 Okay, very good morning to you. My name is Anthony Chung. I'm the head of market analysis here at Amplify Trading in London It's Wednesday the 10th of June So I'm gonna get you up to speed hopefully of everything that's happened both overnight and the general outlook for today Don't forget on YouTube if you are watching this or however other means you are accessing this video Just let me know and I'll put in YouTube in the description of video the link to the registration for tonight's Kind of exclusive online Session that we're gonna be doing myself and the team for the FMC this evening. So feel free to join us It's limited to 500 spots on the the private zoom link and it's a first come first serve basis So hopefully you can join us then for the live release, but just looking over the markets and I guess starting off with this heat map I've got in front of me. This is the close on the S&P 500 from Yesterday and you can see the tech giants Still supporting this equity market recovery after what did look like a Momentary blip off a bit of profit-taking perhaps from those all-time highs that we were hitting in the Nasdaq and with those headlines Of course where we had kind of erased the year-to-date losses from the from the pandemic in the lights of the S&P and so on Apple shares you can see up 3.16% so very much so outperforming the market the Nasdaq in fact briefly topping 10,000 Apple shares being supported by news is preparing to announce a shift in its own main processors in its Mac computers from Intel To its own at its annual developer conference and that helping support the company shares but the big tech giants which we know proportionately make up such a Phenomenally large amount of the index just helping prop things up and once again the Nasdaq seeing a little bit about performance But looking at the cross-asset class mix this morning. I mean it was interesting yesterday We were talking at the time. We are having a chat very early in the morning To some of the traders and we were seeing this pressure that was coming in we eventually broke through that area of previous resistance and Markets ran down quite aggressively and as we were talking During the morning and we were down at these this level You know Sam and I were commenting to the guys that we were like well look, you know when you get such overwhelmingly kind of sensational positive news in the headline and we hit these kind of milestones like a Year-to-date reversal or an all-time high in the case of the Nasdaq It's not unusual to see some people just taking some off at these types of levels. It's a bit of profit-taking perhaps Materializing is not particularly unusual and we were saying, you know Above or beyond that point. We still remain very confident that the trend as it exists at this point in time Which has been this kind of continuous grind higher. We don't really see that dissipating anytime soon And this was as the market was falling Which a couple of the guys the more the more junior traders were kind of questioning You know, how how do you kind of formulate that view and it was more to do with the the function that yesterday? There wasn't really much in a way of a singular Headline driving price activity was a little bit more behavioural in my point of view and when it's like that I think that was exactly the type of movement that you you quite typically see which is kind of exhaustion in the very short-term profit-taking the market comes back down and then if anything it gives other people more reason to just get along again and we see the The bounce as we've seen so many times before Given that then as I've said before there has been a relative inverse correlation between Risk of being reflected when equities are generally moving higher the dollar goes weaker And the dollar just continues to weaken at this point the Dixie coming Quite close to a 96 even kind of handle at the moment And that is continuing to support these major currency pairs When I look at your dollar here this morning and I put it back onto those longer time frames on the weekly You know, we're right up to that ECB spike high That we saw last week when we had the additional ECB German kind of top-up to stimulus both fiscal and monetary And we saw the UR appreciation which in itself is a kind of counter-intuitive move to the usual response, but given the fact that authorities backstopping then The economy from it deteriorating further and also assisting the economic recovery post The coronavirus pandemic that was all seen as a positive and the kind of risk premium coming out of the dollar Which continues to happen so quite interested to see You know, we are right back up to that point, you know, the 200 DMA the long-term trend line going back to the beginning of 2018 It's being tested once again and as we've talked about before any break above this With a more with more force and conviction Then don't really see too much getting in its way from a technical perspective until we get up to around the 115 mark over the kind of more medium term When it comes to cable It's kind of a similar story I mean, there's there's definitely a little bit of you know talking to a couple of the guys yesterday Perhaps a little bit of apprehension Kicking in to a certain degree because we know that there's this looming deadline in Britain with Europe in order to come to some kind of Deal at