 Good morning or good afternoon. I should say welcome to CMC markets on Friday the 1st of November and to this non-farm payrolls US employment report webinar for October Before we get underway. I'll have to do a little bit of housekeeping first with respect to a Disclaimer, but hopefully by the time we get to the numbers. I'll be able to have given you what my expectations are With respect to the US economy why a weak payrolls number Won't be the end of the world when it comes to the payrolls report And whether or not the Federal Reserve the US Federal Reserve who we heard from this week are being unduly optimistic in their assessment of The US economy certainly I think some of the data that we've seen come out of the US This week has been somewhat mixed I think that's probably a fair assessment of Some of the data obviously the Q3 GDP numbers that we saw come out earlier this week Were better than expected. I think the numbers were by and large Low-balled. I think there was an expectation that we were going to see quite a significant slowdown from Q2 From from the 2.1 percent to 1.6 percent in any event We got 1.9 percent with a good proportion of that made up from the US consumer Personal consumption that came in higher than expected at 2.9 Expectation was 2.6, but on the flip side of that We saw a very disappointing Chicago PMI number Which dropped quite sharply to 43? Point to which was the lowest level since 2015, but I think before we get too caught up in that there was some extraneous factors which Which basically gave a downward skew to that particular number and that was the General Motors strike Which would have significantly impacted that particular number. So I've always been a bit suspicious of one-off numbers last month. We talked about US payrolls 136,000 and we saw a sharp decline in wage growth from 3.2 percent to 2.9 and that's a surprise because actually when you look at the unemployment rate and you look at Where where weekly jobless claims are It does seem rather strange that wage growth should remain Fairly weak and certainly decline to that extent. So that does give us a little bit of pause for thoughts when when it comes to hiring hiring trends over the course of the past few months and over the course of the next few months what I think we are Doing with respect to this payrolls report is we are operating a little bit blind simply because it's coming so early in the month The first of November Normally when we get a look at the payrolls report it comes after the ISM reports manufacturing and Services, but the ISM manufacturing report actually comes later this afternoon at About an hour and a half past it at 2 o'clock One at 90 minutes after the payrolls report and one of the think one of the takeaways that I took from the September ISM report was the fact that the employment component was very very weak and yet the payrolls report from last month was still Fairly strong 136,000. Yes, it's well below 200,000, but it's certainly been nowhere near as weak as You know some people have been predicting So what are we expecting today? Well, we are expecting a weak payrolls number today The reason for that is once again the General Motors strike Which is likely to introduce a significant downward skew to the Manufacturing parts of the payrolls report. We're expecting a 55,000 decline in The manufacturing part of the payrolls report Offsetting that we're expecting to see a decent Private payrolls component and as a result the expectation is we'll probably see around about 85,000 Even if we come in at 50,000 again, I'm not going to be overly concerned About that in the short to medium term the ADP report earlier this week was a little bit on the weak side But again, you know, it was still fairly positive over and you know in and above 100,000 so The US labor market still remains fairly resilient despite the fact the manufacturing looks fairly weak so in the context of This afternoon's report even if we get a weak number I'm not expecting a significant downward thrust in the US dollar The reason for that is a dollar index here. We are Currently around about a three month low on this dollar index chart So if I change that to a daily chart a bar chart or a candle chart, we can see that there's certainly potential For us to find support Currently around about the levels that we are now So if I look at the dollar index and I look at the lows that we saw in October We're looking around about 97 10 97 14 anywhere in anywhere in between these lows here. So Even if we get a weak number the dollar sells off I Think it's unlikely that we'll get a move below 97 in the dollar index Which should mean fairly limited downside simply because I think it's very difficult to extrapolate Significant downward momentum from one number, which is likely to be skewed and By the payroll by the General Motor Strike, which will subsequently get added back in When the November payrolls report comes out in December So what we're looking for here is trends and at the moment payrolls growth is weakening But you would expect that Given how long the US economy has been adding jobs over the course of the past 10 years, we haven't really seen a negative number So in terms of the overall picture the unemployment rate is around about 3.5 3.6 percent And we are expecting to see a modest