 Ladies and gentlemen, welcome to the MC Markets non-farm payrolls report on Pride 86 of May. With me, Michael Hueson, thank you for tuning in before I get started. Just doing some risk warnings just to make sure that you understand that I'm not giving you directional trading advice, I'm just giving you an indication of what the markets are likely to do, where the key chart points are. I cannot be specific about individual decisions to buy and sell when it comes to trying to dissect the nature of the data that is about to be released. So without further ado, let's get started. So today's payrolls report, it's probably not as important now than perhaps it would have been, say for example, a week ago because we've got a clearer idea of what the Federal Reserve is likely to do in the coming months when it comes to rate rises. Going back to the events on Wednesday evening, when the Federal Reserve took the decision to hike interest rates by 50 basis points, I think there was a widespread acknowledgement or a little bit of relief perhaps that Chair Powell took the 75 basis point option off the table and we saw a really strong rebound in the NASDAQ and US markets more generally. Obviously that particular rally didn't pass the SNF test because this Thursday candle here saw us completely reverse those gains. Now we're sitting on a very, very key support level on the NASDAQ 100, which I've drawn in through these lows through here. So basically from the lows back on the 2nd of February 2021, we saw a little bit of a brief push down below there in March 2021 before resuming the uptrend, but since the end of December, we've been in a slow decline, we've been making lower lows and we've been making lower highs. Now obviously Thursday's move, lower, slightly, we are probably likely to have a retest of this key support level. But I think in the context of this particular chart, I'll be paying particular attention not so much to what we're seeing on the NASDAQ, but what we're going to be seeing on the S&P 500. And it's notable that we've got similar sorts of support levels, 4,100. Now I was doing an interview with Bloomberg Radio on Thursday morning, yesterday morning and they asked me about whether or not we could potentially see new lows for this year. And I was in two minds about it, simply on the basis of the fact they asked me when the market was up here. And I basically said, as long as we hold above 4,100 on the S&P and we hold above the key support on the NASDAQ, then yes, however, if we break these lows here, and it's important the last time that we did that on the S&P 500, we actually closed pretty much above or pretty much closed where we opened. So there is, does appear to be demand down there at these sorts of lows. The bigger question is, if we go down there again in the aftermath of today's payrolls report, will we rebound in the same way that we did a few days ago? And that is not immediately certain for me, because I think an awful lot will depend on what bond markets do, particularly the US 10 year and the US 10 year bond yield is looking a little bit vulnerable at this point in time. If we look at this long term chart over the course of the last 20 odd years, 30 years even, there's a big barrier up here at around about 310, 325 on yield. So this is a yield chart. We've been in the downtrend quite some time. We're now potentially on the cusp of breaking higher on 10 year US Treasury yields. If we break higher on that, then I think it's highly likely that that's not going to be good for equity markets, and we will potentially head towards the downside. Now, in terms of today's payrolls report, I'm not so I'm not so concerned about the actual jobs number, even though it's important. But with unemployment down at 3.5, 3.6 percent, it's not as important as it would have been, say, for example, a year or two ago, when unemployment was around about seven or eight percent, the Fed has a dual mandate. That dual mandate is to target unemployment, get that back to target and inflation and inflation to be at 2 percent. So as far as unemployment is concerned, target achieved. So now their main focus is on inflation, and they're not meeting that target. They're not likely to meet that target, which means they're likely to raise interest rates by 50 basis points, at least twice between now and September. So that's another 1 percent plus another 25 basis point hikes as we head towards the end of the year. So potentially, assuming that the market doesn't freak out in the interim, we could see another 150 basis points of Fed rate hikes by the end of this year, plus a reduction in the balance sheet. So that is a significant amount of fiscal tightening at a time when growth is slowing and price rises show no signs of dissipating. So I think today's numbers are going to be more important in the context of the wages data, which currently is around about 5.6 percent. If we see a moderation of that, then that could potentially see