 Okay very good morning to you. It is Tuesday the 1st of September. I hope everyone in the UK had an excellent long weekend but straight back into the fold and going to update you with a variety of news stories actually. Quite a bit for me to get you up to speed on but before I do let's have a bit of a stock check on where exactly did we end in August because August was a phenomenal month by performance so looking at a few different things here. Essentially yesterday was a little bit mixed but we did see some outperformance once again in the Nasdaq 100 Apple surge after their stock split 4-1 lifted the Nasdaq 100 past 12,000 for the first time. We'll have a look at Apple and it's new weighting as far as it is comprised now in the Dow in second because it could be quite useful going forward to understand then the slight divergence that we had yesterday. The Dow and the S&P were lower big out performance in the Nasdaq and it could well be amplified now in regard to the new mix and blend of companies within the Dow index. Otherwise though looking at some of the stock performance so here the S&P 500 now has posted its longest monthly winning streak since 2018. It was the best August performance in US equities for 34 years so definitely the show goes on as they say for the time being. The Dow did lag though a little bit yesterday not only because of the outperformance in the likes of Apple which was up I think in excessive 3% by the close. Tesla was also rallying sharply following its own stock split but the Dow lagged with Microsoft and Walmart slumping on concerns China could block the possible sale of the video app TikTok and if you remember that was elevating in individually their stock prices at the end of last week. Looking at the new Dow sorted by percentage weight within the index it's always worth familiarizing yourself with this in order to understand then index overall movement and so actually the biggest company now by percentage is United Health Group. They account now for just over 7% of the entire index followed by top three Home Depot and actually the new entrant or both or two actually sales gen and sales gen sales force and AMGEN two of the new additions to the actual index they are now taking the third and fourth spot Microsoft is fifth and if actually look at Apple now they were previously around 12% or so of the Dow they've now dropped all the way down to 17th slot and they now account for just around 3%. I have had quite a few questions particularly yesterday I was away from the desk but a number of people who understandably are new to markets maybe not so familiar with the concept of stock splits you know so why do they do it in regards to helping boost a stock's liquidity profile in order to help other investors within the marketplace become stock or shareholders given then it kind of devalues if you like the singular price so it gives it more for an opportunity for new entrants to buy that stock particularly with companies like Apple and Tesla which have grown so excessively more expensive over time and it's not the first time these sorts of things have happened I think it was back in 2014 Apple did a stock split as well but rather than me going to this in greater detail what I'm going to do is I'm going to post a link in the description or comments of this video and just have a read of this anyone who is new to markets and you would have heard me say this to you before if we have interacted you know Investopedia really should be your your Bible and my general rule of thumb to anyone new to markets is always be constantly kind of curious and if you ever see anything during the day that you're unsure of then take it upon yourself to really investigate and a really great place or tool for doing that is Investopedia because it's really short form concise it gives you a nice example key takeaways and then generally build up these knowledge blocks over time and you can accumulate a good level of knowledge quite quickly so I'm going to go into this in great detail let you check that in your own time but following in the stock's performance one thing to also be aware of particularly talking about Apple obviously still a major force for markets at the moment interesting on Bloomberg they were saying that according to suppliers Apple is preparing 75 million 5g iPhones alongside new watches and iPads and this comes ahead of course their their general timed unveiling of new products that we're going to be seeing in the coming weeks but this particularly interesting just given the context of the pandemic of course hasn't really dented their ambitions to continue roughly in line with as the article says here with last year's launch so despite everything that's gone on the company still plowing on with the same kind of volume of numbers which is particularly important for this this stock to continue in the trends that it has been seeing another company as well probably worth a shout is zoom obviously zoom being a massive beneficiary of the pandemic situation and the whole working from home and their shares were up around 25 percent after market last night they smashed even the most optimistic of estimates on the street so those types of names continue to sharply outperform the market but yeah quick quick look then that's kind of the general overview of a lot of what was happening yesterday but at the moment you can see stock indices still positive footing the nasdaq future in the center here just above where it was in the