uptick there Certainly looking at Wages growth wage growth is still going to probably come in around about 3 percent I think it's unlikely that we're going to see a significant downward move in Yields or the dollar in the event of a week number What we have seen this week is a bit of a breakout on the upside when it comes to the S&P 500 And I've drawn that in we've drawn that in with respect to this horizontal line through here And thus far over the course of the past three or four days We've broken above this 30 25 30 30 area and we haven't as yet broken below it And while we're while we remain above this level. It's fairly straightforward for technical analysis I'm always I'm very much a levels trader once we break above a particular level and hold above a particular level Then that level should act to support Going forward and I would only revise that opinion when we break back and hold below it So in terms of a technical basis When I look at the S&P here And I draw a horizontal line and draw it down to through For our chart we can see that there's a decent area of support Coming in anywhere between 30 28 and 30 25. So if we get a dip back down here There should be some decent buying interest tight stop loss below 30 20 for a move back Towards the highs that is where the momentum is taking us in terms of where the S&P is going now I'm not saying that that's going to equate into a similar move in the Dow because if we look at the Dow The Dow is telling us a slightly different story in terms of the overall direction for us equity markets and what we've seen yesterday Is a bearish daily reversal? But nonetheless we have seen again once again a fairly decent rebound. So the S&P and the Dow Moving slightly independently of each other But that's been the case with respect to the Russell as well for quite some time the small cap index, which is here If we look at the small cap index We can see straight away if you draw a line through the highs here that has been underperforming Relative to the rest of the market So it's not really giving us a decent indication as to what the US economy is doing and certainly in terms of the small caps The small caps are significantly Underperforming the rest of the US equity market space. The S&P is is pretty much leading the way So let's just basically pull these various numbers out and pull them to the side so that we can see what the expectations are One thing I would be very aware of when we're looking at these numbers ladies and gentlemen Is for any revisions To the September number because one of the things that I was surprised about with respect to the September number was that It was as strong as it was given how weak the employment components were for the ism Surveys In September they were both below 50 or close to 50 which suggests fairly weak fairly weak Jobs growth nonetheless. We've got a fairly decent number. So the forecast for the Forecast for the october payrolls is 89 000 jobs Certainly if we look at bond yields us bond yields A decent indicator of I think where we are potentially likely to go in terms of us yields is This move here and it helps actually if I show you the 10-year yield chart for the US economy, not the german one Here we go. So we're in a bit of a range The top is around about 1.8 percent on the 10-year And the downside is around about 1.5. So we're sort of more or less Slightly towards the top end of the range. We probably will see a drift back down to 1.5 percent You know the federal reserve can guide all they like when it comes to their expectations about further rate cuts But the way I see it They will continue to remain data dependent and in october After after the september rate cut There was around about a 25 percentage Probability that they were going to cut in october That lasted about a week and then we saw Expectations about october rate cuts Increase quite significantly now. This is a quite an interesting screen here ladies and gentlemen When the Fed cut in september The october probability of a cut was around about 40 percent now at the moment For december the market is assigning a 26.5 probability that rates will go down in december If we get a weak payrolls number I would expect the probability Of a december cut to increase to around about 40 or 50 Percent over the course of the next week or so that will be reinforced If we get a weak ism number Later this afternoon, but more importantly a weak services ism number next week And certainly I think over the course of the next week or so We'll get a better indication as to whether or not the feds optimism About whether or not we're going to see further rate cuts Is justified I personally think that it's probably not going to survive first contact With the data that we're going to get out of the u.s economy over the next week or so And I can certainly foresee a situation Where by this is underpriced 26.5 percent I can foresee this going over the course of the next month or so Up to 40 50 or even 60 percent if the data continues to remain on the soft side Because ultimately the market will front run the possibility of any future fed rate cuts Okay, so let's look At some of the charts because i'm guessing that's what you want me to talk about So I will start with the footsie 100 and we can see here that it's not really giving us an awful