 All right, very good morning. It is Friday the 4th of September. I hope you're doing well. I thought I would start with Splash of red New color here going on given the NASDAQ after rallying for 11 of the past 13 sessions Yesterday things coming undone somewhat the NASDAQ 100 finishing down over 5% The other indices not quite so bad, but again some of the biggest down days We've had in a number of weeks, of course some of the mega cap tech names Which obviously have been leading this market higher pretty consistently now for for the last couple of weeks came off The most sharply so Apple was down about 8% you can see here Microsoft down 6.2 Amazon down about 4.6 Google about 5 Facebook about 4 Some of those names which have really outperformed recently like zoom for example came off sharply Tesla Someone and so forth. So yeah a little bit of reckoning say for the relative calm, I think that's been Really observed in markets of late and I think that in itself is quite telling It's interesting always is after a day when we have price action like yesterday and people start to You know, it's quite so quick people's kind of Interpretation that this is the beginning of the end and that's it now the bubble's gonna pop. We can't sustain this I would say look you've got to there's got to be a little bit more to it before I think you can start calling that type of activity, but they're definitely a few things I think we need to be aware of going forward for today's session. So with that being said, let's have a look at a couple of equity charts Because there are some first of all some key technical levels of which the market has been responding to of late So I'm looking here at the NASDAQ 100 and I'm going to switch us to a daily Continuation chart and in particular both the NASDAQ and the S&P 500 are quite a key Technical level, which is the 21 DMA now the 21 DMA you can see here as far as the NASDAQ 100 is concerned has been a really quite telling signal for people to Buy into that any dip that's occurred The most recent one was when we had the bottom end of this trend line coming in with the 21 DMA when we had a Brief pullback of the initial break to all-time highs and what was then also superior of profit-taking And that then created then the next Entry point for then the push in the eventual break Which was quite a key level of course around 11 283 and then the kind of resumption of this really strong upward trend that we've had Now the posh push down yesterday and then in the overnight session Asia was down But certainly not as bad of what we had on the close of Wall Street The losses were slightly more contained in Tokyo Shanghai in Hong Kong overnight But the 21 DMA pretty much being tested to the tick Is quite a key area now to keep an eye on here in the NASDAQ You can see just putting a horizontal line here as well. It was the error support on the 25th of August So it will be an important level Equally, so I'll come back to the Dow in a moment because I just want to bring up the S&P first because the S&P 21 DMA also warrants strong vigilance if I was going to adopt a kind of ECV phrase For the equity market because the 21 TMA as well Is in very close proximity to where price is trading at the moment So that would be my first kind of area to keep an eye on If we were to get some further pressure to the downside and then the next real key area for the NASDAQ or the S&P Excuse me would be 33 97 basically the 3400 level just below their 97 and a half encapsulates that previous high that we printed on the 19th of August that then was Repeated test on the 21st before the break and support level for the commencement of the push higher And that of course was also the prior all-time high previous to the pandemic So for me the 21 DMA in the spools, but then the 3400 and 33 97 I know for one The likes of Sam on the desk He's been calling that figure for a while that if he gets a pullback then and that's an area You know all things to be considered Obviously re-evaluating at the time when we get there But an area where technically he would like to then just pick up some more for re-entry of the long again so Once more the the kind of thinking being that you know corrections in markets after we've had a really sharp run-up like what we've had Some would say is a necessary Component of a sustainable market rally You know if a market just goes up consistently higher and higher and higher It's almost then the inevitability around a fairly significant and sharp sell-off at some point So what is healthy then are minor corrections along the way and and I guess the question mark is out now And how today will perform will be quite telling is today the commencement something a little bit more deeper in that correction Or is it just that and you start to see these dip buyers come in and certainly the 21 DMA will be quite key in those indices As far as the Dow is concerned the one i'm looking at here is This rectangle box here so it in the futures on the daily continuation chart around 28,000 28,052 actually is the figure but what i'm looking at here is the initial low that we printed In yesterday's session and that coincides with the low of support in 25th And then that was the high on the 11th of august on the recovery Which puts us back down and also a key level We can see here at the beginning of the year in late jan before the breakdown on the pandemic situation So for me, this is a really key area of support as well So you can see there's some really important areas technically that are very close by here in the major three indices And one thing I would say is that don't forget it is the labor day holiday in the us on monday now just given The fairly stretched nature of this run up in equity markets Is this an opportunity for some book squaring to kind of rotate out some of these large cap tech names And also not wanting to carry any risk over the weekend Do we see some more kind of closing out of these these positions? I kind of profit-taking and consequently if that does break