 Okay, very good morning. It is Monday 19th of August. Hope everyone is well and had a great weekend. Going to do the usual on a Monday look ahead for the for the trading week So as you can see to the calendar of the side of me a couple of points that we can touch upon But underlined and bolded you can see some of the main events that are happening this week Most importantly is going to be actually on Friday Where we get the main speech from the Fed chair Jerome Powell at Jackson Hole Symposium in the US I'll go in explain a bit more of that in detail in a moment That is actually part of a three-day meeting But again Friday is when Powell is speaking which will be the key one also got the FMC minutes on Wednesday night We've got the flash manufacturing service PMIs for the Eurozone on Thursday morning And we've got also not just minutes from the Fed, but we've got minutes from the RBA in the ECB as well And people obviously very much looking to get the latest kind of hints Into wards the timing and size of any further potential Policy easing to come from both those central banks as well and then to wrap things up for the end of the week you've got the G7 summit happening in Barrett's in France and Of course, it's the first outing for our new Prime Minister Boris Johnson in the kind of international Platform and then Trump of course will be always interesting to see what he has to say just given what we're going to look at he Unsurprisingly has refocused now and pivoted away from China And he's been talking about Europe at the end of last week Of course in the run up to the G7 where he's going to be meeting them face to face those officials So that's kind of the week in a summary, but quick look at the charts Again, Sam will give his full Kind of overview both from an intraday and a weekly point of view He'll also then issue a weekly strategy report to keep your eye out for that He'll tweet out the details from his own account But looking at the charts this morning relatively quiet. There's not really any major news I would say that's occurred over the weekend. We had another mass protesting in Hong Kong Talking to some of my family over there at the weekend and apparently the reported numbers rupper around 1.7 million So, you know getting close to that that kind of size that we had initially a few months ago when the protests really started Generally peaceful so no violence this time But certainly that that situation continues for the moment But overall other than that news flow pretty quiet a lot of people were still Digesting this inversion of the two's tens part of the yield curve And what does that mean for then people's perception about a looming reception? Recession, excuse me, you know Sam we went to a reception at the weekend And then that's really dominated much of the the news kind of cycle So this morning FX markets pretty quiet to be honest Dollar index is basically flat euro dollars has done nothing so far Certainly some trigger points as we go through later into the week to look out for for the euro Sterling a little bit of a pullback few political updates I can run you through gold pretty quiet down about six bucks the 10-year down about 10 ticks With actually US and European index futures Trading higher so actually if anything a little bit of a positive feel to the to set up this morning You've got a kind of unwind of some of the what I feel is an overhyped situation about the inversion of the yield curve And I think a little bit of a pullback from some of the severity of the moves from last week And so equities a little higher Kind of unwinding then of some of that risk premiums to gold and US treasuries and subsequently As a little bit of calm is restored WTI crude just trending higher as well with mimicking the equity movement and we're up Just taking out the highs it looks like from Friday So about 86 cents at the moment but a pretty decent start to Proceedings to get things underway. So let's run through though the news in more detail Before we look at their market from a more technical perspective and again This is I did a couple of tweets at the weekend because as I said much of the the bank research as well as the Kind of public financial media was all focusing on on the yield curve And this was the first one of interest that I saw and it was looking at the delayed tariffs have not Prevented the US yield curve from briefly Inverting so, you know, we had this kind of positive response. You saw that in equity markets when Trump delayed the Chinese tariffs until Later on this year from initially the first of September But then the day after was when the market really got crushed And hence then further bids into fixed income in the flight to safety We're just pressuring yields even further in the long end and subsequently causing the inversion The curve though as a statistic Goes from trading with a positive slope to inverting Experience from the the five inversions over the last circa 40 years Suggests the curve will flatten further over the next couple of months. There's kind of a couple of Pieces of context I wanted to provide you so the point being here is that what history would tell us is that now that this has Happened, it's likely to continue to happen for the next couple of months now One thing that this is leading to as we have This is one of the biggest or interesting parts of the new Period of the long-term kind of business cycle that we're going to go through because if we are in a late phase And we're heading into the recession environment the difference is is that you know the world's never been this much in debt and certainly the unconventional methods of stimulating the economy over the past 10 years by using things like quantitative easing have really kind of almost Officially misshapen the curve if you're gonna buy copious amounts of bonds Then ultimately that renewed demand for bonds is going to pressure yields further That was the point really of quantitative easing But the point being though if we're gonna go into the next phase of an economic downturn requiring more stimulus Well that then is why we're getting this further push in the long end and subsequently now as People