 Very good morning, Wednesday the 8th of January and obviously you've probably seen some of the headlines more updates on Iran For me to cover with you guys and a bit of a view about not only what's going on But what can we anticipate going forward and having a bit of an explanation as well or behind some of the moves? I mean before I get stuck into the headlines Let's just have a look at the charts and you can see these kind of v-shaped patterns across the three center charts this being We got the S. Well, this is the S&P. Let me flick it over to the DAX here. It's got the DAX with a gap Lower at the open but recovery almost a gap filled some of the range low of the price activity in the futures from yesterday You got the NASDAQ that V there and the similar case in the S&P You could map that if you like in a mirror image in the opposite direction the inverse relationship Then with stocks and bonds so as equities got hit last night T-notes bid and then the reversal that came and that's kind of Imitated across all the other different asset classes to one Perhaps that is holding on to some of the gains at the moment is gold in the top right Although it's off the breach. It has seen of 1600 in overnight trade in the futures It's up 15 bucks still But it has seen a pullback of approximately 20 bucks or so for the initial headlines when they were coming out last night The way I'm gonna cover this is I'm gonna cover the news And then I'm gonna let Sam come on and Sam's gonna do hopefully a really interesting thing because he was up last night To about 2 a.m. Trading the events as they were coming out. I must be honest hands up I was fast asleep at that time so testament to Sam Because I'm sure there was some excellent opportunity But I think it would be really interesting to see how he was trading it and how the news was coming out and how he was going About his business in the overnight session Given the kind of drip feed nature of the the way of which news tends to come out at that time Particularly out of that geographic region as well And then he'll do his usual look at the charts and thoughts about where we'll go from here. So Let's flick over to the news this was of course the headline that you're probably Reading as you come in to your desk this morning Iran retaliates with missile strike on US Iraqi bases so remember yesterday, we're talking about the files news agency and they were suggesting that Iran was looking at 13 potential ways of which they could retaliate against the US strike on the Baghdad Airport, which killed the military commander Silamani and so this is the first of those more kind of Aggressive nature and real Response that we've seen other than verbal rhetoric in a physical form Iran firing 15 missiles at U.S. Iraqi air bases yesterday The Islamic Revolutionary Guard Corp has claimed responsibility for the barrage with the Pentagon Saying that the launches did indeed come from Iran now just to give you a bit of context what we're looking at here These are the two sites of which were targeted So you can see well inland into the kind of center west and north of the country in Iraq Importantly though and one thing to be aware of with this Although the foreign minister Zarath has said on Twitter that the government concluded Proportionate measures in self-defense of the Salamani strike There's a few other things to be aware of first off there was this headline and This didn't come out immediately This actually came after some of the initial headlines were dropping in the overnight session on reports of the missile activity and this was the a Boeing 737 bound for Ukraine crashed in Iran and actually Everyone on that plane died. I think there was a hundred and sixty seven passengers nine employees of the Of the airline all were killed now reports that I've heard this morning were that there were no Kind of cause of technical issues from the pilot in itself However, Iranian news agencies are reporting that it was a technical failure I'm a bit surprised by the fact that this isn't getting more airplay Remember it was the 787 max that had technical fault issues Previously that's been a big headache for Boeing from a manufacturing point of view But this is the 737 and it just so happens that it was in Iran at the same time these missiles were going off so They'll be interesting I do think though if this was serious in the extent that it was a plane shot down There are a couple of considerations that I think need to be taken into account If this was a plane bound for a western destination such as a US City and it had Americans on board. This would be a completely different matter The fact of the matter is that this was an airline route or scheduled flight going from Iran to Ukraine and so I guess in that sense that kind of it is less or important in the in the fact of which markets will assign in terms of any type of immediate response But it'll be interested to see how Boeing fares, of course as a singular company if it was a technical fault And that is proved to be true And I must say I take the Fars news agency as a new source with a pinch of salt That would be a big headline Boeing are the largest companies still in the Dow They represent about 8% of the entire stock index and if they are experiencing Technical faults that has crashed a 737 not a lot left that Boeing have other than that So yeah, it's going to be interested to see how that plays