down again Then i'd be looking down around 27 6 24 that prior high We had at the beginning of june and an area the bottom side of the kind of consolidation phase that we saw In the early part of august would be a potential next area of support So you know could we have another heavy down day? Sure But there's got to be some key breaks and what i'd be looking to see that more heavy move down and certainly the 3400 in case the s&p Is a coordinated kind of synchronized break would need to happen Um, obviously we've got payrolls later. I don't really think payrolls is too much Of a big deal, but could it act as a catalyst perhaps? under the right scenario But again It's this idea that I don't think that we're We can call at the moment that this is the beginning of the end of the stock market Kind of rallying. I think far from it. We've got to see some more evidence Of consistency behind the selling And I think today will be quite key and I I would say on the balance though What makes today a little bit more risky Is the fact that it is a long weekend in the states and typically In my mind that tends to add a little bit to the nervousness of wanting to hold onto any position So you could see some more of that book squaring taking place A few other things then to to look at from a Equity market points of view A couple of charts here for one that it was the biggest route that we've had Since june as far as the major three indices in a coordinated just kind of push lower Overall selling taking place and again, hence the reason why it's caused quite a lot of media attention Obviously stocks like apple given just how sizable they are nowadays an 8% move is equating to around $150 billion worth of market cap and You know these news organizations love spinning these numbers and you know, how much is bezos loss in one single day these types of things I really think they're quite insignificant and it just kind of sensationalizes the move I don't really think that that those types of numbers are particularly meaningful Also as well The other thing is you've got to you got to look at the world in a bit of context I mean this is looking at the the rally we've had obviously it's been an almighty one since the trough of the Bottom of the pandemic seen in late march and since that point, you know the performance of apple shares So, you know if we take back what we've just seen it only puts us back to where we were kind of mid august anyway, so As I said, I think we've got to see a little bit more here Before we can draw any real conclusions behind just one day's price action Feel like i'm sounding a little bit like a central banker when I say that One thing that I thought was quite interesting and I just wanted to to point out was this This was looking at Something in the ft And it was talking about insiders offloading stocks now if you're not familiar with this you can actually Track insider activity, so this would be looking at data Based on filings with the us securities regulator Excluding sales made for tax purposes through executive pay plans So basically what this is telling you then is major top level us executives who hold Perhaps some significant shares within a company. What is their activity and a lot of stock traders? What they look at is insider dealing and what we've seen here is that insiders So this would be us executives The figure here capturing stock sales of at least A minimum of 10 000 us dollars in their stock holdings in companies with market capitalization of at least one billion dollars And what we've seen is us executives have sold close to seven billion dollars of stock in their own companies over the last month That comes in at over 1 000 executives. So as we've started to rally and we've had this Incredible move in markets over the last couple of months It says quite a lot when those in charge of these companies at the helm Are actually offloading quite a lot of their stock holding And you wouldn't do that unless you thought that the future was particularly uncertain and that you'd want to cash out your chips at the most optimum level So I just thought it was quite an interesting thing here because Insiders are offloading stocks. We haven't really seen this type of volume Since the 2015 So perhaps then a little bit of an insight as to what you know these these execs on the ground for see about the Ability for this market to continue to punch high from where it is at the moment Right, okay, some other things then obviously we've got non-farm payrolls coming out later um My overall take on non-farm payrolls is Not expecting too much from this particular one as i'm about to discuss And similar in the u.s. Into the uk as well I think the coming months are particularly important And a lot of that is tied to the expiration of various different stimulus packages that have been implemented And help support those recovery you've seen in markets since the onset in in march april As some of that comes to expiration. That's when I think that we're really going to see the telling Situation of the underlying labor market and how should and how fast or not is the economic recovery going to be in in real terms So just having a look then at payrolls for today Looking at the actual details the expectation here on the bloomberg median consensus is for 1.35 million jobs The unemployment rate is expected to drop below 10 percent for the first time since in march when we saw the initial pop Expectations for unemployment at 9.8 percent and average hourly earnings year and year Expected at 4.5 percent is kind of the headline readings um a few different things then uh If I look at this here, we've had Obviously the initial reopening of the u.s. Which was occurring. Obviously they they did that Very early comparative to other areas globally And that did have some repercussion you could say perhaps in that secondary kind of way that we saw with the pickup At the time Through june july with those some belt regions, but even that in itself now started to become a little bit more