 Very good morning to you Monday 13th of January. I hope everyone had a fantastic weekend The plan for the briefing this morning is given There's usually quite a lot to get through because I want to give my view for the entire week ahead Not just the session in front of us. So we're going to stick to a kind of macro fundamental Review for this session. What I'll do is I will issue the weekly strategy report out later this morning with all the technical Kind of levels both intraday and longer term So starting off before I go on to the calendar with the general mood in sentiment this morning And relatively quiet a few things do stick out though the pound under performing a little bit We're going to have a look at some dovish commentary coming out on the front page in the weekend in the financial times for an MPC member That is getting a bit of attention. We've just managed to break below some of the lower bound of price activity We had from the end of last week Meanwhile elsewhere Both gold and T-notes in slight negative territory. You had a metal down about six and a half bucks T-notes down about one and a half two ticks comes as index equity futures Just seeing some positive movement albeit fairly moderate at the open not too much to speak of really Over the weekend's press some of the headlines, which we're going to cover Of course are the highly anticipated Signing of phase one of the US China trade deal As I said, there's a bit of an update from the UK from an MPC comment that was made at the weekend And then also earning season has kind of crept up and that commences on Tuesday with some of the big banks Getting things underway. So we'll have a look at that as well over the weekend as far as Iran was concerned They did come forward Absolutely, no surprise. I don't think claiming that actually they thought it was a Missile and so that's why they shot down that Boeing jet But is that really moving the market will know what what I'm looking at here is WTI crude futures So markets have already kind of digested the latest State of play really and if we actually go back to where we were on that Friday actually I remember because we came back in the office on the Thursday the second and Friday the third and that was when that initial Situation did unfold that was that strike on the US Iraqi air bases And then we had the gap up higher after the Iraqi Parliament was saying that they wanted to expel US troops And then there was fears of retaliation and then we had that secondary little pop back on the 7th But ever since then I mean if you actually look When this whole Iraq Well, excuse me Iran and Iraq situation when he kicked off that was where it started We were trading around 61 flat and now we're down at 59 So we're actually lower now than where we were Prior to this all kicking off and does that mean you should really you know switch off about tensions In the Middle East or no, but I think it just goes to show and as we were kind of Suggesting through the briefings there the idea that When it comes down to it, there's a lot of face saving that needs to be conducted, but overall Real intention behind engagement was probably unlikely and that's after that flare-up of kind of a week of focus I do think and as I've been saying I think now we kind of revert back to the Traditional focus from the macro point of view, which is that of the US China trade talks, which are going to get underway really starting today because that's when the Chinese delegation is going to be arriving in Washington later on this afternoon Otherwise elsewhere. I can see this euro chart still marked up from when the guys were covering Non-farm payrolls live on Friday Just so you're aware if you're watching this and you're not subscribed to the channel Just remember to do so because every morning I'll be issuing this kind of macro fundamental update But also we'll be covering various live events as well like the FMC in a few weeks time at the end of the month So do feel free to join us for that But just looking at this euro and as per the levels that the chaps have marked up I mean, I'm just gonna move this up a little bit so you can see it over my camera feed But some decent levels still really are relevant here. You can see We had that brief momentary test on what was that low point on the third You can see here on these prior occasions that level does carry a lot of significance That being in the futures in the euro at 111 73 and we kind of got up to around that point in the overnight Asia Pacific session But I've failed to to breach it as yet definitely was in close proximity of it at the moment So still warrants some watching but usually to see how that plays out there This is looking at really the last I guess one and a half months of price action or so But let's get stuck into the news and let's go over the headlines What have we got on the calendar for This week well as I've just mentioned the Chinese delegation arriving Washington day two Is tomorrow and then the tentative signing is due to take place on Wednesday, which is the 15th What is the current? Vibe if you like in the general press this morning Well, Trump trade deal raises issue of trusting China to deliver So already the way that the press are looking at this and the various talking heads is that look phase one likely will be concluded in terms of the Signing this week the Chinese vice-premier Liu he will lead a delegation to sign off According to the Ministry of Commerce at the weekend in China However, it's not so much about the signing of the deal. It's about the implementation of the deal and this is where China and the US have often been critical of them is their ability to actually adhere to the agreement the terms of agreement and so What I think could well