high from yesterday evening's close on wall street and you can see here just finding a little bit resistance the edge of pacific session high and around the respective r1 DAX up about 81 in the currency markets the Dixie is down firmly Dixie took a bit of a hit in the overnight session we did have some comments out of Clarida who is the vice chair of the Federal Reserve yesterday now these comments did come out yesterday but i am mindful that quite a few of you were not around particularly if you're based in the UK to be looking at your screen so just a quick update what did Clarida say and again Clarida is the vice chair so as a particularly important person aligned then as closely as you can be to Jerome Powell and left open the possibility of a possibility of employing treasury yield caps at some point in the future now did go on to indicate it's not likely now um in terms of timing and also reiterated the bank's rejection negative rates but kept your curve control basically on firmly on the table and this of course comes after that move towards average inflation targeting we saw just last week so um likelihood that just further fuels that narrative the feather here to remain the supportive hand of markets uh keeping that option on the table uh i guess that for me is somewhat tactical i'm not that surprised by it because after you take a double change in policy is like what we saw last week the the market would probably want some type of reassurance that that's not just it that there are still other options not that it's necessary right now we're not seeing any degree of market disruption but to know with assurance that the Fed is still there to to prop things up and i think that's what the the Fed strategy in their communication was trying to do with careers comments but nonetheless the Dixie overnight has come under some pressure and the Dixie is trading down about three quarters of one percent so down a decent amount and that means that in the major pairs um we are close to the 120 handle now in the euro and also in the british pound we're up at uh the 134 handle now one thing i just quickly wanted to show you was okay let's have a look at the the dollar index i know this is a bit tricky to see let me see if i can move it up a little bit so there you go so looking at the access at the bottom here i mean this is going back to the mid 90s on the far left but if we go back to the where we are right now which is trading we have traded under 92 and it seems like the break of 92 which was the um a level of which symbolically we bounced off in the Dixie yesterday if i can put my cursor um so kind of around this sort of level here on the on the shorter dated chart on the Dixie we hit that level and we got rejected we bounced quite high but the breakthrough that overnight has exacerbated almost some of the weakness in the greenback and if you look where we are at the moment you can see we're right back at around that low that we had in may of 2016 also as well a point of interest in the summer of 2017 and that reference high that we had back in 2004 and 2005 so some quite key levels here technically obviously the dollar has taken an almighty hit in recent times and that trend has continued despite that brief hiatus that we saw in the selling after that momentary kind of yield movement shock that that created a little bit of that gold shake out that happened a few weeks ago that's all seemingly a bit of a distant memory now and if you're looking at gold back to the charts for one moment gold is now having a bit of a test and a move back to the upside so it's kind of normal service resuming to some degree and we're right back up where we found some resistance at the moment at the R2 on the daily pivots but we just shy of 2000 level and of course if we look at the 2000 level over the course of the this whole kind of story of gold over the elevated price movement that we had through late part of July 2000 obviously has been an area here of of significance where we were rejected a number of times before we had the breakout that came at the beginning of August so we're right back up there again as far as gold is concerned again chiefly buoyed by the weakening and persistent weakness in the dollar the other thing is though talking about the dollar is obviously these currency pairs and just taking a shift over to the currency market this is that euro dollar chart we'd be looking out for quite a while and obviously now we've firmly broken through that long-term trend line we've had our eyes on for quite some time and that has opened the door to around the one 2050 looking on the weekly candlesticks here but you can see then somewhat inevitable this kind of grind back up higher for the euro and also helping a little bit with the euro is this divergence and fundamentals not only if we've got a persistent weakening dollar but you know in Germany headlines like this further support the kind of narrative for that move this is talking about in Germany the government today is going to unveil an update to their their latest growth forecasts they issued these back in April and they expect that the economic fallout from coronavirus will be smaller than expected this year according to people familiar with the matter ahead of the official unveiling of these latest forecasts we'll get I think it's around 10 a.m. London time the idea here being then that previously they predicted back in April so if you remember April was right in the depths of the