controlled But nonetheless, we kind of peeked up on the the the june print But since then the number has been Decelerating and so the 1.8 million we saw last time out is expected to decrease Once again One thing that bloomberg were noting which I thought was was fairly interesting Was that any gains in august are likely to be partially offset by declines in education jobs In particular If you think about it in america and we saw this actually we use zoom here Amplifiers as much as many other companies now in the pandemic era But zoom crashed a few weeks ago And that was when all the kids in the u.s. Went back to school because a lot of them are doing it virtually via zoom And what virtual learning means then from a school Point of view is you know, think about it. There's fewer bus drivers Taking the kids to and from school There's fewer canteen cafeteria worker staff There's less teachers than are needed Because you know you can deliver virtually to perhaps a larger group of individuals and so on and so forth so You know all of these things Will contribute to to potentially offsetting Some parts of this but another thing to be aware of on the upside figure could be boosted today due to census bureau hiring this is kind of a A one-time anomaly it happens from time to time And really it's important to x out that number of jobs to get a more true underlying sense of employment conditions the figure Boosted by census bureau's hiring is said to be around 240 000 Temporary workers. So if anything that 135 should be more like 1.1 million for example What's going to happen here is that data collection It takes quite a long time for the for the census to be conducted and actually it will probably impact the next reading as well It's not scheduled to end till september 30th Meaning then that october will be when it shows a decline in actual actual government employment in this temporary nature of being then removed from the data set the other thing as well to be aware of is Kind of furloughed workers getting rehired as businesses reopen That will prop up payroll gains But those reopenings depend on the control of the corona virus and this is quite an important thing I think I just want to quickly touch upon This is just a selection of some real household Companies in america and a lot of these job job cuts have come after the reference period So it wouldn't be necessarily included here This report we're going to see today So you're looking at kind of late august to early september these these job cuts are not Huge but obviously the The accumulation of all of these job cuts is quite telling and and I think more for the sentiment then about employing employing Our employer conditions It's quite telling now one of the things here is that on capitol hill obviously They're still struggling to really come to grips with what are they going to do in terms of the form of the next level of stimulus You know, I know trump managed to do various different executive orders by the end of the day You know, what's going to happen with the number of these? Artificial and fixed period measures that have helped prop up a lot of people who are still furloughed And so this is going to be quite key going forward and actually One thing that I was sharing yesterday was them the chaps at ing put together Their latest research report and it was looking at the types of shape of recovery. So if I quickly show you It was kind of looking at this type of scenario Which is where we're at at the moment a sharp recovery and then a gradual recovery there on You've got a recovery that sees then the potential for a where we are at the moment to deteriorate slightly before then picking up into was the second half of next year and then the scenario where we see a big Pullback essentially from where we're at at the moment. I'm talking about general economic activity and economic performance by real gdp here So the varying degree of pace of recoveries and what is this contingent on? Well, it's really contingent on two main things the development of kovat 19 as a virus particularly as we go into the seasonal part of the year when weather conditions will be Will be dropping in terms of temperatures and people generally start to get seasonal flu and so on but also then the speed and success Of trying to get a vaccine to market and then also its Distribution and so when overlaying those two things they've built basically a scenario model Where you've got kind of a being with kovat, you know, are we going to experience from the most? Loose which would be localized type lockdowns to deal with then the economy acting in the most efficient manner Just dealing with locking it down in very small parts As to not impede then economic progress all the way down to Community transmission remember The difference being that an outbreak in an abattoir is a much better situation than a community Transmission outbreak which would be something like what we've seen in the uk in the northwest for example So one factory place where it's contained is very different from an entire community Which is more consistent and widespread in its transmission And what could that mean? Well community transmission as people Actually become more indoors more cost of claustrophobic spaces That could then lead to national lockdowns. That would be by far the worst case scenario And then when it comes to vaccine development You know, there's obviously in multiple different trials that are happening from different pharmaceutical companies at the moment So could we end up in the best positive case? Which is multiple options Kind of late approval coming the end of this year to roll out then before the summer of 2021 And then social distancing can start to be unwound in the second half of 2021 Economy can then start to regain some momentum The opposite would be delays disappointing phase 3m trials No actual vaccine emerges until well into 2021 That means social distancing needs to remain in place that impedes then this mobility aspect for people to actually