 Very good morning to you. Friday the 4th of June and of course non-farm payrolls is going to be Eagly anticipated today given the fact of the downside surprise that we saw last month and the sums couldn't reaction We had in today a few weeks ago So definitely that's the main focal point But certainly a few things for me to get you up to speed on so let's start off with how we closed on Wall Street and What I was looking at here was a graphic of the last kind of quarter and looking at an equity perspective, but the differential between the NASDAQ composite and blue and the S&P 500 in pink and What we can see here is pretty similar to how we closed on Wall Street yesterday, which was the NASDAQ 100 under performed We were down about 1.1% whereas the S&P was down about a third the Dow relatively flat and even though What we saw was equities generally moving on similar themes actually on the breakdown What we tended to see is in other asset classes particularly given the string of good data We had weekly jobless claims come in at below 400,000 for the first time since the onset of the pandemic We had a record high in the ISM services PMI and we had ADP national employment blowout Expectations even above the most optimistic estimate on the street Trifecta then of good data saw a fairly linear reaction in a sense of higher dollar and higher US yields So major currency pairs run a little bit of pressure We also saw tea notes fall and also precious metals came under some aggressive selling pressure as well yesterday Of course when you probably saw that moving gold and and also in sympathy in silver as well But on equity perspective What's interesting is that whole movement on the sector rotational basis We have tended to see in a higher yield environment and yesterday was pretty similar also with energy prices continue to remain fairly buoyant in the crude space is Energy and financials outperforming comparative to their technology peers for example So that continues to be the case and as you can see that divergence even probably more so more recently as we get closer to that point of eventual policy tightening from the Fed in the future But let's have a look at the charts and we'll kind of incorporate some of the news as well and few things to be aware of In the currency space as far as the dollar index is concerned this morning We're up about 0.1 percent. So we've really kind of held the moves from yesterday So let's start with euro dollar and then we'll look at cable. So as you can see from euro dollar here I'm just gonna shrink the chart so you can see it over my my camera feed Quite a nice Entry point if you are trading late in the US session continuation of that trend of dollar strength That was particularly prevalent yesterday But has been a bit of a theme throughout the week of course because euro dollar did start up on Monday Up at around the 122 50 mark and we're trading, you know, well over a full point lower than that at the moment But you can see that previous load we saw on Friday's session. So this time last week we broke down through that in the European exit yesterday through the fix came back up to that point on the retest late in the US session and then we've continued to drift south as Asia participants of kind of just continued that dollar strength trend in the overnight session that held on to those relative gains in the greenback So as such just keeping an eye on the euro here and we are trading down about 19 pips You can see going back here on the left hand side of the chart if we go back into May on the 13th and 14th It was an area of which we're now trading at the moment So be interested to see how we perform here technically speaking then Room toward the 121 handle just below there is the s1 on the daily pivots and then the overall Kind of mid-May low was seen down at around the s2 At 120 61 could we get down there today? Well, we could and would we get down there this morning? I probably doubt it. I'd say we probably need to see a really strong payroll figure to initiate Further dollar strength to bump us down to that degree But certainly that would be a potential scenario on the daily chart And what's been quite interesting is we've been watching this trend line for a while This goes back over the course of the last two months and you can see it was getting a little bit choppy But failed importantly to to close below that level despite a few excursions to the downside over the course of The last week or so. However, yesterday was a definitive break We also took out that horizontal level of an inflection point at around 121 65 and a half and You always just continue to trade heavy. So in actuality on the downside. It does remain susceptible I would say for further moves here on to to the downside and actually just looking at that double bottom that we had Going back to kind of middle and late May that would be around 120 Kind of 62 on the futures And so perhaps then the little space on the downside for continuation of a move lower today under under the right conditions Of course depending on payrolls, but definitely that's an area I'd keep an eye on and a little bit more bearish the underpriced action of the euro mid that research at dollar for cable Yeah, definitely been a theme throughout the week of Weakness overall. It's kind of under performed a little bit compared to its European peer one thing I would say is that I think trying to connect this idea of the potential delayed reopening on the 21st of June because of the current COVID situation on that and I think it's the Delta variant. They prefer to call it rather than the Indian Then we've seen a top in cable But I definitely think that's more tied to the technical move of had a decent running cable. Don't forget You know, we were trading back in The beginning of May so basically a month to the day We were trading down at 138th hand and we've managed to test up in a multi-year high in excess of 142 So I think that's nothing more than technical rejection up at a rose levels for the time being And I wouldn't really over interpret that at the moment if you're looking at cable here Again, I'll just move it up slightly so you can see but again going back to the same kind of time period as the euro You can see this area here That was around the 12 13th 14 17th on the left hand side That's about where we're trading at the moment at around 140 77 We've printed alert 81 so far and a bit of a Support found around that area due to those previous responses at that particular zone Otherwise a quick