 Ladies and gentlemen, welcome to today's this month's non-farm payrolls webinar with me Michael Houston, covering the July payrolls report. Just some general housekeeping, risk warnings and what have you. Obviously, I won't be giving direct trading advice, but certainly in the context of how I view the numbers. Hopefully we will get some idea of the effect of what a good number will have, what a bad number will have, what is going to be perceived to be a bad number. You know, are we in a bit of a Goldilocks scenario when it comes to a deterioration in economic data, slowing inflation, a weak jobs number, what would that do? Certainly what we're seeing at the moment with respect to bomb markets and stock markets, we are getting slightly different interpretations of the price moves. In light of Chairman Powell's, shall we say, slightly ambiguous, if I'm being honest, press conference, because his comments that the Fed neutral rate was in around two and a half percent, which is essentially where the upper bound of the Fed funds rate is right now was taken in such a way by markets as to suggest that the Fed was unlikely to be hiking as aggressively, perhaps, than was originally thought to be the case three or four weeks ago. And that's been really well illustrated in terms of the reaction of bomb markets, particularly, say for example, if we look at, if I can actually find the chart that I'm looking for, here we go, I finally managed to drag it in. I don't know what was going on with my desktop there. Previously, I've been talking about a break of a head and shoulders reversal on the US 10 year yield. So this is your neckline here. Generally, what happens is when this sort of pattern breaks, we get a push to the downside, which would imply a move towards two percent. Now, we've rebounded off two and a half. And Bullard and Mester's comments earlier this week pushed us back above 2.8. But what was quite interesting about that particular move, and that's the move on Wednesday, that's the move on Wednesday, we pushed up when we actually closed lower, which suggests that there wasn't much enthusiasm for that particular move. So what's that telling us? Well, certainly, there is some disciplinary forces going on at the moment in terms of what markets are pricing. We looked at the prices paid data earlier this week from the ISM manufacturing numbers from the ISM services numbers. And we saw sharp falls in those numbers in July. The prices paid for manufacturing fell from 78 to 60, which was a huge fall. So there was certainly evidence on the actual underlying pricing numbers that inflation has peaked or plateaued in the short to medium term. And yet, when you look at US CPI for June, we jumped to 9.1 percent. And certainly, that places much greater emphasis on the CPI numbers that are due out next week for July, because I think there is an expectation that perhaps those numbers that we saw in June were, I think, partially or mainly driven by food and energy, particularly US gasoline prices. And of course, since then, we've seen prices come down. And we've also seen the dollar weaken as well, but only in the context of the uptrend that it's been in since the beginning of the year. So we've seen a pullback in the dollar. We've seen a pullback in yields. And we've seen a pretty strong performance in US and European equity markets, which is a little bit of a Goldilocks scenario. But that really supposes that the Federal Reserve is likely to pull back on hiking rates. And I'm not convinced that they are. And even if they do stop hiking in 2023, it certainly doesn't mean they're going to start cutting. So that is the conundrum that markets are currently wrestling with. And certainly what the 10-year yield is telling us is probably not overly constructive, relative to what the two-year yield is telling us. And certainly, I think, given the dire predictions from the Bank of England yesterday, which made me start to reach for the whiskey bottle, there is an awful lot of concern, I think, that inflation, while it may be topping, it's not going to be coming down sharply. And I think that's through the, that's the prism through which we have to look at what's going on in equity markets. And certainly, I think Bullard's comments this week, and Mester's comments this week, are putting a much greater emphasis on what the unemployment numbers and the jobless numbers are telling us. Because I think the stronger the data is for the jobs market, then the more likely it is that the Fed will continue to hike rates into year end. And I think that's what we need to start thinking about. But unfortunately, I think bond markets are still looking much longer term. They're pricing for recession, which is probably the right thing to be pricing for. Because if the Fed is going to continue to hike rates, that will impact on demand. And certainly, I think some of the numbers that we're seeing coming out of retailers would support that hypothesis. And certainly, I think in terms of looking at whether or not prices of plateaued, I think one, one particular item can really shed some light onto that. And that is the agricultural index that we have for CM, the CMC agricultural index, which peaked all the way back in May. This is this includes wheat prices, core prices, and Oaks prices. And these have fallen back to the levels that were prior to the Russian invasion of Ukraine. Now that doesn't necessarily mean they're going to continue