nations like the US back in what? 2011 so point being is I think China rightly are trying to reshape the market's feelings around that seven so that they can create some room as the Economic impact of the tariff starts to hurt their economy more and Technically speaking they're looking to counteract some of that well as well with other measures by allowing this currency to weaken But importantly it not resulting in capital outflows So yeah, absolutely spot-on comment. I thought from goldman's this morning This is what it looks like as well when they talk about stabilization of the yuan Here it is PBOC selling stronger than expected fixed albeit granted above seven But here it is having spiked right just a few days ago We've now come off just a touch the other thing that's happened overnight. We did have some Chinese trade data To give you the stats here July exports rose 3.3 percent from a year earlier That's the fastest level since March of this year Stronger than expected, but imports remained weak. They declined by 5.6 percent So continuing to highlight potentially some of the weak domestic demand But exports perhaps getting a little bit of a sidekick from the fact that the currency has been weakening so all in all stabilization in yuan and Chinese trade data Actually, not that bad. I mean the export numbers were surprisingly strong and exceeded expectations So help to calm some of these growing nerves in markets this week One thing on a broader context though. There's a lot of people are looking at is this and This always comes about whenever there's you know quite extreme bouts of selling in the equity market people start to get Very gloomy about the economic future for the global economy and now Inevitably the news agency starts to feed that narrative Obviously a negative headlines are usually much more compelling a case and talking about positive things But we are not short of negative catalysts in the market right now now. This of course is factual, but You know, this has happened a few months ago and we averted that storm But it's back in focus again Basically the inversion of the yield curve the yield on the three-month US Treasury traded as much as 41.23 basis points above that of the 10-year government bond in the US. That's the widest gap since 2007 So yeah, the difference between the three-month and 10-year Treasury yields So invest is seeing no end to yield curve inversion for the moment. Why is that important? Well such an inversion of the yield curve has preceded basically every economic downturn or recession of the last half century So that's the reason why people look at this more of an indicator not necessarily if you're just trading government bonds and spreads if you're looking at a sign about Markets overall confidence in the future. This would be a negative Signal the other thing to Masso keeps telling me about Is the amount of total negative yielding debt in the world So about a quarter of the global bond market, which is equivalent to around 15 trillion US dollars Currently offers a negative interest rate. So just just to be clear you if you take that bond As the person purchasing it you're actually losing money. You're getting less at the redemption date 10 years down the line So you would think well why on earth would someone do that? Well when everything is falling Actually losing just a little is not as bad as losing a lot. So yeah negative yielding debt has absolutely exploded over the course of Basically the last couple of months you can see it's gone from it's basically more than doubled In a case of about one year, which is quite a frightening prospect about where our central banks Again, this is what's gonna make I think the next the next 18 months two years of financial markets So incredibly interesting is that central banks are facing quite Huge obstacles as about how can they re-stimulate an economy given rates in Many nations are so low still and the fact that the world is so indebted and it yields are already so heavily negative It's gonna be such an interesting time to see how they they manage that from a short-term intraday perspective Obviously, then while uncertainties there are more volatility it creates the more potential opportunity obviously to trade But yeah, just thought I'd point these things out. The other thing is again It's gonna sound rather gloomy again is hedge funds have turned their most bearish since 2016 So Yeah, Sam's just saying to me bye bye soon as he starts hearing these headlines He could be right on one point. So let's talk this through So the details here is that the ratio of hedge funds long to short positions This is known as net leverage. It's sunk to its lowest level since February of 2016 The bulk of those positions are basically short. So if you what happens here is Every week we get updates from the CFTC about the market's futures positioning across different products That allows us to see how long or short the market is in a more simple sense The the premise being the ratio of hedge funds long to short is now at its lowest since 2016 Indicating them in the most in many years markets getting short So underlying even though equities have gone up to record high levels Hedge funds are getting more and more building up their short positions now Long positions among those