 Okay, very good morning. Anthony here at Amplify Thursday 20th of June. I hope everyone had a good evening Going to Well, I was just kind of prepping up some of the the tabs so I can talk you through the news is Definitely a central bank focus not just talking about the Fed Obviously, we've got the Bank of England later today. We had the Bank of Japan overnight We had RBA comments overnight so definitely a central bank theme at the moment but before I got on to Jerome Powell and a summary of what happened last night coming in this morning Must admit I'm a little bit surprised by the fact that the market has continued to To kind of take that move a bit further I think when we were leaving gold had seen a bit of a pullback, but you can see overnight it's kind of powered on One thing is technically no Sam will look at this But you know we're punching through some longer term technical points of resistance That certainly helps the the breaks to the upside and if you look at the gold future here in the top right as a very Quite clear pop in price action at three minutes past 2 a.m London time so you know normally a very illiquid part of the session overnight and Orders going through for level gets hit Then that's when you can see some stops run and that kind of type of price action But overall it kind of fits the same narrative of a dovish monetary response. You've got gold higher Dollar then there's a result a little bit weaker All be it still down about two tenths, but and just off its lows, but still down that trend that had been Materializing yesterday has continued European and US stock futures a little bit higher as well as fixing income futures So at the moment at least the markets have taken this as a signal that the Fed are serious They've kind of given the nods to the rate cut in July and that reminds me actually I'll get that up That's something we can look at as well Because I believe now a July rate cut is a 100% priced in we'll see if that is still the case in a second But let's have a look at what exactly did happen. I know some of you were here Some of you might not have been so let's have a review So power opening the door to July rate cut amid Trumpian uncertainty So definitely the trade war is one of the most influential factors for the Fed in the short term for Trying to factor in the risks and the largest one of that to the US economy going forward Overall then there's a quick look This is where July currently resides and obviously the federal funds rage at the moment is two and a quarter to two And a half percent as you can see that doesn't even feature on this graphic So Fed funds now are pricing in 100% probability that there will be a 25 basis point cut at the end of next month The probability of 25 basis points is sixty three point six percent So thirty six point four percent that we're going to get a fifty basis point cut I still think that that's you know, unless something develops between now and then of a much more a kind of negative Situation whether trade war breaking down Again and also incoming data showing quite rapid deterioration in the US economy I still don't think that fifty basis points at least at this point is what the Fed will pursue But certainly 25 is what the market on consensus is looking at now a few things here, this was the statement and Overall one of the things I might regret and saying is that I do think the market Is a little bit in I guess kind of the the initial response to what's happened the Fed have committed to the dovish kind of Expectations of the market, but I do think the markets Overdone this a little bit because I still don't think there's a great deal here You know that's saying that the Fed are gonna just gonna cut three times by the end of the year I think that the the Fed definitely have paid heed to the fact that economic conditions have changed And they talked about economic activity was rising at a moderate rather than solid pace They kind of tweak some of the language around some of the other phrasing as well They dropped of course that idea of patient and instead talked about monitoring The implications of incoming information i.e. the trade war and the economic outlook as appropriate to Sustain the expansion with a strong labor market and inflation. So that's the hint that they're ready That's the tip-off for July I would say But I don't think there's much there and as we'll see with the projections. I think once Again people start to digest this further. I'm just not sure how much more you're gonna get out of it So with that is true Then obviously room for a bit of a pullback in the 10-year move the gold move the dollar move potentially could Materialize and if that was going to happen, I would say that could happen when the US start to come in So around that crossover time 1130 midday London when the US come in having already fully interpreted what's gone on had a night to sleep on it What do they think then and I think on the balance for me? I think what was said I? Think you might get a bit of a pullback, but let's see dissenter James Bullard unsurprising. He is an outline Uber dove so I don't think that was particularly shocking either the one thing that was a little bit Strange was this we were looking at this in quite close detail last night. This is the so they've updated this graphics So now you can see the changes. So the actual medium dot plot for 2019 actually remains the same to splite a bit of a Shift in the composition of the dots, but then you can see the the the gaps here and Most notably instead of being a kind of normal rate-hiking cycle going up in rates. They've got this What is a rather bizarre? pattern of rates going down for a period of a year and then going back up again now this is Again, particularly unusual and I think that's taken the market a little bit of time of what they want to think about that I think at the moment at least the markets have taken that as the Fed are willing to kind of weather the trade