 Okay, very good morning. Wednesday the 8th of April. Hope everyone is doing well Remember to like and subscribe to the channel for daily updates from myself and the rest of the team But going into an overview of what I'm going to cover here. We've got updates on the coronavirus, of course We've got China now in the origination of this virus in Wuhan in Hubei province They are now relaxing their two-month lockdown. We're going to talk about that and its implications potentially And what it might mean for trying to project then what might happen in mainland Europe in North America We're going to talk about OPEC. Of course, you've got that meeting that's any conference call happening Tomorrow and then the G20 energy ministers meeting on Friday. So we'll have a look at that Then we're going to look at a few charts predominantly that of the S&P 500 after quite a Big turnaround in market sentiment as we went through into the latter part of the day And what we feel now about going forward some key levels to look at and then a few other kind of headlines I want to run you through as well So let's quickly have a look at the overall sentiment at the market open And actually you can see here in the top left hand corner is Euro dollar And if I was just to bring up the bund future just briefly here, you can see they're just mirroring each other in a in an inverse relationship if you like so here Euro under pressure the boom was seeing a bit of a spike through this morning as to update you then on this basis. We have had The European officials come out. They're supposed to be in a Euro group meeting happening Well, there has been but after 16 hours of discussions essentially to just switch over my screens They came close to a deal, but they're not there yet So this guy is Mario Centino who's basically the president of the Euro group and minister finance minister of Portugal I was talking about the idea then that they've suspended the Euro group and will continue tomorrow My goal a strong EU safety net against the fallout of COVID-19. So obviously here what we're talking about is a coordinated European-wide response to COVID-19 and that has failed to happen. So even though You know, this is a global pandemic and and the death toll is rising Or be it somewhat dissipating as some of those spots like Spain, for example, or Italy They fail to come to an agreement and obviously markets have seen that as quite a negative in the short term Just given the circumstances that you're just bump lower Just broke through its late Asia Pacific low and boons have caught a bit of a bid on the back of that as well So that's the euro side of things That has meant that the Dixie generally a little bit stronger on some of that euro depreciation so cable also has just bumped back down to a test around its pivot, which was as you can see there The low that we're seeing yesterday afternoon Otherwise elsewhere equity markets I think a really interesting move yesterday from an equity perspective in the US indices because we were initially Rallying quite hard and then we saw one of the biggest reversals that we've seen from a percentage basis We were up quite sharply But then we saw around a 4% reversal from into the close and then even some more some selling into the Asia Pacific session We haven't seen that type of reversal during a one session period since the financial crisis in 2008 So I actually think and I will go into the charts shortly That's quite a meaningful signal now about this kind of you know this idea about a kind of a bear market rally And so on there's some graphs. I want to show you Otherwise oil prices took a big slide last night came on the back of again more Concerns about our OPEC really able to deliver on this promise We have seen some recovery overnight did have API inventories another sizeable build That came out there just adding on to the large stockpiles that we were seeing Last week just given the still mammoth amount supply the US producing but the real immediate lack of demand Given COVID-19 So yeah, let's go through some headlines and let's talk about a few different things now And I'll try and keep this as concise as possible because there's quite a few different elements That I want to mention and first of all is this is the update on the the coronavirus situation globally So confirmed cases now 1.43 million total deaths at 82,000 just above But the area Or a couple of areas to be mindful of this is that FT that excellent graph that they're doing at the moment Which kind of encapsulates more the visual trajectory of where we're at in terms of that The kind of the journey of the virus if you like from acceleration to plateauing to fading as of what we've seen in China So here the UK death tile yesterday was the highest It's been obviously still the worst is yet to come by most Expectations from a medical science point of view But the likes of Spain you can see continued to decrease France still kind of if anything going from plateauing to slight pick up But Italy declining But the US is the one that continues to accelerate at this point more aggressively than pretty much everyone else And the US every day brings new deaths than the last at the moment One thing though even though you know some of these signs here in say Italy and Spain are quite positive Perhaps