 Okay, so very good morning Monday the 3rd of February hope everyone is doing well and had a great weekend Just going to run through from my point the fundamental update for the week And then Sam will have a look at the charts in a little bit more detail both from the intro day and from a kind of week long perspective but just having a look at things this morning and Obviously a lot of Sensational headlines Circulating the Twitter I saw when I was coming in and Bloomberg obviously loving life this morning because there's a big fat number to look at which is a kind of crash in the Chinese stock market last night, but one thing I would like to say is just Keep calm and rationalize the situation. I mean I did issue a Macro piece that I shared online yesterday And I was commenting on the fact that the Chinese futures trading on the Singapore exchange were down 8% by the end of last week And so when Luna New Year holiday is over and Chinese markets open in the mainland for the first time since January 23rd technically speaking we should get a gap down of around eight nine percent and that is exactly what's happened so Not quite sure well, I am sure Bloomberg are just trying to pump a Sensational headline, but I'd just like to reiterate that Markets are just playing catch-up overnight in China and the fall of eight nine actually hit limit down in many shares at 10% Really is not that important what is more important as we'll discuss is what the Chinese authorities are doing everything that they can Barring the kitchen sink to try and just restore some calm in markets And the reason why I'm pointing this out is look at the markets this morning If you actually have a quick cross-check on things and we just change this to the S&P So we've got our usual setup on my my screens, you know stock futures are up And it daks up 20 NASDAQ S&P. They're all trading higher this morning So, you know, I just wanted to go over this quite clearly because when you come in in the morning Obviously, you get this whole negative tone coming from the press But now you've got to just review it. It is a pure function of the fact that their markets were closed So yeah, I wouldn't be just blindly just trying to just come in this morning and think the market's going to drop Like a stone just because China did So just having a look at other assets and this will lead partly our discussion oil did gap down Obviously was under a little bit of pressure I think copper futures as well similarly iron these China linked products as they come back online all got hit But you can see oil here having gap down has already recovered that and we're trading pretty much Flat from where we were from Friday's close gold markets if anything down so Logically then if this was a real credible new occurrence then obviously gold would be much higher But that's not the fact of the case that we're down around five and a half dollars at the moment They're the currency really standing out the pound under a bit of pressure a bit of a gap down You can see in the center top chart And we've just edged lower throughout the Asia Pacific session came back up to pivot and then started to push back down again So underperforming the euro this morning down 56 pips in cable and I'll explain What's driving that move from a fundamental perspective in a moment? So? Couple things to talk about then from my side of things will also review the calendar for the week ahead But Chinese stocks obviously the worst route since 2015 This is putting that into a bit of context those who are around in 2015 will remember that period probably quite well because that was when it was impacting global markets this kind of fear of a of an overall hard landing in China and that was when actually we were seeing some limit downs for US markets at the time that certainly not the case at the moment But going back then the move overnight takes us back to that era So some time ago the summer of 2015 But as I said what is more important in my mind is what are China doing in order to try and mitigate this? well-known fact that was going to happen today, and I don't think it was unsurprising they've come out in a variety of different ways So they've injected cash into the financial system With the central bank seeking to ensure ample liquidity as the outbreak impact Locally starts to intensify on the ground the people's Bank of China cut the rates on funds by 10 basis points and Flip over to here so the central bank in total injecting what would be approximately 171 billion US dollars of liquidity into the market You'll also see from this bullet point here as well in this Bloomberg article the China Securities Regulatory Commission have also told some brokerages that their proprietary traders are not allowed to Net sellers of equities this week according to people through the matter In addition, they said one of the few short-selling tools available in China It's going to be on ban from Monday until further notice. So again That this is I know it sounds a bit odd basically the regulators in China saying That you can't be net sellers of equities But this is China and and this isn't unusual practice in terms of how their authorities try to counteract these types of quite sharp movements in their local market, so yeah a whole trifecta of different ways to try and support the market and You know as far as that goes going forward I don't think this is going to be a consistent thing where the Chinese markets just going to get hammered again and again And again of a similar degree in multiple days What is actually happening with coronavirus? Well the usual screen of live updates that we monitor so total confirmed cases now are just over 17,000 Total recovered on the right-hand side now actually it's starting to open up a gap Over the actual number of total deaths, which currently sits at 362 so certainly numbers are going north But as I said, these aren't shocking numbers. I think as per how markets are perceiving this situation So as I said, I would anticipate that this number will go further north But unless it starts really racking up and this chart down at the bottom here Which is the total confirmed case kind of line starts to go almost vertical again Then I don't think it's going to be something which Western major markets are going to be Influenced by to a great degree albeit. It's still warrants monitoring at this point in time Quite interesting for the crude market although the market as I said