 Okay very good morning guys it is Monday 6th of July I hope you all had a fantastic weekend before I begin my kind of look ahead for the for the week Just wanted to mention on Wednesday evening as you can see here to the side of me We're holding a webinar between 5 to 6 p.m. London time and it's going to be on the importance of risk management So obviously one of the main cornerstones of any successful and consistent trading strategy So I'll be joined by the head of trading peers tomorrow other guys Alex and Sam will also be on the call, but it's an open invitation the registration link is in the description of this video It's going to be an association with aria trading who have a pretty neat software solution as well regarding specifically risk management Which I think you guys would find particularly interesting So hopefully you can join us that'll be on Wednesday. Do feel free. It'll be capped at 500 people online and via zoom So hopefully I'll see you then but let's talk about markets and what's going on and what's driving things This morning and as you can see a definite case of risk on atmosphere Equity markets overnight in China were up in excess of 4% actually was the biggest one-day Move higher in Chinese equities in a year mid-positive commentary on the market from state media and this comes after last week as well the market there domestically was up 7% The front-page editorial in the securities times basically today said that they're fostering a healthy bull market After the pandemic is now more important to the economy than ever The number of mainland commentaries and retweets containing the term bull market Over the weekend was more than 10 times the average of the past 90 days according to the bidee index So the article in itself underpinning the accelerated gains and stock market reforms and excess global liquidity was the main things that they were kind of talking about so as such You can see this feeling right through into the the kind of index futures. I mean the DAX already up Although it's off its highs. It's still up 262 points U.S. Stock futures obviously reopening after the extended weekend and despite some of the Coronavirus situation impeding some what some of the Independence Day 4th of July celebrations That very much being brushed aside, which in itself I'll talk about in more detail I think is a very important thing the way the market is now perceiving the still somewhat accelerated numbers in North American and Basically disregarding them for the time being So the NASDAQ's up about 125 the S&P up 36 In step with that then although it's bumped up a little bit as Europe has come in gold It's still down about six and a half dollars in the US 10 year down four ticks at the moment, so yeah, it's a very much reflection of that and just generally Confidence in the short term I guess over the situation and led by Asia So how long this just general risk appetite can be maintained today will be interesting to see Because this is very much a China narrative that seemingly has given the markets a bit of a boost So I think when the US starts to come in Returning from their holiday and the situation as they said on the coronavirus nationally there isn't good still The markets managed to look over that for now I'll be interested to see how it performed later on this afternoon whether we get a little bit of Profit-taking on some of the moves that have been seen overnight will be interesting In the currency markets the Dixie's actually come off considerably So it continues to be somewhat tied to general risk sentiment as a barometer almost the Dixie's actually down almost half a percent So it's a really quite an aggressive downward move seen in the overnight session So in the currency pairs in the top left euro dollar and cable both on the front foot the euro In fact, it's up about 60 pips close proximity to the high that was seen towards the back end of last week And you know on the weekly will be continuing to keep an eye on some key upside levels coming in The the weekly highs that we're seeing last two weeks both that pretty much around the same level And then that longer-term trend line going back to 2018 will be interesting for sure to watch for out throughout the week, but let's have a look at Overall some of the headline stories. There is a full technical analysis Video done by Sam that he issued on the amplify trading YouTube channel if you just scroll down to his playlist You'll be able to see that and he'll go over the charts in way more detail from a technical perspective But for me just having a look at then through the headlines. This is as I just described people were looking at the CSI 300 the kind of biggest companies in China and Reporting its most overheated since 2014 after gains continue to accelerate Brokerages reported to be talking about this kind of daily turnover topping one trillion yuan, which is very rarely seen So no, it's this kind of the most amount of activity that we've had in a long time And this is what the chart looks like it probably helps with a bit of context actually This is looking at the onset of the pandemic and you'll remember It was around the timings right at the beginning of the year because this was very much Happening the spread of the virus in mainland China before then we've kind of went into that Second and third phase of the outbreak that moved to South Korea Iran Italy and then beyond So it was happening quite early in this year and that was that first dip that we had When the market plummeted due to coronavirus it was then looked relative to contain before we saw the global spread and then the consequent Pandemic situation develop and that was when we hit that overall low And around that time going into March, but the recovery has been Awesome, just like it has been in all the other global indices, but probably even more stretched in the case of China And as I said the kind of state media kind of pumping it up a little bit and definitely the state Just naturally control