 Okay, very good morning to everyone Monday the 9th of March. I've had a good weekend and obviously I turn on the briefing this morning And we're in for a big session ahead if not already have seen this last night where oil prices have collapsed South of $30 a move of 30 odd percent US stock futures are still limit down at the time of me broadcasting this That being from a points point of view in the Dow future. It's just short of 1300 points The S&P down 145 IE 5% so Yeah, really big moves predominantly two factors one the reasoning behind the oil price which we're going to discuss Which you can see here the actual overnight move Is the largest that we've seen since? Since 1991 Gulf War when price battle has erupted that being between Saudi and Russia Which I'm going to go into in a bit more detail shortly, but the other thing of course is the coronavirus Still a kind of clear and present danger for markets as it continues to spread Kind of globally and some updates there that I'm going to go through as well then I'll hand you over to Sam to look at the charts in more detail, but just to kind of Quantify what this looks like from a cross-asset class perspective So you can see here. I've put the three major US indices from left to right down nasdaq and E-mini S&P or on limit down at the moment if you're new to that type of terminology I will explain that as well shortly but that's led to a kind of traditional flights of quality bid at least into US t-notes the t-note is up Two points and four and a half ticks already. I can't really remember much beyond 2008 2009 the last time I've seen that in the US 10 year in an overnight session You know, that's a that's a huge move and so we're trading at 140 So US yields down at record levels once again gold actually did move higher in the overnight session However as per what it's been doing kind of the last real two Fridays We've seen some really whips or price action similar thing happening during the Asia Pacific session It did sell off quite violently More than 40 bucks. However has recovered again. So, you know, one of the main things to put out there today I think if you are a new trader or let's say lesser experienced as much as You know, you could see all the headlines and the drama unfolding. It's a very dangerous Markets trade if you're not kind of refined in an ability to manage your risk Execute in the right fashion and pick your moments correctly It can be quite devastating from a from a trading point of view So all I would say is all of these episodes like we had in the last two weeks are fantastic learning Situation so if that is you and you fit within that category, you know Then don't feel a kind of necessary Necessity to really just jump in the market quite blindly Because as you've seen like with what I've just described with gold. It's incredibly volatile at the moment And so yeah a few things Sam's gonna point out some levels because those who are experienced then this is kind of a Kind of a real Challenge, but certainly an interesting one or one there are Opportunities and so let's just run through a few different things. I'm gonna kick off with oil Starting with the oil chart here because just add some perspective to what we're looking at and this is looking at the Well, let's put it on a daily So what you can see here is I've put a rectangle where we've had the gap down and obviously this really this move began on Friday We had a real collapse in prices I think the move was in excess of 10% and we broke through that key area Which was the low point that we had at the end of 2018 and obviously all eyes and ears were on that OPEC meeting and in Summary as we were kind of calling for midweek last week We were quite bearish on the outcome of what we thought would happen at that OPEC plus meeting and almost felt like Saudi Heard set themselves up for failure by being so bold with this calling of a one and a half million Borrowed per day cut because once you put numbers like that on the table and the market now expects Not only did they not agree to cut that amount The Wall Street consensus was though for a cut of 750, but in the end it was a complete breakdown Is what we saw and actually then what this has led to is Over the weekend. There's been an FT article and according to people familiar with the matter the Saudi Arabia Strategy now is to punish Russia for this episode They're going to start Increasing their oil production. They roughly produce around nine million at the moment. They've said that in a month's time They're gonna wrap that up to ten million and then followed to eleven million whilst also providing all new customers with a 20% discount just to get at the Russians and also the US shale industry. So this is I Mean I really struggled to see the sense behind this move. It's almost like pure anger and revenge That they're trying to put out there to to counteract then what's happened at the end of last week But this is what's caused this You know catastrophic fall in oil prices because you know, this now is an all-out price war And hence those kind of headlines that has erupted and not only this against the Russians But how are the Americans going to respond to this? Donald Trump hasn't really said too much as yet about the economy But if you think about it think about oil prices down at these levels and what that means for a number of the big oil majors now most Oil majors in America generally need oil to trade at around a forty dollar or so Price point as an absolute minimum if you think about it US oil production has has grown almost exponentially over the last few years a combination then of the kind of the Trump administration's view about greater oil Independency the ability to export