 Okay, very good morning everyone. It's Friday the 19th of June. I hope you are doing well. Don't forget to subscribe to the YouTube channel We've got Eddie's latest video coming Saturday morning and then Sam's technical video for the week ahead It was also going to be released on a Sunday as well So remember to hit that subscribe button click the bell icon to get notified as soon as those sessions go live but let's just jump into the charts and look at what's going on this morning and relative Risk on at the moment follows a slightly mixed close on Wall Street But you can see here equity index futures have just been edging up this morning in case of the S&P 500 We're just coming to a retest of the high print that we saw in the Overnight session and also around the highs that was seen yesterday morning in the European session likewise the Nasdaq 100 continues to push on firmly above 10,000 which is also a break of the 17th high Which if we look on a 120 chart means then that the Nasdaq now looking fairly bullish having got above that point and Opening up the prospect then for a run back up to these these all-time highs So, you know those people who are still of a fairly bullish Disposition despite some of the negative movement that we've had in markets particularly a week or so ago And the market just continues to respond as it has done on prior occasions This comes with you know in the briefing this morning Get up to speed with you know Trump and China has been a few developments We've also got the EU leaders meeting today to discuss their recovery fund And also I had a few questions yesterday about the pound and why did it move lower despite Some of the announcements that were made and so on so I want to have a conversation about Those things but elsewhere oil following in-step with equity so that pattern continues In regard to its tie to just general risk appetite on the global picture So despite the likes of the CDC in the US reporting coronavirus cases continue to increase Texas coronavirus cases rose by 3516 to a total of nearly 100,000 which was the largest daily increase on record for the state New York cases rose 618 or point two percent which is in line with the seven-day average at the moment It seems that despite the worsening situation in some of those those key states that again as I've said before did spook the market Around this time last week. It seems though that that has not kind of spread into a wider nationwide situation It certainly is more focused in specific states And it seems like the markets happy to take that and it's tried at least for the time being The other outbreaks as well There's nothing really too much I've read this morning to suggest that things are getting materially worse in China at this point Either and of course that was something which was dampening sentiments somewhat at the beginning of the week on that outbreak in That market in Beijing So yeah, I guess COVID remains the same situation It's an ever-present risk of course for markets, but for the time being there's no Kind of shocking developments that would suggest renewed aggressive outbreaks in new areas And I guess that would be the point of which the market would react more negatively because areas like Texas now People are aware of what's happening Tea notes then down a touch down four ticks sitting around the pivot gold Again slightly counter-intuitive in the fact that she's moving higher at the moment So it's about eight dollars in the FX markets Dixie's pretty flat the major pairs up a touch cable up 23 just reversing the fairly hefty move To the to the downside that we saw yesterday and so on that point. Let's kick off with that What exactly did the Bank of England do yesterday? Well, of course as we Were assuming they did increase their quantitative easing Program, but the kind of devil is in the details and obviously context is really important at the moment You know a lot of people were kind of asking me at the time before the announcement How would you expect the pound to react upon the announcement of QE and I'm on QE alone as a figure The bigger the figure and I if the market is expecting 100 if it comes out at 200 the net result would have been You are looking for a positive reaction in sterling even though they're in more normal economic times increasing of the money supply should In effect weaken your your currency the value of it And so here the focus being then on the more that they can support the economy The more stronger the recovery and the better that is then For the economy the better is for the British pound However, they delivered a hundred and so that wasn't really I think a great deal of a shock Although there were some people looking for more one of the main things that came out of it was the fact that There was around a two-thirds cut to the weekly pace of government bond purchases From 13 and a half billion recently to an average of what they anticipate of around four and a half billion for the rest of The year and that's that's quite important. So what I'm basically telling you is that they're They're expecting tighter financial market conditions and so if anything We've just had retail sales for example come out in the UK this morning, and it's a lot better than they expected However, I'll kind of go into why that is in a moment and why the market doesn't care really but Economic data has been perhaps not as bad as feared There's a couple of economic data points that have been if anything outperforming kind of similar to what case what we've had in the US the big difference here is that in the US although non-farm payrolls US retail sales these types of things have been pretty spectacularly strong the Fed has remained in kind of Ultra accommodative mode, you know unlimited bond buying what the Bank of England did yesterday is basically saying well Actually, yeah, we're gonna do more QE But we're gonna slow the pace of which we're doing it and actually then that's that's a slightly more hawkish kind of situation as far as then The ability or this idea that more is good. They're basically taking it Ramping it down a little bit. And so hence the reason it's received is a little bit negative The other thing is you know when Andrew Bailey was was questioned And this put more pressure on Guilts and the fixed income space in the UK was that policy makers didn't did not discuss negative rates or yield control So, you know, there's a lot of people that were getting I think at the time I was saying this on the briefings I think a little bit ahead of themselves and this idea about negative rates They