this point or otherwise requested extension to the present transition period which is due to elapsed at the end of the year But cable just keeps rising at this point So we've managed to to get above a relatively key area So you can see here the kind of fit retracement from the December high to the the low that we printed In the middle of March as we've gone through that 618 fit Retracement now, which was also the rejection of that high. I'm looking at a weekly candle here So last week which was also for two weeks a strong support level back in late February March So quite interested to see how this performs At the moment I would say despite all the British politics going on The popularity kind of levels in opinion polls for Boris taking a bit of a beating Upon the kind of dealing and handling of the pandemic and the kind of speed of which the government went in the lockdown That's all kind of been Overwhelmed at the moment by just the ongoing weakness in the in the greenback more than anything else nothing really particularly concrete from a An echo macroeconomic point of view from the UK that's looking particularly positive It's just the dollar movement at the moment helping accelerate this What this does mean though over the next coming weeks that could become quite interesting is just given the strong recovery we've had in the pound going from around 114 Which was a multi-decade low up to where we are at the moment Which is coming into what a 128 handle is what if we do get to a point where this game of Brinksmanship between the UK and Europe going into that deadline at the end of the month doesn't materialize in anything And the fact then that increase in the risk of potential no deal being back on the table Many other speed bumps to obviously encounter before that would you know to become the case But do you would you then the pound be somewhat susceptible given its market positioning and in relative complacency at this point in time? Of that that no deal risk being priced in which you would say in this extent is very little at this point So a couple of interesting things just to have a think about on the I guess slightly longer time horizon But at the moment intraday, yeah currency markets the pairs here Euro dollar and cable top left Supported by the weaker dollar the Dixie in itself this morning taking bit of a dip as Europe's come in It's down about two tenths of 1% And gold then up about four bucks not too far off the high print was seen yesterday afternoon Trading out $4 shy of that at the moment and the 10 year has basically just held on to some of the movement That we're seeing during the earlier part of the week fairly quiet session overall yesterday Obviously a lot of market participants are awaiting the FOMC later this evening. So Just discussing a couple of things I want to run you through some of the headlines and what people are talking about and this is obviously one of the main talking points at the moment is this kind of the extreme nature of the the recovery that we've had from the Initial pandemic lows that we were seeing in that stock market route in the middle of March And this is kind of one of the lead headlines from Bloomberg So I just wanted to run through a couple of the points of which they're making and they're talking about I mean their headline in itself Doesn't doesn't get more sensational than that really signs the stock market rally is doomed to end it's kind of famous last words for making me want to get long in in some respects because As we've seen, you know to kind of the hedge fund managers calling this wrong a couple of weeks ago And they were all calling for the top and the market has gone multiple percentage points higher And now you're getting this type of headline Yeah, certainly There's a couple of indicators here as I'll show you that would suggest that there is substance to this this kind of argument JP Morgan for one they're talking about the risk of correction to rise if good news rapidly priced in and I do think that is a Good point if you think about it, you know, what is underlying this recovery in equity as well Really, it's this kind of everything in the kitchen sink mentality from central banks and governments to just really Conduct an unprecedented level of support for the global economy And so therefore there's a degree now of of positivity priced in for what the type of recovery that we should be seeing on the back of the Scale of the intervention that we've had That as well in step with the fact that from the corona virus point of view I was reading Antony Fauci the the US corona advisor still very downbeat. He always has been but so far there has been probably not as The kind of tracking of the cases of new corona virus confirmed cases after the initial peak and decline that we've had The materializing of a secondary wave really hasn't happened as yet. And as I've said before I do still see that as one of the key Potential risks going forward particularly given market pricing right now where we are but at the moment if it if it doesn't happen if it never happens well then You know markets are kind of reflecting that and that's partly part of the reason why we continue to move higher So definitely the more good news gets priced in the more Good news needs to be delivered and if it's not then that's not meeting expectations and markets do need to come off