oil with the rule change that happened a few years ago But also the ability to be at a frack more aggressively given the lack of real Environmental focus from the existing administration and that's meant that all these oil companies in order to take Advantage of this huge rise in ability to sell oil to foreign shores has meant that they've borrowed a lot of money So the problem that you have here, of course is then and the thing to watch today Is these oil firms are going to get really hurt? Particularly kind of the less matured ones of a smaller size of a lower credit rating They're the ones that are going to really fill the pain and going to be at risk of bankruptcy It's probably going to lead to a real slashing of dividends the question mark being can they cover their debt payments with their Available free cash flow or not and some are just not going to not going to make it when oil is trading down at these levels now This is all prompted by what Saudi have done and what Russia have done So how is Trump going to react is quite key here because if you think about it if these oil firms start going out of business Well, that means the unemployment rate It's going to start ticking up the equity markets collapsing This is not what Trump needs or wants in a year of which he is campaigning to try and secure a second term when he's pinned Such kind of hopes on to validate his success of his policies on these types of more Binary metrics that we measure in the economy. So yeah looking at oil here. You can see where before Trump has been vocal to kind of verbally intervene at around this level at $42 But we are way below that at the moment a good $11 below that level if we look at oil on a monthly chart This does bring into play a really interesting level and that is on the I'm looking at a monthly candlestick now And this is 26 bucks 26 bucks is what we printed back in Feb of 16 And there's a there's a chart I wanted to share with you which is this one here I've taken a snapshot here of The price of crude oil going back in 2014 2015 2016 Now in 2014 generally oil prices were trading north of 100 bucks was quite common However during this period, this is where I guess the shale industry in America was much more in its infancy But was increasing quite quickly and there came a choice from OPEC chiefly led by Saudi Arabia Of course was does OPEC now cut production in order to offset then the pressure of an oversupplying nature of a market with the U.S Bringing more online and this is the the main Annotation here is in the top center on the 27th of November of 2014 Basically OPEC took the step where they decided to keep output steady despite that supply cut their main Kind of core of their strategy was well look we'll just flood the market and we will we will kill off this This us shell industry which at that point the break-even price was much higher than where it is today in 2019 2020 Now what happened there was The it did have a degree of impact the number of operational rigs in America decreased quite substantially But what they underestimated was the flexibility of that industry in North America to withstand and weather this storm And what happened was is that the efficiency on these individual sites was way better than what it was and so a real a real policy mistake from OPEC and this then also fell in step with the same situation where China's economy Started to see a continuous downturn with risks of a hard landing. It almost sounds reminiscent Right now of the same thing given the Chinese The coronavirus impact on the Chinese economy and the significant impact that has obviously on consumption for oil So here just to give you some context between OPEC really making that decision Around when that came we were going kind of around the hundred dollar price level and actually when we got to 2016 I think it was February of 2016 We got here to that chart which I just showed you on the monthly which was 26 dollars now overnight in WTI crude We printed 27 34 So we're in a whisker of that price level already But you know these are long-standing really important levels on a much higher time frame You can see that twenty six dollars where it's acted on Time look if we go back to looking at crude oil since the mid 1980s that level around 26 is key So I guess what a lot of people are going to be looking at here potentially from a from a medium term or portfolio Positioning point of view, you know, could there be some good opportunity here for a long Question I've been asking myself But you know when the market's moving with such flux at the moment I think sure if you're thinking about a more long-term cash position and Unleveraged nature than the trading a derivative then then sure you would say that oil is not going to stay down in the 20s for long But from a trading point of view, I think you know listen into Sam and the technicals in a day You're going to be quite key, but when the markets reopen later Keep an eye on Wall Street because the likes of BP in the footsie down 27% this morning and you're likely to see that type of price movement when the US open later The question being then is as I said, what is what is Trump got to say about this because he is not going to be happy and Think about the already sensitive Relationships that he has in the Middle East with the likes of Saudi Arabia the sanctions on Iran You know what is going to be the outcome here because he cannot allow for these North American companies to come out of business So something's got to happen And how does he put the pressure on Saudi and attention that relationship and then equally so with Russia and Vladimir Putin? All right, the other thing of course that is impacting all is the coronavirus but