out at the reopening of trade specifically for that single single stock for sure Continuing on though, there's a few other things to mention This is a graphic of looking at crude oil So the generic first future so the front month futures contract where the most volume is that's the black line And then also we're looking at gold that would be represented by the price in the index the spot price on the left-hand side And as you can see they've both kind of mapped each other in this overall Kind of reaction to the news but extreme bid but then reversal and as I said That's what's been evident in other asset classes like with the equity dip and then recovery as well Now one important thing that's happened here is that the targets that were hit by these 15 reported missiles Were US military bases now two things one the OPEC secretary general has already come out and said Specifically that Iraqi all facilities are secured and the country's production is continuing now That's very important because Iraq is the second largest producer in OPEC and second largest within the Gulf region So no disruption has been seen And that is very important in terms of any Sustained move that could have happened if infrastructure were damaged and that hasn't been the case. So if you like This hasn't for oil traders being as Devastating or bad as it could have been The other thing is Donald Trump of course has tweeted in reaction to what's happened and actually I'd say it's a fairly passive response You would have thought that you know, we were looking at charts yesterday There's plenty of the US personnel within the region and they would have already have Planned for this type of activity and if it were serious enough then you would have thought US would have struck back Immediately, but that hasn't been the case. In fact Trump saying all is well The missiles launched from Iran at two military bases located in Iraq Assessment of casualties and damages are taking place now But so far so good and reports are that there's been zero casualties so One thing that I thought was a particularly good comment that I saw from one individual was the He was saying that Iran needed to do something quick This was coming from the founding director of the Center for Global Policy in Washington And I think he makes two very good points one Iran needed to do something quick if you think about it Just like Trump tries to do and say things in order to appease the people in America that will vote for him And keep him in power The Iranian officials need to do exactly the same one of the most prominent figures in Iran has just been assassinated And so, you know, you've seen the images of the morning taking place in Iran The Iranian government needs to show some degree of strength And so something needed to happen, but of these 13 different options This is probably the lightest of all of them But something quick needed to take place to show some kind of response in physical activity secondly The other interesting comment this this chap said was that this is a placeholder move But a low-cost one and I definitely agree and I think that's reflected in prices The idea being here then is that It's kind of a strategy whereby at the moment I still believe that this is a de-escalation situation Irrespective of the initial knee-jerk activity if that makes sense that we've seen in the very short term So here it's kind of a satisfying a political Objective for Iran, but not wanting to get caught up in an all-out assault in a war issue And that has been ratified a lot of this move that we've seen here in the reversal cross-assets is Iran have come out and specifically said that they're not seeking war And you probably would have read a couple of ours calls this morning apparently quite a lot of algos getting caught the wrong side of these headlines overnight in dolly yen Jumping on the initial moves, but then getting absolutely killed on the back of the fact that algos are not Artificial intelligence, they're not adaptive and have an inability to overlay context And that's where algos can be very bad good at execution bad adapting to Updates to the information and the situation as it evolves and changes So yeah, quite a few different things here that are going on and things that I thought I would cover Final points on the Iran issue that I wanted to share I'll drop this into the chat room so you can have a read But we talked about yesterday ways and means and we have done since Friday about how Iran could target Specifically Saudi Arabian infrastructure in order to cause destabilization within the Middle East And also disruption more impactful because of the volume and the amount of supply of crude oil that Saudi has whether that being tanker attacks The passage of trade and transportation of crews through the suit the straight of Harmuz or the actual infrastructure in itself Which we've seen before with the drone strikes Now interestingly here with this graphic and a comment that I read in a research notes from Morgan Stanley last night Was that they were looking at alternate ways beyond Saudi Arabia of which Iran could retaliate and a couple of things here I think that this graph really sums it up quite or this graphic sums it up quite nicely I know it's a bit small to read, but it looks at possible Iran Retaliation if then looking to target Syria Iraq Saudi Lebanon Yemen or Israel And I think this is quite interesting So