lot of Steerage when it comes to where to go to next it hasn't it has underperformed quite significantly Over the course of the past month or so and that's not really surprising when you consider the pound As had its best month against the dollar Pretty much since 2009 Up over 5.2 percent on the month As the prospects of a no deal brexit recede Yes, we've had an extension to January 2020 Obviously, we've got an election coming up given the state of the opinion polls The market is not pricing in the prospect that labor will win a majority But as we all know from opinion polls they can change very very quickly. So certainly in the context of Where we are at the moment with the footsie 100 we're slap bang in the middle of the range We're looking a little bit on the soft side If we do break below 7200 then we could well drift back towards the lows that we saw In september and october, but i'm not expecting any significant movement in the footsie over the course of the next few weeks I think we will continue to range trade Slightly different story for the DAX we've broken to the top side and at the moment at the moment Momentum is on the DAX's side. We've broken towards the upside We could well see a dip back to 12,700 But if I look at the projection for the current move in the DAX, I'm projecting the DAX to continue to creep higher Towards 13,200 and this price target here Which I've projected from this breakout point on this sideways consolidation here Since we've broken above 12,500 we've gone incrementally higher The trend is clearly up And as long as we stay above these lows here from yesterday Which are around about 12,800 12,780 Momentum is on the DAX's side and we could well move through 13,000 towards that target There now in terms of Currencies euro dollar again Looking to trend higher But approaching some very very key resistance levels So I'm still minded to sell the rally in euro dollar And that's one of the reasons why I think dollar downside is fairly limited Simply because of where we are with respect to euro dollar. We've got the 200 day moving average Currently coming in around about 112 We've also got decent resistance around about 11,80 Through those twin peaks there So there's a significant barrier to euro dollar at 112 and 11,80 And that's before we even start thinking about this trend line that I've drawn in Coming in from these peaks back in february 2018 So significant room for resistance at current levels and then of course above that you've got the 200 week moving average as well So euro dollars got significant barriers to further upside cable on the other hand If we do get any dollar weakness sterling strength, we've got a big barrier at 130 20 Now there is potential for a little bit of a flag here Of forming on this move higher And that does suggest to me that there is some pent up demand for sterling. There's an awful lot of short positions out there And if we do break 130 30 130 40 we could get a significant impulse move towards the upside at the moment Clients are fairly 50 50 when it comes to the pound And I think to be quite honest They are right to be so a little bit cautious about being bullish Certainly the bias is very much to buy the dips look to buy dips on cable around about 127 80 If it does drop below there, then we could see a few stops triggered back towards the 200 day moving average But if you look at the 50 day and the 200 day momentum is very much in sterling's favor And that is also borne out by the fact that euro sterling looks a little bit on the soft side as well Particularly if you look at the moving averages and you look at 85 80 a similar sort of flag formation Big big support through there if we do break lower, then you're really looking at a move down towards 84 70 Um, and that's probably going to be on the back of um sterling short covering more than anything else It's a big big level 84 80 85 sorry 85 80 and that could see further Declined towards the downside ozzy dollar keep an eye on this ladies and gentlemen because this is a big big level on ozzy dollar We've got the rba next week I don't think they're going to be particularly comfortable with the ozzy at current levels look at where we are Look at this trend line. It's a big big trend line. It's looking overbought Um, certainly I think in terms of resistance levels if we do bust bust through here We could go an awful lot higher But certainly in the context of where we are now, I think the rba will be dovish next week And certainly in terms of dollar strength. I think the rba US dollar strength the rba won't want the ozzy above 70 So bearing in mind what I was saying a weak number Not the end of the world could be could prompt a little bit of dollar weakness But certainly in terms of where we're going to go to next I think dollar downside should be fairly limited a good number. Obviously dollar positive could see um Euro dollar fall quite substantially. So it's I'll just be quiet now 128 oh and a nice upward revision. So a very dollar positive number 3% on average earnings We've also seen an upward revision to the wages numbers from last month So all in all that's fairly dollar positive should push the euro down should push cable down Should push dollar yen up also mildly positive for equity markets as well looking at the internals of the report