not so much in the case of definitely the US the UK and France, but one thing I'm looking at and I think it's quite a Symbolic thing that's happening today not that I think that it's going to Create today specifically a meaningful move in markets But I think it definitely could do in the coming days or weeks and that is the fact that Wuhan has relaxed relaxed It's two months long lockdown remember we had the Lunar New Year holiday beginning a year They've been locked down ever since and this is a city of you know over 11 million people So more than 50,000 people have believed who have already bought rail tickets to other cities Flights are resuming from international airports So this is the the first kind of meaningful relaxation there in what had been very stringent Quarantine measures in that particular city and province in China But here what I'm showing you is a it's obviously a map of China So Hubei province where Wuhan is situated is here You can see it's kind of west if you like directly from Shanghai Which is obviously on the coast on the east China Sea if you go up to the north Here there's an area called Heilong Xiang I'm sure I've and pronounce that incorrectly, but just roll with me But this is the one of the furthest northeastern Provinces within China and you can see here it has a land border with Russia and Actually, this province has gone into lockdown They've stopped now movement of their resident residents amid concerns of a second wave of infections in mainland China Now what they're suggesting here predominantly is that it's the passage of Movement of people coming in from Russia into China that has caused it whether that's the case or not Who knows but the idea here and the reason why I think symbolically is very important milestone for China's journey about whether or not we see a second wave of infections in the relaxation now of Wuhan and Hubei province people can now move freely around the country again and That for me is not a worry But potentially could be and so I think now we need to start tracking What's going on there once again? This was a good graphic that I saw JP Morgan in a research note that they had released and they were looking at the conceptual global and Infection curve and I think this is you know I think it's quite a simplistic way to think about the virus just hitting Plateau and going I don't think in reality that that's what will happen This I think is much more reflective of the the true sense of the journey that will get into defeating this virus until the nth degree and that is That the ultimate curve end is going to be quite a lengthy Journey because generally speaking I think when you do relax these measures people will get Reinfected then there ultimately will be a second wave the question is well How big does that become and then how infectious does it then spread as the further areas into a pandemic? I'm sure They would be in China allowed to move around their own domestic country But very unlikely it can be allowed into anywhere else basically globally particularly into the Western world But here what you're looking at is that every every wave that comes there after the first Basically gets ever more smaller as immunity levels from her perspective start to pick up until then We actually hit enough time has lapsed that in kind of medical science a vaccine is developed And is able to be distributed and deployed to get to that point and obviously the other things that pick up over time that create more shallow Kind of ways is not only the idea that the immunity effect from from communities is getting is getting larger But you've also got this idea then that you know general government responses measures People's responsiveness to be able to adhere to certain rules people are just more conscious of this so they can act more appropriately as well So but yeah, this this is what I'm kind of looking at and obviously this does bring Somewhat of a tail risk then to to this orange line which has been moving Lower really for a for quite a period of time and does that start to move back up and that this Severity or not that does occur. I think then would reshape what investors think then given how far ahead they are in Europe Okay, Europe's plateauing in some areas Well, this is just the first of several phases to come and if that China one does ramp up quite sharply Well, people are going to panic about what that means then on top of the already negatively priced economic implications That COVID-19 is going to have so yeah, I just wanted to cover that To go over that because I think it is important and that graphic I'll tweet this after the briefing if you want to check it out my Twitter handles there This was this was an interesting graphic that I saw and I guess before I go into that Let me just bring up the S&P 500 from yesterday because I was I was doing a couple of tweets and talking about a couple of equity Charts yesterday and this is what I was looking at this is the S&P 500 and Couple things I've got here I guess the death cross not so important anymore because we've already Gone through that at the back end about a week ago or so now So it's going to less irrelevant for the moment But certainly the the shorter dated moving average remains quite significantly below the longer dated Here you've got a fib