So I do see what JP Morgan is saying there Few of the few of the graphics then and indicators that this article looks at one is You know the kind of extreme nature of what the 12-month forward price to earnings ratios are looking like at the moment That would suggest that global stocks are trading at their highest valuation since 2002 at this present point in time as you can see here well and above anything that we've seen in recent years And also above those highs that we had in kind of late 2004 Daily moving averages when we're looking at the MSCI So the kind of world index is you know, we're way above that at the moment all on all three measures on the 50 100 and 200 So, you know, is this indicative it being overbought if you were looking at the relative strength index There could be some suggestions that that is the case at the moment And then there's a few other things here I've got some notes here of quite an interesting statistic that I've seen in the options market And it was basically suggesting that traders have established fresh bullish positions And this was looking last week this article actually did come out last week But it's another thing to be aware of so traders established fresh bullish positions last week by buying Around 35 and a half million new call options on equities and that's up from a peak of twenty eight point seven million in February As you can see on the chart At the heart of the speculative activity when you scratch beneath the services smaller investors Small trader call buying made up 50% of the total volume last week the higher since 2000 Past instances where bullish small trader positions made up 45% or more of the volume Proceeded a median loss for US stocks of around 3% in two months time and 15% in a year So it's one of those age-old sayings in in in professional trading Which is you know when the retail market starts getting Overtly, let's say long in this instance It's kind of like the tell-tale sign that a market rally's hit its peak when Retail people start sniffing around and you know, definitely. I mean I've been getting slightly caught up in some of these headlines about the Robin Hood kind of Euphoria that's happening at the moment and these guys kind of picking up these basically bankrupt firms like Hertz for example What is it is rallied something like 800% something crazy like that, you know these companies which have wow for bankruptcy Which you know, these people kind of just taking a punt basically that they're so Depreciated in their value of what if something happened and there was a last-minute Way of just bailing them out and you could get humongous returns on their stock price and people in that kind of New I guess that the investor in a Robin Hood sense is slightly different in terms of its demographic and You know the ability then for the the perception to spread and people just start Flying into these stocks without really looking too much at the underlying Kind of balance sheet fundamentals more so just chasing these kind of you know The the rumor mongering in that sense trying to look for the next big kind of golden ticket returns So, yeah, it's another interesting thing. I guess I'll summarize all of this I saw a really great comment from a chaper Rabbo Bank and he said that if everyone is holding stocks just to pass on the next Neck on to the next greater fall and if the greatest fall is a central bank with infinite liquidity to buy them Then sure prices can keep going up And you know, this is one of the things that my colleague Eddie has mentioned some of the videos that he's done in That you can find on our YouTube channel, but it's one of those things where if the Fed start, you know They're going in every possible length to support the economy And if the the last the buyer of last resort is the Fed or then Who say that stocks can't continue to go higher? So? Yeah, it's interesting at the moment certainly I Guess what I'll be looking for is even if the market does eventually Peter out and you know, sometimes this can be behavioral in a sense of Big round figures targets now the Nasdaq's at 10,000 That's pretty interesting I guess for the first time ever at these double digit kind of 10,000 increment Is that a reason for a bit of just you know profit-taking? You know, this is how that human kind of rational mind tries to make sense of these types of things The point being is is that you know without an escalation in confirmed corona cases or the trade war I would say that even if we did see a bit of a pullback I would actually see that more of a consolidation at this point Rather than a complete breakdown in markets where we see something akin to what we had a couple of weeks ago in March Would be my overall summary All right, well, let's move on as I said I'll put a link on if you're watching this on YouTube into the video description to register for the event I'll be covering the Fed live this evening So I'd absolutely love to have you on board and you can ask me any questions that you have in the run-up to that So I'll be joined by some of the other members of the team as well who'd be trading the event But let me give you a summary the central bank basically People are looking out for them to outline or shed more light on the various lending plans that they have at the moment Unlikely that they're going to intonate towards any further easing that