 Okay, very good morning to everyone. Thursday, 18th of July, hope you're doing well. A quick overview of what we're going to cover. Obviously a quick debrief of the overnight news, where the charts are residing at the moment across asset class, so generally a risk-off tone to the charts this morning. We're going to talk through an update on the trade war. We've got a lot of earnings that have come out, the first of the big kind of fang names, those growth stocks, Netflix shares fell 13% after market closed last night. So we'll have a look at that and what does that mean for the others coming out. We had IBM last night, we've had SAP, one of the largest German companies report this morning. SAP shares are down 10%, and this is one of the largest companies in Germany. So if you're looking at the DAX this morning, it's already down 132 points. So also Japan updates on data exports overnight, very weak. We've got ECB Reuters update on the polling of what their expectations are on Wall Street for further easing from the central bank. And then we can look at the calendar and what our outlook is for the rest of the day. So one thing to say right now is that Sam's not here. And so what I'm going to do with the approach is I'm just going to focus on my fundamental view, my macro overview for the day. I'll then finish the briefing and then I'll go in trading live. I'll review some of the charts more technically thereafter. So for the briefing purposes, I'll just get you up to speed of what's going on at the moment. Good question though before I start from one of the chaps here beside me. There's about the idea of managing, I think when you're learning about macro, about its application day to day. Because one thing that can happen is particularly if you have a very inquisitive mind is when you start opening up the Pandora's box, which is understanding actually why is the trade war happening, what is the end game and what are the Chinese doing. I think very important to look at the world in kind of two time horizons when you're looking at intraday trading and the impact that news and sentiment has. So reading things like The Economist, for example, gives you an absolutely great overview of the bigger picture, the bigger long-term issues that are facing our market, whether it's things like the replacement of traditional currencies by crypto, whether it's the Silk Road project by China. These are all things which definitely are in the news right now. We've seen that with Congress commenting and various US officials on the new Facebook currency. You've seen this as well with this ongoing trade war. But I think what's important is to think and analyse these big pictures, but in the short term, remember that even though you might have a positive outcome on something over the very long timeframe, i.e. multiple years, but on that journey it's going to go through the ebb and flow of being positive and negative, kind of like the trade war. We know Donald Trump needs to manage that quite masterfully in order to keep the economy alive, keep the stock market up in time for when he goes into the real kind of presidential race heats up towards the middle to back end of next year ahead of the election. So with that being said, ultimately, can he afford for the trade war to go wrong? Well, you would say if the defining factor of his success or not is pinned on the stock market and the unemployment rate in the economy, well then no, he can't. That doesn't mean though in the interim period we can't go through a phase like this morning where it's kind of risk off. The latest news this morning, let me just show you, is Trump-G are struggling to find a path forward in trade talks. Now, this is one of the important things that I do in the morning, is I do look at these individual stories and try to map them out. What does it mean, but where are we going on these issues? But one of the things that's quite evident this morning and as we will go through these different stories, it's almost like a cumulative build up of negative news at the moment. Given the fact that equity markets have traded up at 3,000 in the case of the S&P, Dow has breached 27,000, the point being here is that the market is ripe for some profit taking at these levels. And certainly I think that's a big factor behind this pullback that we're seeing in equities, because not just trade war updates which are now more negative, you've got corporate earnings are coming out and on the balance they're also negative. So the fears that market had are starting to be realised through this early part of earning season. Not only that, we're getting further evidence of this global slowdown, Japanese exports overnight, it's what was it, I think it was the seventh month in a row that Japanese exports have been lower. And so it's a combination of these things that I think needs to be taken into consideration. The more negative variables that there are, the more then potent the overall sentiment can be shifted. So yeah, the point being then, looking at the bigger picture in the end game, but then focusing more about the actionable parts of what's going to happen on the intraday, to try and keep that long-term bias not influencing then the clarity around your decisions in the short term, if that makes sense. Okay, so let's run through these headlines. I don't think this is really too dissimilar from what we've really been discussing for much of the week, differing interpretations about the commitments from the