from the all-time high to the March 23rd low Obviously got the aggressive bounce that we saw on the the Fed action and the kind of humongous US stimulus package that got got passed But really what I was more interested in yesterday when we were delivering this briefing was the end of March highs Which did line up with that fib 382 level and we managed to close above there Not yesterday day before and I felt quite bullish at that point because but this time yesterday we were talking about just general Plateauing of quite a number of the hot spots for the coronavirus And then having technically got above these levels just with a bit of wind behind the sail remember We were we're rallying yesterday to start the day I did feel quite bullish that we'd get through 2700 and we had an overall target here on the desk at March June 19 lows Which you can see here this double bottom That acted as great support during the the kind of Q1 and Q2 period of that year And we pretty much got there just above it before then we started to pull back and it's that pullback Which a lot of people are questioning You know if you actually look at it here Well, this is you can see I've got a markup here when the coronavirus cases were improved This is the rally that we had going all the way up to really the open on Wall Street We had a little wobble at the opening bell recovered that but then soon as Europe went home We then saw what was you know a decent pullback of you know, we're talking about three four percent if we're encapsulating as well the The Asia Pacific session now one of the things that I wanted to show you was this and because I think this Fits within certainly my view although my equity markets have been rallying quite aggressively of late And a lot of people are talking about while these exceptional measures that the Federal Reserve are doing We're just buying every asset that they can get their hands on fiscal stimulus You know, we've had another headline come out overnight about another 250 billion the US government want to do for small businesses You know on top of the two trillion that we saw past not so long ago But I have felt that this rally is a bear market rally and what I mean by that is what I'm showing you here And typically then there are three phases to a to a bear market rally Phase one as you can see here. So let's what we've got here are two different things You've got the orange line is the 2000 to 2003 bear market So you're kind of talking about the comm kind of bubble era did what you've had 9-11 as well during this era And then I'm talking about the financial crisis Which is the purple line and then you've got the 2020 bear market, which is this more solid blue line Which is where we're at at the moment So the movement you could say in 2020 a little bit more pronounced and what we've seen in these other occasions certainly of You know a really powerful rally on the upside and then a huge selloff that we have had But we're starting with a much higher base. Don't forget the S&P and Dower trading at these all-time high levels and multiples are way more extreme Than what we were trading 20 years ago. So I would expect a larger range here In that respect from a points point of view. So here though, what's interesting is phase one Bear markets often start with a sharp and swift decline and you've seen that here and you can see that with those other occasions Let's just focus on the financial crisis as a comparison Then you go into phase two now phase two relatively small But what you can see here is quite a big rally actually You know, you can see here on these other previous two historical occasions The market has come back up and really bullish over that period and if you look at 2012 by comparison's sake I mean looking at a proportionate of the selloff to what's been recovered there We've probably still got you know, if anything a little bit more to go but ultimately phase You know, why does it rally for a start? Well after such a large decline There's kind of this nature of it being oversold as a perception and so retraces part of that only then for phase three to Kick in and phase three is the long-term decline that then continues thereafter at a slower more grinding pace as the Fundamentals start to deteriorate. Remember the macroeconomic fundamentals are almost lagging in a sense Kind of like with that jobs data. We've been seeing from a payrolls perspective. It's lagging the jobless Which is weekly But then going forward we're going to see absolutely Catastrophic figures in unemployment rates in PMI data in manufacturing activity Well, particularly this hard data, you know things like GDP for Q2 is going to be a Absolute, you know Historical moment because it's going to be by far the singular largest contraction that we've ever seen and so Yeah, I mean despite some of the upward moves that we've had. I mean, I do certainly have that view that you know Whether this is the tipping point. I Actually think it is I think I think yesterday was very meaningful in terms of the the fact that the market Stuff was so bullish and then saw such a such a decent pullback And as I said that type of pullback in its intraday session hasn't happened in the best part of about 12 years And so, you know, have we hit the tip now of phase 2 and phase 3 now commences If