over these types of things probably a lot more direct than say other Western developed nations and then continuing to pin it on stock market reforms and excess global liquidity And we've just had this real sharp Acceleration here in the last few weeks as you can see On the point actually of the what they've pinned it on the Natlata Suggestion of excess global liquidity. It was an interesting report that came out Overnight or over the weekend for JP Morgan the US Bank They were basically saying the extremely loose monetary policy will be required for a long time to support growing debt levels worldwide Boying liquidity along with global equity and bond prices So JP Morgan essentially saying this is going to further inflate The market essentially as we continue to get back on our feet economically So it kind of fits lockstep with what the Chinese state media were saying and then Some of the other things that people have been looking at is goldman's have come out with a with a research note as well over the weekend and they were talking about the fact that Essentially, they're still decent risk reward for Chinese stocks not unless US-China relations substantially deteriorate from here But what they're saying then is they're they're supporting their call for being overweight China in a regional context The stocks that appear most exposed to US-China relations are technology companies and ADRs While domestic demand focus consumption and healthcare names should be relatively immune So that makes pretty much makes sense anything tied to any exposure that could be subject to say tariffs on The kind of demand for for import export orders from China sure or anything with American related listing But when it comes to a more domestic focused narrative and companies that are dependent on that domestic story in China Then they should continue to outperform and for those interested if you were Wanting to have a look there is actually in this article You can find on Bloomberg a full name of the actual companies that tend to Underperform and also outperform the actual Chinese companies names could be quite interesting to monitor But yeah, Goldman's also they they have what they call a Kind of meter or a barometer of just generally US-China relations I know this is a bit small to look at on my screen here But I have retweeted it or tweeted it this morning if you want to click on it and have a closer look but it's an annotated Graphic going back to January 2018 when we saw the initial kind of intensification of Tensions between the two nations and that was when we were going through that kind of tit-for-tat process in 2018-19 of the ever-increasing Tariff rates But if you look where we are at the moment, I mean obviously it's been incredibly volatile relations between the two nations through much of 2019 But here after peaking in recent weeks and mid-China planning Not as we've seen now implementing the new security laws for Hong Kong things have dropped off quite substantially In fact and so in that regard they would see it from their specific measurement As being far from the peak of where the most intense tensions have have been in the past And more recently from that Hong Kong situation So yeah, I mean that pretty much sums up really the overnight moves so as I said definitely a risk-on feeling to the open but in my mind This is somewhat a continuation and perhaps I'll be proved wrong but the the driving force of what's helped futures pop up and fairly aggressively I mean the overnight session has been that Chinese story And I just wonder how how long that can last for because typically the markets at the moment are very much driven much more from the US Cut us so it's more US centric And also with the updates on the COVID situation being I think more of a focal point for Western markets than it would be for the Fari. So definitely From an underlying economic situation, I mean, I don't think that China is out of the woods yet on either There's much as some of the recent PMI data that we saw last week has continued to suggest general expansion is returning I just think with a lot of this is kind of a bit of State interventional most talking it up looking to squeeze every drop out of this kind of bull market kind of Ideology and just squeezing it up to what is By some measurements quite an overbought market when you're looking at the the CSI 300 in China at the moment Update then on the COVID situation Let's have a look at things and what are we looking at? And so I thought this was quite interesting actually as it tells quite a distinct story of what's happening globally at this present point in time in the UK we continue to see a decrease in the seven-day rolling average of new cases per million in COVID and That is a positive kind of signal because of course we've gone through the next kind of phased of reopening So if you are out and about in the UK this weekend one of the first times You can go and sit in a coffee shop have a pint of beer in the pub and so on so this is the a real key Mildstone now for getting the economy back up and running But obviously as I've said many times before the next two weeks the second half of this month will be particularly interesting to see Whether or not we start to see a Pick up again of the next kind of second wave of viruses in the UK so the UK for the moment is Is heading in the right direction? Suggestion of control Containing the virus in Europe pretty similar. It's kind of static Kind of plateauing so there hasn't been an elevated second wave despite some blips that we've seen in the likes of Germany Their country still remains in that reproductive rate. It's just slightly below that one level importantly But the two areas that have been growing quite rapidly America is obviously the one that gets the most attention Just given just their demo demographic the size of their population the number of cases is now particularly large and a lot of these states have studied to Reverse if you like the reopening process