actual full nationwide lockdowns experience globally at that time so it's probably the maximum point of pessimism you probably could have had that particular time so I don't find it that surprising that perhaps now a little bit more clearer visibility and that the fiscal monetary responses are now well known and the market has recovered that things are probably going to become still deep contractions for the end of this year but perhaps not as bad as we previously forecasted as a reference point back in April they predicted the German economy were contract by around 6.3% and we're looking up for a vision to perhaps just a contraction of 6% for example but I'm not saying that's the the silver bullet for the euro but it definitely helps that idea that helps push euro and you can see here just looking on the slightly shorter dated chart we've broken above the levels that we were trading and around the middle of the month if I quickly just transition my screen back so here on the left hand side that was the high printed on the 18th and we got rejected close to that price point in yesterday afternoon session and that's probably going to act as an area of support for the time being which is also coinciding with around the r1 on the daily pivots obviously as the dollar weekends cable continues to benefit cable now just looking at this chart here reclaiming the 134 handle which puts us right away back up to where we were in December of 2019 you know we're at the best levels clearly year to date that we've had and it does come irrespective of the these types of comments so the EU chief brexit negotiator Michelle Barnier has said in the telegraph days unwilling to open discussions of Britain's latest fisheries proposal until the UK budget budgets on other issues so we continue to remain as a distinct impasse here in these brexit talks and as I've said before through those timelines that I shared last week I really don't see yet any type of visible breakthrough or compromise happening right now even though you know the clock is ticking and time is is diminishing in regards to get some sort of soft tentative deal by the 2nd of October in order for it to be ratified by the end of the year the end of transition period so yes this sounds pretty frightening concept for the kind of success of those negotiations but I wouldn't expect anything else given the amount of time they still have to debate such issues so I wouldn't read too much into that in the moment as I've said before I continue to say at this point I think cable is driven by other forces I the dollar for the time being is more of a potent force now talking of FX probably prudent then to also get the Aussie involved because we did have the RBA overnight so just jumping around some different headlines here so firstly what did they do with their interest rate decision well I didn't really see any reaction because everything was as expected so they left interest rates in their three year kind of yield target unchanged so no shocks there but we did have overnight in Australia that generally the currency supported by a couple of different things better than expected building approvals and current account data coming out of Australia but also we did have in China this so in China overnight we had some information where China's factory activity expanded at the fastest clip since in nearly a decade basically in the month of August 53.1 was the number above expectations of 52.6 it was bolstered by the first increase in new export orders this year so overnight the currency markets again due to this figure but also the dollar weakness to Chinese Yuan actually traded at its highest level since 2019 but also as given the importance of the Chinese economic story for then supportive of general trade and the demand of goods from Australia from an import basis that's also a good story for the Aussie and so the Aussie just tracking a little higher in the overnight session and I was looking at the Aussie yesterday because I put out a briefing on Sunday night and I was talking about now that we had broken this long-term trend line dating back to 2014 that I'd be keeping an eye on the 74 handle as the first point of target which was that high that we had back in the end December of 2018 and here we are right at that level so it was quite interesting yesterday actually we basically hit that 74 and then you can see we got rejected and people would have been just booking profit on that trade on the basis of that long-term trend line so yeah quite a nice trade I know the people who were in the market some of you got hold of a little bit of that riding the price move up during yesterday's session and then just looking to bail on that position as per I think a lot of people looking at the same thing if they did during the latter hours of yesterday's session only to be bid again for those reasons just mentioned Chinese solid data persistent dollar weakness and some decent Aussie numbers as well just helping push things back up again in the overnight session but sticking within that FX region let's get the yen involved because last time I probably spoke to you guys we were talking about the somewhat surprise resignation of the Prime Minister Shinza Abe so what's the latest here well the latest article suggesting that top government spokesman Yoshihide Suga is emerging as a front-runner to become next Premier heightening the chance then what that candidate symbolizes the chance that the government will continue