to fall. But what it certainly does tell us is that the inflationary pressure that we were seeing in April, May and June has started to diminish. More importantly than that, if we look at Brent crude prices, they've also fallen back quite sharply as well. So on our continuation contract for Brent, we're below $100 a barrel. But what's even more interesting is if we look at the December contract for Brent, that's trading down at around about $91 a barrel, $91 a barrel. So it's quite a bit lower in terms of where markets of pricing crude further out down the line. So again, a disinflation or a disinflation, I'm not going to say deflationary, because we're certainly nowhere near that. But certainly markets of pricing in much weaker oil price two to three months out. And that's that prevailing trend is feeding into bond prices. Now obviously, you've got natural gas prices, which is which are going in completely the opposite direction. They're near multi month highs for US, we can see that here, where there's a decent top at around about 9.5%. So that is what I think central bankers and central banks in general are really concerned about. And UK natural gas prices as well, which topped out in the middle of July, they've been edging up since the beginning of the month. And that's really the problem that central bankers are having to wrestle with right now. So Fed Pivot, no, big question is, what sort of payrolls number is going to elicit a response in terms of either a stronger dollar, a weaker dollar, or a spike in yields? In terms of the yields question, particularly the US 10 year, we can we, I think we can say with a certain degree of confidence that we are in a downtrend still, with respect to that. So the lows are getting lower, the highs are getting lower. Yes, this is a bullish reversal here on the daily chart, which could take us all the way back to 287. But what it doesn't do is invalidate the head and shoulders reversal. So you've got to remember that currently where we are at the moment, we're around about 269, 270. So there is certainly potential for us to go at least another five or 10 basis points up without reversing the move lower that we've seen from 3.5% back in June. And maybe next week's CPI numbers are probably the catalyst that could determine whether or not this trend down continues. And it's probably less about today's payrolls numbers in the context of that overall story. In terms of Euro dollar, a weaker dollar could actually see Euro dollar push back up to this level here, 102.75, 102.80. As you can see, there's a big top here at Euro dollar in terms of where we could go next. And ultimately, given what we're seeing with the dollar index, given what we're seeing with Euro dollar, I'm still of the opinion that we sell the rally in Euro dollar, given the fact that natural gas prices in Europe are likely to have a much more significantly negative effect on the European economy than they are anywhere else. I mean, the UK economy will be effect will be affected by and certainly the dire outlook that was painted by the Bank of England yesterday would appear to suggest that, you know, things are really, really bad. But however bad they are here in the UK, they're going to be degrees of magnitude worse in Europe, particularly in Germany and Northern Europe, probably not so much in Southern Europe, where they get their natural gas from Northern Africa. It's really the economies in Europe that are reliant much more on Russian natural gas. And for that, you're going to have to blame Germany because they still get around about half of their power down by Nord Stream One. So the question I was asked earlier was, what a strong number, what a strong payrolls number push equities down, I think it's probably going to act as a little bit of a top on equities. And certainly, I think the the levels to watch for are as follows, we're going to start with the S&P. Because if we can look at the S&P here, we can see that we've got a decent area of resistance around about 4,200. So let's just get rid of that and pop in a nice horizontal support and resistance resistance line through there. So around about 4,200, there or there about is probably likely to give us a decent indication of where a decent support and a decent resistance level is likely to be. Even though we've broken that minor downtrend line there, we still got those highs there. More importantly, I think, than that is the fact that the NASDAQ 100 is pushing right up against a fairly decent resistance line from the highs here. So I think a fairly decent number expecting 250,000. Bearing in mind, we expected 250,000 last month and got 372,000. Anything north of 250,300 is likely to be potentially negative for equity markets. I struggle to make the case for a strong rebound given the outlook that's currently being painted. Now, that's not to say that outlook is likely to pan out. And one of the things that the Bank of England said yesterday, and was very honest about, was the impact that higher natural gas prices were likely to have on growth going forward. But I think that scenario is unlikely to play out because it assumes no response whatsoever from governments, notably the UK government. And yes, you know, basically people are distracted by the Conservative Party leadership contest. But we should know by 5th of September, who the new Prime Minister is going to be, if not necessarily before that. And ultimately, there will need to