 Good morning and welcome to CMC Markets on Friday the 13th of December and this look at the week ahead for the 16th of December and this will be the last one of these for 2019 so before I get started I'd just like to wish all our clients and listeners a very merry Christmas and a happy New Year and certainly the markets got the Christmas present that they wanted because not only did we see the Conservative Party win a stonking majority in the UK election but there is also the prospect of a tariff delay to the raft of new tariffs that are due to go on Chinese goods on the 15th of December as well as the prospect of some form of phase one China-US trade deal And that has propelled markets to US markets in particular to to new record highs. We've seen the S&P 500 head towards that 3,200 area Which is the next potential target in this Long running uptrend that we've seen over the course of the last few weeks after the breakout through the 3,000 level the Dow Jones people are talking about the potential for that to go to 30,000 now whether or not that happens or not is is is another matter but the big question the big question here or the big difference here is that Two significant event risks appear to have been pushed into the background that pushed into the background Obviously a big majority for the incumbent Conservative Party makes the Unlocking of the Brexit fog of the last three years Much clearer it now seems very likely that the withdrawal agreement will go through Parliament get passed on the 31st of January and As such the Discussions will move on to the next phase and what it does do is it does move the debate on it moves the debate on to The future relationship and ultimately takes remain off the table So what happens next? We've seen a big rally in the pound We've seen the FTSE 250 hit a record high as All of the concerns about our nationalization Discount have seen all of those big stocks that would have potentially been in the firing line of a new Labour Government suddenly see an influx of new money go into them and you can see that on these charts The these two particular stocks that I picked out here Barrett developments house builders up 11 and a half percent today on the back of the result Overnight and the big majority as well as RBS also up over 10 percent for Pretty much the same reason those significantly off their highs So there's an awful lot of exuberance for markets at the moment And as a result you're seeing big gains pretty much across the board for all UK focused stocks But we also need to put a little bit of a lid on the exuberance as well because While we've managed to navigate a significant roadblock And the road seems an awful lot clearer There still remains significant obstacles going forward and if we look at that in the context of the value of the pound Which rallied hard overnight towards 135? meeting my medium-term objective of 135 and The prospect now is whether we can see further sterling gains going forward or whether or not We could see a little bit of a pullback and I think for the For the here and now I think the 135 is going to be a difficult nut to crack on The top side, but nonetheless, I think it is a significant Indicator that we could well see further sterling strength over the course of The next few months, but I think for the here and now we could see a little bit of profit-taking kick in And we could see the pound drift back from the 135 highs to around about potentially 132 20 132 30 over the course of the next few sessions It's also been a significant breakout in euro sterling, but again here We've got a massive big support level at 83 if I zoom this chart in you can see it very very clearly here This series of lows through 2016 we've held those lows on a number of occasions And as such it this is likely to be a very very key support level Over the course over the course of the next few days So if we do break below 83 Significantly below 83 then the potential for further sterling gains and euro losses is quite high But we are very very oversold so if I think for the here and now Given the losses in the euro that we've seen over the course of the past few days and weeks We may be right for a little bit of a rebound in the euro But certainly I think the sterling strength that we're likely to see over the course of The next few days could start to taper off a little bit if we're unable to move below this very key support level That I've indicated on the downside Now as we look ahead to the week ahead Obviously the China terrorist deadline has come off or looks to be coming off certainly reports The China and the US have agreed a phase one trade deal has boosted market sentiment and Reports that President Trump has signed off on this Does appear to have been Received with some reticence on the part of Chinese officials So there hasn't been any confirmation at the time of recording that the Chinese are going to buy into this nonetheless I think it will be unwise for them to push back too hard on it I always think it's better to talk than not and I would imagine that further discussions are likely to take place as we go into year end As we look ahead we've got a host of Chinese data coming out in the week ahead Chinese retail sales and industrial production And given the recent success of singles day in November It would be disappointing for Chinese retail