Start to resume normal activities and therefore economy and the economic response is very slow accordingly. So Yeah, I just thought this was super interesting. I did share these on my my twitter yesterday So check it out But I think this is why my endpoint is to link this to payrolls is why I don't think payrolls now is that important the Fed have kind of set their stall We know what the deal is there. They're not going to make any changes regardless of what this figure comes out as What's going to be important now is what does this figure look like? In oct in october in november, you know when a lot of these fiscal measures start to be unwound And that leads us on to then really Our man rishi in the uk the uk chancellor Reading quite a lot about this this morning and that argument I've just been talking about about the This kind of the uk in particular globally is going to be one of the first countries in europe To start unwinding these emergency measures post-covid as I said yesterday this kind of phrasing of there's no such thing as a free lunch And you know, ultimately you're going to have to pay in taxes and it's very crude and simplistic But the idea here is that his job here is he needs to manage an economy But he also needs to be somewhat fiscally prudent in order to think about then managing it appropriately going forward So it's a balancing act But there's a couple of things here that I thought were quite interesting and for one politically Boris Johnson's government's under quite a lot of pressure at the moment Sunak has warned that rebels in the uk conservative party will vote against the autumn budget if the government proceeds with tax increases, so it's been a particularly divisive Kind of idea here about raising taxes as we start to wrap up and unwind and withdraw the emergency measures post-covid This could obviously have some real tangible impact on the actual lives of people in britain on the on the street if you like So not only have you had number of policy u-turns which have hurt the conservative party's reputation and therefore their performance in the polls Things could get a lot worse if you start to see internal fragmentation within the Tory party party in itself So all of this I think it's quite interesting because obviously there's quite a few other things coming up like brexit as well to deal with So just to give you a flavor Sunak this week ended a subsidy program aimed at helping the restaurant industry A ban on evicting residential tenants in rent arrears is set to expire on the 20th of this month furlough ends in october Think tanks estimate that as many as three million people Will still be on furlough at the point of which it ends three million Soft deadline for brexit obviously coming at the beginning of october According to the times newspaper this morning Senior officials close to borrower see only a 30 to 40 chance of a trade agreement with the eu as it stands right now Another point many mortgage borrowers will face the end of their payment holiday Remember a lot of people were given the choice then to just just park their mortgage payments. Yes, they got to pay it Later at some point but while they're under pressure perhaps being furloughed on No real job security to just alleviate some of that short-term pain of those payments going out They're on a holiday, but that's got to come to an end as well So there's a number of things happening here and I know the The pound obviously has been you know on resurgent Resurgency of the pound over the last couple of months, but for me that's predominantly being based on the dollar Not really the pound and a lot of these things I think will start to build up With the uk over the period really I think of the coming weeks and what actors are growing fundamental weight on sterling And particularly we've had a bit of a bounce of late in the the Dixie, of course If that gets sustained to any degree, you know, I think there's there's different room for a bit of a pullback there in cable What's my overall take here? Well, germany as a as a comparison have pledged to extend its furlough program into next year As the crisis goes on but obviously from a fiscal situation germany is quite different to the uk, but politically I just wonder whether Given all of the risks associated with so many things expiring all at the same time and compounded by brexit uncertainty I don't see much in the way of choice that sunak has other than to start pushing these things out and extending them for a little longer Before we have a little bit more clarity on the economic situation and the bracelet situation So I wouldn't be surprised if He has to swallow a little bit of a further worsening in the uk's debt situation in order to just offset a lot of this Because there's also a lot of political pressure as well to manage The potential threat of mass job loss. So yeah, just thought I'd cover these things This is obviously one of the main threats then This is a little snippet from the ft of why this is so critical Is that here are some numbers associated with with these types of programs that are due to basically end And the fear here is that many banks are worried about a potential wave of defaults Meaning that without any type of state guarantee They could be pursuing thousands of struggling companies through the courts And that's because the government's lending scheme has provided only 53 billion pounds to some 1.2 million companies through three programs bounce back loans guarantees for small business loans and the coronavirus business interruption loan scheme And if all of these start coming to an end, you know, can these companies legitimately survive Particularly these small medium-sized firms which do make up the proportion of the main types of companies that employ people in britain So push comes to shove I think he rolls it over for another month or two at a minimum But we'll shall see until that comes to fruition I think it will add a growing potential negative weight to sterling's outlook in the