be an emergency budget. Because you know, energy bills of 3,800 pounds a year are going to push around about half the UK population into energy poverty. And it's hard to see how any, any economy can ride that particular fiscal shock out. So there will be something that they will have to come up with. Certainly more tax rises are not the way to go. So around about this sort of area here, 13, which is basically akin to the highs that we've got at the moment, 13,000, I'm gonna say 13,400 as a fairly decent resistance level. If we get a strong move here, then there's certainly potential to go back to the 200 day moving average, which as we can see from here, has acted as a fairly decent barrier going forward. The important thing to note here is we're still in the downtrend. You know, we have not necessarily seen the start of a new uptrend here. Certainly there's nothing in the price action that's made that makes me think in those terms. Before we get to the numbers, please feel free to ask any questions. Again, we've got the DAX here, we're still in the downtrend here. So again, this particular doji here would appear to suggest that the upside again is starting to get a little bit stretched on the upside. We are running into some key resistance levels on all the major indices. We can see that on the FTSE 100 as well, very long upper shadows. So again, here, any spike higher, they're finding much more and more difficult to sustain in the short to medium term. And as we head into the weekend, I think it's unlikely, even though we've had a fairly positive week stock wise, it's unlikely that we'll make new highs unless we get a really horrible number. And I think that's the only thing that would potentially push stocks quite a bit higher if we get a really rubbish number on the payrolls. As I said, 372 on the previous number, which was and which was up till today, the worst number this year for US payrolls. We haven't had any ADP payrolls numbers for the last two months, we will start to get them next month because they're changing the methodology on that. But ultimately, I think anything in line with expectations, 250,000 would appear to suggest that the labor market is robust, there's still job openings just below 11 million. So there's no lack of tightness in the labor market is it is still relatively tight in absolute terms. Wage growth, again, that's expected to weaken from 5.1 to 4.9, which is extraordinarily counterintuitive when you think about it. Because if there's all these vacancies, why aren't wages higher? Why isn't the participation rate higher? It should be. And yet it's not. But there is some evidence that more people are coming back into the labor market. As a consequence of the fact that prices are rising and ultimately they need to pay their bills. So I think when we look at the dollar reaction in terms of today's payrolls numbers, I think a strong number will be dollar positive and equities negative and a weak number, conversely, will be equities positive and dollar negative. But again, it will be very, very short term. One number does not make a monetary policy decision make. And I still think that we will find that in September, the Fed will hike by 50 basis points at the very least. And let's not forget, we also have the Jackson Hole annual symposium at the end of this month. So we could get further clues as to what the Fed is likely to do in September in any case. But to my way of thinking, I still think we'll probably get 50 basis points in September. The Bank of England probably is going to have to go the same way, unless we get any significant indication of weakness. But certainly I think, even though we're starting to see inflation level off and start to roll over, any thought that we're going to drop from nine or 10% down to three or 4% in the next 12 months, I think you really got to be very optimistic. And perhaps maybe been on the grog, because I can't see the Ukraine situation changing anytime soon. And that for me means that natural gas prices are likely to remain fairly elevated. So let's wait for the numbers, and I will now be quiet and wait for the market reaction. Unemployment down to three and a half percent. Canada payrolls was downs 528. I mean, that's a huge number 528 non farm payrolls. I mean, that is an absolutely huge number. So that suggests to me that there's more people coming back into the workforce by virtue and wage growth strong as well. I mean, that's strong dollar and very negative for equity markets. So it does appear that that's played out exactly as I suspected it would. And essentially, it means that 50 basis points is the is the very least that we can see. I mean, it's double consensus, double consensus. So I mean, we might as well throw our models completely out of the window. I mean, not only did non farm payrolls beat consensus in June, 250 were expected 372. We've even gone higher than that in the revision, as we can see there 398 from 372. But we've we've double consensus here and the unemployment rate has dropped to three and a half percent. Now, let's have a look at the participation rate, because I think the participation rate could be also be very instructive when it comes to the payrolls numbers, because if the unemployment rate has fallen and the participation rate has gone up, that is very much a positive factor. So that we were expecting 62.2 on the participation rate. And that's fallen. I mean, that's just incredible. So so