war risk Looking between the lines perhaps just given the political timeline of an election to be delivered and Trump's second term by the end of 2020. Maybe this is a bit of Giving a little wiggle room for the economy with a lower rate trajectory for next year only then for it to pick up pace You know once all those big risks are put to bed because Trump can't afford for them to lose so Don't really I'm not sure how much credence I give that it makes logical sense in terms of the graphic and the timing but you know if the Fed were to start basing their decision-making around Political events and politicians like Trump. I think that they're they're lining themselves up for a big mistake down the line And the other thing is here. They're kind of they're breaking that traditional rate-hiking cycle Which is normally one of many and cuts the same one of many If you break that I'm fearful that markets will be a little bit unsure of how to judge then your next move And the more uncertainty there is the less power you have in the ability to influence markets through verbal communication And that's almost a kind of self-inflicting for the Fed in the long run So a couple of broader thoughts there to think about but the one thing is yes 2020 has gone down But we do bounce back back up albeit a little bit lower, but rates then move back to the upside. So again What does this mean? Well, you know Goldman Sachs was one of those banks if you remember when I was doing the preview last night who were expecting no rate cut Well, they've come out and they are they now see the Fed cutting rates in July and September upon reviewing of the information of what we saw last night. So again now we've got clarity, you know, it was kind of You know speculation based upon, you know, theoretical knowledge of what these analysts thought could happen Now the Fed have come out and given the full summary of economic projections I think the consensus is now that the Fed are going to be cutting at some point The variants will be how aggressive and the timing of when but July seems to be definitely in it's about When's the next one happen if at all The other thing as well. I thought I'd mention this was out yesterday, but it Certainly is quite interesting basically those people Without being mentioned close to Donald Trump have speculated that Trump believes he has the authority to basically Demote Jerome Pound from being fed chair now Apparently some of the lawyers have been looking at this and technically there could be a way to basically Remove power from the Fed chair position. Obviously Trump very much Critical of power because saying that he's he's lifted rates too fast too high And that's been to the detriment of the US market. And so hence the reason why he wants him replaced I'd like to say right now This will absolutely never happen. I can pretty much would like to put my My name on the table there. There's no way that Trump's gonna demote power. All this is is Powell playing Political games so that it looks like again. These hedging is bets. It's not Trump's fault It's Powell's fault all in the time for the political race for 2020. This is just PR management from Trump For the general public in the US to feel to distance himself from any potential future economic shock and So then he's you know, he's got someone to point the finger at so Absolutely power has said Immediately yesterday that he's gonna serve his full term. I'd absolutely expect that to be the case not only This but Pelosi of the house. She was saying yesterday Someone who obviously has large confrontations with the president She said there's no way that can happen because the central bank by default supposed to be independent in the first place So he wouldn't even pass this through Congress. So Yeah, this is just Trump 101 tactics serving a political agenda rather than anything for markets. I wouldn't worry Powell's gonna be here to stay That being said as well another another Trump ism. Obviously the market got a big rally two days ago On the back of the fact that Trump tweeted about the positive telephone conversation He had with G how they're gonna have extended talks at the G20 at the end of the month So on and so forth. Well Chinese media again We did cover this yesterday, but just to get you up to speed did come out and say upcoming trade talks between the two Countries are unlikely that's unlikely to immediately resolve major disagreements between the two sides Now, this is the point here Trump again Timing is of the essence. He tweeted that several hours before he then officially Said he was gonna run in the race and he had that campaign rally in Orlando, Florida So again all about timing when it comes to Trump and all about his political agenda, of course So do I think a deal is gonna get done for the G20? Absolutely not Are the two gonna talk? Most likely they will But there's still gonna be differences to resolve. I'm sure so just because equity markets I think I've had quite a positive run and we could even now we're in striking distance get to those all-time highs again You know this trade war is far from resolved at this point the G20 though Will obviously be a pivotal moment where we could see a bit of a pullback when Again, if you think about all of these meetings we've had on a public stage It's been positive positive positive positive. We get up to the point of let's then do this deal And then it falls down again, and it almost feels like we're building that way up for the G20 as it approaches Okay, enough on the US and Trump. Let's move on update on the Tory party Leadership contest we had the third ballot last night. So poor old Rory got the chop After his fairly tame performance that he did in that second live televised debate, so he's gone I don't think that's surprising at all One thing I think that's more interesting here is the fact that Rory Stewart apparently has been having breakfast meetings Over the last few days with Michael Gove Now