the dollar come off and markets potentially rebound. Because at the moment, today's sell-off is predicated on the basis of slowing growth and runaway inflation and runaway prices. So if we see any signs of inflation starting to moderate, that could actually potentially be positive for a rebound off these support levels. So in terms of the NASDAQ, we're on a very, very key support level. And if we get wages data that is likely if we get wages data, which is around about 5.5, 5.6 percent, then that shouldn't be too negative. The problem we've got is crude oil prices and commodity prices in general. They're still looking quite well supported and likely to continue to remain so. But I'm reluctant to say that crude oil prices are going to go significantly higher over the course of the next few days, simply on the basis of Chinese demand. There isn't any Beijing is potentially going into lockdown. Shanghai is in lockdown. China's got a 5.5 percent GDP target, which they've got very little hope of hitting unless they relax their zero COVID rules. And that doesn't look likely in the short term either. So that's going to cause potential supply chain disruptions, which in essence, I suppose you could argue it could be inflationary in terms of supply chains, not so much in terms of demand for crude oil. So that's a slightly murky picture coming out of China. And this week's Chinese data has been pretty appalling. And there's little prospect of that improving in the short to medium term. So over the course of the next few days and weeks, keep an eye on this 310, 320, 10 year yield. If that shows any indication of moving significantly higher, that could be potentially negative for risk, and we could see a break lower. So 4,100 on the S&P and on the NASDAQ 100. Yulian, because you just asked me 12,700 is a key support level here. I am a little concerned as to how quickly this was reversed. Thus far, we're holding above it. But if the CPI numbers, which are due out next week, and are probably likely to drive this market more than today's payrolls numbers, we've got US CPI. So please be aware of them. They are due out next week, US CPI for April. If we get a softening in CPI, that could potentially be positive. But at the moment, it does look as if this support level could well give way over the course of the next week or so. If we get any retracement back to round about 13,000 in the NASDAQ, look at these three peaks here, here, here and here. It's highly likely that we'll probably be an opportunity to sell into those, to sell into any rally back to those levels there. Because on each time that we tried to break above that level, we failed. So that's the key resistance on the NASDAQ going forward. And it's a similar sort of story on the S&P 500. If we look at this chart here, the series of highs all the way through here, 4,300, if we get a rebound today as we head into the weekend, then I would certainly be looking to pair any long positions if you've still got any heading into that resistance level. If we look at the sentiment levels for the NASDAQ, we're pretty much 50-50 in terms of positioning for clients. So our top clients are 71% short of the NASDAQ, 29% long. So the risk reward in terms of our client positioning is that there's more money sitting on short positions than there is on long positions. So moving on to European markets, this trend line that I've drawn in on the DAX, if you've been a regular watcher of my weekly videos, you'll know that I've had this line in for quite some time. It's thus far been holding. I've only had to redraw it once. We retested it on Thursday. We weren't able to break above it. If we take out these lows at 13,500, then it's likely that we'll see a revisit of the lows that we saw back in March. It is interesting to note that while US markets have retested their lows for this year, European markets haven't, but it's not altogether surprising, given how much richer valuations are on US markets relative to European markets. But nonetheless, we are still very much in a case of sell the rally mode when it comes to European markets and equity markets more broadly. Futsi 100, yeah, I mean, what can I say about that? If we do get a big sell off, it's likely to be mitigated by the fact that we've been in a range for quite some time and likely to continue to be so, given that the Futsi has such a big basic resource and energy component within it. So while commodity prices remain high, Futsi 100 should outperform. In other words, it won't decline anywhere near as much as its peers. So the gold price, yes, indeed. The gold price has been a bit of a headscratcher, but that's trading inversely to what US yields are doing. So we've seen a big spike up in US yields over the course of the past few days. And that would explain why the gold price has slid back down to this trend line support through here. And I'm going to knock that line out because it's not really serving me at all. We're still in an uptrend