didn't even discuss it, you know, never mind, you know getting towards putting a trigger on it And rightly so they shouldn't be doing that at the moment But the fact that they haven't even discussed it and they haven't even discussed yield control, you know, so that they're a long way off you know being What I am comparing to which is some of the other central banks I either fed which is kind of they're saying look We're gonna do whatever it takes the Bank of England haven't It doesn't appear that they've really got to that point and that's a disappointment for the market as far as Sterling this concern as far as guilt's a concern. So there was a bit of an expectation that look they were gonna pledge to do more But yeah, that's that's the reason Why I think it's kind of the back the Bank of England in summary signaling that they feel for the moment at least That look we'll give a little more QE, but that's it. We feel like we kind of signal we've done enough now And that spooks people a little bit in the short term So what I expect expected is to spill over and start weighing on the pound now No, but one thing I think that's quite interesting was that yesterday the one person who dissented from the increase of quantitative easing Was Andy Haldane and Andy Haldane just so happens to be the chief economist at the Bank of England So of all this roundtable discussion of these monetary policy committee members the one guy that you think Well surely given his job title is going to be the one who has the most kind of focus on the economy And he's the one saying look we don't need to do even more QE at this point, you know, never mind any of the other steps So I thought that was particularly Interesting and it does lead to the idea then that we might get to the point where retail sales this morning Let me just bring up a tweet that I I shared this morning Retail sales this morning in the UK was really strong now. Is that a surprise? Well, no, I don't think so it came in at 12% month-to-month expectations of 5.7. However as this analyst is suggesting Is that the 12% month-to-month bounce in UK retail sales in May was totally unsurprising This this chap who at Samuel Tooms is actually a very well respected guy. He's the chief economist at Pantheon macroeconomics So definitely worth a follow on the macro front But he he was saying that retail sales account for one-third of overall consumption spending the former's recovery partly reflects then a Reallocation of spending during the lockdown. So it's the latter point that explains the reason why it was such a sharp Recovery in that figure, but what's quite interesting if you look at the pound actually when the data came out the pound actually dipped So even though it was strong There are firstly some analysts expecting that to have been the case despite the median consensus being lower But also if you think about what we've just discussed with the Bank of England Well, then the stronger the data gets Then all the less accommodative that the Bank of England will remain And so therefore if you think about it the euro two weeks ago when the ECB over delivered when the German government over delivered When the European recovery fund kind of got into place the euro rallied in a positive fashion So if all these things start getting tapered back like what we're observing a little bit in the short term here in the UK So the UK with the announcement yesterday and if the data gets increasingly strong Well, all the more reason then for them to be less kind of extreme dovish in this kind of Pandemic period and that perhaps then just kind of removes a little bit the punch bowl that's kept markets come so elevated More recently. So, yeah, I hope that makes a bit more sense Moving on next story then Looking out for leaders holding their video conference today to basically just discuss this 750 billion European recovery fund as we've said before they struck that tentative agreement Week two weeks ago and that saw a generally positive reaction in the euro. However, that was kind of Again a framework agreement. They've got to get the the details down And this is where the potential complications could come of course. So the program which needs the backing of every capital City would be funded by joint debt issuance and a significant step towards closer economic integration And of course then that joint debt issuance is where the difficulties will lie Because the frugal for as they're known. So good to get used to these names They being from left to right and Sebastian Kurtz the chance of Austria Frederikson the PM of Denmark Mark Rutt the PM of Netherlands and Stefan Lofen the Prime Minister of Sweden. So these are the people particularly Mark Rutt of Netherlands who's been quite adamant and vocal about the situation here in regard to the kind of I Guess fiscal discipline and the idea that then they are in effect Going to be picking up a little of the tab for what ultimately is a recovery fund that benefits countries not their own IE the likes of Italy and so on those in more Economically or say fiscally challenging times Officials expect Friday's debate to formally kick off. What would be weeks of negotiations? They've warned that there'll be at least one more session will be needed to reach a deal in terms of a formalized Session like today's one with negotiations happening in interim periods. So Don't be looking for like a one and done kind of silver bullet that yes This is done or one or if anything the risk probably lies on the other side That there's just complete fallout when they start talking on this video conference call later And if that puts into jeopardy then a backward step in this European economic integration idea on the recovery fund I'd perceive that as a negative if that was to to happen So again, if you're picking a side here The risk is to the downside because it's unlikely going to strike a deal this quickly because it's going to require Much more discussion because it's quite a technically challenging thing to to get done The other subject matter that people looking at is this Donald Trump Basically last night. He threatened to cut ties with China and remember The US officials met and been the Hawaii midweek About trying to come together to renew dialogue despite some of the the tit for tat that was going on between the two Night nations. So one day later The former national security advisor John Bolton releases a very negative memoir on Trump and all of a sudden they've gone from talking on Wednesday to now Trump saying that Look, we can decouple from China if we want to that