what MS was saying was that possible near-term Iranian retaliation could include attacks against Israel using Hezbollah Proxy escalations in North Korea You know they were bang on with that this research report Predated that of the missile attacks last night. They've also talked about cyber attacks as well And Iran could pursue more aggressive strategy But remains mindful of US military power and meanwhile election Politics stateside is likely to limit US engagement for those reasons. I think we were discussing on on Monday So hence the reason why yes, there can be flare-ups and bouts of volatility But most people are still fairly sanguine about this issue and the ultimately This isn't a game-changer if you like This is just a momentary focus on an issue which has flared but ultimately will stabilize So I'll let you chew over that graphic in a bit more detail But definitely I think my advice is still that you want to kind of pre-equip yourself with the ways and means of how Iran could attack the West through proxy wars with other nations given the allegiances and alliances that exist within the Middle East And the geopolitics is quite complicated, but this graphic does a good job of simplifying that And if you're gonna be proactive in order to anticipate and react to news This is my advice to go go about that type of way to be more responsive to headlines Okay, moving on quickly Brexit Well House of Commons reopened last night. I forgot to tell Sam actually I was sat Two seats down from Rory Stuart on the tube yesterday when I was heading to go and deliver a lecture at the London Business School Didn't get a chance to talk to Rory. He was with a friend I assume a deep in conversation, but yeah House of Commons reopened yesterday So he was back to business, but so was this chap right here Boris Johnson And today is significant because Boris is meeting the EU President later at number 10 Downing Street now Johnson as per the headline is set to say That he will not be asking for an extension to trade talks now That is a continuation of the status quo. It's not new But what is he referring to quick look at this timeline to refresh your memories because I know we've been somewhat Side-tracked by the Iran issue since we've returned for the new year But obviously now January 31st the UK leaves the EU Technically speaking we conclude then this remove or move between article 50 and into the implementation or transition phase now one thing is particularly key here is that It's not like Boris has 11 months then to negotiate a trade deal. I mean yes in a way you could look at it That is the case, but importantly at the end of June the 30th of June is the deadline to request and have acceptance of an extension to the transition period now from a legal perspective one It's going to be incredibly difficult then Boris has to basically get a trade deal on the table That can at least be agreed at this point with some top-level tariff type agreements And how they're going to conduct trade for example in five months And that's a big ask when more complicated trade deals with bigger nations has taken several years And so here then it's kind of a balance of between He's going to play this kind of assertive card because he wants Europe to kind of Make it serious that he's willing to take this up to the end of December and Revisit the idea or notion of a no deal so Europe for trying to force their hand The other thing here though is to Europe has said that they would allow an extension They would allow an extension to the end of 2021 of which Some might say then that that's probably quite a likely outcome given point one Which is the complexity of the legal side of getting a deal done in such a short time frame my my base case here then is that The rhetoric's likely to remain firm I would say there's likely to be a lack of progression as we we go through the coming months Boris is going to want to keep the pressure on all the way up until the summer and that then means that potentially a lack of Real movement meaning that no deal then if he doesn't request that extension of which is not looking likely at this point And I don't expect him to not until the possibly the 11th hour if he doesn't which I think would be actually a better strategy For Boris and he pushes this back to December 2020 he needs that that That kind of weapon on the table of a no deal to get a proper deal done so As me and Pierce were talking about in our 2020 outlook, maybe some light relief for the pound In this kind of honeymoon period post the election the majority government However, things are going to get back to no deal scenario come the summer And we're going to expect further pressure coming into the pound at that point So as far as today's meeting between Boris and the EU president is concerned, I don't think much is going to happen He's going to say look, you know that you know what we want. This is what we want You're picking to say that's not what you're going to get you're going to have to if you want Remind you of the June deadline to submit your request for an extension and Boris is going to say don't want it And and I don't think that's going to be particularly a pal move of this morning other thing that we've had just quickly you have had the German factory Orders come out this morning at 7 a.m. Quite a substantial miss on expectations markets We're looking for a plus 0.3 print it came in at minus 