 Welcome to CMC Markets on Friday the 19th of June 2020. Thank you for joining me, Michael Houston, as I look ahead towards this preview of the week ahead beginning the 22nd of June before we get started. Just a quick housekeeping, risk warnings and what have you. And then we can get into the content because it's been a fairly interesting week, I think, all told. I think what we've seen coming on the back of last week, which was the first negative week for Equity Markets since early May, we've settled down a little bit, traded a little bit sideways, a bit of a more positive bias despite getting off the week on the back foot. There's been lingering concerns about second wave infections in China, Japan, India, as well as increasing number of cases in a number of US states, namely Arizona, Florida, Texas and California. And I think that has taken some of the edge off the economic optimism that we would see a V-shaped recovery and that V-shaped recovery could actually end up becoming a much longer U-shaped recovery with a very flat base. And then that flat base could actually last maybe instead of two or three months, could be six or seven before we start to really recover and push higher. Nonetheless, what we've seen over the course of the past few days is markets stabilised after initial wobbling start. We can see that in the way that the FTSE 100 has behaved in the aftermath of that big decline that we saw just over a week ago on Thursday the 11th of June. Big declines, down three successive daily declines and thus and since then, we've slowly clawed our way back up, bouncing off the 50-day moving average on the UK 100 as well as the trend line support from those April highs, which have drawn just above the highs that we saw in March. What we can see from here, the price action is telling us, despite all the negative headlines that we're seeing, there still are fairly decent appetite to buy the dips in equity markets. And you're getting all of these headline reports about Robinhood traders, these Robinhood accounts that people are using to buy bombed-out sectors, bombed-out stocks. For the moment, that strategy does appear to be working well and I think it's important not to second-guess it. Ultimately, the price action tells you all you need to know and at the moment the market appears to be comfortable buying dips or on any pullback. So until that pattern changes, then it's fall-hardy to try and pick the top. Trying to pick the top in a market like this can be akin to a little bit of a fall zero. What I wouldn't be doing is buying at the top, but certainly looking for opportunities to get back in. Dacks, again, similar case in point. Got a very nice trend line coming in from the March lows, which at the moment is supporting the price action as we look to potentially retest the highs that we saw earlier this month in June. So again, here we're seeing very much a case of buy the dip. And if we look at the S&P 500, it's telling us a similar sort of story, albeit with different trend lines, but ultimately with a 50-day moving average acting as a little bit of an underpinning to the overall market. And we have seen a bit of a decent rebound off the 50-day and the 200-day as well. We could actually well see the 50-day cross above the 200-day, which would be what is termed as a golden cross in terms of technical analysis. I wouldn't read too much into that given the fact that the 200-day is pretty much flat at the moment and has been trading flat for around about the past two to three months. So the 50-day crossing above it, it's not particularly instructed. It's not a bad thing, but it's certainly not a uniformly positive thing because we could quite conceivably start to roll over and then both trade sideways over the course of the next few months. So using it as an indicator that we're going to go aggressively higher is probably not the best indicator to use. If we take out the previous highs in June, that could well then target the previous all-time highs that we saw towards the end of February. So certainly keep an arm of DAX, keep an arm of S&P, keep an arm of FTSE 100 and that 50-day moving average. That's acting as a fairly decent support level going forward, so we remain very much by the debt mode. So that's what the situation is looking like at the moment. Concerns about rising infection rates, concerns about the potential for another lockdown. Personally, I think the bar is very, very high for another lockdown simply because of, I think, fatigue over the current lockdown already. You're seeing UK shops reopening this week. We've seen rebounds in retail sales this week in the US and the UK. The UK rebound not as aggressive as the US rebound, but I think the US rebound is being fueled an awful lot by those stimulus checks that the US government issued to millions of people in April. So I think you're seeing an element of that and also furloughed employees starting to come back as the economy reopens. The UK retail sales still a fairly decent bounce, but it was much lower than the previous month's decline, which was minus 18% or 12%. The UK is slightly behind the curve when it comes to reopening the economy. That is likely to be reflected in the coming weeks flash PMIs from France, Germany and the UK, which are due on the 23rd of June. Now, we've seen some fairly decent indicators that the economic reopenings that we've been seeing over the course of the past few weeks are starting to feed into these numbers. Just as a reminder, the record loads that we saw in April were in the high teams, low to mid teams for France, Germany and the UK. Now, we're not going to get that for June. What we're hoping to see is numbers in the mid 40s. Certainly in terms of France, looking at the estimates or France services PMI in June, we're expecting a jump from 31.1 in May to 45.2, with Germany 36.6 to 42.5, and the UK a jump from 29 to 37.5. The UK is the weakest because ultimately shops here in the UK have only just started to reopen this week, so there's going to be a little bit of an empirical lag there, which could actually get caught up when the final numbers are published in the first week of July. So what does that mean for cable and euro-dollar? Well, cable is not looking particularly constructive at the moment, I have to say. We've broken the uptrend line from the lows that we saw in March and we're starting to head lower, and that could mean that we could well see a retest of the lows that we saw in the middle of May, around about 1.2075. So we've also crossed below the 50-day moving average, so on a technical basis cable is not looking particularly constructive, and as such we could see it roll over and head back towards the lows that we saw in May. The dollar's looking fairly well supported. If we look at euro-dollar, it's a similar sort of story, but more importantly, we are actually above the support level of around about 1.1170, 1.1180. So I think while we're above that, there is potential for a bit of a rebound, but look at what the highs are doing. The highs are getting progressively lower. That suggests to me that the euro is starting to weaken, and if it breaks below 1.1150, we could well see a return back to the 1.10 area. One