the participation rate has come in at 62.1, which let me just pull my Bloomberg out of the way. So yeah, that's that's fallen back ever so slightly. So that's got me scratching my head. I've got absolutely no idea why a participation rate would fall back. And the headline rate headline non farm payrolls rate will go up. But I mean, to be quite honest, it doesn't really matter. It's what basically the market thinks. And the market strong dollar, euro dollar back down, cable back down dollar yen, slightly lower, sorry, slightly higher rather, what am I talking about, slightly higher. So the next higher for dollar yen is going to be that 13480 level that we broke below on the way back down to the cloud support back here, and a retest of the 50 day moving average, which I talked about in my morning comment on the chart forum on the spread back, the spread back platform. So running into resistance at the 13480 area, and 50 day standard moving average, and move above 138 13480 retargets 136 136 area. And these these highs is these these lows back there. So as I might my approach to technical analysis is fairly simple. It's really trading the levels and levels trading is probably the most efficient way. For me, I'm not saying it's going to be the most efficient way for you but the most efficient way for me in terms of how I look at the markets more broadly. Now, before I move on to looking at the Canadian dollar, does anyone have any questions as to any markets that they'd like me to cover? Certainly the the Canada payrolls is going to be slightly just overshadowed by the fact that the the non farms was so positive. But certainly I think in the context of this particular trend, the Canadian dollar has also been weakened by the fact that we've got lower oil prices. It's a petro currency. It is very much driven by how oil prices trade. So certainly in the context of this particular move, we're likely to see a retest of 129 and a half. I mean, we're pretty much already there. And a potential retest back towards 130 on the basis of those payrolls payrolls numbers there. So does anyone have any questions on anything that I haven't covered already? Because that's what I'm here to do. Let's look at let's do a quick preview perhaps of US CPI next week, perhaps. Actually, let's do gold. That's always a nice, it's always a nice one when you get a strong dollar number like that. And the gold prices actually respected this downtrend line from the peaks back in March, as well as the 50 day moving average, we test we pretty much hit it on the money. And as I say, I mean, it's not something that I set up before, I'd almost forgotten that I drawn that particular chart. But again, here, we've got another classic example of support and resistance lines being respected quite nicely. So not only was this trend line from from the peaks here respected in the gold price. Obviously, if we now look back at US yield charts, unsurprisingly, given what we were talking about earlier, yields are now higher. So the tune of 279. So again, what I was saying earlier, we can see a retest of at the very minimum and move back to 285 on that number. And it's quite likely that we will probably get that. And obviously, the dollar has rebounded off this level here. And actually, if we zoom in a little bit on this particular chart, and make it a, you can see that there's potential for a little bit of a bullish reversal on this daily candle back earlier this week. So certainly, this bullish reversal here suggests that we're going to see a rebound in the dollar, perhaps back to around about 107.40, which obviously then means we get a lower euro dollar, given the fact that the dollar index makes up around about 57% of euro dollar. You're all very quiet, ladies and gents, which essentially leaves me to believe that perhaps you haven't got any questions, or you can't hear me go. Here we go. Now we're getting him now. Okay, right. So that could not equities shrug stronger interest rates and push the S&P to super job report. So hang on, you're asking me whether or not, because we've seen a stronger report, it could actually be positive. Have I understood you correctly, Alan? I want to make sure that I'm answering the question. Right. No, the answer to that is because the US Federal Reserve is likely to tighten faster. And if the Federal Reserve tightens faster, that will impact on demand, it will pay back consumer spending, and therefore, sales and revenues of US companies will diminish. If the US central bank was inclined to tighten a lucid monetary policy, then yeah, absolutely, that would, that would certainly be the case. But because the economy is improving, it means that the Fed is more likely to tighten than Lucent. So therefore, it's not as good for equities. So hopefully, that makes sense. Usually over the last 10 or 15 years, whenever you've had slightly improving economic data, there's been never any prospect that the central banks would tighten monetary policy. That dynamic has changed in the current environment. Better economic data is not necessarily good for risk assets, given the fact that we've already rallied 20% from the July lows. And that's the prism from with which you need to look at this particular piece of good news. Good news is no longer bad news. So sorry, good news is no longer good news. It's now potentially bad news. So the big question is absolutely you've asked the right question. Where are the next key levels for