G20 meeting in Osaka, Japan a few weeks ago. China kind of saying, well, the US firstly saying that you need to be buying as you committed that you would our agricultural goods. China coming back saying we will do that, no problem at all, but you just need to unwind the tariffs that are in place and you need to do this, that and the other. And so again, they're a stalemate. So I would definitely be keeping an eye out over the course of today's session for any potential further information coming out of either Trump via Twitter, or there's that Chinese journalist we know who kind of speaks on behalf of the state through state media on Twitter. So his commentary and just also any other Chinese comments that come out to update us on the situation. So remember after the G20, I'd say the trade war kind of dropped down the kind of the main news that was driving markets. It's slowly surfacing back up to the top again. So I definitely would be mindful of that as potential shifts and sentiment that could come on any commentary. The other thing of course is earnings and earning season we knew was probably going to be fairly negative, but it's kind of confirmation of that Netflix shares were down 1313% after market last night. Now, just to add a layer of context here and to really make the point about why the fangs see such sensitivity to the economic environment, Netflix shares were up before last night about 35% on the year. So if you think about the performance and comparative to standard indices, Netflix has had a decent year, but the quicker they rise, the harder they fall in that respect. And someone like Netflix, which isn't a particularly profitable company in the sense of generating large profit. It's all about their ability to continue to add new subscribers, widening of that user base in order to monetize at a lesser point. But if we are going into a downturn, the consumers start to tighten their belt, well then these kind of companies and the services that they offer are typically the first ones to take a hit. Now, the important stats from last night then are based around the subscriber numbers and Netflix reported a loss of 130,000 customers in the US. A result of higher prices, a weak slate of TV shows that came to market over the quarter. It signed up 2.8 million subscribers internationally in the last quarter. Now that might sound like a lot, but that was basically half of what the company was expecting. That's the worst numbers I can recall ever seeing for Netflix. Obviously they're facing a lot of incoming competition. We mentioned Walt Disney, but remember Apple are also looking to diversify away from their iPhone and as such further pushes into applications and services. So streaming services on Apple have come out this year. Next year you've got Comcast and AT&T bringing online their video services. So a lot of competition now and what otherwise was a market that they had a real strangle hold on. It was the biggest losses of subscribers in fact for Netflix since they split their business model away from just being solely male DVD to then DVD and streaming. I remember because I used to be one of those guys who used to pick five DVDs and they used to send it to me in the post and then I would mail them back. I was trying to think when that was. It's got to be like I guess eight, nine years ago when I used to do that. But yeah, first of the fang names and remember it's not that Netflix is particularly important in isolation from a macro or an index point of view. Sure the share price got whacked last night, but in context it was up sharply on the year but it's the first of the fangs to report. Tonight we have Microsoft, the world's largest company that forms part of that same unit of kind of classification of firms. We've also got Amazon coming next week. We've got Alphabet and all these other names to follow. So the first one out the bag has been particularly disappointing. Other company earnings we've had, IBM came out last night. Revenues down for the fourth straight quarter, pressure on its older products and services. It's tried to reposition itself into cloud computing, artificial intelligence, cryptocurrencies and blockchain technology predominantly that underpins it is what they've been trying to push into you and they've not really done that successfully. Microsoft has been one of those real success stories that's managed to pivot into cloud computing. And as I mentioned yesterday, for the first time that now generating more revenue than their kind of classic Windows model which is being the reason why while Amazon and Apple have kind of done this to a trillion dollar valuation Microsoft's had a nice climb to the top of the mountain. IBM though really struggling. I was trying to look at some stats and I think it's... Well let me just scroll down. They've suffered 22 straight quarters of contraction before a brief flirt with growth back in late 2017 but tough times for IBM which was such a dominant company back in the 90s. But again, this is the new changing of the guard, the products and services that they once dominated and no longer necessary when we're moving into a more technological phase of cloud-based systems. The other company of course I mentioned SAP they've got absolutely slammed at the open and this is not a small company. It's one of the largest in fact in Germany and by de facto of Europe they're down 10%. Hit by trade war as profits undershoot expectations so in regards to SAP basically their