for gold prices. So it still remains very much a case of by the dip on gold. Decent support. If we get a move back to here around about 1840, 1850, but very much a case of by the dip on gold prices, because I think if we do get a risk off, so if we do get a sell off in equity markets, the gold price should still benefit from that, even as the US dollar benefits from that. What's particularly interesting, and I've got five minutes, so I will quickly talk about what we're expecting in terms of the numbers. US payrolls were expecting a number. Oops, I didn't mean to do that. That's called a lazy mouse. In terms of the payrolls numbers, we're looking for a slightly weaker number than the number that we got in March. March was fairly decent at around about 431,000. If we look at the weekly jobless claims numbers, there's certainly no indication at all that hiring trends are slowing down. Nonetheless, I'll be paying particular attention to not only to the jobs numbers, which are likely to come in around about 380,000. We could miss because ADP missed earlier this week, but 380, 380, 303, anything above 300,000 is not to be sniffed at. Unemployment rate 3.6%, but the labour market is really about wages. If we come in hotter than 5.6%, that's likely to be dollar positive. Now, earlier this week, in fact, yesterday, this is particularly interesting, cable. What we've seen with cable is not good. What we saw from Andrew Bailey yesterday paints a very dark picture for the UK economy. And I think there's a decent chance we're probably heading towards 120 over the course of the next few days. Why 120? Well, if we go all the way back to the Brexit vote, back here, this was the Brexit vote, found support around about 1,980, 120, 1,980, 120 here, 1,980, 120 here. That was obviously the COVID sell-off, which didn't last very long and came straight back. So that was straddled over a week or two. And now, potentially, we could well retest 120. We've got strong move lower, sideways consolidation. We've broken down below these lows here. And I think as long as we stay below 125, 125, 30, then we're probably gonna head back towards 120, which essentially means that Euro dollar is potentially likely to move lower as well. So I'm still bullish on the dollar longer term. So even if we get a slightly weaker dollar today, then we are likely to see a stronger dollar in the long term. I'm still bullish dolly in. I still think we can go to 135. So why do I think that? Well, basically, we've broken out below above the previous peaks, all the way back in 2015. Where's the next level on this chart? The next level on this chart is these peaks back in 2002, 135. So I think as long as we hold above the lows that we saw earlier this week, so let's go back to the daily chart. These two twin lows here of 128, 50, 60, then we could well see further gains for the US dollar over the course of the next few weeks. Why do I think that? Well, the bank of Japan's not raising rates anytime soon, whereas the Federal Reserve is likely to continue to do so. So right, we've got the numbers coming out now, shortly rather. So in about 45 seconds, so I'll just quickly do Euro dollar. This is the breakout that I was talking about when I wrote a piece earlier this month or maybe the end of April, about Euro dollars of potential parity. This is the next target for Euro dollar, 103.40. So while we stay below 107.80 and 108 and the breakout of this, then initial target 103.40 after that parity and then after that 96. Now, obviously this move here has taken place over three or four years. So I'm not talking parity in the short to medium term. I'm talking over the course of the next 12 to 18 months and essentially, again, it's sell the rally Euro dollar, sell the rally on cable. So numbers coming out now. Here we go. 428, that was for non-farm payrolls, fairly decent number and a revision. Average earnings 5.5, again, pretty much as expected. So there's no wage inflation there at all. Unemployment rate 3.6. So these numbers are fairly lukewarm. There's nothing to be overly concerned about and we are getting a little bit of a rebound in equity markets as I suspect and a little bit of dollar weakness as well on the back of that. So pretty much in line with expectations, 428 on the headline number, assuming that number is correct and Reuters haven't sent me duff information down the feed, 5.5% on the average earnings, which pretty much in line with expectations, slightly below expectations for slightly below the level that we saw in the previous month, 5.6. So all in all, a fairly decent jobs report, wage growth in line with expectations. There's nothing here that's likely to prompt concerns that wages are starting to accelerate aggressively. So all in all, a fairly neutral jobs report, fairly positive I would suggest for risk, but does it really change the overall direction of travel when it comes to equity markets? I would suggest not really. And I think attention will