sales to come up short in November We have some see we have seen some improvements in the PMIs and that would appear to suggest that we are seeing a little bit of a Stabilization in some of the Chinese economic data It's also going to be a big week for UK banks and but we talked about Royal Bank of Scotland just then We've got Bank of England stress tests coming up on the 16th of December Now these were pushed back from the 10th due to the election And these stress tests are set to focus on the deep on the prospects of deep recessions in the global economy As well as the UK economy They'll also test the banks on their resilience to financial market stress Probably wise given the repo crisis in the US at the moment so RBS Loys HSBC Barclay Santant era standard chart are all required to take part and The results of those stress tests will be closely looked at to see whether or not any of these banks need to raise extra capital But we can certainly see on the back of RBS here that the highs from this year around about 272 80 are going to be a tough enough to crack so They'll they will certainly said there will certainly be Focus on UK banks also Bank of England rate decision on the 19th of December Now that we've got a clear path in terms of the next stages for Brexit I think the Bank of England will be sighing Sighing a little bit with relief. Obviously, we still have no idea who the replacement for Mark Carney will be we may get some clearer idea of that as we head in to January or maybe towards the end of December, but it's unlikely that any policy makers are likely to shift focus On the current divisions within the Bank of England Monetary Policy Committee as you may recall at the last inflation report Michael Saunders and Jonathan Haskell both pushed for a cut in rates in November so it just shows that the same old group think is alive and well in Thread Needle Street. I think it is Unlikely that they will deviate from the stance that they came out with in November certainly flat growth For the three months to date for GDP Highlights, I think the strains that the UK economy is currently feeling but now that the Now that we have a clear timetable for Brexit Maybe we could see a little bit of a rebound in consumer sentiment as well as potentially seeing some new investment capital Flowing into the UK now the prospect of a Labour government has been kicked into the long grass for the next five years and The prospect that they could well actually change their policies to actually reflect the real world and not some dystopian environment Straight out of the Venezuela playbook. We've also got third quarter GDP for the UK This is the final number. It's expected to be confirmed at naught point three percent. It could come in higher than that But by the by, you know, this is pretty much a rear-view mirror stuff. We've also got a whole host of Economic data wages CPI 17th and 18th of December retail sales on the 19th of December. So again, these will give us a good indication In terms of how low inflation is expecting inflation to come down to one point five percent in November While wages are expected to remain solid at three point six So as we lead up to Christmas, we're still in a little bit of what I would call a Goldilocks scenario for wages and inflation Which is likely to give consumers consumer, you know, real earnings a boost going into 2020 retail sales have been a little bit weak in the lead up to this to the end of this year We could have seen a pickup as we head towards Christmas Given that Amazon tends to start its prime deals now in the middle of November as opposed to Black Friday and we could also see a pickup and consumer spending as we head into Christmas now that the election is out of the way And all of that uncertainty is now in the rear-view mirror We also have earnings numbers from sports direct. They've been on a bit of a tear over the course of the past few months As we can see from here this this this chart here from the lows that we saw in August They're now at their highest levels this year So I think the big question for sports direct shares is really Has Mike Ashley put the problems of the summer behind him when the company was hit a tax demand from Belgian tax authorities to the tune of 605 million pounds He's certainly looking to rebrand the business. He's looking to call it Fraser's group at our house of Fraser Whether that successful or not remains to be seen but certainly in terms of the share price rebound that we've seen thus far Momentum does appear to be heading in his direction. We also have the latest numbers from train line Third quarter numbers the IPO back in June. They're trading at a significant premium to the IPO price Before we sign off for 2019 let's have a quick look at the German Dax that's hit its highest levels since early 2018 again as Investor sentiment gets a boost in Europe on the back of the prospect of an orderly withdrawal agreement and Produce tensions between the UK Germany and France and obviously talk of a US-China tariff deal has also given Risky assets a boost but it certainly looks like that as we head into Christmas There's probably more upside in markets than there is downside And I think on that note ladies and gentlemen, I'd just like to say I wish you all a merry Christmas a happy new year, and I will see you all again in 2020. Thank you very much