 Good morning and welcome to CMC Markets on Friday the 10th of May and this quick preview of the week beginning the 13th of May and contrast the performance this week of equity markets in general To the optimism that we saw at the end of last week and the very good US payrolls numbers We've seen a little bit of reality Creep in concerns about Chinese tariffs the increase in Chinese tariffs on the back of Donald Trump claiming that Chinese officials have broken the deal seen big declines in US markets European markets in general, I don't think it's raising the question As to whether or not in the short term we may well have seen the peaks Well, let's have a look at some of the charts. Obviously, we can see the S&P 500 is flirting with the 50 day Moving average. We've seen a very sharp down move Over the course of the past few days. We've gapped lower from the peaks that we saw at the end of last week We made a marginal new high on the S&P 500 But we weren't able to sustain those gains and we've slipped back below 2900 so I think the big question is where do we go to from here? Well, certainly, I think the narrative is as has shifted ever so slightly and if we look at the Dow Jones While the S&P 500 did make brand new highs all-time highs Last week it was interesting to note that the Dow Jones did not We haven't been able to take out the Twin set of peaks in and around Just above the 20 just above the 26,000 level We can draw a horizontal line all the way through these peaks here And we can see that there was a significant area of resistance on the US 30 or the Dow Jones Look at the German Market the the DAX we've seen a lot of choppiness over the course of the past two or three days We've managed thus far to maintain Maintain momentum above 12,000. We've had little spikes below it, but we haven't as yet been able to Push significantly below it, but I think what we can say is that while we've seen a rebound Over the course of the past few hours I think the big question is now that these new tariffs Have kicked in is whether or not they will actually be implemented. There is now a two-week grace period because any new tariffs Will not be applied to goods that are currently in transit. So any goods that left Chinese ports Prior to midnight eastern time today Will not be subject to tariffs when they arrive any goods that leave Chinese ports after After today and arriving say one to two weeks time will be subject to tariffs So there is still time in the calendar to Avert these increased tariffs Another thing that's quite notable this week has obviously been the ramping up Of the stakes with respect to Iran and the US's approach to Iran New sanctions have been applied To Iranian exports of industrial metals and the USS Abraham Lincoln carrier group has sailed into the Suez Canal So that could actually prompt an oil shock if we get a deterioration In conditions there also in the coming week We've got the prospect of a decision for the us on EU imported cars And that could well be a decision that could could weigh on risk appetite going forward So I think the trade story Is going to be a continue to be a headwind for investors to navigate a round As well as obviously further discussions with respect to the EU summit coming up On the 16th of May in the coming week In Brussels, which is likely to be a low key affair Heading into the European elections, which are due on the 23rd of May and which I will probably cover in more detail next week But the key the key the key items on the calendar for the coming week Are as follows and we can see that from The way the pound has performed over the course of the past week or so It's pretty much continuing to trade in the range with a slight downward bias We've had some decent economic data out of the UK economy This morning GDP 0.5 for the first quarter And actually business investment showed a significant pickup in the first quarter up 0.5 Which confounded expectations of a 0.7 decline that being said The brexit uncertainty is likely to continue to weigh On business investment going forward Certainly not going away on the wages and unemployment data, which is due out on the 14th of May Wages numbers still look likely to remain fairly robust at around about 3.3 percent And the unemployment rate is expected to remain at 3.9 percent As far as the charts are concerned The cable rate is currently flirting with the 200 day moving average Which is currently acting as a fairly decent area of support at around about 129.60, 129.50 If we do break below there then obviously the the lows that we saw In April are likely to come into play in and around This 128.60 level in the short to medium term The oscillator is starting to turn over so we could well see a little bit of a roll over there But we're still in the range and I see no reason to see Any I see no reason as to why we should break out of that range We've also got some additional China data out This week now China does have The ability to react to the US sanctions the the US tariffs rather That have been increased in the past 24 hours And I think one thing about the Chinese economy that last week's trade numbers or this week's trade numbers told us Was they have underscored the fact that the Chinese economy continues to face challenges With respect to weak domestic demand The US is going to continue to keep up the pressure on the trade front And this week's April retail sales and industrial production numbers need to be able to maintain the rebound That we saw in march now these numbers are out on the 15th of May An industrial production in particular saw a strong rebound In march from 5.3 to 8.5 percent The april numbers I think really need to consolidate this move To the 8.5 percent which was a four and a half year high for an industrial production So there was significant evidence of a strong rebound there though This might have been a result of some catch up After the lunar new year holiday which prompted a little bit of restocking So I think we could well see april activity slipped back a touch I'll be particularly interested to see how retail sales perform Given the improvement that we saw in march Which saw them rise to a six month high We've also got US retail sales for April and that's due out on the 15th as well the same day as the china data On the earnings front, it's going to be a very very big week as well You may have noticed that I've got a few IPOs up there. Obviously we've got uber technologies out later today and um It'll be very interesting to see where they finally trade at once they start to price on the new york stock exchange Initial pricing is coming at 45 dollars a share, which assigns it a valuation of around about 80 billion dollars now I'm highly skeptical about the valuations of some of these these um these companies Um, I think they're incredibly overvalued I wrote a piece earlier this week about investors potentially losing the plot When it comes to IPOs and you can read about that on the news and analysis section of the website I certainly think there's potential for further downside in lifts Share price we can certainly see that in the context of the price move that we've seen here We've got first quarter earnings coming out on the 16th of may for Pinterest Which I think by and large is fairly has had a fairly decent Performance in the wake of its IPO. It certainly surged out of the blocks gone quite a bit higher But like most of these unicorns, it's still to make a profit. Its losses are reducing. They came down from 182 million dollars in 2016 to 63 million dollars last year revenues are around about 750 million dollars But if you look at the valuations, we are talking multi billion dollar valuations And to sort of put that in context, we've got beyond meat the vegan burger producer Their valuation is in the region of um 4.3 billion dollars on turnover of 87 million dollars So you've got a 4.3 billion dollar valuation on turnover of just short of 88 million dollars and losses Of 28 million dollars. So if this if that isn't an accident waiting to happen, I don't know what is um Having said that the share prices has the share price has come off from the highs that we saw earlier this week IPO at 25 dollars spin is high as 85 dollars. It's from now around 68 dollars But if equity markets continue their downward thrust that we've seen over the course of the past few days Then I think investors will start to look an awful lot more closely at some of the valuations of these IPOs So uber will be closely watched I'll be keeping a very close eye on that when it prices later today and over the course of the next few days I'll also be looking very closely at lift and beyond meat because I certainly think there's potential For further downside in those we've also got some big earnings out in the coming week. We've got First quarter earnings for war mart on the 16th, which is one of the few us retailers That's actually being able to take the fight to amazon recent retail sales figures have shown the company has continued to outperform Its peers and the us consumer does appear to continue Be able to spend money now the acquisition of flipkart may well weigh on its numbers But ultimately, I think War mart has been one of the few us retailers. There's actually been doing fairly well We've also got earnings numbers out from vodafone four year earnings For 19 out on the 14th of may burberry group four year earnings on the 16th And thomas cook first half earnings Also due out on the 16th So big week for earnings big risk in terms of further downside Moves in global equity markets, but we are approaching some very key support levels So I think in the context of the footsie 100 keep a very close eye on these high This key support level the 200 day moving average around about 71 95 These lows around about 71 80 if we break below there, we could well see further declines But for the moment there could be a little bit of bargain hunting coming in around these sorts of low levels And the same applies to the german deck. So that's it for today. Thanks very much for listening Michael Houston talking to you from cmc markets