gap down, but recovered This was quite an interesting statistic Chinese all-demand has dropped by about three million barrels a day or 20% of its total consumption Let me just flick over to this chart here so you can visually see that This is just the coronavirus squeezes the economy. Obviously that's going to have a material impact on Productivity in China. So subsequently their demand for oil decreases But China is the biggest net importer of oil on the planet more so than America And so definitely quite interesting point as to see how oil is going to play out over the Coming weeks as this actual physical demand for oil has to be factored in So that's the kind of the update generally on the Chinese situation So as you can tell I'm fairly more Calm in some respect than perhaps some of the market news agencies are trying to to pretend this situation out to be this morning And so really as per usual Looking forward to the US open and the cash equity space to just see how how markets react Could we have a little bit more downside? Yes, perhaps, but is it going to be anything radical like what we saw overnight in China? I don't think so. It's my kind of net summary One of the other articles of course, I mentioned the pound under performing a little bit this morning. This was quite a lot of commentary over the weekend an update on Brexit. So now that we've had the kind of symbolic move in toward this transitional period as of last Friday UK is now out of the European Union albeit still tied on all the same rules as they try to negotiate by the end deadline of the Implementation phase at the end of 2020 So Prime Minister Boris Johnson is set to give a major speech basically in London today and He is set to threaten to walk away from talks with the EU rather than accept demands from Brussels to sign up to the block Single market regulations and the rulings of its court Boris like to say wants a Canada style deal Now just from a context point of view the European Canada deal took roughly seven years to negotiate So it's not a certainly not a quick job to get these types of things done when you're talking about nations to the size And to the depth of the previous ties that they had with a land border of course with Northern Ireland and the Republic To figure out now the foreign secretary Dominic Rab reinforced the point that there won't be a close alignment or regulations in free trade deal and that Basically is the biggest sticking point of course Michel Barnier is also due to give his red lines on the European side in Brussels today So yeah, the pound definitely just re I guess factoring in this idea of a credible threat of a no deal So I know it feels like perhaps can we have a no deal? Absolutely. Yes, we can have a no deal at the end of 2020. So just because Brexit quote has been delivered, you know, we're far from it in reality being Delivered as yet. And so there still is risk of this and As per our expectations, we've been talking about the briefing in the desk for a while This is just the way of which negotiations start. I would expect Boris probably under the hand of Dominic Cummings Absolutely, there's no other way that I would have thought he would approach these talks But he needs that kind of weapon on the table as a credible threat And I would imagine he will continue this type of rhetoric. We're gonna hear today in his speech I would anticipate for the next coming months and as the time starts to dwindle, of course On the stopwatch of the transition phase that's going to become an increasingly negative force Fundamentally for the pound Irrespective of the fact that there might be some short-term reprieve in the economic data on the back of the securing of the majority Government as per the soft data we've had in the PMIs recently As I said, the real deal-making I don't think Movement on these so-called red lines is going to start coming until the summer When that end of June deadline comes from an extension request point of view for the transition So yeah pound a little bit underperforming this morning on the Anticipation of this kind of rhetoric to come from both sides about how far away they are from getting a trade deal done Quick look and review of the calendar then. What else is coming out? Well, let's have a look at some overview of US economic data You've got ISM manufacturing later on this afternoon that then leads into non manufacturing PMI in the US on Wednesday So Monday Wednesday, and you've got the ADP employment change on Wednesday as well So remember from those key data points, we're going to be looking out at the employment constituents in particular from the ISM readings ADP of course acting as a solid precursor then to the regular jobs report from the BLS Which is going to come on Friday. So non-farm payrolls. I think expectations were for a headline readings around 156k With the unemployment rates still remain remaining down at record low territory Around 3.5% which would be just kind of holding steady now non-farm payrolls As a summary, I don't think is Obviously, it's a trading event to be aware of and does impact conditions intraday on Friday for sure But overall, I think non-farm payrolls is going to do very little Overall to change people's expectations about when and what the Fed are going to do with their policy going forward But nonetheless, these are key indicators to be looking out for throughout the week as I said Monday Wednesday and Friday on the US data front and you also get US factories on Tuesday As you can see though after market today, you get the final of the the big kind of companies to report So alphabet this is being from the Fang names We've already had the lights of Amazon Microsoft they've all come out with particularly good earnings reports Amazon of course jumping 10% after market following their earnings last week. And so Apple have also followed suit so can we get the Make America great against slogan for the trillion dollar club Which I'll see but one of the key things people looking out for with the numbers tonight a metric is their type of revenue generation Outside of their paid advertising space so things like YouTube for example, and how are they performing will be quite quite closely monitored Talking of earnings. This is the overall Summary of major companies coming out. So just to give you some of the top Kind of larger market cap and bellwether names. You got Conoco Phillips Pre-market on Tuesday got the likes of Walt Disney