funds. This is what makes this potentially a Storm brewing for market movement in the equity space is that apparently The faith in crowded stocks are surged to a five-year high now to explain this what it means that is that those people who are long are Basically highly concentrated and only a certain select a few stocks so Particularly those in the software and biotech space the ones where the biggest large short positioning is in is in materials and financials You can I think the latter is pretty self-explanatory the economic slowdown materials will get hurt on the growth Prospects diminishing and financials in this low-rate environment will also get hit point being is though the more Concentrated a few names becomes well Then if everyone's short the market starts to come up Well, you're gonna get a bit of a short squeeze And that's where you get these kind of episodes of quite sharp Recoveries where we get a big sell-off and all of a sudden though Market starts coming back up and as it comes back up Starts then pressing a lot putting a lot of pressure on these short positions And some of them are gonna are gonna have to buckle and at that point the market jumps back up And we get a new elevated record high even though the market is short So, yeah, this the inversion of the yield curve The trade war risks Interesting definite interesting times for a macro top-level perspective and certainly it does feel like The chips are kind of stacking up at the moment for a Significant episode of volatility at some point in the near future Okay, moving on Looking at oil prices Well, let me just have a look yesterday was obviously really interesting We had a significant down day in price action yesterday, particularly in the afternoon We also had the infantry data As well, but wanted to just quickly put it on a daily continuation chart So you can see the fact that briefly Very briefly you can see here looking at the futures We got below that low point that we printed that kind of double bottom in June And that would put us back down to the lowest levels basically in seven months to the beginning of the year Right into kind of mid-January, but as you can see from the peak of price action that we printed 23rd of April we've now pulled back 24% so obviously bear market territory if you're looking at that the type of movement on the pullback that we've had So I'll let Sam give his thoughts technically about what he thinks about that But the point being is we know if we start looking at a longer time frame chart Let's bring in this sweet spot here, which is at 42 now you'll remember Saudi Arabia obviously at the moment have this very ambitious project called vision 2030 which is a Diversification project away from its dependency on crude oil a necessity for that nation now given the fact that Americans and Russians have diminished the power that Saudi has in order to just manipulate supply to move the price of oil In that diversification plan they obviously need to raise money Now part of that strategy would be then that the belief is that Saudi really needs oil trading north of 80 dollars In order to finance this type of project. However, the price is coming against them So if anything they're offside in that trade if you want to look at it Excuse me in that way Now, what does that mean? Well, the verbal rhetoric starts to come out from these these oil nations and particularly Saudi Arabia Because they know if we can break below that June double bottom as we tested and seen a very very sharp bounce yesterday I mean we bounced about a clear two dollars off that test But a break of that level technically really does open up a lot of clean air to bring us back down to these lows that we were We were training right in the middle of that Q4 2018 Route that we have across global markets and Saudi know that so what have they done? They've already started verbally intervening in the market. So this is 101 OPEC strategy And basically the Saudi Saudi Arabia has phoned all other major oil producers So including that of Russia to discuss possible policy responses As oil prices have hit this fresh seven month low the kingdom apparently that they said they will not Tolerate a continued slide in prices They're considering all options and the important thing is is they've kind of been brought into action by the severity And the pace of the sell-off yesterday, but this comes ahead of a OPEC gathering Happening in Abu Dhabi on the week starting the 9th of September. So pretty much a month to the date They're going to be meeting. This is one of their kind of interim meetings on a catch-up of OPEC members Because as you can see they know or we know that they have been continuing to roll over supply cuts Which has meant the OPEC output This is a graphic guide back from March 2019 to the current day And you can see OPEC output has continued to decrease So you've got the volume here of millions of barrels a day So it's gone from around 30.7 million in March all the way down to way sub 30 and yet Despite that the price still keeps coming down the idea here being then that because of these Multiple indicators about slowing economic growth the demand at the moment is outpacing the supply cuts The demand decrease that is so do OPEC need to take more aggressive action What I would say is if