 What's up? It's good morning from him and from me. It's Thursday, 28th of January Let's get into it now. What's been going on in the market? As you can tell Wall Street bets and The run for cover from hedge funds is the talking point of markets Definitely the main culprit for the underperformance in US equities yesterday We had losses ranging from 2 in the Dow to 2.8% in the Nasdaq. It was the biggest S&P 500 route we've had in a couple of months dating back to October Even in after hours, we continue to move a little bit lower But that then following on from generally the earnings updates where we had Apple Tesla Facebook all of which Traded lower in aftermarket trade Tesla the worst of the bunch down 5% Apple down Over 3 but we're going to talk about those a little bit more detail in a second, but look In all honesty, look, let's talk about what's been going on in markets and as far as this morning is concerned It's all kind of a little bit picking up from where where we left off yesterday So equity index futures a little bit softer this morning The dollar is a little bit firmer So the major currency pairs trading up for the time being a Dixie up about one tenth of a percent Oil slight negative Tino's broadly flat gold down $11 on the session Yeah, the the main thing I wanted to stress here at the open this morning was that when we're looking at the The general decline in equity markets yesterday and the overall kind of sentiment that was pushing things Definitely it started to pick up when the US started to come in and definitely this whole idea about the kind of Wall Street Bets and this clash between David and Goliath on the short sellers is is a US Generated story because we're talking about US equities here So a lot of that move really started to get initiated after the close We also break out of the kind of bottom end of the range that we're trading in the spools over the last couple of sessions But the point I wanted to make here is that look this move was nothing to do with the Fed Absolutely nothing the Fed did exactly what was expected. There was no surprises at all So the move was very much more ties to this idea about not one specific headline as such that That came out yesterday, but a covering of shorts and some of the stock subject to this kind of new Retail activism if you like which is forcing a lot of deaths to cut their profitable longs Elsewhere to cover their their shorts and a couple of notes. I've made this morning and a few stats But if you're wondering how the short-selling work You know what's this kind of gamma squeeze and what how do market makers further fuel the bid in some of these Small stocks then check out the video that I did with Eddie yesterday He did a really good kind of 10-minute explanation about how all of that works. I'm going to talk about it much more from The impact it's had so Goldman Sachs hedge fund industry VIP ETF Which tracks hedge funds most popular stocks tumbled 4.3 percent yesterday It was worst day since September and that comes after Monday saw the largest unwinding and equities by hedge funds since August of 2019 Interestingly though one of the main things here is that The most shorted companies in the Russell 3000 so again as we work our way down this kind of Hierarchy of market cap stocks the S&P 500 being the biggest then we work it down The 2000 the 3000 so on we get down to much smaller sized companies So the most shorted companies in the Russell 3000 have been the indexes top performers this year so far 159 companies in the Russell 3000 rows by more than 10% yesterday. That's even as the index in itself fell By around 3% One of the things that we saw yesterday It really goes to show just how much of a grip at the moment Wall Street bets This kind of online community hub on message board on red it has over the markets is that moderators of Wall Street bets briefly blocked non-subscribers from accessing their page last night and That caused some of the most discussed stocks to just fall as much as a third Before the page turn return to its previous status and all of those stock prices rebounded That's almost like the the blind leading the blind slightly and as soon as they talk about stock It just moves and when they don't it then doesn't move and it reverses that initial spike now the overall kind of summary here the Piecing this together why is it happening and also it is this type of behavior going to continue today for example well Let's talk about it from a why is it happening point of view then we'll look at the S&P chart We'll have a look about whether or not this is going to be a persistent thing or are we in for a bit of a rebound so One of the main reasons why yesterday this move here does look fairly heavy And I know that at the time it definitely Did feel that way going through the the early part of North American session But a lot of this as I've just described is about hedge funds Taking action to reduce their exposure through forced liquidations and certain positions So one of the things here is that well once those liquidations have taken place and those positions have been Let's say slim down. Well, then there's no more of that activity to take place at that point and one of the other things at the moment, I think is that you know given the targeted focus of Wall Street bets and this kind of retail mob on some of these bigger short seller hedge funds then They're just going to steer clear I would imagine would be the most broad proven course of action until the dust settles And then that in itself means that this this continuous liquid liquidation kind of move We saw yesterday is probably unlikely to be repeated at least Continuous or to the magnitude of what we saw yesterday That's I mean, it's not to say it can't happen again What I'm saying is that it's not a move that has in Infinity in the markets where it's just going to go down and down and down and down. I would say now Why has this happened? Well, the the kind of notation I made to myself was when reading a few articles I think that this I Think this situation is really interesting from a Almost a societal level of a reflection of what's going on in the world at the moment because these self entitled as they would call it degenerates on these online message boards We had come at a time where The barrier to entry to stop trading has dropped substantially with low cost Transactional cost to be able to trade this as well with the sharp growth in stock options trading Which is typically something that in the past has been more An area for professionals to