aftermarket on Tuesday Wednesday Merck general motors Qualcomm aftermarket Thursday quite interesting from some of the smaller cap but more Sensitive, let's say to general risk appetite. You got Twitter pre-market uber and Pinterest coming after market A kind of the main headlines that you're likely to read as we go through the week From a statistics point of view, I think there's roughly about 90 odd companies reporting in the SMP We're roughly about halfway through the entire 500 companies being reported this far in the earnings season from a European earnings perspective. You've got BP for the FTSE on Tuesday Glaxo Smith Klein coming out on Wednesday So some of the biggest FTSE companies reporting Tuesday Wednesday and then from France You've got a decent portion as well of the market coming out because you've got BMP Paribas on Wednesday And then you've got Sanoffi and Totale So pretty much the three biggest companies in France and subsequently in Europe Reporting on Wednesday the Thursday pre-market Other than that that is pretty much it overall final word I'd say on the RBA could be quite an interesting one. I think the We had some better than expected jobs data last week Which has pushed back markets expectations about the how immediate they might be with an interest rate cut And actually on the balance Wall Street is anticipating the RBA to remain on hold Later on tonight, so we should know the result of that by this time tomorrow This comes then despite the Aussie and I'll get Sam to bring up the Aussie when he comes on in a moment Because there's been some quite interesting moves as a key technical area We're at at the moment and we've had a bit of a repricing in of a rate cut at some point in the coming months Really two-fold by external events that the Australian economy has been hit by the most new one Of course is the impact that it's going to have with their biggest in the most important trade relationship Which is a lack of demand coming out of China, which is being impacted by the coronavirus and then the Ongoing and severity of the bushfire season which has had implications as well for the economic Ability of Australia to perform as per what it normally should do at this point in time, so Interest rate cut is happening at some point I think markets are pricing in now April for the RBA rather than tonight's meeting All right, that is it from me gonna hand you over to Sam And I wish you a good week ahead I will Post in this link, so if you did want to get a bit of a feel for what are the key themes coming out for This week excuse the rumbling in the background someone's just finishing his bacon sandwich And I'll hand you over Sam. All right guys a good one All right guys. Good morning. Let's have a quick look over some of those those currencies before I'm gonna look at equities S&P by the way Just starting to drift lower so do keep a watch on that just bringing in the euro here Decent end to the week has to be set after the Wednesday Thursday We're perhaps suggesting that we could push higher We did on Friday, and we're up to two levels. I'm just gonna bring it here on the daily chart Let me just remove everything. I don't need all of that to Test and you can see here on this this daily Daily level the 111 30 area on the futures those lows you can see we broke through then to come back to retest that So that's a pretty key point that you're gonna have people iron up as an area of resistance should the dollar start to Strengthen so just keep a watch on that see how that reaction Should we come up to have another test of that again? You can see that failed test lower of that trend line We also had some decent price action there suggesting that push was going to happen However, it's kind of decision time around this point here This would be the key level that I'll be looking at those previous lows here and well above obviously remaining You know that we can push higher I'll be looking towards sort of 112 area and if that holds well It could come down relatively quickly back to test that trend line again having a look on that 60 minute you can see as we came into that zone in the early hours Or right on the clothes I should say we we have obviously since it's drifted down And we're testing some of those key points keys highs you can see from the 24 So keep a watch on that you've also got the pivot and then any of these previous levels as well that we're Perhaps going to retrace to and with that let's get the outfit an archie up just to see if there is anything potentially Interesting on on that point as well Any of those levels that do come into play that maybe have a another high in the mix for that the pound Did gap slightly lower at the open Boris? The reason for that and it wouldn't be surprising I think if we do have a further drift down over the next sort of couple of days as the market this price is in this no deal stuff yet again or This trend line I think could be a bit of a guide this morning You can see here that and you've also got a Previous high before the breakthrough that we saw on Friday as the dollars weakened across the board So below there below 130 145 I think you can see some further pound weakness if we look for Retracements to get short higher up any of those previous lows from the morning decent area 130 170 I'd like to look at that. However, it has already worked. I'll just be careful Of you know waiting to get in without any confirmation But 130 170 pretty keen also just a bit above the pivot 131 86 so from a point of view just looking to get short on the pound I like it below The the trend line and then these areas I think it's going to want to see a bit confirmation But those are your lines in the sand to the upside and obviously if you're you've bullish the pound and you like the idea of getting long Well above those areas are equally as good at some point this week or in the coming weeks Just keep a watch on that gap fill as well 20 ticks from the high where we pushed to today to the That low from Friday evening so to keep a watch on that have that marked up should be see Any strength come in Aussie dollar starting longer term here? You can see we're at levels not seen since October last year and that is is pretty key You know not the only market that is near these lows But if you start to see some of this day to improve if you start to see Closes or fake breakouts below these levels well what an opportunity perhaps to get long it'd be really