you're trading in today That's a really big level now what we bounced off the low yesterday You can see it quite clearly from a technical area of support. That's the key area to watch I think if we break that don't forget the $50 psychological handle is sitting just underneath there by about 58 cents That does open for me the trapdoor for a push lower. Who's gonna enjoy that price slide? Well, it does fit the narrative of Trump Politically looking to manage the middle class with a kind of artificial tax cut If you like with cheaper prices at the pump. However, Trump starts to also get nervous when the price gets down to that 2018 low that we had down at the 42 handle That's when those credit spreads of those US energy majors which have borrowed a lot of debt in order to finance these projects to really Make the most of the shale revolution with oil output in the US up at record levels They start to be pressured and then you'll see Trump quickly Reversing his calls then if we ever got back down to that lower lower bound price So yeah a couple things to be aware of there for crude. I'll let Sam look at more of an interlaced strategy with you guys This is the Sun newspaper When I first brought this web page, I wasn't sure if I was looking at the right website it looks more like a Cartoon but not not gonna judge But the point being is that you know when it comes to information that can move financial markets You got to look at all press publications and the Sun is no different The Sun have a very good political correspondent very timely with news and sources And basically he's come out with the latest piece this morning Saying that a general election could be held on the 1st of November Obviously, that's the day after a no deal. The idea being is that Boris can then go to the public I've delivered you Brexit and then the day after he will call a general election That's the latest rumor that's doing the rounds this morning Okay Calendar wise what have we got this morning is particularly quiet not too much going on You've got the weekly jobless data at 130 wholesale infantry cells at three o'clock for the US It's kind of a side point I would say And that's about it so really I'd say calendar wise there's not a great deal going on main take-home points are a Little bit of reprieve from the concerns emanating out of China they did fix the Currency just above seven however it was stronger than expected trade exports also exceeded expectations So that should calm or alleviate some near-term concerns in the short term however Lot of headlines that are quite negative at the moment hedge funds being bearish in their short positioning accumulation You've got the inversion of the yield curve again So I think definitely today's a more sentiment driven day I do think the volumes really will start to pick up and be much more US centric So I'd suggest really focusing your ammunition and energy capital towards that part of the day Keeping an eye on the equity market sure oil on that that lower bound price as well I think it's going to be quite key as we go forward throughout the day Okay That's it. Let me hand you over to Sam and I wish you guys a good day. Thanks very much Hi everyone. Good morning. Just gonna bring the pound Into into play it's something a bit of dollar weakness for the euro and The pound against that dollar and just having a quick look here is we it's getting squeezed from both the brakes And we went through this yesterday and you can see we had a brief go at Trying again to get below the lower part of that trend line and I'm a false break. It's a Pretty tricky one to cool what's going on there But more interesting up from the top end You're gonna get the what would be the fourth test around today's our one yesterday's highest So you can really see Pound going on we've reiterated There's not really much driving things at the moment and sort of waiting for a clear break Either way might be the favored move obviously things are moving better elsewhere in a market It's just been drifting really all be it higher, but those highs as well have been getting lower So work just keeping an eye on what happens around this are one top end of that trend is well Priced to get squeeze break above that obviously the main Target areas to look at you'd also want yes, it's hard to go But we'll be looking back to the higher that we had of the week at one twenty two thirty two I think on the future So we're keeping that marked up on the chart for the euro we found support yet again down on that low Yesterday and we're just you know again similar to the pound and that we are to sort of drifting from both directions Not necessarily in the shape of a pattern, but those last two highs of coming down and those two lows as well Getting high so just getting squeezed in from both directions in terms of opportunity wise I think from the downside and it hasn't really Caught hold of you know a real recovery from these this move that we had from the beginning of August to the upside But you know breaks of these lows and then obviously back down to the 112 Hand or could be could be key for anyone looking for that dollar strength to resume And if we are to to break out of this little Free session three-day range you would obviously want those highs to go We are coming to what's