trade rather than a retail trader, but does give optionality then literally for having very small Kind of lottery ticket bets on these type of stocks looking for like you've had a 1600% gain in a single stock price But overall it comes in the context of Definitely a deeper rooted issue, which is I think a disenchanted youth where you know, there's difficulty in you know labor market conditions particularly in a pandemic and environment but coming off of the kind of the gradual recovery through the financial crisis which has caused quite a Inflated gap of wealth between You know kind of baby boomer generation to now this generation Z and millennial the difficulties they confronted with with you know Home ownership being so expensive And these sorts of things so I think there's there's a lot more that's going on as well in the context of You know, there's stimulus checks being handed out in US. There's people who are not at work There's people who are locked at home during the pandemic. So it's almost like All of the ingredients have just come together to form This perfect cocktail that's created this type of movement at the moment, but underlying it. I think is this Real kind of Activism mentality on the kind of against Main Street or Wall Street in this case But it's just being played out in a different different way. So Yeah, it's interesting. Is it going to be long-lasting. I don't think so I think it's just it's just kind of come to this complete Crescendo moment which is which was yesterday. I still think it's going to be a talking point for a little while But I think the world will move on as far as the traditional assets that generally that we look at So what else is there to actually be aware of that's in focus for markets today? Well, look, let's have a quick look at the S&P 500 because it has been Moving lower obviously from from yesterday's set off inspired by a lot of what we've just been describing Technically speaking the lows that we had here on the the 15th of January that has been a point of down the Recovery resistance that that's kept the upside during the Asia Pacific session before we've drifted back lower Now one thing to note is the actual movement over the Fed was pretty benign the actual deeper movement here came after market And perhaps a little bit more pronounced than the likes of the Nasdaq and that's because we had You know when it comes to people like Apple for example, the Apple numbers were pretty spectacular From a corporate earnings perspective their EPS dollar 68 against dollar 41 revenues 111.4 billion obviously breaching 100 billion for the first time and over the expectations of 103 billion I think that China base revenues were up around 58% The iPad the iPhone the Mac the wearables the services they sort of smashed it basically but the thing to understand when it comes to Corporate owning season and particularly a stock like Apple, which is almost like this kind of buy the rumor sell the fact type of price activity This is Apple's aftermarket share performance. It's down 3.3 percent effectively But I think it's important again to look at the context because if you actually look at Apple shares then the aftermarket Put them down around 137 which basically puts them up where they were on Monday so the stock had been well bid all the way into the release and They basically confirmed what the market believed was going to happen I mean it was very well Telegraphed in the press that the revenue number the overall performance given the iPhone 12 given the pandemic situation And the impact that has on wearables home accessories services division We all knew it was going to be good. And so as I was kind of discussing on the Amplify livestream yesterday The upside relief was going to be minimal at best if anything profit-taking short term Definitely Apple I still think has a long way to go to the upside So I don't I don't this doesn't really spook me at all. It's kind of pullback I think it's just a function of the pre pre positioning we saw into the earnings the other companies I mean Tesla was down about five percent, you know some question marks over their kind of government credits reliance The payout to Elon Musk for the way that his his Renumeration package is structured because given the meteoric rise to share price Then Facebook was down about two percent. I mean when I look at this S&P as From a technical perspective and I stick it on a on a daily chart Which is this one here. I do think there is a perhaps a little bit more room for for downside I've got marked up here these two rectangles that I've had on this chart for for a while And now that we're below that area if I just make this a little bit bigger here this kind of Peak of activity that we had at the end of last year. We came back down to Briefly test it here and find some support in the middle of January And as you can see we broke through that closed below the yesterday We've had a full smooth above there and we remain below that 3742 here on the daily chart So that does mean then I think it does open up a bit of a prospect that a deeper move here looking at this Chart from a technical perspective 52 50, you know, is it going to get there today? I don't I don't think so, but I think it's Gives this depending on where we close today. I think it gives this market room for perhaps even a further pullback But then Ultimately, I think the normal pattern then resumes where we get up and then we eventually start to move back up And we do head to all-time highs. So As I said, I think, you know, once hedge funds have readjusted their positions You know covering their short bets on the back of this attack from the wall street bets then That's not a long lasting thing that's going to going to be around forever. And once those positions are adjusted, they're adjusted. So Ultimately, then it kind of lands at the feet of This guy Geron Powell, you know, what did he say yesterday? Well completely as expected Largely a reiteration of recent commentary near-term uncertainty needed To be navigated before a more constructive medium term what he means by that is the constructive medium term Is the idea that the vaccine will get rolled out in time into the second half of the year And that will then support the ongoing economic recovery in the us and globally The near term we have to get to that point first, obviously, so That would suggest then that now is not the time to be talking about things like tapering or Altering the parameters around their bond buying program The Fed chair Powell leaned back against that idea