 Good morning and welcome to CMC Markets on Friday the 14th of October and this quick look at the weekend beginning at the 17th of October. It's been a while since I've done one of these on a combination of catching COVID, but also going on annual leave. So there's quite a bit to get through. Certainly we're starting to come into the beginnings of earnings season as we look ahead to today. Friday the 14th, we've got JPMorgan, Wells Fargo and Citigroup due to release their third quarter numbers. So as I record this video, we still don't know in particular how good or bad they will be, how positive or negative they will be about the economic outlook for the US economy. But what we do know over the course of the last few weeks has been the fact that there are significant concerns that inflation is becoming an awful lot stickier than perhaps was originally thought to be the case and that the global economy is slowing quite sharply. And we've also got significant ructions in the UK gilt market as a consequence of a market reaction to quasi-quartings, mini-budget at the end of last month, all of which I've sadly missed those particular fireworks and I'm sort of picking them up now. But certainly I think if we look at the ructions in the gilt market, we can see that there's been a significant uptick from the end of September. We are now back sharply lower. The expectation is that we will get some form of U-turn from the Chancellor. Obviously the pound is rallying on that basis as our gilt prices, as we see a sharp sell-off in yields. So I think irrespective of what happens this coming week, the focus will obviously be on the Chancellor of this checker, the UK government, and whether or not they look to reverse further parts of the mini-budget. But I think the most important parts have already been reversed. So I'm really not sure what markets are reacting to. There was some heavy criticism of the Chancellor at the time, Rishi Sunak, of implementing a significant increase in corporation tax from 19% to 26%. Now markets are rallying, apparently, on the back of the fact that that might be re-implemented. I mean, that seems completely counter-intuitive to me and utterly ridiculous. Having a tax hike that actually hasn't been implemented yet. Certainly I think there are questions to ask about the PR around the mini-budget. I think those are very credible questions, but to be rallying on the basis that a corporation tax rise will be re-implemented seems perverse at best because there's no evidence whatsoever that the higher corporation tax rates will lead to higher revenue, but there we go. The markets are rallying, the guilt market is rallying, yields are now starting to come back off, and things are starting to stabilise. So really the big question is, what Monday next week brings us all the Bank of England withdraw its support for the guilt market, as they've said they will do today. I think given the fact that they are arbiters of financial stability, I think they'd be unwise to do so if it is required. So I think irrespective of what Governor Bailey has said this week, if there is continued turbulence on the guilt market, then they will be forced to intervene to provide liquidity. In any event, we've seen a significant pullback, I should say, in guilt yields. If we look at the two-year, which is what we're looking at here, we're seeing a significant pullback on the weekly candle, which hopefully should continue. That is obviously the markets are now pricing in or pricing out the prospect of really aggressive rate hikes from the Bank of England in November, but I don't think that was ever really likely. The biggest concern at the moment is US inflation and those CPI numbers that we saw yesterday, which came in on a core basis much hotter than expected, and at 6.6% a 40-year high. So that is prompting speculation that the Federal Reserve will not only go by 75 basis points in November, but will also do another 75 in December. That's another 150 basis points by year-end of somewhat perversely markets rallied yesterday on the back of those numbers, but I think if you look past those numbers and you look past the rally, you can make a case for the rebound that we saw yesterday. We've already been declining over the course of the past week or so in anticipation of a fairly hot CPI number. So the fact that we got one shouldn't really have been too much of a surprise. If we then basically extrapolate out what we can see is we've seen a technical rebound on the part of the S&P 500 from 50% retracement of the entire up move from the 2020 lows to the 2022 highs. So what in essence we've seen I think over the course of the past 24 hours has been essentially a technical rebound of technical support at 3,500 on the S&P. That doesn't mean that we're not going to see further losses. It just means that we've probably seen a little bit of a pause. So that's essentially I think the reason for the rebound that we saw yesterday in the NASDAQ 100 and also the S&P 500 and has helped support the markets this week. It doesn't change the underlying direction. We've seen a rebound from the 61.8 S&P retracement level on the NASDAQ 100. So again here we can attribute yesterday's pullback to a technical rebound on the basis of that we were coming off a decline heading into the numbers. Very much a case of sell the rumour by the fact if you like and I think that's the only rationale that I can put forward as to the reasons as to why we got a rebound yesterday. So we're extrapolating that out for the Germany 40, the DAX again similar sort of rebound there and we're getting a nice little pullback on that. The pound has rallied quite nicely on the back of the rebound that we've seen in guilt prices and slight dollar weakness on that basis as well. So again, I think the big level on cable is 114.80. It's as high as back in October. If we can extrapolate a move back above the 50 day moving average, then we could we'll see further sterling gains. But at the moment, while we're below this resistance level here, then fading sterling strength still remains, I think, the primary strategy as we look forward. Euro sterling, slightly different story. We pretty much reversed all of the losses that we saw in the aftermath of the many budget, but we are still in the uptrend from the lows back in back in July, July, August. So we need to pay particular attention to the 100 day moving average and the trend line support from this level here as well. So certainly keep an eye out for that. Looking further forward, I think we can expect to see further volatility in financial markets. We saw a fairly decent rebound of the FTSE 100 when we dipped below 6,800. I think that still remains a fairly key support level in the short to medium term. So I wouldn't be too overly concerned about the fact that we did dip below it and hit a new 20 month low. Obviously that is a little bit concerning if you've got a stop loss below there, but we didn't close below there. And