S&P for support? Well, let's drill down into slightly shorter term. So what we can see here is a four hour chart. Well, initially, the first support level is obviously the trend line support of the lows. So we're looking at that level there, but that's no good. We don't want that because it's just too far away. So let's now put in another trend line support of the lows from here. And then we've got that. Now let's look at previous lows. So this previous low here is likely to be the next key support for the S&P 500. Where is that? It's 4075, as well as obviously this trend line from here. So the next area of support for the S&P is going to be the trend line on this four hour chart from here, as well as these lows through here. So that's essentially the way I deconstruct a particular move. We failed just below 4200. We've taken out these lows at 4135. Now when US markets open in around about 40 minutes time, you could well get an initial short squeeze perhaps. But ultimately, given how good those wages numbers are given how good those payrolls numbers are. Any thought of a Fed pivot gone? Forget about it for at least the next four to five weeks, simply on the basis of the fact that these numbers will potentially be will be remembered until such times as we get another payrolls report. Next payrolls report will obviously be the first week in September. We've also got two more CPI reports between now and then the first one of which is next week. So ultimately, the narrative for now is better data equals more aggressive Fed. And that's the message that you need to take away. So ultimately, the next move lower on the S&P is likely to run into support in and around these areas here. Obviously, what also that means for the NASDAQ is a slightly more different story. It's going to be much more aggressive this move lower for the NASDAQ. And I talked about that because of this trend line here. It's respected it perfectly, which I was a little bit apprehensive about. You're always a bit apprehensive about being short so close into a number or being looking to sell so close into a number. So the next key support on the NASDAQ is obviously this low here around about 31 13 160, which we're currently right at at the moment. You've obviously got these twin peaks through here. And I'm looking at an hourly chart here. But if we do a similar sort of analysis on this, we can also draw an interim trend line through these lows through here. But also look at these series of lows through here and those series of peaks there, which is around about 13,050. They're up there about 13,070, 1380. So again, it's not trying to be overly complex when you're doing analysis, you know, you can have as many MACDs as many RSIs, slow stochastics as you like. The most important component when it comes to analyzing markets, it's price, price, price. In terms of fibs, yeah, fibbing actually, fibbing actually levels are just as relevant. So let's say, for example, you want to draw some fib levels on this chart, that's fairly easy to do. You take the low there, you take the high there, but they only work if you're absolutely certain that we've seen the absolute high of this of this move higher. At the moment, I would be reluctant to use fibs quite yet until such times as we retrace at least 20% of this move higher. So fib measures only work when you can be absolutely certain that you've seen a top or bottom of a particular move. This is just one set of price data, a really good payrolls report, a good really wages report. That could be all unwound the next week with the CPI numbers. So we're not there yet. We haven't taken out this low here on the NASDAQ. So I would be cautious about calling a top on the NASDAQ quite yet. Those numbers would suggest that we potentially have, but we still need to see confirmation of that particular move. So I hope that sort of makes sense to you. I'm hesitant to call a top on the NASDAQ quite yet. I'm encouraged by this data. Doesn't necessarily mean that we won't see it because in terms of the FTSE 100, we have seen a fairly decent bounce back. What happens if CPI is very low? Then what? Well, then we go back to the entire, is the Fed going to pivot? Is the Fed not going to pivot? The moment there's more emphasis on the equity, there's more emphasis on the labor market. And this is why it's very important that you move from data point to data point. And when you have a position and you've got a decent profit, you take that profit. It's all very well having a stop loss. You also need to have a take profit. And you need to make sure that you take your profit, pocket the profit and then move on to the next trade. You should never ever be wedded to one particular stop loss when you're looking at a nice, juicy profit. So I think that's one thing that really doesn't get looked at an awful lot. There's so much emphasis on stop losses and there's not enough emphasis on take profits. These numbers are good, but it doesn't mean the S&P is going to fall off a cliff. It doesn't mean the NASDAQ is going to fall off a cliff because as you say, you could get a very weak CPI number next week and then suddenly everyone's goalie locks again. So this is the nature of what markets are like at the moment. And I think that's something that we really do need to be aware of. Trade the market as it is. Trade the price action as it is. The data hopefully will support the move, but look at the price action first and foremost. Right. OK, I