is a policy option So Trump threatening to cut ties with Beijing and obviously this is a political knee-jerk reaction To him now having to really ramp up and you would expect this over the weekend as well Lots of anti-Chinese comments now because he's got us to move the needle of public perception back to the fact that look I definitely did not cut any deals with Xi about getting me re-elected. We are not friends There is no back door kind of deal here. And so he needs to get them on sign whether or not That is the case of what Bob was saying. It was true or not wouldn't surprise me But for Trump now, this is kind of a PR exercise to try and get the belief back That, you know, that he's willing to be stern with China, let's say Interestingly, this does carry in my mind a little bit of a tail risk for markets because what is Joe Biden doing? Well, Joe Biden's going full guns blazing now. China and Xi is a bully Trump is weak and dealing with the issue. And so You know, if you have two candidates saying all of this, you know, there's obviously A possibility then that something could happen whereby Necessity of trying to promote this anti-Chinese rhetoric. It just goes maybe a step too far Maybe trying to retaliate in some form and then, you know, perhaps that could have a negative Reaction, however, I would see that as not being the base case and that people will see straight through this political kind of narrative that these These campaigns are going to hold in respect to China going forward, at least for the time being This was the tweet that Trump did. So again, as usual, using the usual platform of Twitter to convey this type of thing Interestingly, you know, despite the COVID despite what Trump and this kind of The situation with China, I mean, look at the markets this morning, you know, it's one of these things here where Again, don't don't take news headlines You know, don't just take them as they are try to question it and try to think of it a little bit more Objectively as you know, what are the purpose behind the people that are saying these comments? And as we've just discussed, you know It's a pretty obvious response from Trump It surprises me a zero amount of what he said last night about China And so when you look at these charts, you know, the market doesn't care because everyone sees it from the same perspective So at the moment, you know equity markets continue to remain pretty buoyant for the time being and and so As we continue to punch higher oil here testing the R the R1 now, which was the the brief overnight early Asia-Pacific high So it's going to be quite an interesting day. You know, tea notes have already got through that What are that double bottom that was seen as well In the kind of late us hours and the Asia-Pacific session. So everything's setting up at the moment for a fairly Kind of bullish start to proceedings and when this type of activity is happening it generally then starts to see an unwind in terms of the The kind of premium into the us dollar We've typically seen that The dollar move in response to at the moment if risk on dollar weakness And so therefore major pairs particularly sterling currency If it was a little bit overdone yesterday, perhaps room for a for a bit of a bounce On the cards, but I guess the near-term challenge for sterling would reside at the pivot level in the near-term Just coming up before there So kind of a couple of areas of interest I'd keep an eye on there if I was looking at the the British pound Would be kind of that area there and then here as well. So if we were to come up Keeping an eye on that pretty firm area of resistance around 66 69 here in the futures So really here On any further recovery And then in the euro now we're at pivot I'd be looking at this kind of area here So the cluster of those highs that were holding price activity And yesterday afternoon you also got the low On a couple of prior occasions as well. It could be quite interesting for the euro and any further recovery here on the upside. So one 12 528 there final kind of stories Just going to point this out. It's had zero market impact, but thought it was worth a mention The economy in japan remains in an extremely severe situation But it has almost stopped deteriorating according to the cabinet office in japan's government They said overnight in its monthly assessment. It's the first time the government has upgraded its view. In fact, since january of 2018 So despite all that's going on despite still You know, as I said, this every present danger of covid the actual japan government the cabinet office has upgraded their economic view But again, the that report very seldom does it really move markets, but just worth noting On the calendar perspective A few things to be aware of here. We've already had those retail sales the european council meeting is going to kick off from around 9am So a few hours time And then from a data perspective, it is very quiet actually There's not a great deal coming out of the us. So Again, it's going to be more of a sentiment technical led session perhaps for the us afternoon Do have a couple of speakers including Um feds pow and feds mester participating in the live video conference talking Basically about the workforce building a resilient workforce In ohio So that's not going to come down until 6 p.m. London time feds mozengren non-voter is speaking on the us economy And current financial market conditions. That'll be at 315. The other thing here just to be aware of is this it is Of course quadruple witching the simultaneous exploration of single stock options and futures and the same for stock index options and futures so For anyone who's not familiar with this Then basically on the third friday after month of every quarter march june september december you get quadruple witching and this can See a pickup in volume And it sometimes leads to an increased bounce of a volatility from a Awareness point of view depends what product you're trading From the equity perspective Then you've got the footsie at 10 15 euro stocks 11 the dax midday And then you get the us indices at the market open with de caccaron in france at 3 p.m. This afternoon to do also Keep that in mind at around the market open of the north american indices That is it Nothing really much more for me to add at this point So feel free to ask me any questions, of course Just feel free to leave a comment on the youtube channel Don't forget to subscribe to make sure you get first access to those videos. I mentioned over the weekend. Okay guys Have a good session ahead and have a great weekend