seems to be the job done for the time being at least for the current Economic situation But I guess more detail one of the things that they're going to be unveiling later tonight is their Their kind of summary of economic projections their outlook or forward guidance that they give And that means then looking into what do they see employment? What do they see their growth targets looking like over the end of the year and the subsequent years there after and that gives us an idea then of where we can anticipate rates to start to come off kind of ground zero at the moment the latest Economists survey that's been conducted by Bloomberg They say that the FMC is likely to project that it will raise rates only in 2022 While some see no hikes before 2023 or later. So this kind of Zero interest rate policy is here to stay for the foreseeable future that I have no doubt in the FMC If you remember they took the unusual step of suspending their forecast in March So remember there's eight interest rate meetings from the Fed every year every alternate meeting So in the US it falls on every end of calendar kind of quarter. So March June set deck. They'll release these projections They suspended March because of the fact that it was right in the middle of the pandemic kicking off And it was the zero visibility really that they had the the forecast would have been none Void the moment they were written at that point. So this is going to be the first real concrete Tangible update to these forecasts since going back Right to the beginning of the year in that sense or the end of last year So they're definitely going to be some radical changes for sure Powell did say at the time of the projections would be released in June Might they not release it? Perhaps but I think the central bank job is to provide some form of Of guidance to what the future looks like and that's a very important part of companies having that Being able to visualize what that looks like in order for them to make some decisions About you know, how they operate and who they employ and so on in terms of the importance for their recovery I think that the Fed has no other choice but to offer this guidance The Fed Can know You know from a market reaction point of view the the projections you'll like to see you're going to be pretty dire Don't forget that they're going to go through a radical shake-up given the fact that the existing projections are so outdated However, remember markets are forward-looking and you know as we saw with the ECB looking for a contraction of somewhere in In the likes of 8% for this year They then look for a sharp recovery of I think it was 5% the following year So it's the idea there that know for the ECB was revision from around 0.8 to negative 8% Massive but the markets were actually focusing on well, that's okay. We know that what a what is the future looking like? so that's what's going to be important for drone power and perhaps the press conference will hold the key then to So how optimistic he now is about all of the different things in which the Fed have deployed and How effective that is going to be going forward in time and how does he see the shape of that recovery looking like and over? What time horizon will be important? The committee is like to discuss clarifying the the kind of monetary policy intentions including Targeting yields for some treasury maturities or otherwise known as yield curve control Which has been adopted by some other major central banks Economists do expect the committee to adopt this tactic, but most say that they'll probably wait for September for an announcement The Fed is currently purchasing treasuries in mortgage bank securities In the amounts needed there are also a couple of suggestions from some analysts that they could increase that figure on the monthly purchases I'd probably see that as lesser the case right now because markets seemingly are functioning Okay for the moment in terms of there's no, you know great panic being observed And so I don't really see the need for adding Too much more beyond the more functional liquidity kind of programs and the things like the Main Street lending program changes Which they did yesterday. I think are more Probably appropriate for the time being The bottom line here is we can expect the Fed to kind of re-emphasize their willingness and readiness To use a full range of tools to support the economy. It's kind of the main thing But we'll go into this a lot more detail later a few other headlines just to round things off This was an exclusive and in Reuters this morning Sticking with the central banks the European Central Bank officials are drawing up Apparently a scheme to cope with potentially hundreds of billions of euros of unpaid loans in the wake of the coronavirus Outbreak according to two people from living the matter said ECB preparing effectively a bad bank to buy up That what is expected to be a wave of coronavirus toxic debt Just look at the charts this morning to tell you that this isn't an immediate market mover at this point in time I don't think it's really a particularly surprising thing just given the state of which The corporate environment is at the moment And so I guess this is just a next logical evolution of what it is that they've been doing So yeah, I wouldn't really be factoring this too much in for any short-term trading decisions in