get more pessimistic the long end is Outperforming the short end and and the yields are decreasing and you get the curve Ball flattening to the point of then inversion and so negative yielding debt every time I tend to look at this this chart at the moment. It's just a quite a frightening prospects So negative yielding debt When Tomasso was talking about it to me Only a couple of weeks ago. It's basically added Another half a trillion or so as it does so we're now up to around north of 16 and a half trillion and their most Interesting thing here is how rapidly that's shot up through 2019. It's been incredible It's gone from it's basically doubled the amount globally And so this is kind of the testing point of which central banks are gonna face going forward into the future now talking of the curve though Couple of banks have said some interesting things and this is one out of JP Morgan and I thought I would share They said the yield curve message is distorted, but risks remain and again They're looking at distortions for the same kind of reasons that I was just suggesting a moment ago about the fact that we've had an unprecedented era of Unconventional policies, which means that really this this time really is different As cliche as it sounds from these previous post-war episodes of when we've had these kind of indicators That signal a recession now one interesting point I think that JP made was this as I bolded Treasury inversions are lesser reflection of US recession risks and more of a recession of the desperation for yield by foreign investors flocking into the US dollar denominated bonds as yields turned more negative in Europe and Japan so you think about it those yields Way lower at this point and so you have to go to these dollar denominated assets Which in in turn then as a function of of trying to find yield or return for investment Forces then the yields in the US to then follow suit In not what is an underlying reflection of economic stress But more a function of the movement of portfolio flow in that sense to still hold bond exposure So then that that's one of the key things I thought the other thing as well is that I don't think it's so much about the curve It is really showing distress right now of an immediate looming of a recession in America I don't really think the data supports that but the point being is it's about the managing now of the Investor perception of a recession I think is a more of a threat than the actual underlying economics at this point. So again in short I do think that this Inversion as I was kind of saying back in March when a different part of the curve did the same I do think this is a little bit overhyped I do think yes last week was a bit of a capitulation of people really buying into that that story And so this morning I think the market right to have a bit of a pullback from what otherwise was a bit of a tough week for markets globally Okay, looking at a few different things This is the final kind of point. I wanted to make about The inversion this was quite a different point of view actually from all the negativity that I was reading This was quite a large bank out in the far East base in Singapore DBS and they were talking about US equities of historically traded higher Six months after the yield curve inverts. In fact the S&P 500 has registered gains of 9.3% on average after this type of thing tends to happen Another stat there credit Suisse a recession occurs on average 22 months following such an inversion and lots of actually quite a variety of different banks Talking about different time frames, but the point being from a you know If you're not used to this if you're not if you're new to markets that it doesn't miss you know The inversion doesn't happen and the recession happens next week. There is a quite a protracted drawn-out period now The interesting thing about this of course is that there's this small thing about a US election happening at the end of next year And if you actually you know think about the timing if that's about 18 months away That's right in the kind of sweet spot where the inversion happens now and the two's 10s Should be hitting right at the moment of when Trump's going to be looking to secure a second term So that's what's going to be ultimately really interesting over the months ahead how he tries to manage that situation Talking of the man of the moment Donald Trump As I said, you've got a g7 meeting in Barrett's in France happening at the weekend So as much as he will be commenting about China I would imagine as we get further into the week is going to be more and more tweeting about Europe This is normally his tactic going into these big Kind of meetings with all the heads of state He goes in quite aggressive because he really wants to send a message to them before the face-to-face talks He said last week just to refresh your memory. The European Union is worse than China. It's just smaller. It treats us horribly Barriers tariffs and taxes. So, you know holding nothing back there The other thing of course, it's going to be particularly interesting is Boris Johnson gets his first kind of outing on the international stage And he's committed to delivering Britain's exit from the EU as we know by October 31st deadline So it's going to be interesting to see how Trump has been very much politically aligned Because it's within his matching of an agenda about taking back control and making your country no sovereignty great again So he's been very much a backer of Boris Johnson to be interested to see how that goes down The g7 and then Trump is also in the middle of a six-month delay in deciding whether to impose tariffs on auto imports obviously a huge deal for the likes of countries like Germany, of course Which would mean that a decision could come on that particular area in mid-November So again more potential stresses to come for Germany and Europe as kind of Trump pivots away from China momentarily The one thing that you're probably likely to hear Trump talk about quite a lot is France's fairly contentious digital tax Which targets 3% of large tech companies revenues from digital activities now this obviously is targeted people like