before I get there I thought I'd just finish off the oil chat with this one Bank note has come out of Goldman Sachs Overnight and they've basically said That they see oil going into the 20s Their prognosis for the oil market is even more dire than that period that I spoke to about in 2014 Where the price war last started it comes ahead with a significant collapse in oil demand due to the coronavirus as we've discussed So everyone's as we kind of saw last week getting more and more bearish on this situation Talking of the coronavirus it's obviously is the other the big topic and this isn't just a global response with the sell-off That we've had in the flight to quality bid on just oil It also comes as we've seen a greater expansion of the numbers globally of the total confirmed cases and deaths of coronavirus and We've known this for some time the movement came what two weeks ago when it moved out of the boundary of mainland China into likes of Italy, Iran and South Korea, but in my mind we've moved on now into a third phase that is Spooking markets and that is the fact that the number of confirmed cases in Italy now is north of 7,000 France and Germany is now above 1,000 and these are areas of course where you know any type of quarantine nature would have huge ramifications then for eurozone Global growth and then similarly expanding that out and to include the UK North America the global economy Outside that of the impact. We've already kind of seen in that of mainland China so another key thing here is Italy and not sure if you read it at the weekend, but basically over the weekend Italy have taken the unprecedented step of quarantining 16 million people In the region of Lombardy including the capital Milan Palmer, Medina, Venice all these cities have been put on lockdown in a national emergency expected to last at least a month and So anything where that includes major public spaces Maybe infrastructure related to travel as all we put on lockdown and this is obviously going to have a huge consequence on the Italian Economy and so much so that we've already seen this morning That the Italian deputy economy minister started talking about the government considering extending the DAX the tax moratorium Talking about state guarantee scheme for banks, you know They could be a real risk of a collapse which could have a systemic impact on their system So now it's you know, there was this big talking point before about will governments step up to the plate? And provide fiscal to complement the monetary stimulus. I'm afraid now. They don't have an alternative They have to so, you know, when I was looking at things like the UK budget and was there any preparation I needed to kind of Convey to you guys well quite frankly there isn't because all the detail that there might be it's all been Overshadowed now about how is the government going to counteract the inevitability of the fact that probably The UK is going to experience similar quarantine type measures I don't really think it's too much of a question if but probably more when In certain parts of the country So this is what spooking the market remember these things don't need to happen in a material fashion Just the risk that we think that they're going to happen is what we're seeing in front of us in our screens this morning That in addition to the OPEC plus meeting and the fallout in this price war that's now erupted has caused This quite large Scale of volatility that we've had all right a few other things Quick look at this. I'm going to share this link into the chat and I'll also put it on the video on YouTube But I post it Obviously in the daylight today I get a lot of questions about limit downs because for a lot of new traders They never really have heard of this terminology But if you look here at the S&P 500 you can see the overnight price action And you can see this kind of flatlining on my candlesticks here I'm looking on 30-minute candles and you can see the same thing as replicating on both the Nasdaq and the down And what that means is this market has hit limit down so overnight in Globeck's Electronic trade which opened last night. Remember US clocks have changed so the time differential between London and the US is shortened For the sessions ahead and what this has meant then is that the reopening of electronic trade So outside of floor trading hours markets can only move a maximum of five percent Now what happens then once we go into Wall Street cash equity trading hours So in Chicago, that would be 830 New York 930 then what happens is that these price limits then kick in and Correspond to the for following three levels of price halts 7% 13% and 20% and So what you can do is when you're on this link if you click on this button here view price limits It then opens up this page where Obviously, I'm not interested in Bitcoin futures here where it defaults to but if you scroll down You can type in equity limits and then just type in which other index that you're interested in looking at And so here the S&P 500 and it will pre calculate then ahead of the open Well, what is the specific level for each index future? You are trading where the limit halt would kick in if that makes sense And you can see all the corresponding numbers depending on what contract you're looking at So we'll go over all of that again ahead of the US open because it's going to be particularly relevant for that session ahead Final few things on that fiscal stimulus front. This was on Bloomberg this morning So I thought I'd just quickly cover the Trump administration is drafting measures to blunt the economic fallout from coronavirus And help to slow the spread across the US Including a temporary expansion of paid sick leave and