the reason that's quite interesting is if you can kind of switch the supporters who are backing you then into Gove To tip you over Jeremy Hunt where Hunt and Gove are pretty neck and neck that could be quite troublesome for Boris Johnson As I've said before he wants to avert if possible going against Gove because that would be more of a tricky one to handle In a playoff between the two characters hunt I think would be more of an easier one for Boris to manage Boris out in front by a clear country mile at the moment as you would expect So it's more about who's going to be whittled down to the final final two now There is going to be another ballot Happens today and the result and we'll be expecting one more to be chopped off and I would be fully expecting that to be Sadji Javid That's result though is coming out instead of 6 p.m Slightly earlier time of 1 p.m to look out for that now interesting headlines in the news this morning Couple of people putting rumours around close to Boris Johnson that he could potentially eye an early UK election potentially penciled in for the autumn The autumn being obviously around the timings of the delivery of then the current end of article 50 And it's risk of a no deal. So if you think about it, I can understand a strategy here The deadline is October 31st if you held the general election just before that and you were Boris Johnson and you Absolutely pushed hard about this idea of winning to do a no deal I think you probably would get quite a lot of public support that being evident with the rise and support of the Brexit Party and Given the fact that Jeremy Corbyn is so reluctant to commit to To a second referendum for example, which would probably be one of the most powerful arguments to counteract that I think that Boris, you know, it could be a quite a compelling case to try and get a stronger majority in Parliament to then go and renegotiate Avert a no deal, but now you can go back to Brussels through then an extension to say March 2020 and say Well, I've got more control now Europe do me a deal and I can get it through Parliament I do think that has some legs The only problem here is that remember April or the summer of 2017 Theresa May thought pretty similar to what we're thinking now here for Boris Johnson and it absolutely backfired egg on her face to a spectacular degree and Obviously polling is one thing sentiment trying to ascertain that it's difficult. What could the actual result be? Who knows so it comes with a huge tail risk for Boris if he went down that route But I can kind of see the logic in why he might want to do that now Other things are today moving away from the politics Although that being a obviously an important and Restricting component of what the Bank of England are likely to do today the Bank of England What Bloomberg are saying here in their decision guide is you've got the ECB Draggy sounding incredibly dovish at the beginning of the week at the ECB forum You've got your own power now committing and markets very much expecting rate cuts in the near term from the Fed But the Bank of England might sound in the context of the global central banking worlds a little bit hawkish Now a couple things here to be aware of why that might be the case this is looking at The Bank of England curve so although They might sound a little bit hawkish one thing is obviously the global Situation has changed amid some of the ongoing tensions on the trade war So the Bank of England curve for what market pricing was for future rate rises This is the black line But over the last month obviously as people these other forces at play from the other central banks globally have got dovish as data has Deteriorated as the risks and the trade stuff has got Larger or then that's where that orange line comes in and so The current rate of interest is here, but you can see the kind of what markets are looking at now It's a little bit more shallow than where we were a month ago In terms of the evidence then of what what comprises of the UK economy and kind of gives a fairly more balanced argument is that factory output The last reading you can see here on there the chart on the right-hand side That's quite a significant drop as you can see after what was three consecutive positive readings Now a lot of the reasoning behind why UK manufacturing production has kind of held up over the course of what has been a Slowing economic environment with political uncertainty has been this idea of Brexit stockpiling But obviously once infantry's build There's only enough stockpiling to to happen for a limited period of time and once that's done Well, then what because ultimately underlying this is a lack of appetite and demand for purchasing of goods in this sense So that's obviously a negative if we look at some other things the pound has You know had to reflect this but not only that the pound being probably most sensitive to the fact that a no-deal Prospect has been rising as it's become clear that Boris Johnson is most likely to take over from Theresa May As you can see we're getting very close to the the low point that we had in December of 2018 Bank of England though It's not all doom and gloom because the other factor here that the Hawks will be Discussing at their meetings will be the fact that inflation is At target, you know, although inflation was dipping through the back end of 2018 It has stabilized and remains at targets So that would be indicative of the fact that you know at this point There's no reason for them to cut rates because one of the considerations here could be that if we look at this UK unemployment is still at its lowest rate since the 1970s, you know, UK unemployment is in fantastic shape at this point and The logic here would be that if that continues because it is decreasing at the moment. Well, then that could lead to Renewed inflationary pressures and so is there reason to be hawkish in this particular area So, you know, there's obviously different parts of