Facebook like Amazon Alphabets Google and so on and although Trump himself has been not exactly the biggest supporter of these big tech companies Over recent past in these administration certainly France though penalizing American firms is something of course that The US president is not going to like so again if you're trying to ascertain the type of areas that he's going to pick on These would certainly be one of them so Trump definitely more to come of course this week other things still on the radar Italy So Tomasso's just come back. I'll get the latest update from the man himself on the ground I'm not sure though if the the rolling hills of Tuscany are the place to get the the latest political insight but You can see here. I thought that I would share this This is a reflection of Italian 10-year bond yield and this is looking at the spread over the benchmark German boom So again in a most simple sense what tends to happen is that all European Yields a benchmarked against the German 10-year and what we look at then is when we get these political flashes or economic stress The the relative country in questions yield starts to rise to price in That you know reflection of that that negativity and what tends to happen then is you get a further removal away from a static Benchmark 10-year yield to a rising Italian or Spanish whatever the case might be so the wider the spread in that instance the more Uncertainty there is created and so what you've got here is an explosion in the spread that happened after the political crisis Sparked a bomb route that was back in kind of Q2 of 2018 It's remained elevated really ever since the latest episode that we had was Sylvini pulling the plug on the government now the reason why I mentioned Italy is because the PM Conti addresses the Senate on Tuesday and of course We're just keeping an eye out for what the latest is because Sylvini is already called for the breakup of the existing coalition five-star politicians themselves have Talked about potentially looking to now form a new coalition then dropping their partner league and instead replacing them with the Democratic Party so Whether or not there's enough political appetite to get that over the line yet to be seen But the thing people are looking out for here of course is the potential and timing around a snap election The risk of course that would see this spread Balloon ie move back up higher to retest and there's kind of sweet spot here a line of stress If you like is 300 That then would be along the period of Whether the league in that instance of a national election in Italy were to prove as strong as they are in the polls Which is just a whisk or off getting the majority themselves as a singular party Other than that whether or not they would team up with the brothers of Italy and so on and so forth. Those would be the most Negative in terms of the impact on Italian assets as a result Okay, quickly looking at other things. I said pal pal is the main event Undoubtably for this week, and it's not coming till the end of the week. There are certainly some other things to of course look out for but Jerome Powell He has this Jackson Hole symposium every year This was You know the reason why people really look at this quite closely is because back in the Bernanke days He came out and he made quite a really important statement Which did give very much the latest Change in monetary policy from the Federal Reserve at the time And so people look at this as a as a platform for the Fed chair to really give an insight into current economic conditions But also give the latest clarity about what is it that the Fed intend to do then going forward in the future So it's like an update if you like from the previous Fed Meeting the latest projections and so on. What do I think that power is going to say? Well, actually I think he's gonna as per usual. I think he's gonna play a fairly even hand. I don't think he's he's gonna Draw too many conclusions from this yield curve and version Situation which I'm sure the press pack will be pushing him on the Fed before recently have said Similar to what we've been discussing that actually the curve has been influenced by other Factors this time around so there's no need to really Panic just yet Although they'll probably say something on the lines that they continue to monitor all market developments both internal and external And respond to incoming economic data the usual kind of line I would say will probably apply so with that being said just given a lot of the movements If all things were to remain equal and in generally market perception and positioning I think that then by default could leave the doves a little bit disappointed if they were looking for power to really Step up to the plate and start committing to 50 basis points in September I think you're gonna be strongly disappointed because I really don't see that happening Market tends to agree as well at this point We were looking at the federal funds rates futures Last week and if you remember this number was getting kind of close to 30% that being This bar on the left-hand side to take the Fed funds rate down to one and a half to one and three quarters That 30% reading is now dropped to about 12% and so Overwhelmingly the market expectation is for a cut but a cut of just 25 basis points to the tune of about an 88% probability at this point obviously subject to change final thing Just switching over to the UK a little bit of a dip actually in the pound here more recently I'll let Sam go into that If with more color, but Corbin is the main kind of headline story gearing up for an election The Labour leader vows everything needed to stop a no deal Brexit the kind of headline here from from Jeremy is That will promise to do everything necessary to prevent a no deal He's going to give a speech today that will renew the pledge to hold a second Brexit referendum if a general election is called this year Nothing really knew there I would say The problem isn't so much This idea that you know because Jeremy is now saying this that means that's it, you know Brexits off. It's more of a challenge to Boris the parliamentary arithmetic as much as it's