I think that was very important. The strength of that rebound suggests we could well see a move back towards 7,000 on the S&P 500 as long as we stay below 3,800. And I think that's important in the context of the overall up move that we've seen over the course of the past day or so. As long as we stay above these, stay below these, these peaks here at 3,800, then I think the downtrend is likely to remain intact for the S&P. In terms of looking ahead, earnings numbers, we've got Goldman Sachs numbers, we've got Snap Group, we've got Tesla Motors. So Tesla Motors is going to be fair or Tesla Motors, Tesla. We already know that the numbers for Tesla are likely to be better than they were in Q2 given the fact that some of their production capacity came back online after the COVID shutdowns in the early part of the quarter. So we've obviously also had to contend with the fact that we've had a 3 for 1 stock split on Tesla. That's making the shares much more affordable. We've got fairly decent support going through these lows all the way through here. So that's worth keeping an eye out for the $20680, $207 share level on the Tesla share price. Operating margins need to be, we need to keep a close eye on them. They fell from 32.9% in Q1 to 27.9% in Q2. Tesla has been hit by higher costs in terms of its Q3 numbers. Can Tesla deliver a record second half as it looks to increase its maximum output all four of its factories? So it's able to easily pass the 1 million cars mark by the end of this year for vehicle deliveries. They're looking to sell 1.3 million or deliver 1.3 million cars this year. The Q3, they reported 343,000 deliveries, which was slightly below expectations. But again, rising costs have prompted must to announce redundancies in some areas of the business. So that's going to be a very key earnings announcement in terms of what Tesla expects for its Q4. For Netflix, again here, Netflix have announced a new ad service, which is going to be starting in November. The Q2 numbers in July appear to have been a catalyst for a little bit of a rebound in the share price, the slow recovery that we've seen. This cheaper ad base model is going to be costing up to $7 a month. In Q2, the company lost subscribers for the second quarter in a row, albeit by less than had been forecast. The loss of 970,000 subscribers was a relief, given that 2 million subscriber loss was expected. Revenues are still fairly positive. They rose 9% to $7.97 billion. The Q3, Netflix is saying it expects to add back subscribers with hopes that they will see growth of 1 million, reversing the decline that we saw in Q2. So I think in Q3 revenue forecasts are expected to come in around about $7.84 billion. That's still a 4.7% increase on the same quarter a year ago. Profit forecasts are lower, around about $2.14 a share. And that was slightly disappointing, but Netflix has reiterated that it still expects to deliver a 4-year operating margin of 19 to 20%. The risks, I think, with an ad base model are that it will cannibalize its more premium offering as some customers trade down. So we do need to be aware of that. And I still think Netflix needs to look at a mitigation strategy for FX, because it's losing about a billion dollars a quarter due to the strong dollar and FX effects, given the fact that it produces films and TV in more than 50 countries and three out of its six most popular TV seasons are using non-English language titles. It should be monetizing that user growth much more effectively. And I think it's surprising that shareholders aren't being more vocal about this, because it's a huge hole in the company strategy. But certainly, I think, in terms of the overall outlook, Netflix is certainly looking an awful lot more positive in terms of where it was, say, for example, three months ago. But the shares are still down quite heavily over the course of the last few months. Deliveroo, keeping an eye on their latest third quarter numbers, they're still turning out some fairly decent revenues. But unfortunately, their losses are still going up because their marketing spend is increasing. So they need to really start controlling their costs to try and put a flaw in the share price. If you look at where the IPO price was, 390 were well below that. And we really do need to start see some progress on cost cutting, as well as the idea that they can return a profit. Fast fashion has had an absolute nightmare this year. ASOS, I mean, we only need to look at that chart to really understand that they are really suffering in their four year numbers on the 19th of October. The big question here is, have we seen rock bottom in that 500 pence a share when you look at where it was all the way back in 2021? Well, I mean, it's just been a sight to behold. So at some point, you've got to think that perhaps we are going to see some sort of a rebound going forward. So that's ASOS. We've got Goldman Sachs, as I say, I mean, I think the outlook, I think in terms of Goldman Sachs and banks in general, we've seen a fairly poor performance so far, but we do appear to be starting to see signs of a bit of a bottom. I think the big question for banks is credit impairment losses. Are we going to see significant increases in credit impairment losses against the backdrop of rising rates in the US at the moment? All of these banks have been setting aside much higher impairment losses in respect of non performing loans and what have you. And it'll be interesting to see whether that trend continues as we head into the end of the year. So in terms of currencies, there's still a strong dollar story. Certainly Euro dollar still remains in the downtrend. We have made marginal new lows and still bearish on Euro dollar and any rallies back to the 50 day moving average in this downtrend line here. I think that's definitely the way to play it. Certainly in terms of the cable, it's a similar sort of story. Dolly Ends made new 24 year highs above 147. It's retested and made a new 24 year highs and now it's now a 32 year high above 14770, which was the highs in August 1998. So now we're looking at levels all the way back in 1990, which is a hell of a long way back. If we look back to here, it's even before this chart goes back to. So we're looking at levels last seen in the early 1990s for Dolly Ends. Haven't really seen any evidence of intervention thus far. We might start to see it if we get anywhere near 150. As I said with the Bank of Japan, it's not about the weakness of the Yen, it's about the weakness of the or the speed of the decline in the Yen. So they will they will they will intervene at some point. The big question will be as and when. So that's for this week. If you're hearing any banging, I do apologize for that. That's basically because we're having I'm having some work done in the house. Hopefully it wasn't too intrusive and you will have a great weekend and hopefully speak to you all same time, same place next week. Thanks very much for listening.