 Hello and welcome to CMC Marcus on Friday the 16th of November and this quick look at the week ahead beginning the 19th of November and not surprisingly I'm going to be talking about Brexit because that seems to be the dominant theme and has been the dominant theme over the course of the past few days. And I think the main focus obviously given recent events is likely to be on the possibility or probability of a leadership contest in the coming days. This could happen as early as Monday or Tuesday of the upcoming week and if it seems likely the 1922 committee get the requisite 48 votes they need to trigger a no confidence motion then we could well see a leadership contest in the early part of next week. Now getting a leadership contest is one thing, getting a mandate to remove the Prime Minister is another and I think that's where we need to really make the distinction. We've seen a number of resignations over the course of the past couple of days as a result of the Brexit plan put forward by Prime Minister Theresa May and as you can see from the sterling chart it's had a significant effect on the way the pound has traded over the past day or so. We've still however managed to stay within the range that we've been in for the past three months so I think the market reaction has been somewhat temperate in the context of where we've been and where we're likely to go. There's still a big floor around about 126.5, there's a big resistance level around about 131 and I think until such times as we break out of that particular range I think the likelihood is we're going to see further volatility. Furthermore there's no confidence vote, just because there's no confidence vote does vote rather does not mean that we could get a new Prime Minister because getting 48 letters into the 1922 committee is still a fairly low bar assuming they can get that number. To replace Prime Minister May they would need 159 Tory MPs to vote against her to get an overall majority and even if there was a get that it's not immediately clear who they would replace her with nonetheless even if a hundred Tory MPs were to vote against her I think it's very difficult to see how she could carry on. My gut feeling is that I think getting the 48 letters is a big enough hurdle she could well find that she may get less than a hundred Tory MPs to vote against her and if that's the case she can probably stagger on she could probably get the deal put through or put the deal to a vote and then politicians are faced with what is pretty much a binary choice except the withdrawal agreement as it currently is with maybe a few modifications and it is a draft agreement it doesn't lay out the terms of trade going forward so there is still a possibility an outside possibility of a third option may be going to the European free trade area because ultimately all this does is lay the foundations for a transition agreement a standstill transition agreement until 2020. The arguments appear to be around the backstop to the transition which basically has an expiry date of 20xx I think that's where an awful lot of the sound on fury surrounds is coming about as a result of that and as such I think once it comes to a vote in early December we are likely to find that the options available to MPs are going to be fairly binary and I don't think there is just personal opinion I don't think there is a majority in the House of Commons to crash out with no deal so I think the consensus view at the moment is despite the volatility is that some form of fudge some form of agreement will come out of recent events and in that context the range that we have been in with respect to the pound is likely to hold for the foreseeable future if we do break below 126.5 however then you're really opening up the lows that we saw at the end of 2016 currently coming in around about 119.5 120 the figure so looking ahead to the coming week we have the prospect of a confidence vote that may or may not happen we may get to the 48 letter threshold but we then have to find out how many conservative party MPs are prepared to us the Prime Minister and in essence put forward a candidate to replace her and at the moment there doesn't appear to be any obvious candidate to take up that mantle also coming up we've got the UK inflation report hearings on the 20th and I think Mark Carney will be appearing in front of the Treasury Select Committee and he could face a number of questions about further questions about the prospects of a no deal and the effects on the UK economy and any steps the Bank of England would be take or would take to mitigate that if it were to happen the bank downgraded its outlook for the UK economy in the fourth quarter to 0.3 it also remained confident that the third quarter would come in at 0.6 now given recent events that fourth quarter forecast may be slightly on the optimistic side early data does appear to support the view that the UK economy has done has done fairly well in the third quarter but it's really a question of the sooner this Brexit this Brexit uncertainty is wrapped up we'll get a better idea of where we'd go to from here it's also Black Friday in the United States it's US Thanksgiving on Thursday so you retailers in general will be in focus this week retail sales spending the US retail sector has been doing all retail sales have been doing fairly well but the retail sector itself hasn't been without its problems this year it's replicated the problems we've seen here in the UK high street stores have struggled with growth online shopping shopping malls in the US have experienced similar problems with US big retail names struggling to keep up we've got the latest numbers from Sears which is currently in chapter 11 they'll need a fairly decent Black Friday performance to try and mitigate its way out of chapter 11 those earnings numbers for Sears are due out on the 21st we've also got Best Buy and Target Q3 earnings on the 20th and we've also got a significant focus on the banking sector which has seen significant declines this week over concerns about a no-deal Brexit but also the prospects of a possible general election because of the leadership uncertainty surrounding the incumbent government and we have Clyde Stale Yorkshire Bank earnings coming out on the 20th as well and we'll get a first idea of how they that tie up with Virgin Money is playing out now that that deal has been completed we've also got EasyJets latest numbers for the full year in light of the problems that we've seen and heard about in the airline sector so quite a bit to get through over the course of the next week or so we've also got the latest Canadian inflation and retail sales data which is out on the 23rd and Germany and France flash manufacturing services PMI numbers and obviously further developments in Italy but the main focus I think for the coming week given the political uncertainty that's coming out of the UK will be the focus not only on the pound but also on Euro sterling and again once here once again here we've seen despite a disappointing performance in equity markets in general we're still in the downtrend for Euro sterling that we've been in since those peaks in August so if you join a line through these peaks here I think as long as we are able to stay below 89 40 on Euro sterling then the range is likely to remain intact for the foreseeable future so that's it for this week thank you very much for listening it's Michael Houston talking to you from CMC markets