the economy that tells slightly different stories But the idea here is that not I don't think that they're gonna sound so much hawkish They're just not gonna sound as dovish and quite rightly so given these factors than some of the other central banks So I think just don't be shocked or surprised. You might get a little knee jerk Flurry higher possibly on the upside in the pound on the release But ultimately I still think the point is is they're not going to change rates until really there's any Brexit uncertainty that's removed Otherwise we have the Bank of Japan overnight I really don't think that warrants talking about too much in all honesty The Japanese yen if anything has suffered on the back of the dollar weakness Rather than anything B. O. J. Inspired Bank of Japan leaving rates on hold as completely expected by all analysts you've then had the Head of the RBA in Australia low reiterates the RBA rate cut on the table as spare capacity persists so Again has the Aussie moved? Well, if you look at the Aussie dollar this morning, I mean, it's actually trading up in the futures testing around it's our one So again, it's more reiteration of what was said before when the RBA cut rates most recently Final thing I just wanted to mention was the DAX is seen a pretty positive start to proceedings Obviously the DAX following in suit and sympathy with the move in US index futures from overnight and the pickup this morning just on the back of the Fed, but Worth keeping an eye on SAP Actually, let's just have a quick look where SAP are trading that quickly jump on teller trader Just wonders Not too much of a read across I was anticipating potentially Oracle had Particularly strong sales numbers out overnight The company showing strong demand for apps in transition to cloud technology hardware revenue Declines 11% in a legacy unit, but shares aftermarket yesterday did shoot high on the back of the update from Oracle Oracle obviously an SAP the most two dominant forces in the software application space and so potentially a Reader cross for the German maker as well All right, well, let's have a quick look at the calendar and then I hand you over to Sam few things He wants to say as well This morning So from a UK perspective You've got UK retail sales coming out at 9 30. You've then got the Tory leadership We got the Bank of England 12 Tory leadership ballot next round Elimination of probably suji Javid at one o'clock for the UK retail sales then accordingly are Such as UK data is being of late. I wouldn't be looking for something too spectacular spectacular in reaction Retail sales though is expected to come in negative. I guess it's a case of that's not too surprising It's just how bad is it? So I'd say on the balance Given how markets are or market participants are generally viewing the UK economy A bigger reaction might come if there was an upside number an upside surprise Otherwise Bank of England midday. You've then got the weekly jobless claims coming out of the US Philly Fed all at 1 30 and then speaker wise Bank of England's Mark Carney and Chancellor Philip Hammond give their annual mansion house speech Didn't realize that was today. So that's one of their black tie dinners They have this evening just up around the corner from the office here that sometimes is used used as a bit of a staging post for Policy thinking but just given this coinciding with the day of the Bank of England rate decision I would say it's highly unlikely. You're gonna get too much more from Carney Chancellor Hammond Maybe for his political views could be interesting We shall see All right Gonna come off the mic and hand you over to Sam because I can see markets are seeing a little bit of movement session Hi still in equity. So I'll see what he has to say. Thanks very much guys Yeah, hi guys. Yeah equities pushing on not just in In the States, but Europe as well Nasdaq and S&P just pushing a new high as we speak and asking as we get up to These heights obviously got to start talking about all-time highs again What an opportunity I had orders rate waiting About ten points below that lows a bit frustrating But is what it is move on not going to cry about it too much But in terms of a percentage move to all-time highs, you've got imagine It's gonna come pretty soon looking at here in the futures. Well, it's less than half a percent, which is incredible Considering where we were back in the beginning of the month that move from that low to the high Just a mere 8% push That could easily happen today, of course in stocks and just having a look where we're we're trading now We've put the pivots on for a bit of a guide. You can see we're already above that R2. Yes, they didn't Really move that much to be honest. It's only overnight that we had a continuation of this push higher weaker dollar gold pushing on as well So 2950 we're now above and not too far from that all-time high Whether you'd want to go chasing this market or not from As high as we are now Maybe not too aggressive. You're already on in of course fantastic opportunity to to hold this position for a retracement Perhaps looking, you know, you can see here overnight. What a good trend line This was before the break around quarter past seven If that was to come back and get tested that somewhere you've got a You could argue you'd be looking at for a level support and then lower down 29 36 obviously that's a fair whacker way now about that and R1 could offer a good level of support The NASDAQ similar in price action and that we pushed higher and you can see the R2 Which offered as a bit of a level of resistance this morning has already come back and retested that area So quite technical this morning You can just see from overnight just green candle after green candle, which is quite extraordinary looking at the the NASDAQ on that Longer-term chart this does have a bit more to go to the to the all-time highs So in terms of opportunity for a more medium-term trade, you know This might