of the things that is also helping support equity markets at the moment is optimism over further stimulus programs. The European Union is talking about sitting down, and is now starting to sit down and talk about the detail of their own 750 billion euro pandemic recovery plan. There is still likely to be a significant amount of toing and froing and pushback from the frugal four of the Netherlands, Austria, Denmark and Sweden, and I think there is some disquiet amongst some Eastern European countries about how the 500 billion euros of grants will be divvied up and the conditionality surrounding that. So that's the discussion that's likely to continue. There's also further discussion about another US stimulus plan, a trillion dollar stimulus plan on infrastructure, which was also doing the rounds earlier this week. So central banks remain front and center. Bank of England this week is slightly less dovish than was expected, but I don't think you need to read too much into that. I think the Bank of England will continue to do whatever it takes. It's done an extra load of QE. That's likely to get it towards the end of this year, and ultimately that's all they really need to do. Keep the finger in the QE pie and try and keep the UK economy ticking over, keep liquidity flowing while the economy gets back on its feet. Putting extra QE at this point in time will serve no useful purpose because the economy isn't as yet fully up and running. It needs to be fully up and running so businesses feel confident enough to be able to start reopening much more broadly and getting people back through the door. And unfortunately consumer confidence is going to have to play a huge part in that. And one of the things that the latest retail sales numbers showed me was that more people are shopping online than ever before. 33% rise in online sales in the retail sales numbers for May. Now let's look at euro sterling, and it's not looking particularly constructive for my long sterling view, short euro view. We continue to trend higher on euro sterling from the lows that we saw in February. Haven't been able to take out this up trend line. And if we move above 1954, which looks like we could well do, by the time this video goes out, it could well have already done so, we could well be heading back to 92 and the previous highs that we saw in March earlier this year. So keep an eye for a break of the 1950-70 area for euro sterling for a break higher. Let's quickly look at Brent Crude. That's still looking fairly well supported. I still think it's possible that we'll see a test of the 200-day moving average year as economies reopen. And OPEC continues to talk about a potential extension of the production cuts of 9.7 million barrels a day beyond July into August. I think the one thing that I think OPEC plus users will want to do is try and keep prices fairly well supported, certainly anywhere between $35 and $45 a barrel, because if they go much above $45 a barrel, then that will take the pressure off the US share industry, which has been hit quite hard as a result of this decline in oil prices. What other things I'm keeping an eye out for US personal spending for May? I'm expecting to see a big rebound there, given the rebound that we saw in retail sales. I shouldn't see too much of a surprise there. We did see a big decline, a record low of 13.6% in US personal spending in April. I would expect to see that rebound quite strongly in May. Estimates are for a 5.1% rise. Given the rebound in retail sales, that could well come in higher. As the US consumers would turn off furlough, that in turn could see an actual drop in the personal income rate at the same time. What does this mean for gold? Difficult to say really, but at the moment, very much by the dips, looking fairly well supported in and around these series of lows here, we're in a range of gold. Not really expecting too much either way, but certainly it'll look a little bit frothy anywhere near the previous highs of 17.66%. That'll be fairly well supported anywhere below 17.00%. A couple of UK companies announcing some important numbers in the coming week. We've got Tesco's first quarter numbers. Sales should be quite good. Certainly in terms of the latest retail sales numbers or supermarket sales numbers, Tesco actually came in as the best performer, boosted its sales by 11.7% in the latest Nielsen data for supermarket stores. Also, Nielsen is selling its Polish business for 181 million pounds. What will be interesting I think in terms of Tesco's is how well it's managed its costs because its last four-year number showed a one billion rise in overall staffing costs as a result of the coronavirus pandemic as it took on extra staff to offset workers who had been offset or extra deliveries and what have you. Also, we've got the latest four-year numbers for Royal Mail. Again, here we should see whatever happens with respect to a drop-off in its letters division, we should see more than compensating for in a pickup for its parcels division given the increase in online shopping that we've seen. I've used online an awful lot more in the past two months at any time than I have ever done before. So Royal Mail should see a bit of a pickup on the back of that. Something else that's worth keeping an eye out for next week, there has been some talk, I haven't found any reference to it anywhere else, but we could see some stress tests for US banks. So they can be found in the products and there's a US bank's basket, particularly if you want to diversify your risk on a particular sector. There's a whole host of shared baskets which you can trade and which will allow you to diversify into a particular sector and find the details of them on the main CMC markets website under share baskets and instruments and that will give you an indication of the components of the various shared baskets and how they are made up. But these stress tests, when the results of which, when they are released are very, very important. The last time these stress tests were conducted last year in 2019, the worst-case scenario was a 10% unemployment rate in the US and a 10% economic contraction, but well beyond that now. So I think these will be important in the context of how many banks pass, what extra capital the Fed will require banks to raise to offset the challenges that are likely to come about as a result of increased defaults, not only amongst US consumer but also amongst businesses, amongst US share producers. The US banks have already taken steps to shore up their balance sheets. The last set of earnings numbers, they suspended their dividends, they suspended their buybacks and set aside nearly $25 billion in provisions for potential and non-performing loans. So assuming these stress test results come out on the 25th of June, then we could well see some movement in US banks, J.P. Morgan, City Group, Wells Fargo, Bank of Milan, could well be significant in cases of poison, gold and sex. So that's it for this week, ladies and gentlemen. I trust you. I will wish you all a very pleasant weekend. In the meantime, I'd like to thank you all for listening till the same time, same place next week and see you all again next week. Thank you very much.