interesting to see the closing price of This this sort of test of those levels which you can see we haven't quite got down to that lowest point yet So for me you still you know don't want to pull the trigger necessary just now But if you just put this back onto a more intraday you can see over the last few hours We have just been chopping along chopping along. They're not too much going on It's going to move that rectangle as you can see just below Fridays and overnight low 66 85 on the futures. That's the your area to keep an eye on to the upside. You've got a nice area of resistance That's sort of creating this zone as well to the upside if we were to not come down and test it And in fact that the low has been printed while I doubt that's the case Just keep a watch on any of these potential trend lines to come in which When they could when if they were to break could lead to a faster reaction to the upside like you've seen with the euro And the pound however this Aussie perhaps needs to really test those lows before any Significant move to the upside does take place speaking of key levels to the downside oil is Very similar. Let's have a quick look here at the daily chart. You can see We have come down and tested all of those lows. What an area You know here going back to January last year What difference a year makes highest prices hardly moved. You've got those lows all through there through June August you can argue a bit of October and we tested that now So technicians will obviously be keeping a watch where we close a bullish Close today and and well this market technically could be a good opportunity to get long. However You know from a fundamental point of view if the technicals also get that break below and we're on fifty dollars Well, this market really could push lower and I would be targeting towards sort of forty seven fifties forty seven eighty ones and and I was speaking with You know a friend of mine on Saturday morning about oil and they firmly believe that we are in for a break Below this whole area To that sort of forty seven fifty point as well You can see here some nice price action around that time and I For one if we can get the close below the fifty fifty five point We'll be having a bit of that trade myself However, we finish up and that trade never comes in and a bullish Close like we were saying and this market can certainly push to the upside Where would you feel a bit more comfortable about getting long today? Well, maybe the breakdown area that we saw on Friday fifty two sixteen original low of the day turn into resistance That's above the pivot so good a place as any other suggests before, you know Looking to get long and target up towards well fifty three bucks for that trade wouldn't be the worst one In the world S&P mentioned it was just drifting lower After breaking a bit of support not a massive move by any means but thirty two forty just gave way and Five five points or so pushed down there to a low that we had in early trade as well So not the most aggressive open Or European open sort of that's followed through to US equities, but certainly the way we finished Friday and the The panic that was going on in the markets the weekend has been kind I would say but looking for that That selling to continue if I just move that a bit lower I'd say 32 29 and a half is a good as place as any to be Looking to get short. I think again You're gonna want that that confirmation on these moves especially Monday morning a lot of people don't really like trading Monday The ranges aren't in you know have a bit of patience is what I would say even though, you know You might see some you know spikes through for equities. I think if you're looking to get short certainly on Certainly on the S&P that would be the the trade I would be be looking for to target that low that we had from last week And having a look on on the daily chart Let's just remove the the pivots and everything else that comes with it so far just where that low was You can see not a bad area technically that we had never closed off We made that low on the 31st of December We spiked below once twice three times hit it in the fourth no close below there if we were well Maybe you know start things start to get a bit more ugly again And that low that we had obviously on the very beginning on general is that the third or not the eighth? 31 79 could be a point people would look at ideally From a point of view look into it to get long equities for the Trump election push I would like to see anywhere near that 3100 handle and retest of that that trend line that of course broke through Last year you can see around that area would be fantastic of course. That is a big move away and The way stocks go after a bad January It's generally quite positive for the rest of the year anyway from a statistical point of view the Dow Jones Yes, early trade and we can't get much better than that push higher on the open come to test the previous low Hits it to the tick along with some low Highs that we had on Friday and you're you're back down there by what's that 200? 200 points or so so really nice opportunity there in in early trade if you weren't watching the Super Bowl That could have been the one to have got in on similar level for the S&P That you know you'd be happy to see break before getting short here on the Dow 28,231 give or take a point or two that would be where I'd be looking for that quick Look at gold as an I am taking a bit of your time here in the morning You can see obviously spiking higher in early trade to then coming all the way back down and now down five bucks from the open there a couple of trend lines you probably want to look to have on from some of these previous lows just in case we do push To the downside More you can see they're sort of coming in here from the loads of the 21st or the 24th Any down move in gold there's gonna be quite a lot of support For a push to the upside but if these trends were to go Then you're gonna be a bit more comfortable that price could push lower So the upside for gold similar if the S&P was to break those levels to the downside 1580 85.7 is a good line in the sand is as you could like just seeing the pounders is testing that trend line I think there's a bit more downside to come for the pound given Boris's comments Hope everyone has a good trading day. Good week ahead. We'll catch you all in the chat And we'll get that strategy report sent out at some point this one You