um, we saw A 36 000 decline in manufacturing payrolls. We're expecting a bigger decline there expecting a decline of a 55 000 um Looking an upward as I say an upward revision to the september number from 136 to 180 And um, if I could just Just quickly have a look at that break it down even further um, the underemployment rate seven percent participation rates gone up to 63.3 Average weekly hours 34.4, which was as expected. So all in all that's a fairly decent us payrolls report dollar positive likely to Like to likely to cause the dollar to rebound and be fairly positive for equity markets negatively um, but also I think Reiterates I think recon all confirms the optimism from the us federal reserve About the health of the us economy. It's Doing okay. It is slowing slightly, but overall Those numbers paint a fairly resilient picture of the us economy. So Questions now getting a question about kiwi dollar. So That's probably going to be a fairly similar outlook for the picture that I painted with respect to the Aussie dollar if I can actually wait for the chart to open and here we go And yes indeed you've got a nice little top coming in through where we are at current levels So if I just draw horizontal line in through there quite easily a nice top at 64 50 um, certainly the positive payrolls number Should keep a lid on the kiwi And should see the kiwi come back down towards This 63 80 level of the past couple of days not expecting any changes in policy from the new zealand central bank um, so for me at the moment the kiwi dollar should be capped roughly around The highs of today So that's my view on kiwi dollar Look to sell into the strength while below 64 40 Stop loss above that look for a move back down Towards the lows of this week around about 63 and a half um, any other questions ladies and gents I'll quickly look at dolly n because we haven't looked at that yet, but with dolly n pretty much in a range when it comes to The us dollar against the yen capped at the 200 day moving average We can see that on this chart here Those of you who will follow my regular updates on the chart forums Will know that the 200 day moving average has been something that I've talked about um for quite a while Um, you can check out the forums here On this button there there we go So earlier The earlier earlier in october I talked about the 200 day moving average in the 109 20 30 area As being a fairly decent resistance level With support at around about 107 40 50 and the 50 day moving average And that's pretty much played out as I expected it to nice little cap at 109 20 Hasn't really broken above that if you actually draw a line through these lows here You've also got a nice little trend line coming in Through here So if I just draw that in There And it's pretty much where we've rebounded off Right now, but also we've got the 50 day moving average So, you know, this is where technicals can come in really really very useful And it's something that I try and use an awful lot but without over complicating it One of the things about technical analysis is trying to keep it as simple as possible Um, sometimes I look at other people's analysis. There's just too many there's too many lines on there. There's too many charts You know too many indicators too many moving averages. I keep it simple Trend lines too moving averages And I only use the 50 in the 200 day on the on the daily and a simple Slow stochastic and that's essentially all you really need. You don't need anything more than that All you needed to do is determine The overall direction where the key resistance levels are where the key support levels are And then trade your risk Around those levels if you want to over complicate it that's entirely up to you But what that can make you do is become very indecisive Because you can put as many indicators on there as you like But what they will do is they will give you conflicting views Find find yourself a settled strategy and stick to that won't always work And that's why you have stop losses, but ultimately Keep it simple And by and large Wait for the market to come to levels that you're comfortable with and buy and sell around those levels um What's the probability of November rates after non-farm payrolls? I'm being asked. Well, I would suggest that That will probably decline, but we'll find out It's too early to say because we're waiting for the ism manufacturing report which which comes out In an air in 20 minutes time. So You know ask me that in a week's time. You're not going to get a significant move in rates over the course on the basis of one payrolls number It is very positive. It's certainly better than expected But let's wait to get all of the data over the course of the rest of next week Out of the way then the rates market can make a decision Based on all of that data as opposed to just the payrolls data, but certainly in terms of the u.s labor market There's no signs whatsoever of job losses and those manufacturing jobs that we saw um decline In the manufacturing jobs that we saw a decline in this month's payrolls number will get added back Next month. So we saw a 36 000 decline Let me show that to you on my bloomberg so you can see the numbers that I'm working from So it's this number here Okay, the manufacturing which is the general which is the general motors Job