software sales in Asia took a significant hit on the back of this ongoing trade war. So if you look at the backs this morning that will explain why we've pushed lower gap down. We had an aggressive test at the initial futures opening down at S2 and that's where we reside at the moment. Elsewhere moving off company earnings. Japan I mentioned their exports fell for a seventh straight month in the month of June. This is what that looks like on a chart of the last two years. You can see I don't think Japanese exports decreasing as a surprise. Expectations were for a negative print of just over 5%. It came in slightly worse than expected. But the point being is that you know there's a couple of different things here to monitor and will supplement the reason why the Bank of Japan in the near term are going to have to ease policy. And let me explain why. It's because the trade war again absolutely centre to a lot of these things that are impacting trade globally. Japan is suffering on the back of that. Not only that they're also going through a trade dispute with South Korea at the moment. Exports to China falling rapidly. Electronic components and chip making equipment shipments to China dropped over 20%. And this is an export led country when you think about the Japanese composition of their equity market. The other thing of course is that this doesn't bode well for timing because scheduled coming up in the calendar in the coming months is a sales tax increase that is due to hit in October. So if companies were suffering right now under the uncertainties surrounding demand dropping on trade war they're going to get waxed with a sales tax increase in the coming months which is only going to exacerbate that problem and make it worse of course. This is one of the key things. Remember the Federal Reserve is due to cut rates not only at the end of this year but it's going to conduct multiple rate cuts as far as the market is concerned at this point. Market surprise for three rate cuts by the end of the year putting us from two and a half to 1.75% in the US. If then the currency weakens as these cuts get priced in well by product of that the yen strengthens which is going to make again a third thing worse. Trade fall number one you've got sales tax number two now you've got a strengthening currency which is going to hurt exporters by product of the dollar weakness on the back of the execution of these cuts. So what did the Bank of Japan got to do? They got to cut. They got to do something to ease policy to weaken their own currency to make sure that that by product of dollar weakness doesn't re-strengthen their own currency. So just interesting at the moment Japan obviously their central bank the BOJ members we've heard over recent weeks very committed to doing more if necessary well by looking at the state of play at the moment they're going to have to do more in the coming months for sure. So on that point talking about ECB as a new Reuters poll that came out overnight it's very similar in fact in detail to the Bloomberg one we had a couple of weeks ago. ECB are set to cut rates in September according to all of the economists surveyed at major institutions QE 2.0 still on the cards as a statistic over the course of the last four weeks the probability now of QE being restarted in the Eurozone has risen from 15 to 40% in terms of not quite yet tipping the balance that is the baseline expectation but we've increased a large amount in expectations from these economists at banks that QE is going to be inevitable at some point in the future. Now what's going to be important is you've got ECB meeting happening I think actually the ECB meeting is next week I think it's actually next week today maybe I'm wrong you can correct me in the chat if I am but there's an ECB upcoming meeting and the point being is if the ECB are going to do anything if they're going to cut the deposit rate in September they need to be talking about it in this meeting because they need to basically prepare the market and shoe in expectations that then they can deliver that deposit rate cut without causing too much shock to the system in that respect. So what we're looking at very much so here the survey is reflecting is this large amount of blue which is the ECB need to change their wording i.e. alter their forward guidance to give us clarity and enough of a hint to position for forthcoming cut that will come in the months thereafter. So yeah that's the current state of play and then the final thing I thought I would cover is WTI Crude I mean I was looking at Crude this morning it's down about 13 cents but for me WTI Crude in the price movement that we've had recently in the last couple of days certainly if I start looking at the week as a whole from a fundamental perspective we've had a decent pullback in Crude we're up at 61 we trade now back at a 56 handle it's a decent pullback here of like four five bucks and you know if you think about the two main reasons that were elevating price one was Tropical Storm Barry that has now been and gone and the other thing was the rising tensions in Iran however on that latter point you're starting to see news like this Russia throws weight behind EU effort to bolster Iran trade Moscow calls for oil to be included in payment system to circumvent US sanctions so I can almost guarantee Donald Trump's going to say something about that today and what he thinks about the latest move by Putin the idea though being that there's a conscious