now turn to next week's US CPI report, which is due out on the 11th of May. Now, that I think is probably gonna be more important than today's payrolls report. Now, I know Richard that I haven't gone through Aussie dollar or Canadian dollar. Don't worry, I haven't forgotten you. I will come on to that shortly because obviously we've seen a Canadian jobs report as well, which also has posted a fairly decent number. Well, let's look at this. I mean, to be quite honest with DollarCad looking at this chart here, we're pretty much in a range trade on that. So I would suggest that Canadian money for the Bank of Canada monetary policy is going to pretty much shadow US monetary policy. And as a consequence of that, we're gonna continue to trade in the range that we've been trading in since the start of this year. So anytime you get near 129.5, 130 on DollarCad, it's probably gonna be fairly well offered. And on the downside, drop back to rules 125. Again, there's really not too much to say on DollarCad. On Aussie dollar, now that has been interesting recently because obviously the RBA raised rates at its meeting this week by 0.25% to 0.35%. They will raise rates again next month. You can pretty much guarantee that once the federal election is out of the way because there is an Australian election on May the 21st. So, for me, I think that big, big support on Aussie dollar at 69.90. And I would be surprised if we break below that if I'm honest with you. I think the Aussie dollar has found itself a natural base, you can see how solid that support level is down there. Obviously, we've seen a little bit of a sell-off on the back of the NASDAQ and stock market sell-off yesterday. But I think what's interesting about this particular move is that we didn't retest the lows of earlier this month. So I think the fact of the matter is the RBA is also behind the curve when it comes to raising rates. It's not further behind the curve than the Federal Reserve and the Bank of England. So I think you could potentially see the RBA start to get an awful lot more hawkish now that they've ripped the Band-Aid off of the initial rate hike. So this candle here suggests to me that there's not much appetite for selling Aussie down towards the lower end of the ranges. But as I say, that could change going forward. So I would suggest the Aussie is probably going to outperform the Kiwi slightly simply because the Aussie is playing catch-up on the RBNZ. The RBNZ has been hiking rates for a lot longer. Therefore, an awful lot more of it is already priced in, which would explain perhaps why the Kiwi is slightly underperforming the Aussie. Because if you look at Aussie Kiwi, I would imagine the Aussie's got to play an awful lot more catch-up when it comes to its performance against the Kiwi dollar, where the RBNZ is pretty much at a 12-month head start on that. So that is what I would describe the differences to with respect to Kiwi and Aussie. I'm hoping that makes some sort of sense to you, Richard. If it doesn't, please feel free to ask some follow-ups. Another piece of data that might be interesting later today, and it could give us an insight into the health of the US consumer, is it's an item that doesn't get an awful lot of attention, and perhaps it should, because I think in terms of US retail sales going forward, it could give an indication as to whether or not we are seeing what I would argue is a slowdown in consumer spending. Now, March consumer credit numbers, which are due later this evening, are gonna be interesting because of the big surge in borrowing that we saw in February. Consumer credit in the US surged from $8.9 billion in January to $41.8 billion in Feb. Credit card lending contributed to $18 billion of that amount, which was a six-fold increase on the January number of 3.1%. Now, you could argue that that was just basically as a consequence of the fact that the US was battling COVID restrictions. People didn't go out in January because they were isolating at home and the weather wasn't particularly good, but there is also the fact that why would you load up on credit card spending if interest rates are going up, and particularly credit card balance interest rates are going up? If you've got a high level of savings, the US consumer has benefited from three lots of fiscal stimulus from the US government. So why would you, if you had savings in your bank account, why would you not use them? Why would you put your money on credit cards unless you were looking to clear that in a subsequent six-week period after that? So the consumer credit numbers, which are due at eight o'clock this evening, personally, I'll probably be down the pub, so I'll look at them on Saturday morning. But if they come in particularly strong, that would suggest to me that the US consumer is living on credit at a time when interest rates are about to go through the roof. The housing market in the US is already starting to slow down with US mortgage rates well