losses there or They they get taken out. So 36 000 they will come back in next month Now we've got the private payrolls 131. That's the big component there Which has seen a big jump not only in Expectations for this month, but also the revision upward In the september payrolls report as well 114 to 167 So u.s labor market still fairly resilient We're going into november in november We will also see an awful lot of temporary hiring because of Thanksgiving and the run-up to christmas And november payrolls generally tend to be fairly positive Because of that and if you actually look at the last four or five years for november November has always been a strong month for payrolls So certainly in the context of november payrolls I think it's unlikely That we will get a december rate cut Assuming of course all of the other data comes in in line I'm being asked about netflix. Hmm. Yes I've been talking about netflix for a while Curious about netflix which got close to seven million new subscribers. Yep indeed I mean if you actually look at their subscriber numbers 150 million over 150 million global subscribers So let's let's have a look at netflix because I have to say It is one of those stocks that it's on the cusp It's on the cusp of potentially rolling over And it is under attack From disney because disney's Not only disney but also apple apple's tv plus The big level for me on netflix is this level here. It's around about 250 Now momentum is starting to turn negative on netflix And certainly they're needing to spend an awful lot more money to stay and still but they are still by far The market leader when it comes to streaming You look at netflix and how much it costs a month 899 8 pound 99 for a uk subscription It still compares very favorably to amazon prime Which is 799 and you can argue that Apple's tv plus is 499 and quite a bit cheaper But I would argue it's cheaper for a reason It's not anywhere near as good and also with netflix what you see is what you get You don't have to pay any extra for netflix content amazon prime you do Because if you go to amazon prime and you want to say rent or buy a film That's over and above your seps your your your amazon prime subscription Same thing with apple in the itunes store if you want to rent a film From apple you pay over and above you will be paying over and above Your apple subscription so even though the base line the baseline subscriptions for an awful lot of these channels may be cheaper You will be paying extra over and above What and then probably end up paying more on a monthly basis than you pay for for netflix so while People line up the headline numbers when it comes to a netflix subscription It's still fairly decent value for money because you don't pay over and above What is on the sticker price on the month to month everything that you get from netflix Is included in the price you can't actually say that when it comes to an awful lot of the other Subscriber service and that and I include sky In that because you go to the sky store you still have to pay extra for certain films so palladium What point would I buy in then no i'm not telling you that I cannot give you advice And i'm not going to fall for that one All I would say is that if you're going to be long of netflix you need to put your stop loss below the previous low And that's all I would say Certainly in terms of trend We have seen a nice little trend line coming in there so If you're looking to Manage a risk trade on netflix you'd put your stop loss below that trend line and look for a move through 300 dollars I would certainly be looking for a move through 300 dollars if we are going to move higher But my big concern about netflix Is it's cash burn Even though it's still adding subscribers. It's still spending more money than it's taking in You know and that for me is the big concern It's it is quite a leveraged it is quite a leveraged stock Um, okay palladium. What do what do I think of palladium? Let's open a palladium chart. Well, it's quite clear That the trend is your friend in this particular chart So really you've got to buy depths with palladium and the easiest way to To time this particular trade is just draw a line through the lows here And try and find a buying opportunity because at the moment it's showing no indication whatsoever Of interrupting It's uptrend And if anything it is starting to get slightly overextended You would have hoped to have seen a bit of a reversal here around about 1800 The fact of the matter is we haven't really managed to break Break above that but by the same token if I now draw a horizontal line through here We've got a nice area of support In and around 1740 1750 So I would argue that if we do break below 1740 We could see a drift back towards This trend line through here, but it's very much This is a very much a buy the dip market for palladium You can't really look to trade against the trend because there's no evidence at the moment that the current trend Is showing any signs of reversing So palladium is very much by the dips if we look at platinum Slightly different story, but again You're looking you're looking at buying the dips again. Just draw in a simple trend line Look at the highs in relation to the lows It's fairly simple analysis But if you draw a line through here you can see straight