of a premature exit of their kind of accommodative monetary policy at this point all as expected so All in all then this in itself away from that fmc meeting I do think is one of the reasons that will underpin Even with a pullback the fact that equity markets will stay relative elevated if not Back to all-time highs at some point in the future Because again, it's going to be supported by the ongoing assistance both from a monetary but also from a fiscal perspective as well Of course under Joe Biden A few other talking points to get you up to speed on the EU remains at loggerheads with AstraZeneca The drugmaker refused to cave into demands To take its vaccine supplies from its uk factories to increase doses going to the block in mainland europe They are due to speak again today. So that tip for tap continues to go on I don't think that headline in itself is something to be spooked about. I think now the market has already digested this idea that the Initial numbers of supply Of the vaccine in mainland europe are going to be substantially lower than perhaps was thought just a couple of weeks ago But that's baked into price now. I would say I think this needs to be monitored A really extreme fallout that causes some sort of protectionism Reaction in retaliation, I would say that disrupts then the global Distribution of vaccines in general obviously would have very destructive For markets given that that would impede then the economic view about The medium term. So it doesn't even monitoring bill I don't think this headline itself is much of a thing The german health minister came out just a few minutes ago and said that they will experience at least another 10 weeks Of a coronavirus vaccine shortage So that's the kind of time frames that we're operating with at the moment um Moving as an extension on that We've had uk prime minister barris johnson come out And obviously the the tone has changed already from a few weeks ago But basically johnson putting england on notice that the national lockdown will continue for at least another six weeks remember The government was quite hopeful by mid february and even though the vaccine Being administered has gone relatively successfully Comparative to peers in the uk it is slightly off target in terms of that pace But all in all just given the situation on the pressure on the infrastructure on the nhs and so on and so forth I think this was very much expected If anything, it wouldn't be surprising to see this even roll on further. So again, it's not a market move I would say uh, there's really a focal point for this morning That then leaves us on for what have we got today? Well, we've had a couple of the first german state cpi's come out already Again, I don't think they're they're going to be massive the month-to-month Saxony figures already come out point five percent. That's the same as previous I wouldn't be really looking for that to initiate real firm direction in european assets um This sentiment figures that here for the eurozone For any new trader these look quite interesting, you know economic sentiment industrial sentiment service sentiment But they very rarely move the market. So again I wouldn't kind of be sitting on your hands if you should see an opportunity I don't think you need to be particularly cautious around the timing of those numbers The main kind of figure from a from a schedule perspective is the q4 advanced us gdp figure It's expected to obviously decelerate sharply from the huge bounce that we saw From previous studies 3.4 percent down to a four percent figure. We do have a wide range Remember, this is the advanced figure So it does carry the propensity to move markets the most out of the advanced preliminary and final readings and the range then is much wider this time round because it's a kind of A modeled generated expectation of what the gdp headline of four percent is from all these different banks and research houses So the range is zero to six point eight percent Even if it goes either way, I don't think it's a particularly big deal for the fed So beyond the intraday. I don't think it's too important But for the intraday perspective, sure a breach of either side could be interesting how to take it while I guess if we get a negative print Which is considerably weaker obviously than four percent growth and the lower bound of of zero You probably be thinking then well Look, there's no way that the fed are going to have any of this exit talk about their their policy at the moment. So Teeners would probably be bid the dollar would weaken if anything Equities could be supported by this idea that you know, there's no need to fret about the the timing of policy anytime soon So that's how I've kind of interpreted that but that's coming out 130 will be one of the main focal points of the session ahead You also got the core pce figure the initial jobless claims all coming out at the same time jobless claims expected 875,000 from the price 900 we saw last week new home sales then follows at three But I'd say the 130 group of data is much more important As will to be the open on wall street to see Whether or not then is there any more further unwinding of some of these short bets by these hedge funds? But one would think they'd be pretty active already over the course of the last few days to try and Run for cover and so if that is the case And then you get a gdp number which perhaps hits a bit of a sweet spot where it's not fantastically strong It's kind of okay Moderate gross let's say which allows the Fed to remain fairly loose in its policy And then the market starts to recover Inevitably because from those earnings reports like tesla or apple I really don't think that really they were bad reports It's just a function of just how their share price has been reacting ever since the last last few months Um earnings for today, you've got probably mcdonald's pre-market is one of the main ones to look out for visa The airline american airlines Mastercard a few other names, but mcdonald's probably been visa the the larger cap wants to be aware of and then you've got a 70 Note auction coming out for any u.s. Fixed income traders. All right, that is it going to leave it at that any comments at all feel free to Just leave a comment. I'm happy to respond If you're watching this on youtube remember to like and subscribe really appreciate it and remember to check out eddie's video As well on the channel definitely worth a watch on what's been happening with gamestop and explaining it With much greater detail. Thanks very much guys. Have a good day