above 3% and potentially heading north of three and a half. So it could be a double-edged sword, but a weak number could indicate a US consumer that's starting to cut back and not take on extra debt or another big number could signal a sign of higher borrowing at a time when rates are rising and the economy is slowing. What's the last 24 hours have told me is that markets don't necessarily believe the Fed when it comes to they think that they will be able to deliver a soft landing for the US economy. They think or they're more likely to believe what Mr. Bailey of the Bank of England said that we are heading for a tough 12 months. And the fact of the matter is that potentially markets are looking at what Bailey said and what Powell said and thinking, who's being more honest with us? And at the moment, the markets think perhaps Andrew Bailey is probably being more honest than Mr. Powell. And that would explain why yesterday and this morning we've seen weakness in equity markets more broadly. If you look at the way the DAX has been performing, it's set to finish lower for the fifth week in a row. And we can see that if we change this to a weekly chart. Yeah, there we go. Five weeks on the spin, down, down, down. So that is the way that I'm gonna be looking and approaching equity markets over the course of the next few days. It's about selling into strength against the trend line resistances, looking at the dollar and buying dollar on dips. Until such times, if we get some evidence that perhaps inflation has started to peak, certainly in terms of the CPI numbers. And we've also got US PPI next week as well, producer prices, factory gate prices. They were 11.2% in March and they rose from the February numbers. So it seems rather strange that markets are predicting that CPI the next week will decline from 8.5% to 8.1. That seems rather counterintuitive to me. It'll be good news if it is because it essentially means that perhaps the worst of inflation in the US is over. But if you've seen US natural gas prices this week, you'd have to think that that is not right. US natural gas prices this week have actually gone up. So you can see that here. So there's potentially more inflation in the pipeline for US consumers going forward. And yes, natural gas doesn't get anywhere near as much use in the summer. And obviously there's also a lot of US natural gas being exported to Europe to try and replenish supplies there. But if we also look at say, for example, commodity prices, we're also seeing what I would call an awful lot of stress starting to get built in there as well. So in terms of wheat and corn, though mercifully we seem to be trading sideways when it comes to wheat prices. But it is remarkable that the way these commodity prices are shadowing each other. You've got Brent crude basically behaving in a very similar pattern in terms of the peaks that we saw in March and then trading sideways. And that's what Brent crude is doing right now. If we look at it here, it's up again and again trading sideways. But nonetheless, inflation is gonna be a clear and present danger for quite some time to come. Okay, ladies and gents, do any of you have any other questions for anything that I haven't already covered? Because now is the perfect time. Ask me a question. What do you want me to look at? I'm just going to see if there's anything that I've missed out. I just need to get rid of that. Sorry about that, ladies and gents. Just need to get shot of that. Someone just trying to contact me. Sorry about that. Okay. Yeah, I mean, I AG, I mean, to be quite honest, I was talking to the BBC World Service about I AG this morning. And I gotta say, it's really disappointing when you look at the way I AG have performed relative to Lufthansa and Air France KLM. I mean, they're obviously paying the price for getting rid of too many staff. And the fact of the matter is, I would suggest there are pretty dysfunctional airline. They've got too many brands. They've got Iberia, they've got Air Lingus. And obviously they've got British Airways. And British Airways, there hasn't been anywhere near enough investment into that airline. And I think there is some speculation that they could come under pressure from Brussels to spin off the UK brand. And I potentially don't think that's such a bad idea because I think under I AG, it's become a bit tatty. There has been a bit of a pickup in premium and business travel in the first quarter. They've obviously had their problems with IT issues. Obviously the Asia routes are suffering because of China and what have you. But North Atlantic should be fairly decent and they expect to return to full capacity on the North Atlantic routes by Q3. So I would suggest that potentially the bad news, a lot of the bad news is priced in and barring any mishaps you can see from this chart here that apart from these two days here, the shares have found fairly decent, steady buying interest in and around the low 120s. So I think