problematic for Boris now Given it's only up one technically and hence the reason why he might want to call this election in all it is, you know Gain a more stronger footing in the lower house of Parliament. The same principle can be applied to The remain kind of contingency and that is that you know There's enough people in the Labour Party that would still vote to leave Even without a deal and that would go against the party line So that means that Labour would need to support of other Pro-remain parties that being the Welsh party the Greens but most importantly the Lib Dems And the problem is the new Lib Dem leader Joe Swinson has said that she would not back Jeremy Corbyn Now if the Lib Dems don't back a Corbyn led Caretaker government in the case of a vote of no confidence against Boris Johnson. Well, then it's dead in the water anyway The thing that really needs to happen here for this real remain alliance to potentially change the direction of Brexit is You've got to get rid of this guy But the problem is this guy is sticking around and he is showing absolutely no signs of leaving so Here it's still very much up in the air how this is gonna gonna play out at this point, but You get my point what I'm saying with the Performance of a remain alliance just because he's now Stepping up and talking about a second referendum and so on the point being is is there's a real lack of Cross-party unity that really have faith in Jeremy Corbyn which could be a massive stumbling block and if then bottom line the Pro-remain parties cannot get together to to basically elect then a Interim Prime Minister well then Boris Johnson technically speaking could say well If they can't do that, then it's my right that I don't need to resign Which would normally happen in a vote of no confidence against the government because the opposition can't form anything Concrete and therefore even though I've lost in no confidence. I will remain Prime Minister So it could end up going that way as well lots to be to be seen So that's it. Let me just quickly wrap up then so for today's calendar very quiet Nothing major going coming out. I'd say much of the action really comes later into the week Overnight tonight if you're trading the Aussie just keep an eye out for the RBA minutes And then as I said Italy may be back in focus as Conti appears in the Senate On Tuesday Wednesday, do not forget on Wednesday I'll need to just correct that the amplify live session is happening here on Wednesday. It's gonna be a Wednesday night Not Thursday So Sam and I will be doing a live session on our amplify trading YouTube channel We're gonna start at 6 p.m. London time. It's very much an open Q&A format What we wanted to do is We're gonna open the floor to you guys Our subscribers we want you to lead the discussion I've put a couple of feelers out to see to get the ball rolling a lot of you want more information about this whole yield curve Story and negative yields definitely we can cover that but we can cover anything else Do you want to as well on the night? It's gonna be me and Sam responding to your questions as we take them We then will finish that session with the full real-time Coverage of the FMC minutes which will come out at 7 p.m So that will bookmark the end of the session I can give you a bit of a build-up how I would go about approaching that type of event Then we can analyze it as it happens Sam can kind of review it from a trading perspective If there is the opportunity to trade, I'm sure he'll share those And then we'll wrap it up. So that'll be a Wednesday night Thursday. Eastby minutes Will be key and then of course Powell on Friday is the big one. All right That is it from me. Let me hand you over to Sam and I wish you a good week ahead. Thanks very much Hi guys, hope everyone had a good weekend and we'll just start off with the The pounders Anthony'd mentioned we just had a bit of a drop down really from eight o'clock So that volume coming in from the London opener We've had a push below the pivot finding support on that first test back to what was the morning high Around 830 on Friday. So that remains there to be a key level and is one I've had Britain down before around 124 44 On the futures so keeping in a close eye on what happens around there and not just This level and I'll come back to the pound in a moment You've also got euro pound and having a look at last week where we you know, couldn't quite get below So coming back to that first test back of what was the the low of the 31st of July? so this market very much a Key level support one to have marks up and the reaction from that we're starting to see a bit of a reversal Here and if we can get maybe above the the low that we had back on the the 15th You could expect some a further push to the upside so both the pound and the euro at relatively interesting points Overall, but the euro pound more so here with that low of the 31st finding really strong support Last week back to the pound more intraday and having a look at another test of this point now a Breakthrough that I don't think it's out the question to to get us down 20 ticks or so to an area support that we had on Friday before the s1s and Potential trend lines come into play and for this market overall technically Look at it. It's it's been relatively choppy as of recent obviously that 120 still marked up here And we're having on even though we're now a lot further away than where we were last Monday when we did the briefing and Would this be I think there's better markets to trade of course, but opportunity-wise may well The best opportunity I should say may well happen later on in a week There is some dollar strength to come with some pound weakness break of this trend and then really look into attack that low That we had of the year But other other than that for the pound you've got quite a lot of resistance Obviously the double top that we had this morning remains key around the R1 You've got quite a lot of resistance going back to the beginning of August as well I'm gonna look over to the euro. So we had this morning I'll just bring in This whole chart had a nice We've got a trend on had a nice break of this trend that you