also got asked about Aussie Dollar and I will cover that. I hadn't forgotten my stuff. So I will do that now. OK, so this is my long term look at the Aussie Dollar. As we can see, we've got this entire up move here. We've moved back down. We've traded back to 7050 and now we're trading lower again. So the next key support on the Aussie Dollar is the lows that we saw earlier this week at 6880. And obviously what we also saw here was a bearish reversal on the move here. So obviously further Aussie weakness goes slightly counter to what we've seen over the course of the last week or so. The RBA, in my opinion, will continue to hike rates. The RBA is still continue to be behind the curve, but it will be outweighed by weaker commodity prices. So if commodity prices remain weak and the Fed continues to remain hawkish, then it's quite likely that the Aussie will continue to trade towards the downside. I don't see the Aussie falling off a cliff, but I certainly see that the potential for weakness back to around about 6870 in the short to medium term is this support here. If we break this key support here, then we could well head back towards the lows. But at the moment, we can see from the daily chart, if we drill down into the four hour chart, we can see that there's a decent area of support all the way through here. So you need to be a little bit careful about being aggressively short of it. But what I would do is if I was looking to trade the Aussie, I'd be selling weakness back to around about 6980, 6990 for a move lower. And it's really about where you look to get in when you're trading Aussie dollar. It's not about what you're going to do now. These payrolls numbers will push the Aussie towards these lows. The big question for me is whether or not we're able to take out these lows. OK, so OK, any other questions, ladies and gents, otherwise, I'm going to wrap this up and wish you all a fairly do you so do I see more weakness in commodity prices? You're going to have to be slightly more specific because it depends which commodity prices you're talking about. We're talking about copper. Let's have a look at the copper chart. I still think we're going to see fairly decent demand for copper because ultimately the energy transition will require an awful lot more copper. But if you look at the way things are at the moment, there's fairly decent resistance in copper around about 360. So I think the big question is is whether or not we've seen the lows and I think an awful lot of that will depend on demand out of China. We've got China trade numbers over the weekend. If we look at this particular trend line here, we're very much in a reactive uptrend. If we take out 360, then we can potentially go higher. But again, it really depends about short term demand and the Chinese economy. Zero Covid Chinese economy is unlikely to grow by anywhere close to five and a half percent this year, let alone three and a half. So I'll be very much dependent on demand over the back end of this year. And I'm not confident about that. If you're asking me longer term, do I think that copper will go higher? Absolutely. Yes. But we're talking over the course of the next two or three years. In the short term, it's much harder to call. Where will I will ask to finish this season? Yeah, thanks, Phil. Higher than Spurs, hopefully. That's all I'm going to say. Do I see silver recovering soon? Someone's got a sense of humor. That's funny. I like that. Ask me after the palace game tonight. Silver, again, we're probably going to see some short term weakness in silver. I'm still laughing at that. Again, on the back of a on the back of a stronger dollar, we can probably come back to these sorts of levels here. So that's going to be around about the highs of July, 19 dollars, 19 dollars an ounce. We can see it drift back to there. And again, we're in a downtrend for silver in the same way that we're in a downtrend for gold. So if we look at it through the prism of gold, if you're looking at potentially high yields and gold prices, then until such times as we break higher in gold, because gold is a fairly decent proxy for silver, then I think silver prices are probably going to drift back down as well. Oil prices have already covered. Again, I think we'll probably continue to remain slightly soft, simply on the basis of weaker demand in the back end of this year. I don't think the Chinese economy is going to pick up significantly, strongly enough to drive oil prices back towards the levels that we saw in the early part of this year. So I can certainly see the scope for that. If you look at forward contracts for oil, then that would appear to suggest to me we are going to continue to see slightly weaker oil prices, but they're not the things that I'm worried about. It's natural gas prices that I'm worried about. OK. Anything else, ladies and gents? Any sensible questions not like where we'll ask and I'll finish this season because I'm not taking bets on that because I usually get that wrong. OK. Well, in that case, ladies and gentlemen, thank you very much for your questions, both serious and tongue in cheek. And I'll see you all the same time, same place next month when we cover the August payrolls report and see whether or not we're any further advanced in terms of when is the Fed likely to pivot anyway. Have a great weekend, ladies and gentlemen, and I'll speak to you all. I'll see you all same time, same place next month.