happen here if we look at it outside of an intraday perspective I guess from an intraday perspective the risk is the first half of this week a Low I think probability but quite quite high impactful event could be if the whole thing just comes crumbling down last minute That's not I would say out of the realms of possibility Or be it not the base case scenario that we and markets have at this point That's like to remain vigilant for as they said over the the fact that they arrive as of today but otherwise although our Year-end call as a firm is that the S&P much in line with lights of Wall Street will finish the year higher than where it ended 2019 the idea here is that it's going to see some bumps in the road and I think Inevitably what might happen here is that you know we see a degree of potential success in midweek. However It's going to be interested to see whether or not over the coming months not so much I would say the progression of phase two Rather heard the compliance of phase one particularly from the Chinese side that could then create The exercising of the option that apparently is still in writing that the US have had that they can still Re-initiate tariffs And put on new ones for example, so it's kind of this we this is not a new concept This is always being the art of the deal if you like which has been they want to keep the weapon on the table to keep The Chinese honest the question mark will be that any sign of a lack of compliance from from the Chinese side Could we'll see a material pullback on the threat then of the US ramping things back up again, and we almost start reversing the positive Positioning that the markets have reflected up at all-time highs at where we are at the moment So yeah, that that goes a little bit beyond this week As I said, there are some risks to this week alone, but yeah, definitely interesting going forward This was an interesting graphic that I thought I'd show you because if you remember back in the summer of last year The market was in hyper kinds of kind of sensitivity to the positioning of the Chinese you and you remember We were breaching at the time the psychological symbolic level of seven Per US dollar and that at the time was had always been a level of which China had Defended in fear of potential kind of mass capital outflow of in the country the kind of Snowball effect that could have happened, but they managed to see a what I would classify as a Disorderly weakening of their currency. However, look where we are at the moment We've pretty much eradicated that entire kind of sequence of activity This coming of course as the Chinese economy has shown some signs of recovery Some of the PMI data has just been coming ever so slightly off its lower levels So a bit of stabilization there global demand Appearing to somewhat stabilize because we also got over this hurdle almost although don't want to Count it too soon about that inversion of the yield curve that we also had over this period of late summer That appears to have just dissipated as well in terms of an ongoing view of the market and trade tensions Of course have eased With the passage of potentially this phase one being concluded. So here we are back at six point nine The strongest level for the onshore Yuan in five months. So taking us back to July of 2019 as far as Trump is concerned This is the agenda for today So actually there's not any Top-level engagement with China from Trump He's got a spot of lunch with the vice president intelligence briefing Which is kind of usual course for his day And then he's actually attending doing a bit of PR later a national football championship game Before he comes back to the White House So if anything any leaks or rumours that do materialize on the trade if there is any last-minute hurdle It's like to come from journalists rather from the man himself Trump you probably saw tweeting in Farsi at the weekend That was a bit of a surprise when I did see it on my my Twitter feed He was condemning the government's kind of action with the people's right to protest has been quite a large degree of protesting In Iran in regards to the government's handling of what's happened with that jet that got shot down and the response That they've made with the West and so on and so forth So so just Trump marketing machine remains in in full speed at the moment Moving elsewhere go jumping back to the calendar One of the main things I wanted to talk about was UK For two reasons Firstly if you look at the economic calendar today, you've got UK GDP industrial manufacturing production If we then fast forward to Wednesday You've got UK inflation data CPI PPI and RPI Actually, I need to check I mean I did have here one of some calendars had the autumn budget, but that has of course been bumped until we get some clarification with the Situation pertaining to the January 31st deadline of conclusion of article 50, but then going to Elsewhere in the week Friday, then you've got UK retail sales If you look at the week as a whole growth data Industrial manufacturing data inflation data and retail sales data particularly busy week for The UK economy now overlaying that with this. This is a chap. You might not recognize him Girton Flager is a member of the Monetary Policy Committee of the Bank of England. He is If you're in America, he's a voting member so to speak there's nine of them in total But this was a front page kind of splash in the financial times at the weekend And it was titled the Bank of England NPC member is ready to cut Interest rates now what he actually said here was that he said he would vote for a cut in interest rates later this month if Key data do not show a bounce in the economy following the December general election Personally, I think it's been a close