short term All right, final few things This is looking at crude oil crude obviously came off quite sharply yesterday in tandem with equities Looking at the chart here technically with oil Again, I think perspective is probably warranted I know we've been generally fairly bullish with oil and I don't really Think that I would turn bearish at this point just given what's happened over the last two days I do think that As we come down here, we're in close proximity on the low We printed yesterday to the 40 dollar handle and the futures just around 20 cents above that I do think though that the around 38 50, which was that 10th of july low Also on the low on the 30th of july and you got some points before there at around 40 39 50 As well where the price has previously reacted to I still think these are pretty good areas of support One thing that people are looking at is The volume of crude arriving in china, which is the world's largest importer of crude Is set to slow according to data from refinitive after rising for five straight months But generally speaking, I think from some of the chinese data we've had things have been relatively stable I guess again Exactly the same argument that we were looking out for with oil. It all comes down to this Yeah, the the shape of the economic recovery and so therefore de facto how these assets will react And particularly with the consumption of oil the net demand for that product Is intrinsically tied towards the expectation of the economic recovery So the clovered 19 situation how that is dealt with by authorities and The the speed of which a vaccine is forthcoming Will be very telling then for the performance of oil going going forward in the medium term But yeah a bit of a bit of profit taking perhaps. I mean, you know when you look at oil These are looking at weekly performances And you can see there's it's been very seldom the case over the last four months where we've traded negative on the week The last time we did was back in the transition through july into august And that also happened as well in that june to july period as well. So Yeah, it's been flat lining a little bit of late But just reversing probably the last four weeks or so of gains to to be pretty scratched at the moment. So again I'm a little bit reluctant to start putting out new Bullish or bearish views. I think you've just got to wait to see how the price unfolds Through today and then going into the resumption of trade next week before we could see about how sustainable The market kind of reaction was to what happened yesterday more broadly. The other thing finally with the fed Two fed officials spoke yesterday and you remember this is before the blackout period We are now into a blackout period Which means then for anyone new to markets the no fed official can speak now until that fmc meeting on the 15th and 16th of September this is kind of their routine in order to divert any type of leaks and rumors and things ahead of the official unveiling of their latest announcement that september meeting key, of course a little bit more definitive details Perhaps that the market is awaiting in regards to following on from average inflation targeting being adopted as outlined by pal Jackson Hole speech And also we get our latest update in the summary of economic projections What these two chaps said then the final two speakers Were evans and bostic and they played down The chances of updated public guidance on the path of interest rates of their upcoming policy meetings suggesting There would be more clarity on the outlook for the economy first and there were some hints that that might not really come until the spring and so I think that's pretty Standard management of the situation the markets have heard what they need to a little bit extra dovish policy Maneuvering with the inflation side of things from power Jackson Hole. There is no real Way to quantify it accurately. I think about projecting the past of us economic performance of unemployment Even inflation As well as then interest rate predictions over time Because of the degree of uncertainty with the number of things that are happening in q3 q4 of this year, you know, whether that's the The u.s. election, of course What's going to happen with co vid what's going to happen with the vaccine? All of these things mean I think the Fed are right to adopt this kind of more generic blanket statement type um Approach rather than being definitive because if they're definitive they're only going to end up being wrong And they can't really afford the loss of credibility in that sense. So not too much to interpret I think from that I think that's the prudent approach that they've taken And perhaps that could be what the outcome is really to the september meeting that anyone who's looking for more definitive concrete kind of Milestones as to what might indicate in the future the Fed to take some kind of action. I think they could be disappointed to be to be honest All right quick finish off and a look at the calendar A few things to be aware of then This morning Construction PMI in the uk is not really going to be too much of a factor. So really it's all about the afternoon Non-farm payrolls. Don't forget Um, I will be covering non-farm payrolls live with the team On an exclusive webinar conducted via zoom All you need to do is go on to the link in the description of this video and on the comment section You can register for that still some spots left to join us. It is a capped event So yeah, join us for that. We'll do a full thorough more Advanced kind of rundown ahead of that and we'll have all the members on the team on board So that's really the focal point for today Otherwise then the other thing I I guess I'd be very keen to look at are those key technical levels that I mentioned in us indices and Yeah, let's just see how things play out at this point Okay guys Have a good session ahead. Hopefully I'll see you live for payrolls later And if not, have a great weekend and I'll see you on monday. Thanks very much