as long as there are no further surprises in inverted commas, where 8% down today could have been a lot worse, then perhaps we could well see a pickup as we head into the summer season. The only outlier that I do have, British Airways, is obviously fuel costs because of margins and the impact on margins. And also an income squeeze. If people aren't feeling particularly flush, then they're not gonna go on holiday, abroad, transatlantic. And obviously that's where British Airways makes most of its money. Doesn't make any of its money on domestic. Obviously also depends on how well Iberia do on their South America routes, how positive that is. But I would argue relative to other airlines that it's probably the cheapest of them with the potential for a little bit of a pickup. But at the moment, I find it very difficult to be overly enthusiastic about any airlines, despite the fact that US airlines are much more optimistic, but then they make an awful lot of money on their own domestic routes. So hopefully that wasn't too long-winded, Phil, and answered your question. The data from the non-farm results comes through Reuters feed. So basically what you've got is your market calendar here and it basically feeds in through the market calendar through here. And with the market calendar, you can basically set alerts for the numbers to come out. So I'd set alerts on the non-farm payrolls to basically pop up when the numbers were released. So if you want the numbers to send you an alert and basically select the alert function on the right hand side of the market calendar here, and every time they come out, it'll send you a warning that the numbers are due. So, but it comes by way of a Reuters feed which comes into the back of the market calendar. So I hope that answers your question, Christopher. Right, just being asked the question, news wires today saying ECB going to start rate rises soon. Yeah, I mean, there's an element of that. You've also got, I think, the euros up today simply on the basis of the fact that we're heading into the weekend. So you're getting a little bit of short covering, bit of hawkish commentary that they could hike rates in July. They might, but they've also got to be very cognizant of the fact that if they do hike rates and are too aggressive, they could blow out spreads on Italian borrowing and the weaker countries, which they don't want to do. So their scope for raising rates, I think, is fairly limited. I think we could get a 25 basis point rate hiking in July, but by then, the Fed will have hiked by another 50. So, you know, what you're seeing here is a little bit of position adjustment, I think, ahead of the weekend. You're also getting a little bit of sterling weakness, euro sterling strength. So, euros getting bit on the back of sterling getting sold against the euro. So you might get a move back towards 106 on Eurodollar, but I'm still of the opinion that we'd refer on Eurodollar, though it could well be slightly more resilient than say, for example, the pound is in the short to medium term. But as I said in the previous, as I said previously, euro sterling has consistently found it very, very difficult this year to really break through this, well, even last year for that matter, the 86 area. So we could squeeze back to 86 on Euro sterling, but even then, you know, 86.50, there is a limit, I think, to how high euro sterling can go because I'm not sure that the European Central Bank has the capacity to raise rates by that much. That's no problem, Christopher, quite more than happy to help. If you wish, drop me an email, that you will be getting a feedback email after this webinar is finished. Now, I think in the next 24 to 48 hours, you'll get a follow up email. If you want someone to give you a call, Christopher, and walk you through some of the features of the platform, I can arrange that for you. So just let me know, just reply to the email that you get. I think it may be on Monday, come to think of it, but you will be getting an email asking for feedback. Anyway, hopefully that's all for today, ladies and gents. Thank you very much for your time dropping in and listening in. And I hope you all have a great weekend. If you are interested in catching up on my thoughts and what have you on a week to week basis, I do do a weekly video, which usually goes up on the News and Analysis section of the website every Friday. So today's video will cover essentially what I've covered today, so you probably won't need to tune into that. But generally, every Friday, I do usually a 20, 25 minute video talking about what's gone on during the week and what's coming up for the week ahead. So please feel free to tune into that on a week to week basis. Otherwise, have a great weekend. Hope you enjoy the sunshine out there and I'll speak to you all same time, same place in a couple of months because there won't be a payrolls report next week. Thanks very much for listening, guys, and have a great weekend.