down the policy course set by Abe which importantly is an abonomics which is those three arrows of unprecedented amounts of fiscal and monetary stimulus at the core of it and so we saw this big sell-off obviously which was concerns at the end of last week about what his resolution might mean for the fate of that particular strategy for the country and that was causing a strengthening play for the currency in Japanese yen however continuity of some case kind of abonomics 2.0 if you like would help you would think stabilize this price not necessarily reverse course completely but at least eradicate the kind of pressure then for any continuation of just basically any further kind of downside at this point excuse me let's just remove this in regard to moves towards this sort of direction if I was to look at the the currency chart here so yeah this was the the move that we had at the end of last week basically it's just about xing out this this potential now which is the risk that we could have seen a longer term play where you know the key area of 104 looking here on a much longer weekly candlestick chart where that 104 would be a key downside level on the idea of the eradication or let's say severe watering down of abonomics would have meant for dolly yen as a pair but if this candidate continues to break away as the front runner in the form of the the top government spokesman suga then what you would expect then is perhaps some stabilization of the currency pair rather than a push down as this arrow would indicate would be my interpretation to take from that at the moment but we continue to monitor still fairly early and there's a lot of candidates still jostling for political positioning at the moment I would say so so protect perhaps one to continue to watch okay yeah jumping back a few other final articles just to to mention one of the things was this quite an interesting note came out on monday from analysts at jp morgan talking about the us election and they said investor should position for the rising odds of donald trump winning re-election betting odds are now even generally speaking irrespective of the fact that biden still leads in the polls and what jp are saying that the reasoning the rationale here quite simply is largely due to the impact of public opinion of violence around protests as well as potential bias in polls to remember we've had a number of protests I think there was one latest one in portland following a shooting where pro trump and black lives matter movement protesters clashed in large scale in portland in in washington in the us on the weekend so this continues to be a recurring theme and a couple of things here from jp morgan what they're saying to further this they said but based on past research there could be a shift of five to 10 points in polls from democrats to republicans if the perception of protests turns from peaceful to violent also the outcome of any debates and the democrats that start some protests will be key the latter risks turning off voters generally if seen as too permissive but also could alienate progressives if it's seen if it's not seen as sympathetic enough so basically a key point here is that covid in the us generally speaking although obviously we've got this period of seasonality to come if that coincides then with schools reopening does that act as a potential catalyst then for another wave in the us you know who knows at this point but if covid continues to remain on general controlled point well for this time at least if that situation improves the covet if the narrative changes more to these protests it's going to be particularly difficult for biden to manage to appease both sides of the political spectrum that he's trying to catch her for the vote and for trump then it takes away one of the biggest negatives which has been this handling of covid and puts things square and center on this this tried and tested us political formula that has shown success through presidential campaigns in history which is law and order and the more the violent these protests become i would see the more positively and this plays in favor of donald trump's likelihood of him improving in the polls following on from the conventions some of these other clashes that we've had with the site improvements with covid actually the polls have been narrowing and actually biden's lead which if you remember was as much as plus 10 earlier few weeks ago is now just plus 6.2 and you can see here this red line is trump whereas biden's remain relatively static trump really has started to make some some decent headway since really the republican convention since that began post period and with more violence that's been seen actually the more it moves higher there's some interesting graphics actually from the ft this morning i haven't got them to hand and it shows you where people who are indifferent so neither republican or democratic minded and how they feel about things like the black lives matter movement and actually the the kind of momentum behind that for someone who's not engaged in that traditionally as a subject matter has started to dissipate fairly sharply actually so and that in itself also plays into the hands of of donald trump so yeah i as i've always been and you know don't take this as my political biases but i still just based on the facts i still firmly believe that donald trump will win a second term at this point is my take final story i thought it was just worth a mention just to not