particularly on the Sun Belt so those southern states In particular The other country down here at the bottom which actual case numbers are much lower It's coming from a much lower base, but it is Australia and you can see the trajectory of the curve for Australia is incredibly steep here at the moment and What's happened here? And this was actually an underperforming market in the overnight trade was actually the Australian market The number of COVID-19 cases in Melbourne Victoria's capital has surged in recent days the state reported a hundred and twenty-seven new COVID-19 infections overnight And that is the biggest one-day spike since the pandemic has begun and it has led for the first time The border between Victoria and New South Wales has been shut in 100 years So they're taking these you know pretty unprecedented Historical steps to try and contain now the movement of people in these highly infectious areas And that is going to have of course implications on the Economic recovery of Australia are given these are quite key areas in that regard So the Australia continues to face quite challenging time at the moment UK and Europe is still relatively positive and the US continues to track in a negative fashion But at this point at a rate of which it would appear markets still are relatively comfortable with at least for the time being From a numbers point of view total cases now in the US nearing on Three million you can see here on the seven-day average. We continue to remain on a fairly steep incline. So I guess over the next Week or two we're looking for where does that plateau? And then on a state-by-state level you can see here the areas like California, Texas, Florida Which have been those key ones and do comprise of the three largest most popular states in the entire United States America case numbers generally are still rising at this point in time and and obviously from a beyond the intraday and Perhaps right here right now. This of course is going to have implications then for the political favorability of the president and this is going to be a real talking point obviously that he'll have to defend and On that note, you've had Donald Trump tweet overnight, of course New China virus cases up because of massive testing deaths are down low and steady The fake news media should report this and also that new job numbers are setting record says, you know He's hitting a lot of things here in this one tweet. He's blaming the virus You know, he calls the virus. It's the Chinese virus It's not it's not a virus is the Chinese virus again looking to disassociate that anything that he's done It's that it's his fault deaths are down and they're trying to link that to the fact that it's testing that then is Making that number look higher and then also talking about that people that the media is Biased in the fact that it's not reporting about the good things like the jobs number that we had last Thursday So it's kind of classic one-on-one Political gamesmanship going on But of course will continue to be monitoring this because as far as the bookies are concerned as far as the average pole of Poles nationally in America Biden still is the favorite by quite a clear distance at the moment So he really does need to get a handle on this and soon and when it comes to Donald Trump That probably means that you know, he's not a passive guy. He's going to be out there being assertive and the aggressor So much more from him to come this week. I'm sure Looking at the actual calendar for this week. It is it is pretty quiet. It's not a great deal going on here And as far as today's concern, you have had some German numbers come out this morning German industrial orders a month a month 10.4 percent, which was slightly weaker than expected But no real impact for markets here You have got this afternoon the ISM non manufacturing So this was the quite unusual quirk given the holiday short week last week Was that normally we would look at something like this ISM figure for the employment component to gauge them better the employment Situation ahead of the labor report on payrolls, but we're actually seeing this after so How important this is? Yeah, I mean, it's worth monitoring I don't think it's going to be a massive game changer to be quite honest But the ISM normally factoring number is expected to move back into expansionary territory Above 50 from its previous 45.4, which in itself should be quite meaningful But again, how long that this can be sustained given perhaps confidence will start to be Dented given the Repickup that we've seen or re-acceleration in a number of these key states in America and the COVID-19 situation So how how much you can buy into just one month reading given that we know in the here and now things are changing quite fluidly I'm not so sure other than that is pretty quiet Tuesday Equally so overnight though by this time tomorrow will have the latest RBA Interest rate announcement rates are expected to remain as they are Going into Wednesday and Thursday again very quiet trade balance data coming out Germany on the latter on a Friday we get Again pretty quiet nothing really major coming out of the US and some Japanese inflation linked data and Italian sovereign debt update coming out from Fitch and Then also the other thing to look out for this week is the the recommencement Of course, I believe it's in London this week is the trade Negotiations or the trade pack or Brexit between that of the UK and Europe But no really massive headlines I'd say on that regard so far seen over the weekend UK national press So that is it. I'm going to leave you with that Hopefully then you can join me on Wednesday The link to register for this free webinar will be in the description of the video if you're watching this on YouTube So just go ahead and register you'll get an alert then when we do go live and a reminder at the time But any questions just feel free to leave a comment and I will wish you a fantastic week ahead. All right Thanks very much guys