see going back starting here on the 13th 14 15 Got a breakthrough and retest was make this bigger now You can see of that this morning. We had the push through around 7 a.m Retest pivot was good and since then we have pushed higher So worth keeping an eye should we get any further retest of that? Obviously above where we're training you're looking here at yesterday or Friday's I should say afternoon and morning high 111 30 is key the R1 again has some nice levels like the pound does as well from previous sessions We'd also be interested should we get you know real confirmation of this trend line break What happens around today's R1 111 60 But also a nice double bottom before a push through that we had on Thursday following those ECB comments about Their next sort of stimulus package or how the market perhaps isn't pricing in accordingly So that area those draw an X around there would be pretty key for me to see what happens Alternatively to the downside. I'm so move this above. Well, just the right hand side of the The camera it's like with the pound just having a look I know it's not necessarily a trend line yet, but potentially on that dollar strength and Opportunity-wise looking for those yearly lows break of that trend later on in the week, of course if Couldn't have this could also be an opportunity But for now, I think with the trend line break looking to see what happens at these higher levels for the euro S&P had a decent Open we're finding resistance on what is a really key level from Last week's trade. You can see we just found really nice support 13th and 14th before that push through first retest That at 2920 is how pretty well put in this longer term To show more days that all gets low that we had seems quite far away now To the upside, you know if we were to get through this this level Which is obviously key, then you are looking towards 2940 Which is again a very important resistance from the 13th from the 8th and also the second as well to the downside if we were to and This is likely to happen were to have tweets from from the trade or both sides And you could obviously see a negative impact And I'll be looking at this trend to break But also you'd have to really get through the the high that we had on Friday, which really acted as Well didn't really act as resistance this morning overnight as we push through to 2894 retest of that trend line That's when you could start to think about maybe things going to the downside Understandably for all equities though just coming off a touch in the US. Let's bring in the NASDAQ here as well similar Price action didn't quite necessarily make the exact level that the S&P did but you can see they're all just coming down a Touch same for the Dow looking at these these trend lines to see how well they can be respected Should we come back to get a test of that? We'll go into a bit more detail longer term for breakthroughs, but just for the S&P As mark itself just have a look at how far away we are from that all-time high Just under 4% from where we're training so not too far having to look over to gold Worth having on the trend line from Friday's highs where we're where we're trading now You can see that just getting squeezed in a touch really solid base of support going back from the 14th And then each day after that including this morning bit of a zone you can argue now as well with the The S1 1513 highs that we had back on the morning of the 14th as well So nice early morning opportunity either way you get a feeling here Worth having on surprise getting squeezed and obviously had that spike through on the 13th which was The last Tuesday really strong push but then rejection down see as equities were recovering So I'll just be for for the gold here waiting for I have a break higher Probably more favorably or lower underneath S1 1513 to target down towards the lows of the 14th But for now price just getting squeezed in and certainly looking over the last few days not too much Is really happening there oil however, I do quite like the the trend line and if I just drag this again to make it smaller going from the The July highs you can see just nicely respected on The 13th quite well to get that third test That's something I would have on for the remainder of the week or until if we can get up to test that point pretty pretty key Trendline to have on just above where we're trading you can see We've just come off the touch and made this or just about to make this potential trend line here You've got those highs from the breakdown that we had back on the 14th And then of course What will be quite a key level up than R2 with the previous support on the 14th before we did have that big day To the downside like with gold just relatively choppy last couple of days Certainly if we can get above this whole mini range of the last couple will be pretty key You can feel going forward to the downside quite a lot of support. We just could not get through Around 54 dollars we tried on the 13th the 14th the 15th and didn't quite get down to 16 But really solid base also you could argue worth again We'd like with the euro and the pound if we were to have a push to the downside Worth having a trend line on from that low the 7th just to see what happens Should we come back to to test that at any point at the moment? That looks like it would come in around 55 dollars quick. Look over the Dax, which you can see is well Hitting some resistance from the similar day that the US equities Have haven't quite made it up to maybe the initial low that morning for the breakthrough That's just coming off a touch after a strong Initial push worth keeping in an eye again like with the US funds just on these trend lines Which can see is slightly better respected as well You've already got those free tests on that looking to come in around the R1 as well So well keeping an eye what happens with the decks and euro stocks is coming off the touch and how that could Impact US equities as well any questions as usual, please do let us us know the The data can and today relatively quiet before picking up a bit into Tuesday Wednesday and Thursday I hope you'll have a good training day and a great week ahead