confuse you in case you see this headline you think it's a negative because i'll tell you now it's not and i explain why and that's because there's a synoffy and regeneran pharmaceuticals have come out overnight and they are suspending tests on using their rheumatoid arthritis medicine as a potential weapon against covert 19 after weak results in a final trial of clinical trials now although this sounds quite bad on the headline it's kind of like wow these are big pharmaceutical companies and perhaps this was the the magical formula that was going to be adopted for the rolling out of a solution for covert 19 the fact of matter is that the CEO of i think it was synoff here had already stated that this actual trial was seen as a particular long shot and so the actual credibility behind it and therefore net the expectation of it being successful was already very low so the fact that they've come out and actually the final clinical trials have proven that point is not a surprise at all so i would not take this as a negative headline in that extent and that that's pretty much it from the news side of things so yeah plenty to digest i hope it all kind of made sense actually before i just quickly jump to the calendar i just want to quickly mention crude oil because i didn't mention that on sunday but one of the main things here i've been looking for updates i'm sure more will come today but generally speaking the things i was reading at the weekend were suggesting that overall the impact then from hurricane laura was to a much lesser degree than perhaps people were fearing initially so we'd be looking for reacceleration the reopening of those various facilities within the gulf to come back online pretty quickly and so we have seen some fairly volatile price movement in oil i mean yesterday's session i can see we did drop a decent amount before finding a bit of support we're training a 43 hand or back up 50 cents for the moment on a on a daily continuation though it's a fairly interesting price action i've been keeping an eye really over the last few weeks on the 21 dma generally has been a pretty good line of support for price generally speaking and also then with the low that we had back on the 27th of august coinciding around a similar point that would be 42 36 so on a slightly higher timeframe i'll be looking at these areas as a pretty decent area of support for price but things would suggest now you know you've had the chinese data overnight that was that was strong in terms of their manufacturing activity in fact that grew at the fastest pace in in about a decade you've also got covid yes there are areas like india i understand which are still particularly bad but overall in places like the u.s still relatively controlled equity sentiments still continue to push higher and so overall i would say i still favor the oil should continue to track higher technically speaking i think we do need to really break through this 43 32 that second of march high we flirted with it a couple times never really confirmed the break but i think once we do i do think it's a matter of time when we do then we'll see a decent push up to 45 and fairly quick succession not saying it's going to happen today but i think that's definitely the price movement that i'd expect over the the coming days okay um calendar wise for today what have we got um moving on to the european morning these are generally final manufacturing pmi numbers that we'll get so we're not expecting too much market reaction to it you do get though the german unemployment change and rate coming out just before nine a.m london time so keep an eye out for that um going into then the uk uh manufacturing pmi again final reading for august that's coming out at nine thirty alongside mortgage approvals and lending if you do get the eurozone flash cpi reading for august coming out 10 o'clock so yeah a couple things european related to to keep an eye on that german job data in the the flash cpi numbers coming out the eurozone at 10 a.m that comes come out alongside the eurozone unemployment rate this afternoon again final manufacturing activity number for the us and then you get ism manufacturing much more important for the session that'll be at three o'clock those numbers did expect to hold up you might have caught me on sunday talking about how critics swiss analysts were talking about the potential deterioration further into the fall but for the moment i'd anticipate that these numbers should be fairly robust steel still again you've got the manufacturing tuesday no manufacturing is coming thursday as far as the ism us figures are concerned beige book would be expected too much of great deal out of that and then you've got the api inventories of course coming later on this evening from a speaker's perspective ecb deguindos and lane speaking morning and afternoon and then feds brainard who is speaking actually on topic in regards to the recent change in fed policy and she is a governor and she's going to be speaking at 6 p.m london so that'd be one o'clock in the afternoon if you're based in new york all right i think that's a long enough briefing sorry for the for the length but quite a few to get back up to speed and welcome back if you're in the uk back into the fold any questions at all just feel free to drop me a comment and yeah any information about stock splits and what does that mean i'll drop that link for you to have a read as well in the video but have a great day ahead thanks very much