look in some of the other charts Let's have a look at gold definitely a real mover yesterday, of course given the The initiation of that positive data and dollar strengths and high yields gold Saw a Potential opportunity there on the break of the trend line from the 19th test on the 28th. It did come back up Quite nicely at one point to that level Before then the real aggressive momentum trade kind of took hold and Looking here at the bounce that we've seen this was the low in the overnight Asia pack session So it's a little bit choppy overnight and slightly more liquid conditions And we bounce snap back high on the back of that but that Rejection and this is what you tend to see when you see a Illiquid Momentum based fast money move a lot of those people who are short there would look to bail at the first nearest Clearest point and the pivot levels often in a fast moving market do do provide that kind of clarity But also you can see that previous low back on the 19th in proximity there around that kind of 1855 area We've we've adjusted so far So gold kind of now holding pattern. I would expect until payrolls as far as The S&P is concerned not too much in the way of interest of where we trade right now, but certainly What I found quite interesting about equities yesterday was Yields generally remained higher as did the dollar and gold remain lower on the back of those positive factors from the data releases But equities initially sold off So it kind of felt a little bit like people might get a little bit apprehensive about a knockout You know kind of payrolls then people start fearing about Fed tightening But then we just got countered by some aggressive dip buying So a really strong recovery And I think I guess not to try and curve fit too much rationale behind these moves But I definitely think it's an important practical point when you're trading payrolls later The moves and seem much more clear And so therefore much more actionable from an execution point of view in anything other than equities Because with equities, I think there's that balancing act between you know Is this good for equities? Is it bad in a sense of the implications on policy? Whereas the other products I think are moving in a lot more clearer and a more kind of linear way in that Respect so do bear that in mind later But perhaps then it's kind of like well strong economy The Fed is only ever going to be gradual and cautious. So net net after the initial kind of Correlated move on asset classes on the sell-off people's just rationale kicks in well look the Fed aren't ever gonna You know tighten Ridiculously quickly and equities kind of stabilize at that point I guess away from all of that on the technical perspective This is that daily chart. We've been obviously tracking for the last couple of weeks and that key level around forty one eighty and You can see we had a brief dip below there yesterday, but failed to close We've had another test of it as well this morning, but that that's gonna be quite interesting I think as far as the payroll the end of today and this week is concerned for just general sentiment being bullish or bearish over the short term for the S&P do we have Situation where we push back up and actually you finished a day with a really strong gain And we push up back up toward the high end of the range of the week Or do we break this down and actually close below it which could signal then some further? Gradual move lower albeit. I'd still expect it to be counteracted lower down At lower points by by people looking to to buy the dip Something to be aware of in the energy market Again, we did see a bit of a dip on the crude oil infantries yesterday. That was this kind of red candlestick here However, quite a nice response that we have been seeing ongoing and so certainly something I'm keeping an arm going forward Is this kind of trend channel going from the last two weeks? It's been fairly well Respected as we've continued to just grind our way higher in crude getting ever closer to 70 dollar marker We're pretty flat this morning, but something I'd be aware of from a technical perspective All right quick look at the news stories then get you up to speed a few other things first off talking about Biden President Joe Biden offered to scrap his proposed corporate tax hike during negotiations with Republicans according to two sources For me with the matter yesterday It would be a major concession of course by the Democratic president as he looks to kind of hammer out the Details around the infrastructure deal Biden offered to drop plans to raise corporate tax rates as high as 28 percent instead set a minimum 15 percent tax rate aimed at ensuring all companies pay taxes The reason why he's talking about all companies ensuring that they pay their tax as you will know Biden's 15 percent tax floor seeks to stop those large multinational companies like Amazon Starbucks all those ones that you read which have then Presence in say low tax areas like island in Dublin for example and pay little to know US taxes at all So it's trying to capture some of that and it's then seen as a brokering deal in order to get more Cross-party agreement given the fact that obviously the Republicans are going to be anti Tax rates jumping up as high as 28 percent to get his infrastructure deal over the line Other things I thought were quite interesting in the press You might not really recognize some of these faces, but this is feds Kaplan So let me just read out to you two fed speakers and remember this is the final week Of course in the final day before they go into the blackout period where they're not allowed to speak ahead of the June 16th meeting so the commentary at the moment I think is quite key and there's a real subtle observation I think that's been Evident this week through the number of speeches that we've had so Kaplan said quote I think it would be wiser sooner rather than later to begin discussions about adjusting our purchases With a view to taking the foot off the accelerator gently Gradually so we can avoid having to depress the break down down further down the road now A couple of things to bear in mind whenever you hear a federal reserve official speak Two questions. Are they a voting member of which Kaplan is not and then to what is their monetary policy view? In general and he is a hawk So the fact that he's talking about this idea Of adjusting purchases sooner rather than later and having those discussions kind of is in fitting with those those His stance, but let me just give you the