European assets overnight we did us some Chinese inflation metrics come out and Few things to be aware of I guess for one we had factory deflation deep in in May amid a Slow recovery so CPI year-in-year came in at 2.4 percent expectations were for 2.7 The PPI came in at a negative 3.7 percent Expectations were for a negative 3.3 percent. So both figures lower than anticipated Demand remains weak essentially is what that information is telling you the factory gate deflation dropping to its lowest in almost four years That's bad news for corporate profitability investment Employment so despite everything the Chinese central bank and the government have tried to do in order to stimulate the economy is still isn't having a a Potent effect albeit it has helped stabilize their market so pork inflation slows remember that was Incredibly high just given the African pigs swine flu that was effecting pork prices and this was even before everything started happening with the pandemic and As I've said their producer price is falling the fastest since March 2016 So is there much to read into this? Even though that we could have expected my overall assessment is no not not really not for not for this morning's open at least It just goes to show then that the pressure is probably likely to be on the Chinese authorities to continue helping supporting the Their local economy going forward So, you know if you hear any more rhetoric out of the central bank is probably going to be something along those means In order to counteract this type of thing But just goes to show that you know China who are several stages ahead You could say in terms of where they're at with this coronavirus post the peak they are still Going through quite a slow protracted arduous process of getting their feet back under the table again, you know, and is that Indicative of what other countries are going to see who are further behind on that kind of infections curve Yeah, this is just a look at those figures which we've just discussed So the CPI you can see here dipping after that elevation that we saw but Predominantly based on the back of an acceleration of food prices in particular at the beginning of the year going into the lunar new year new year Period, however, see demand dropping Dramatically during the pandemic so both those numbers moving lower and probably the more worrying one more reflective of their economy giving an export dependency on manufacturing is the PPI decline Overnight you had the all infantry numbers just a quick look at how the initial reaction here It was it was pretty tame to be honest. We had a bit of a downtick here At the time the numbers came out. So in WTI crude futures What were those numbers or we had a crude build a very sizable comparative to what market expectations were of eight point four two million Expectations were for a draw of around a million cushing and draw two point two eight five million gasoline just shy of three million distillate Just over four point two seven million One thing that What was looking at yesterday? was the tropical storm Cristobal, however that now is the Basically has continued to dissipate as it's moved further inland. So it's now just the remnants of in that respect The latest update I was reading last night and it's moved on considerably is that US Gulf of Mexico oil producers So down in this region here have returned about sixty thousand miles per day back into service after about thirty five percent of the Gulf's oil and gas production was temporarily taken offline When that previous tropical storm was passing through that region so it anticipate them That also they'll be bringing more and more back online as we go forward through the next 24 hours The MHC website obviously something that needs tracking at this type time of year You can see here. There is now Disturbance taking place within the Atlantic with a 10% chance of a cyclone cyclone Formation in 48 hours probably a little bit early yet to see its Projected direction, but perhaps something else to keep an arm as we go through the next coming days Looking at the calendar for today. It is actually particularly quiet for the morning There's no actual major UK European data coming. So it's very much a US centric session with the focus of course on the Fed later on this evening You do have US CPI coming out Again similar to other inflation readings that we're seeing around the globe at the moment Just given the lockdowns that have been in place can expect demand to be reflective of that And so CPI is expected to decrease slightly the year in the year in the US expected a point two percent the core year And you expect at one point three percent The DOE all it all infantry levels will obviously come out later And now just using that as a reference point with the quite large build that we had As our baseline expectation for when the DOE's hit and then you've got the Fed coming later speaker wise ECB Schnabel Vice President de Gwendoz speaking midday and this afternoon and of course will be monitoring with great interest the press conference which were in power at 730 London times so 130 if you're in Chicago That is it any questions, please do feel free to leave a comment. Let me know Hope that was informative Remember to like and subscribe to the YouTube channel if you're watching this there and I'll see you same time tomorrow. Thanks very much