be one to to look to to get in a favor over the S&P 1.5 1.6% away from from that height looking at the pound obviously coming into This morning you have the Bank of England coming up So whether you'd want to again trade this ahead of that or not It finally broke through and this again was overnight the the key level. We had marked up 27 17 20 area those previous lows acts is really good resistance came back down to below one 127 what was the previous high of the day that acted as support at 9 30 and since then it's just been pushing Higher and higher the dollar now down overall today 0.3% Having started yesterday at a two-week high Or a couple of days ago is it a two-week high on the dollar index But the pound pushing on key levels to be aware of to the upside and we'll go through this obviously closer to the time of The Bank of England, but we are just ticking ahead of what is Being quite a good resistance that started this down move again on the 13th the higher that I wouldn't necessarily It's saying it's going to get away from things unless we were to get above 127 21 on the futures it was the the double bottom low the the 12 before we had a breakdown around 430 on That day of the 12 so keeping an eye on that as a as a level of interest. I think I Think there could be still a good opportunity to get short here in the pound medium term But keeping an eye on this level course with the Bank of England That will really dictate things into the shorter term medium term Of today and the rest of the week euro with the dollar helping push higher here key level around the R1 You got those previous high of the 14th the low of the 12th So it's just a key zone in general to be keeping an eye on and with the The euro dollar you can see again just putting this on a longer term chart every time we have pushed higher Since we're going back here to May it has been met with a faster move down So we can still see where we're contained if you like in this try to trend channel and I'll just draw it, you know roughly here You can see we not too far away from testing the top end of that So we're keeping a close eye on that over the coming days also That's that high just gonna put the pivot on quite a key Zone if you like for today in the week top of that trend channel You could argue that there's a trend line coming from these tops as well around here, which would be around 114 You've got the previous lows There's a really key zone for the week from where we're trading now the R2 to 114 We certainly somewhere to keep an eye on for the euro monitor that level as we go in Gold Highest we've been for a couple of years or it was the highest we've been for a you know a couple of years on that push back to Well 2018 so a year or so I should say But the high of the year was reached yesterday You can see just how important this this whole area is going back to 2014 2016 and July and then of course 17 and 18 really really key level. It wasn't so long ago Last summer where people were talking about you know coming back to these these lows that we started back In in the the early part of the millennium That hasn't happened. You can see we have continued to push iron really squeezing on this here This is that weekly chart If the Fed are going to continue to be overly dovish and the dollar does weaken as Trump might want Well, maybe the opportunity here is still actually to get long and look to target Above 1400 which someone in the chat will the Lucy was was saying yesterday So let's have a you know look to see if that can happen elsewhere and having a look at oil We had a decent push overnight and certainly that correlation between equities and the S&P Is going to going to help well with that she's pushing if if oil can continue to do so We're now out the top end of this range You can see 55 was that one that we talked about in the beginning of the week Just how important that would be, you know, you can see these lows going back from November last year which held the double bottom we then pushed higher and that key level we just had a go at breaking here around 55 38 which was the previous low on the futures of the 8th of March really key Can we confirm a break above that today and this week and if we do so, you know I wouldn't be surprised to see a faster move back to 58 just purely technically looking at this market I know other people will have a different opinion But that's why this this sort of level the line in the sand is a good gauge of sentiment Certainly going forward, you know, you know on the flip side if we had broken this low on the 12th of June Well, we could be down near 48 for all we know, but we've pushed higher oil now back above It's 10th of June high and also the low that we had back in March quite significant if we can close above that Safe havens is coming under a tad of pressure the boond on the pivot I'll be keeping an eye on what was the the previous high of yesterday Afternoon 120 172 35 as a key level t-notes which pushed higher and sustained I mean it was the only one for the whole duration of the 7 7 30 Fed and press companies yesterday that sustained its move higher coming under a bit of pressure here This morning, but what a key level this would be and again a gate a gauge of sentiment the 18th high the higher of Yesterday was also the R1 be keeping a close watch on how we react around that point Also, probably looking like there would be a bit of a trend line before that you can see from yesterday evening size So keeping an eye on that also looking to coming around the 128 handle stock still pushing on Gold keeping a close eye Towards the end of the week as well About those multi-year levels euro and pound supported perhaps a bit overbought Bank of England could be a good opportunity to sell if it doesn't go In favour of the Hawks, but looks like it's very much a case of risk on in the market for now Any questions as usual, please do let us know. I hope you have a great Thursday and a great trading session