1.3 percent as you can see here This is the first declining factory order since August mainly due to a 3.1 percent fall in foreign orders and new orders are falling from both the euro area and other countries So the German economy really does still remain under some heavy pressure at the moment. I'm looking at the euro this morning Didn't react too much at the time But as I've been talking we have seen a bit of a further concrete break through What was really a support level from earlier this morning and we've gone through the low of What yesterday's session I did hear Alex here on the floor talking earlier about the 200-day moving average being retested a couple of times So presumably that's broken now Yeah, and so that's going to be a meaningful signal for a lot of the technical traders looking on the higher time frames I'm sure but Sam can have a look at that The other thing from the calendar perspective today Obviously everyone's going to be looking still a lot of focus on the Iran issue particularly when the US come in just so you're aware President Trump go back to his tweet. He did say He will be making a statement tomorrow morning, so that is today today Trump will be giving a national address Given the situation of the missile attack on those US bases in Iraq. There's no set time as yet So of course will keep you posted and I'm sure the squawk will be covering that life as in when it comes out But that will be important Again, my base case view there is very stern Wording, but no actual military action, which as far as mark is concerned I think then they'll be able to digest that in a fairly orderly and calm fashion Otherwise on the calendar we do have ADP employment National employment coming out later on this afternoon obviously a precursor for non-farm parallels on Friday the last ADP Saw a number at sixty seven thousand as you can see here That was for November of 2019. We're gonna get December data today That was the lowest number last month in six months well below market expectations of what as well at the time Which were for a hundred and forty so it came in at sixty seven thousand was expected a hundred forty thousand So it's going to be interested today to see if that does indeed bounce back The Wall Street estimate is that it does and it goes back to a hundred and fifty thousand So we're interested to see that figure 115 London time We then get the oil infantry numbers coming out of the DOE Later on this afternoon So I'll recap all of the API numbers that came out last night But again, they're largely a side order now because of the news that came out last night Which is a much more dominant factor for crude oil prices From a calendar point of view from the speakers Let's have a quick look at the timings of what we have so The EU president is speaking with Boris That's going to be taking place around 11 a.m. This morning ECB to Gwendoz at 1 p.m. This afternoon feds brain art at 3 o'clock the ones you're looking out for All right, let me hand you over to Sam And he can go over his side and explain how he was trading the market last night as well. Okay. Have a good day guys Yeah, hi guys, hope we're all doing well. Yeah, I'm not usually up at around one second Around midnight, but after I got home yesterday. I was so tired I actually had a nap so then when I woke up I was pretty full awake and it was checking Twitter in bed Sound like Anthony now, but yeah the Headlines started coming through and there was rumors going round and it's actually quite annoying at the time because the There seemed to be just so many fake Tweets going around that there had been an attack But then once you started getting it from the the major headlines BBC reporting it The spectator index was the first one that I'd seen so We had an initial pop lower in equities and obviously gold and safe havens went higher along with oil and booted up the the laptop and Started to look for an opportunity to get short This market and it was trading the Dow And after we had broken through the the low of the the week you can see Here on the fifth Sorry Friday's low once that had broken through I was just looking for that area to come back to to get retested and I'll put the trades up on Twitter later But you can see here Once price had broken through and this was around just well sort of half 11 ish I got in on the the retracement to that area and targeting what was then the original low As the first target and then if we put this back on a longer term chart there was a level Just a bit below here the lows that we had from the 18th Where I exited the rest of that trade I did have another go Looking to get in to the trade a bit lower down because the headlines were still coming through and The the market was certainly thinking that Trump was going to retaliate And it was going to come soon So tried the the previous low to get in to that trade again It didn't really go anywhere and that's trade was a small loss here And that came and stopped me out around about 140 and it was at the time when I was actually speaking to Safe Ali, I'm sure obviously you all remember Him from from Amplify and he was you know talking about on the other side of things how Perhaps it wasn't all as bad as it seems you obviously had all these talks that us were moving their troops out That this attack was No casualties does trump even need to respond the fact that trump hadn't tweeted and and then you