possible help for companies facing disruption from the outbreak according to people Familiar with the matter still yet though to hear definitive detail coming out of the US President I am sure he's going to be vocal though on issues such as this and Also specifically on the price of oil much later on today I think his his strategists are probably just thinking about the game plan right now and hence the reason he's held off So far, but it is coming and it is going to be quite interesting and important for what he has to say The other thing on this side is the central banks. You've got the ECB later this week on Thursday And at the end of last week, I actually thought the ECB might hold off just giving their limits Relative limited room for maneuver on their policy options. However, again, I think they don't have a choice now And I think they'll cut the rates again by a further 10 basis points I think they'll look at targeted liquidity Injections to help promote and stimulate what can be quite Tight liquidity situations in markets like we've seen in various episodes in the repo market in the US And then also they unveil their latest Macro-economic staff projections of which I'd be anticipating downgrades I don't think it'd be unsurprising at all to the likes of growth for sure and probably a slight tweak to inflation as well, so I Mean that is pretty much it just as a reminder obviously every Sunday. I do write a piece Called the macro menu, which I'm just going to put the link into the chat now And this has the full calendar of the week ahead And so if you do want to see all the data points speaker events and so on you can refer to that And it also has a summary of some of the things that I've spoken about in this briefing It will be updated with this video as well shortly after All right, that's it from me. I'm going to hand you over to Sam. Let's hear what he's got to say And I wish you a good day ahead. Thanks very much Yeah, hi guys. Good morning What an evening last night and obviously morning now start off with a bit of oil We'll get some of those longer-term levels up I was just having a look at the the spot market for oil and that load From 2016 the double bottom on the spot has been here and hence why We've had a decent recovery from then so I'm just going to put this on to the weekly time frame Let's just drag this over and move it up and you can see as well here in the future as well We did have a little bit more to go on the spot. It did hit those levels So certainly when we if I should say we have any further Movement to the downside just keep an eye on your spot charts as well because obviously that Did offer a good level of support Below there certainly on below the low of the day and the futures be aware of around $26 $26.09 I think to be precise the low that we did get back there in February and January 2016 below there and and yeah that $20 can look to come through there are quite a few lows as well Which I'll put into the chat later worth having these marked up going back to the beginning of the millennium For oil the way it's it bounced from that low. It's already up. Well for bucks or so Just I suppose resistance levels It's going to be tricky today because of how a liquid the markets going to be at each price I'm sure the volatility is going to be a lot higher But here is one just where we're trading now You can see we have been a bit of support and now a bit of resistance and we're already 20 20 cent below that point Is there much point in the pivots on no not really if we were to get back up towards there There's you know something that's most likely come out, but you can see a decent push Higher here in oil from those lows, but still massively down for for the day and Yeah, I mean where we finished Friday 42 You know almost $10 down to where we're trading now and a half But yeah resistance levels, you know that's something I've been looking and I looking for I think if we were to get back below 30 bucks, then you might see a continuation of this move to the downside S&P I was just having a look next door and We're we're at levels Well, so we'll see what happens once we open again, but we're levels traded back in August last year Which sounds crazy really doesn't it you say we're you know come down all this way from the old town highs But we're only where we were August 2019 which is insane is there more to come you'd have to be of the bias that there should be but that Does not mean once it starts over that you click sell You know and with the the speed of these these movements as they're going to come through You do it, of course, you know not want to be going in full size because it could be over very quickly Seen tweets, you know send these this is the potential to be the hardest day of people's trading careers So if you know experienced traders are saying that take take note Above where we are trading I would obviously keep an eye on those lows that we had from From Friday, but also if we just scaled back down here around the low that we had from the previous week on the 28th But fed which was also the second of October low So I'll be keeping a watch on there for opportunity if we were to find some strong resistance That could be an opportunity to then get short back down towards these lows It might not however give that opportunity and then it's just worth marking up some of these levels that we did have from Beginning of August after that Chinese devaluation and then may as well. So yeah, it could be that You know we get down towards these levels some point soon But predicting how it's going to do that is not going to be easy Just mark up your key levels wait for whatever confirmation you want if you want to get in and I would go