context So new york feds williams who is a voter sits a little bit more Center if you like in his policy view He said quote while it makes sense for the fed officials to begin discussing their options for adjusting monetary policy The u.s. Economy is still far from the point at which the central bank might begin to withdraw its support And so for me What I think is quite clear and has been prevalent this week is the voting members have kind of towed the line Whereas the non voting members have been a little bit more Leaning on the side of talking about tapering And I think that's an important signal and I think that is a tactical approach from the fed in order to plant the seed To acclimatize us as investors To this notion of discussion on tapering to almost kind of control it in our minds and not freak out When those discussions in fact do materialize So all the time the official line is no it's too early yet We get told subtly on the side then from the non voting members that actually We we should start talking about tapering now So when it happens, it's like a good in between to get us like our behavioral Kind of psyche in the right place to minimize market impact. So this is quite classic. I'd say central bank communication tactics But something for the new guys to be aware of so let's to not get too spooked when you hear these guys talking Now another thing I just wanted to quickly have a look at You know through all my career. I never thought I'd be talking about heartbreak emojis, but here we are It's you know 2021 and Elon Musk I thought was being a little bit quiet this week Given his recent string of tweets and he hasn't let us down He's saved it for that Friday feeling and he tweeted overnight bitcoin heartbreak emoji and so he then had this meme talking about A breakup and quoting a Lincoln Park song that it didn't even matter in the first place So a couple things then to be aware of jokes aside Bitcoin's price first of all has reacted to his tweet This is one of the things I find very challenging to accept with some of the base bitcoin argument about it being Decentralized and you know away from intervention from a singular authority like a central bank. Well, I mean Elon Musk is like the central bank on steroids as far as his direct influence over this product. It's quite crazy So how you can have that view? I'm not quite sure but that aside Bitcoin has actually weakened over six percent since he made that tweet. He made that tweet here That's a price point. Um, just looking at it technically I've just been looking at the top end trend line, which has been containing price overall, but Rather than so much bitcoin of which if it does start to move lower, obviously Just keeping an eye on this trend line for the 19th 28th You've also got this kind of level here at around 35 780 in the futures, which was the air of support Through a couple of the recent trading sessions And then obviously just following further the decline and using the reference point of the previous price action at the last two weeks So 34 to 35 and you know how bitcoin moves we could quite easily see these types of levels Intra day be interested to see how the u.s. Come in given he tweeted it overnight If they're seeing it with fresh eyes But if bitcoin's remaining weak the one company that obviously suffers is his own in a slightly self-inflicting way and Tesla I think would be one to watch obviously payrolls is going to create some subsequent movement in U.s. Indices, but that aside We saw some selling pressure quite heavy in tesla In the latter part of the u.s. Session there were some reports about china orders of reportedly halved We also saw a kind of short-term kind of Two-week trend line break And we were looking at that horizontal level with the trend line 600 was a key And kind of 596 600 that zone was quite key for the test of the stock price And that trigger point and the catalyst of the news just saw the run lower And then we just kind of settled it around that low we printed on the 20th So here this was the close last night and obviously the tweet came overnight and subsequently bitcoin has now weakened 6 Plus if bitcoin starts to weaken further let's say 8 9 10 15 percent Just saying then definitely i'd be looking for a technical break here And that could act as a trigger point then for some further selling pressure to come into tesla shares So something to look out for that may low then would be down at 547 27 Should we get there but something to just keep an eye on later this afternoon? all right I'm not going to talk too much about payrolls now because I will be covering that Live later, so i'm going to leave that aside and just say One overall top level point Which is the data yesterday was very good I'm not going to include jobless claims specifically in that because it wasn't part of the reference week But generally claims jobless claims have been on a continuation of a positive employment trend The other data has been particularly the adp a lot of people will criticize adp saying it's not very accurate It wasn't accurate at all last month, but people still put a fairly heavy weighting to it Point being is market the way the market reacted yesterday Your dollar is still firmer the yields are still higher Gold has bounced off overnight lows, but it's still lower And so in my mind then the market is susceptible To anything other than a very strong number today you might see reversal in these prices is all i'm saying remember last month We were looking for knockout numbers One one and a half People talking about two million and it came in at two six six I'm not saying that necessarily happened again What I am saying is the take into consideration the market positioning from yesterday The bar is quite high now for an upside number. I think the headlines expected at six fifty for me I think if you get six fifty you actually see a bit of reversal some of yesterday's move It's just not good enough for how the market set itself up for this release. So Yeah, I'll go into it more details later ahead of the actual number, but that's it. I'm going to leave it there I'm not going to bother looking at too much else on the calendar because otherwise got factory orders 3 p.m fed share powell does speak as well At midday Speaking at a bis panel with christine legard dsp president and the pboc governor gang So it's something to just be aware of All right guys, that's it. I'll leave you to it. I wish you a good day ahead and good luck for payrolls and enjoy your weekend Thanks very much