effort to de-escalate the situation in potential conflict with Iran as long as that is happening that sees some of that risk come off the table which was looking quite confrontational when that drone got shot down just a few weeks ago so if anything I'd say the reversal of oil here a little bit of just some of that risk premium those two big factors that were helping elevate price just being unwound that being that weather pattern in the Atlantic that hit in the Gulf of Mexico and now slight de-escalation in the Iranian side of things okay, quick look at the calendar for today what's coming up so we have UK retail sales coming out at 9.30 I'll do a full debrief or preview I should say before that comes out closer to the time we are looking at a negative print on the month-to-month but that was the case I'll remind you last month as well the year-on-year though is still remaining positive at 2.6 so we'll be interested to see how the UK consumer is holding up if you remember I would say the UK a little bit similar to the US on the consumer side US retail sales a couple of days ago strong that's because good rate of employment we saw that in payrolls unemployment remains low and in terms of the inflation rate comparative to wages there's a healthy gap there meaning that consumers can remain at least at this point slightly unaffected by these other more market sensitive issues like the trade war which are more priced on forward looking expectations of global growth being more pessimistic the consumer for right now has the ability to spend and I think the UK maybe slightly similar unemployment lowest in since the mid 70s wages still tracking at high levels very high in fact decade high and then therefore is there still an appetite to spend irrespective of the fact that we're in the midst of Brexit right now and consumers generally have been quite unconfident about there the economic outlook going forward so it would be interesting to see whether retail sales in the UK can follow suit of the US reading I might remind you though that the base expectation here the median expectation on the street is for a negative month-to-month print retail sales in the UK of course just be mindful you've got to look out for not just the reading but the ex fuel reading as well in combination otherwise going further forward into the afternoon you get your weekly jobless claims out of the US I would see that as largely a non-event given the fact that the job situation in the US is fairly robust at least for the moment I don't think jobless claims really changes the needle for the Fed and their decision-making process so I wouldn't be looking for market move on the back of that you do have though Philly Fed business index that could be quite interesting to monitor it certainly isn't up there as the most important tier one release out there but I definitely would be mindful of that release at 130 I think actually what's going to be quite interesting is going to be the open on Wall Street how the equity traders in the States feel after the latest updates from Netflix, IBM what we've seen from SAP how are they going to position themselves then for the upcoming results that we've got on the docket today we're looking for Microsoft but they're not going to come until aftermarket tonight a couple of other fairly large companies no one who's really I'd say classified as like a bellwether that's going to really move sentiment Union Pacific, Honeywell, Morgan Stanley I'll get you all of the times and expectations for those earnings I'll pop them in the trading life chat room so all in all going back to the charts you've had a bit of a risk off close to Wall Street that's fed through into Asia do be aware though that the markets in Europe if you look at the DAX it's already gapped down and move lower this morning very early in overnight Asia Pacific session so even though everything I'm covering is overtly negative I wouldn't be thinking why I'm just going to hit stocks and start selling at these points absolutely not the markets already down a fair bit if you were thinking okay I want to get short equities I would be looking and we'll discuss some of the technical setups after the briefing I'd be looking for higher levels up to maybe reinsert the short higher up not at these current levels would be my strategy more broadly speaking same if I was looking at that flight to quality bid maybe in the US 10 year looking for a reentry around pivot to try and get back into the market to play it higher kind of same with gold pivots playing kind of near term level of support be looking for that kind of pull back to those levels which would be particularly interesting then if I was still thinking that the market could push on so kind of if you look at the pivot level which is basically here today you've got those previous lows that were seen very early and retested this morning you've then got those areas of high points that we've printed close to support and resistance so yeah I'd be looking at that as the play if I was going on the fact that the US are going to carry this through and we could see some continuation of negative sentiment so it's not about just jumping in reacting to the news thinking it's the end of the world it's about just being strategic and now looking for good solid entry points to re-enter the market alright guys that's it thanks very much for listening and I'll see you in the chat room we'll go with some levels in about 10 minutes time have a good day