smaller size Because these moves will definitely resemble your your normal size through there the backs, which is currently Open at the moment. You've got a nice resistance level that I'll be keeping an eye on here at 10804 I like it I think it's a good point that could be an area where people would look at the looking back to to get in To go short. So one two three break through this have a look see how that holds up I think if we were to you know five minute close below there or hit some nice resistance Then that could be something that I would like to look of above there Then you know these markets are not going to hang about they could really push on and you know next week It's 80 points up and you're on the low that we had from around six o'clock and you don't want it You wanted to success before every trade when you're going to be wrong and you know that happens move on go for a walk Last thing you want to be doing is getting in and out these markets getting involved in that chop Which is going to be there for sure Currently well this I'm gonna start which is probably the first time I've ever started with this Currently the Kiwi which you can see had a flash crash overnight across every single pair around 145 insane move lower That's the lowest it's been I'm gonna put this onto a weekly chart for that reason that is the lowest we've been since May 2009 so an insane move there for the Kiwi and it's almost reversal all of that As an opportunity goes though, you know across the board for those Kiwi pairs once you do get a bit reversal or more of a reversal to Where that started? I think that could be a good opportunity for a short So that's certainly something that I'm gonna be keeping an eye on the euro Push higher as well. I know where it looks nice here on this Low that we had overnight bit of a trend Yes, we had a little false break early at 6 a.m I like the idea that if we break through that to get you know potentially the gap fill to be honest That's something I'm high enough I know that's going against the recent trend of this market from those lows and how insane that is up to 115 in early trade this morning or so levels Not seen since March last year, so pretty pretty crazy there But yeah in terms of the euro I like the idea that if this trend line breaks to get a short to go for that move lower And the pound you can see also benefiting from safe Haven moves Which is also a bit a bit unusual, but that's just coming down a bit as the dollar just tries to recover a touch This is the highest the pound has been since earlier this year early in Feb late late January And I'm very regret not getting long on that 14th of October long high even more now But so yeah up to 132 keep a watch on that I do like the look if we can come back to 130 79 about 70 ticked away from here because the highs we had before 1113th of Feb I Think the way I'd be looking at all different currencies and let's have a critic over at the yen is Identify your levels and if they don't come there that doesn't mean you know You want to go chasing and look for other opportunities put that that plan and preparation in because You get involved. I mean just look how big these ranges are so a lot of what happens is going to be chopped between All of those points So yeah identify your areas you're interested in it and go from there similar trend here in the yen This is the yen against the dollar So if that was to break through you could see something similar in the euro and we start to push down Quite like these areas here the high that we had in late trade yesterday when I'm on the open That could be an interesting point But the end is testing that trend line there and the euro as well So keep a watch on that because I do like the idea if we can get a nice five minute close below This could lead to a further move lower gold up to 1700 earlier on But we're down 30 cent $30 I should say since then Which is a bit worrying you would be expecting gold to Really have pushed on and at the moment. It's completely right now flat from from where we opened up and Especially once maybe us actually is open up It'll be the interest to see what happens here the the the worrying thing of it not being a bit higher means maybe we are Gonna have to come a bit lower first here. We draw that up. That's the highest we've been since December 2012 Yeah, I guess through their 1750 would be a point of interest But before that 1720 just because we had some resistance in 2012 December, which is insane to be even looking at levels Like that, but if the dollar does strengthen a bit euro come lower Break of that trend perhaps gold as well to follow suit and the end to come off a bit. I Don't know whether that's the safest play it might be that you just waiting for to you know good Get long gold a bit lower down nothing really wrong with that In in in the morning, you know remember Monday as well It's always gonna be tricky let alone the fact that we've just had the you know, the craziest open I hope we've seen in a long time keeping an eye here on the Daxus to wrap it up around this point of interest the low that we had around one two four o'clock before we broke through After quarter to six a quarter to seven Sorry that for me is the key first resistance that we're gonna see across equity levels Can we hold there if we do then I'd be looking for us to drift that lower above there We might get a little bit of preve and quickly as well Guys as usual any questions, please do let us know there's gonna be plenty of opportunities out there But you do not have to go chasing on a day like today be patient Size I would absolutely lower that because obviously these moves are going to be a lot bigger Than what you would have been used to