been a pretty key level over the last few days one twelve fifty four was resistance point back on Tuesday morning, and then yesterday morning, and we're coming up to it today As well and and those levels as we just squeeze this charts the left-hand side You can see how important that was as it was the breakdown on area Before we move lower on the 22nd So just a point of price action key level to be aware of one twelve fifty four and a half On the on the futures there to have marked up quick look over and move to gold which of course yesterday just Kept pushing into the afternoon getting as high as 15 22 on the the futures in a bit We've had drifted down since then I think you know with this market in such a Strong move to the upside you can see The opportunity may well be on the break of this trend from those highs yesterday to this morning's highs Looking to get long above that. We were respecting a Trendline all yesterday Let's have a look how that's coming into play. It depends. I guess way exactly you would start that If we get it on there and we go from the 830 low on Tuesday Matches up with the second test later that day before this morning and then just again now So price just getting squeezed in the volume not necessarily going to be there But you can see at least you've got a quite well respected technical setup So, you know the theory behind this would be you know waiting for that push To the upside of course works to the downside as well However, you'd want to know get short gold at the moment if the volume is not there to the downside It might just give you a better opportunity on a break that to prefer to wait the Opportunities to go long on previous areas of resistance turn support or just support in general But probably favouring the move to the upside as this market of course is just keeping pushing on and on The S&P we taught yesterday just about the the area Around 2880 has moved this to the left hand side and you can see the importance of of this point This circle rectangle that area up is getting above the by the camera all around here pretty pretty important and We're just coming back into that area where it was a bit of a mess and price couldn't really make a decision about where It wanted to go at the beginning of June and we are just perhaps looking to To slow down this recovery for now no real Reason I would expect it to dramatically push higher today Unless we were to get maybe above one of these kind of trend lines that you would have on Getting squeezed again from from both ways worth having a look at what the Dax is is doing on the morning We'll have a look in the moment as it just has come down in the last 30 minutes or so But this market, I don't necessarily expect too much today in the way of movement. You see The recovery that we had back on the sit strong and then yes, they're relatively flat day overall from from where we opened Kind of expect that to be the same thing Today quick look over at that Dax which is coming down and just on that area of support from the morning was the initial high Pass one so that would be somewhere to mark up and an important level to have on bigger move to the downside You could probably be you know waiting for these trends to break which you know would be at a similar time or could be a similar time Considering that move as well to the upside those highs that they were to go. You can see why today's are one When the higher day were as important as we go back to the fifth you can see that was the morning high Which we haven't come back to test before then surprised again getting squeezed, but not necessarily expecting too much today in the way of big movement in equities oil as and mentioned you've got some key levels In play and and that low from yesterday to putting this on to that daily Continuation chart now you can see just how important that was just from the back at the beginning I should say of June and and then a January as well So really key level that's a to break and and you know get into that $50 handle and I'd say below that forty nine thirty seven is an area I'd have marked up which was the low we had back in November last year to the upside and really when you could perhaps say well look what a great level support We're now drifting to the upside The breakdown that we had on from the low of the end of July we broke yesterday Cleanly 53 55 so that's probably the the points that I would have marked up and The moment where we're looking like we are drifting back to that area Which you know looking at oil previously in the last couple of years when you get these big moves and retracements You know really good opportunities to get short back on those so I'd have that certainly marked up You can see the original low from yesterday at 53 12 and then that area 53 55 Marked up on that as well So keep an eye on obviously what the Dax is going to do for Brequities and I think that the upside today might just be limited to touch the pound obviously come into a key level euro similar So to keep an eye on and and gold as well as mentioned just getting squeezed from both directions We're probably favoring the upside just considering the overall trend that we have been on as usual any questions Please do that us now. I hope you'll have a great trading day And I catch you in the chat