it hasn't happened now, I do think it is coming in the next week or two And certainly with US numbers still in terms of the COVID-19 numbers in America Not yet peaking and we haven't we're not going to get to that peak for about another one or two weeks You know, could that be then the tipping point? We shall see of course Okay, a few other things to mention oil obviously oil is So interesting at the moment. I showed you the graph earlier. We've been see saw price movement and we're not talking about small moves either You know, we if you take the actual High to where we were I mean, let's just quickly quickly show you the graphic here or the graph I should say so here's where we were when we finished on Friday and where we were at the low from Yesterday evening we're down almost 20% so after rallying you can see this was the initial talk from Trump that came last week on what Thursday when he was talking up about a 10 million coordinated cut Possibly 15 Saudis were on board. We're all rallying into this OPEC meeting that was supposed to happen on Monday And then oh it hasn't happened yet And now people getting a little bit nervous about will it happen, you know This is this is the idea now about the management of expectations markets Expectations are high that they have to deliver and now people are getting a little nervous and you can see that what was an actual You know historic gain in oil over such a short period of some 35% We're now only up about 11% from where we we trade as of right now this morning. So what is going on? Let's have a quick look so I'm going to walk you through a few different things first of all Saudi Arabia and Russia Are said to be hammering out and I'm going to leave this one here as a graphic that you can just look at while I'm talking Saudi Arabia and Russia are hammering out an agreement that the delegates said will reduce global output by around 10 million barrels per day Some form of cooperation from the US who is obviously the world's largest producer is said to be necessary In order for them to agree to any type of action according to these delegates President Trump said on Fox News last night That he talked with Saudi Russian leaders and that he expected them to work something out So typical kind of classic Trump. He's not really saying anything He's just sort of saying They're talking they're in dialogue, but there's no details and this is somewhat What's disappointing the market at this point that they haven't come to something more conclusive already? You know because the clock is ticking in that respect and deadline that markets have assigned this now Is this teleconference call is happening tomorrow? But that then leads on to the G20 meeting of energy ministers now Why is the G20 meeting of energy ministers important normally? It really wouldn't be it would all be down to the OPEC plus meeting As they have the overall predominant control of oil, but remember this is a pandemic There's been a catastrophic drop in demand for crude which is saw prices crashed to at one point south of $20 barrel So what needs to happen here is not just a Saudi Russia and with OPEC name type of reaction This needs to be a global coordinated response of all oil Producing countries that does include not just the US, but includes Canada includes the UK includes Brazil includes Norway All these different countries need to be involved But this is when then particularly the G20 energy ministers have to be part of this deal now one thing that was muted in the Wall Street Journal sources yesterday, which I think is very important point if you're trading this type of information going forward today Tomorrow and so on is what are the what are the variations the different scenarios of what could happen here now on that point? I did do a Tweet about basically I shot a video yesterday It's about 20 minutes long where I mean you can see it here I go through you know what's been driving fundamentally the headlines behind the the kind of shifts and volatility in oil I explained about how the news flow works if OPEC meetings. What are the expectations? What are the specific numbers associated to each individual country? What underlines then the relationship between US Saudi and Russia? What is this idea about US antitrust rules that could be broken if the US were to take part in the Discussions at the moment and then most importantly potential price targets under this variety of different outcome That we could see now. This is a type of thing that I update fairly regularly I'll be doing this probably at least three or four times a week and it all goes into a lesson Now this isn't publicly available This is what I publish amongst other members of the team on the Applify now portal which is our This is our kind of on-demand On-line fully course that you can do but in addition to just teaching you about how we as a global macro firm View analyze and trade markets. So it gives you the full kind of all the different asset classes Technical analysis psychology trading the news That one of the things that we've added in there's an addition on this is a Chactical macro now well, I'll do these types of one-off Insights into these these types of market-driven events from a fundamental perspective So you can see here live recording of the jobless numbers Charlie