away What needs to happen for the trend to change So at the moment you've got these series of glows through here And they are likely to contain The move higher So that's the move there for platinum Any other questions ladies and gents? I don't think I've forgotten anything have a quick look at oil prices for those of you who are interested And this is a trend line I saved earlier Let me zoom that out And again, we've managed to hold this uptrend from the lows in december last year Apart from a brief flotation down through there So even though the oil price is starting to roll over in terms of the slow stochastic the price Is looking fairly well supported while above this trend line here Lean hogs. Wow. That's a bit out there. Okay. Let's have a look This is going to test my analysis skills. So let's go searching for it. Yeah, we go This is why I like technical analysis John basically you can do Any sort of analysis you like as long as you can actually see the price history and the price action Because it's essentially about buying and selling patterns so Looking at this chart here very much In a sideways consolidation over the course of the past few months, but there's very good support In and around these these lows through here. So We can see if I just turn that ticker off The Very much a range trade at the moment with lean hogs. You're looking at fairly decent buying interest in and around these lows in august So around about 62 there and there You've got a fairly decent area of support in and around through here You've got the 200 day moving average through there and you've got a nice little pivot Going through 70 so Certainly in terms of the short term you might have a little short position through 70 with a stop loss above the 200 day moving average Or you look to buy the dip in and around the range lows through here You can come in, you know, you can come a lot. You can you can look at the commodity space And apply the same rules to it as with any other market. Look at the highs and the lows Look at the areas where there's Supply and demand Where supply and demand starts to equalize so you can see through here You've got 70 dollars there. You've got a high there. You've got a low there You've got a little bit of a low there and you've got a little bit of a peak there So you look at the fundamentals and then extrapolate the technicals On top of that and it's essentially all all that I do You don't really have to know an awful lot about the underlying fundamentals of the market for me I just look at the actual what the price action is doing and where the where the orders are most likely to be Look can have a quick look at corn if you like because it's just down there Open that up And again, I mean it's quite a choppy market but again You can see straight away that there is a little bit of a trend higher. It is a little bit messy But it's looking fairly stable at the moment is corn in and around the 200 day moving average Okay, so it's 1248 Hopefully I've covered everything that you'd like me to cover ladies and gentlemen Unless you've got any other questions. I think I can pretty much wrap this up. So In the absence of any other feedback Um I'd like to thank you all for gold. I knew someone was going to come in with something gold. I forgot that Okay, gold it is Quickly open that my old favorite I mean for me, this is very much a range trade Gold looks very very well supported anywhere near 1480 We can see that from This horizontal line through here. We did have a little bit of a brief flirtation Below 1480 to around about 1460 but overall The market is range trading with fairly decent support in and around 1460 1470 1480 I wouldn't be looking for a significant amount of downsiding gold prices Given where we are at the moment in the economic cycle The likelihood is that we're probably going to get further central bank easing either from the ECB Or be it on a fairly limited basis But unless there's a complete meltdown In trade talks, I'm not expecting gold prices to Go up significantly higher But also come crashing off So for me, it's very much a range trade in gold at the moment Look to buy dips towards 1470 1480 And look to maybe get out around about 1510 1520 currently around about where we are at the moment um so Yeah, I mean basically That's that's my viewing goal. It's not particularly controversial um You know at the end of the day You just have to say you have to say what you see so To sum up if you like what you've heard today, please leave a review on truss pilot All feedback is you know, gratefully received Otherwise, you know, basically that's what I think as well john I think it's going sideways and I don't see any potential for a significant move One way or the other at the moment. So you pretty much summed up what I think about it at the moment. So as I say summing up hopefully You found this webinar of use and hopefully join me same time same Well same time not same time because the us will clocks change will will change back this weekend 115 first friday in december for the november payrolls report. So i'm off now to get myself A quick orange juice and something to eat. Hopefully you guys will do the same until Next time next month and the december payrolls report. This is michael hueson signing off and um, I hope you all have a great weekend