call. Therefore. It doesn't make much data to swing it one way or the other And the next few NPC meetings are absolutely live Now this is quite interesting because if we just quickly jump to the hawk dove Kind of composition at the Bank of England you can see here Haskell and Saunders They're the two that have been dissenters remember the last couple of meetings have been a 7-2 vote split for the Bank of England They are the two outline doves If they go on this table sits pretty much mid-range However, the interesting thing here, of course is that over the course of the last week and a half We've had governor Mark Carney obviously outgoing in a few weeks, but we've also had Ten reiro who both have struck a similar sounding Kind of lines or interpretation of the situation about the impact of still Uncertainties on on brexit if you remember looking at you know measurements like the suite of the PMI data in the UK Things are materially worsening and so if you like the needle from a hawks dove's perspective is growing ever so Slightly more dovish in a sense that potential rate action might need to occur And so this is what's weighing on the pound a little bit this morning As you can see in the let me just get that top chart I've just managed to break through the lowest point that was seen what this would have been Friday's price activity or Thursday's actual low was here and so just managing to get below that at the moment and training a 130 20 mark For the time being and we just put this back onto a weekly little bit messy on this chart So actually let me just come back to here Put on a 90 minute. So having broken below those levels of the Thursday low the next kind of areas Potentially could be quite interesting got the 130 handle that also is that low print you can see there on the 27th And then the prevailing low for the price activity when we bottomed out at the end of last year that came down at 12940 Would be the bigger prevailing move whether we'd get there this week or not yet to be seen But as per this comment from the MPC member Flage at the weekend and it coming in Combination with what Carney and ten Ray Rose said we already know the stance of Haskell and Saunders, I mean if you take all five of those people I mean five four that's enough to tip the balance with a nine-person MPC that the Bank of England have got a cut rates So the point being is the economic data coming out the UK this week given that Commentary does become with renewed importance. So other than everything being so Brexit dominated Of course of the last few months Specifically this week I feel that economic data might get a little bit more attention with the potential for a little bit of ignition For downside price momentum should those data points come out on the weak side of things Other than that from a from a Brexit perspective, it's not really too much to look out for Just so you're aware Boris Johnson is in Northern Ireland today This comes after Northern Ireland's main parties on Saturday formed a power government or power sharing government They reopened storming for the first time in about three years so He's back there obviously trying to Patch up what's going to be partly some of the most contentious issues of this Future trade relationship, of course with Europe in that era of Northern Ireland But as I said, I'd say the economics is really going to be quite important for this week if you're trading the pound Now elsewhere from a US data perspective a couple things. I think you should be aware of Looking at it from a very top level. You've got Empire State manufacturing coming on Wednesday Then you also have the US CPI and retail sales report as well coming out Retail sales on Thursday is going to be particularly important The CPI and the US is on Tuesday session and then the final kind of thing I wanted to mention was Earnings you can see here. I've got JP Morgan City Wells Fargo So the traditional commencement of earning season starting off with those kind of top tier banks Now you're going to get Goldman's Bank of America also Alcoa reporting on Wednesday MS on Thursday Shumbage is reporting on Friday. This is what people are talking about and It's the idea that corporate profits likely dropped for a second straight quarter at the end of 2019 dragging down annual earnings growth to the smallest in three years But this is it investors seem fine with that the idea being then with The the kind of stabilization of global growth and putting us back to where we are at the moment Eliminating perhaps some of those runaway negative thoughts people were having about the global economy only a few months ago the market seems able to really digest this and With the main chorus on Wall Street being that the stock market is going to return positive gains for the year I would see that in combination with still Relative accommodative monetary policy coming by way of all of the major powers and then I don't think people are going to fret Too much about any weakness that's being seen here by the numbers. This is the general Landscape for the earnings as I said the major banks will be pre-market as they always are JP City and Wells Fargo we kick things off on Tuesday morning if you're stateside And that's pretty much it. There's any real need for me to touch or talk much beyond that and So I'm gonna wish you a good week. Feel free to leave any comments on the video I'll do my best to respond throughout the day As I said any technical levels though Obviously you guys more than well equipped. I'll leave you to that, but I will add a few Kind of long longer play levels that I'm looking at for the week as a whole in the strategy report Which I'll send out later. Okay guys, that's it Have a good session and a good week ahead. Thanks very much