track coronavirus efficiently and then Sam North who you're probably familiar with He used to do the videos with me before the quarantining He does his daily trade setups where he reviews the European session every day and puts out his his outlook for the From a technical perspective for the day ahead So particularly good if you're swing trading medium to medium term trading as well So yeah, that's all on the Applify now Portal it's a subscription portal But as I say not only do you get access now to a kind of the best of our knowledge and content in terms of a structured course Which is a certified diploma level status But you also get now this rolling content that we're updating every day on these key Fundamental issues as well as trade setups I'll drop a link in the video for those interested But one of the things I was Suggesting to people yesterday with were two things. I guess I can share here on the briefing and one is who to follow for timely and Timely release of news and rumors as well as decent analysis that's going to help you Fundamentally understand what's going on So if you did want to have a look here's a list of you know Perhaps 10 11 people that I think if you are trading oil or at least if you need to monitor these OPEC meetings These are all the people that I think you need to plug in to your tweet deck in order to monitor it all in real time quite a Different combination of different people So check that out but the other thing that the Wall Street Journal was saying yesterday and I think this is an important point if you're trading this type of event is What are the scenarios and one of the scenarios is if they did cut 10 million Well, what the 10 million look like because what if you saw a headline come down the kind of tape and it said the Non-Saudi Gulf nations cumulatively are going to cut 2.5 million now at this point in time What does that mean to you to me? That's a deeper cut from non-Saudi Gulf Countries as a whole then what's currently used as a reference point which is the journal sources, which is 1.5 million So if they're going to 2.5 million that would mean that probably extrapolate that out across then Saudi Russia US Canada Brazil these types of countries you're probably looking at a number bigger than 10 million But this is what I mean about people's abilities to be able to trade the news you can only trade the news if you have that lateral kind of depth of Retention of numbers of what is actually happening at the moment. You've got that Ability to know with every piece of news. What is the what is the the kind of expectation value? How is the market priced? What is going to be able to move this asset price? And that's how I look at markets and why I'm able to do the kind of job that I do is because I'm always thinking in that in that way, so hopefully that's useful as a There's a bit of an insight so to speak, but just running you through the final few headlines and I'll wrap things up I did mention this briefly earlier, but just to go over once again the Trump administration of our Congress for an additional $250 billion in emergency economic aid for small US businesses Again really hitting at where they need to help in terms of their funding because it's those businesses Which are going to really fill the pain of this this current situation and potentially then also to help Offset what is already a bad in the in the period to come unemployment situation The other things were you've got the feds coming out with their minutes later on this evening I don't think it's going to be a big deal to be honest because I think it's quite old the Fed have been very Reactive and done a lot since the time that minutes came out They are talking about you know Royce's a little bit sensational They're talking about the frenzied policy response because you remember this is when the Fed slashed rates to zero This is when they restarted QE. They were saying that other central banks The broadening their access to US dollar funding and all these different types of things. So it'll certainly be a Quite a historic account of a meeting from a Federal Reserve history sense But as far as market moving, I don't think it's going to be too too much to be honest And then this was another thing the Aussie perhaps a touch-softer overnight Australia's coveted AAA credit rating has come under threat overnight as the country's parliament returned to pass an emergency 80 billion US dollar stimulus package, but obviously as we've seen with the likes of the UK quite recently The more debt burden they have the lower quality their sovereignty becomes albeit, you know Australia still up there near the near the AAA ranking and it's only their outlook which got changed to negative from stable at this point in time Calendar wise for today. What have we got? Let me just shift this over so you can see so we have had Not too much so far coming out this afternoon It's relatively quiet to be honest You've got the oil infantry's in the afternoon and then the FMC minutes coming on later on this evening So we're gonna leave it at that any questions as per normal Just feel free to to leave a comment I do respond to them throughout the day absolutely happy to help and just remember to subscribe to the channel as well Alright guys. Have a good day, and I'll see you tomorrow