started to see the markets really push on Um, I didn't take any of the the longs on. I'd already taken the the two trades That I wanted a good winning trade where made sort of nearly 200 points on that and then you know a small loss on that one So I was happy to sort of knock it on the head from that Looking at the market now how I would be looking to play this if I just remove those lines off. I think it's You know interesting to see us just hold up pretty much actually where I initially got in that tray But you can see the original low here From the early morning 28,447 I'll be looking at that as a line in the sand above there their markets really, you know have taken this as A one-off there's going to be no escalation from this and we can go However, if that is to hold and especially into the afternoon or the u.s. Morning, you may well see A little break lower and trump can come in and say something else But for now it would be a case of of wait and see let the market tell you what's going on So below this trend line above this horizontal area of resistance is where I would be looking at Of course above and below there are still key levels the previous low of yesterday Which broke around nine o'clock would be a point that I'm keeping an eye on below that trend line And any of these areas of support as well having a look over at At gold as well. I didn't take this trade on as obviously was in The the Dow Jones at the time but a really big push hit the 16 000 And it was around this sort of time here where we saw the retracement elsewhere That I was happy to sort of scratch that second trade and not really look for a continuation of the moves that happened Just after 11 o'clock looking at this now put it on the 60 minute You've almost got the line in the sand but to the opposite direction here in gold as well What was the original sort of low of the asian session the r1 today 15 85 Be keeping a close watch on that as well below there. We're now then looking towards I would say key point or 15 74.8 as a very Important level to have marked up. Also, you can see if that was to get hit this trend line from yesterday Which was so well respected even into nine o'clock yesterday would be a level I'd be having marked up there as well the euro as and mentioned Coming under a bit of pressure this morning Give me one second We're good Lack of sleep is what it is but there we're back in business having a look at the euro Obviously that coming under the pressure there and breaking that that 200 day moving average on the spot market so It then brings into the trend line that I've been talking about all week if we get this on and it's actually as we sort of Let's put this on the daily charts room We put this on the daily and bringing this trend line that has been so well respected We're just starting to have it go at breaking that as well So the 200 day moving average on the spot You've got this really key Important trend line and we know what 2019 did every so often when the euro pushed higher trend line broke And we made a new low for the year not saying that's going to happen Because of course we want that confirmed break on the daily trend line But that is something that I would be absolutely paying a close attention to Putting it onto the 60 minute bringing the the pivots back on you can see just where we're trading now just taking out Very very briefly that low from yesterday We get too excited because obviously you've got the low from friday there as well And it's more of a zone You've got the high as well from the 26th the 19th a really key level 111 74 Again talking lines in the sand. That's as good as any There for the euro if that was to to break through you got some really key Levels of interest 111 56 and 111 30 to the downside which would Be obvious targets if this is to hold and we get a snap back Of course that could be a really good buying opportunity. So where we close the day for the euro will certainly be Of major interest oil Obviously, this was another market. I was looking at at the time of trading the dow We pushed higher and of course when We started to push lower and this is again is that candle which Effectively stopped me out on the the second trade of the dow Everything just started to to reverse in terms of the line in the sand for for oil You can see we are just coming to perhaps a bit of a lower part of this trend Let's have a quick look at that So see how that holds up. So I look to have this on we're getting squeezed from Both directions there you go a little pop through there In terms of areas of support below if this is to hold $63 is a pretty interesting level and actually you'd argue it's more of a zone along with yesterday's highs As well. So keep a watch really a 63 below $63 I think we could absolutely continue the the previous two-day trend and start drifting lower here Quick look over the pounders to see how that's reacting a little pop higher through the pivot Caught my eye and we have come back to retest what was the previous high and that's held Relatively well for now. I think if you're you're long as long as you're above the pivot You're you're happy enough the higher the day is also pretty much the hive of Around midday yesterday. So keep a watch on that 31 88 As a as a key level to have marked up as usual any questions, please do let us know We'll be on to the chat throughout the day and available in the comment section Thank you