 Good afternoon, and welcome to this week's weekly webinar on Monday the 27th of February and Look ahead to the key events this week before I get started have to do the obligatory disclaimer risk warning So that basically anything that I talk about discuss. It's not meant to be trading advice It's just to give you a broad overview of some of the key events that I think will move markets not only today but this week this week as well and certainly, I think The main event I think in the absence of non-farm payrolls and the US employment reports because they've been put back a week Due to the fact that February is a short month 28th 28th of February obviously is the last day of the month tomorrow That means that the Bureau for Labor Statistics Decided to put back non-farm payrolls from the 3rd of March to the 10th in Order to get a much more accurate gauge as to the health of the US labor market I think I think that's particularly important given the fact that the week after the non-farm payrolls report comes out the Fed is due to meet in March for its second FOM second rate meeting of 2017 Now I think that there's there's a lot of expectation about what the Fed might do at that March meeting My personal view is that they should get on with it cut out the prevarication and raise rates in March Markets currently are probably allocating around about a 40% probability of that happening You can see that in the data here, but I think a lot will depend on What happens in the next 24 to 48 hours as to whether or not the Fed moves in March or whether it doesn't at the moment? The market is pricing in a 40% probability the Fed will move 25 basis points in March and a 60% probability that they will keep rates unchanged Certainly if we look at the bomb markets, we can see that yields have come off in the course of the past few days looking at US 2 year yields I Think they're the probably the best benchmark in the context of what the Fed may or may not do Over the course of the next two to three weeks there at their lowest levels this year and the lowest levels since The Fed last raised rates in December and we can see that here. This is when the Fed raised rates in December Since then yields have come off not only on the two year, but also the 10 year as well So I think the market is is pricing out the prospect That we will get a move in March and it's likely that we could will probably get a move in May or June Now that could change those odds could change because there's a lot of moving parts of this particular story And we've talked about it in previous weeks. I think a lot will depend on The Trump trade the reflation trade at the moment US markets Look as if they are going to Open pretty much flat from where they finished on Friday Think there's a little bit of caution starting to creep in Certainly if we go back to the 9th of February You may I'll cast your mind back to the 9th of February simply because it's important in the context of What expectations are with respect to tomorrow's speech by President Trump to a joint sitting of the US? Congress now that's taking place around about midnight Tuesday Wednesday, so 7 p.m. Eastern time on Tuesday it's around about midnight UK time so the Asia Sessions probably going to be fairly busy and It's this speech by President Trump that markets have been hanging on to with respect to so-called phenomenal tax plans Which he teased the market with on the 9th of February when he was meeting airline chief executives He's talked about something phenomenal. He's talked about something big league and there's certainly an awful lot of expectation as to What he could come out with now later today? The US government is publishing a two-page summary of the proposals that mr. Trump will be outlining later this week in his speech to the in his speech to the joint sittings of Congress and Some of the Expectation has been about cutting funding to the environment protection agency and boosting military spending So certainly I think defense stocks could be ones to watch over the course of the next couple of days Now obviously there is a big question as to With respect to whatever mr. Trump's plans are they will still have to basically go through both both both houses But not only Congress but also the Senate and there's a very good question that I've just been Asked here with respect to the debt ceiling. How much of an issue will the debt ceiling be and I? Think you have to look at that in the prism through the prism of What the what the politics are with respect to? Previous Republican attempts to stymie the raising of the debt ceiling the previous on previous occasions when Republicans tried to block the Raising of the debt ceiling. We had a democratic. We had a Democrat president. This is no longer the case obviously president Trump Is now president now? He's not particularly popular with some on On the on the Republican side So certainly don't think for one moment that any of his proposals will get an easy ride We could well get further Input in terms of what he plans to do with respect to Dodd Frank And the Volcker all and certainly I think there isn't wide-scale There isn't a wide-scale ambition to repeal all of that. I think a lot of that I think I think a lot of that was but was very very necessary And I don't think we'll get a large-scale rollback of that. We may get a tweaking of it We also may get details about Streamlining of the tax code the US tax code at the moment. They've got seven seven different bans for the US Tax code there's talk that he might look at streamlining that to three There's also talk about a border adjustment tax So basically any any imports will be subject to a 20% tax now an awful lot of US Retailers are pushing back against that because it will push back will push up their prices and actually hurt the very people It's designed to help so there's a lot of moving parts in this particular Trump story Ultimately, mr. Manukin Steve Manukin the US Treasury Secretary has already tried to dial down expectations About what to expect Certainly, I think that has that has fed into the slight decline that we've seen in US yields because of the fact that if mr. Trump's fiscal plans are less inflationary than ultimately the the the urgency for the Fed to raise rates is not likely to to be As significant at the moment the markets pricing in the prospect of two rate rises this year We could well see three Certainly the FOMC Hawks there are some on the FOMC committee One of which is Robert Kaplan of the Dallas Dallas Fed who's talking later today He's talking about raising rates sooner rather than later Janet Yellen's already got on the record as saying it would be unwise to wait too long So at the moment the markets don't quite believe that the Fed could move in March Personally, I think they should just get it over with so we can focus on something else And then think about when the next one is going to come whether it's going to be in June or September Irrespective of what you think of the US economy. It is doing. Okay. We've got durable goods out later today And that is likely to post its fourth successive monthly rise This is core durable goods expecting a rise of 0.5 percent You can find out where all the information with respect to US data is on the market calendar Here we go. This is the number that I'm particularly interested in. It's this one here this one here The total orders also includes Airport aircraft orders and what have you and tends to be much more volatile than the the month-on-month order This one here, which probably tends to give a better indication as to the health of the US consumer and you know as we can see from This here if we go and open this look at the event information for this alert What it tells us is well not only what's expected But what also the previous months were the previous three or four months were and we can see that going all the way back To October US durable goods have been holding up fairly well Actually, this will potentially be the fifth successive monthly rise in durable goods Which obviously suggests that the US consumer is now starting to feel a bit more flush Despite rising inflation because wages are also starting to rise at around about 2.5 percent a year Obviously other factors to be aware of this week US GDP Expecting a expecting a revision to US GDP and upward revision from 1.9 to 2.1 the 3.2 one is the figure from Q3 it's not the 1.9 first iteration that we saw a couple of weeks ago, so we're expecting a slight outward revision there from 1.9 to 2.1 What I think is going to be of particular importance I think in the context of what we're expecting this week is the feds measure of US inflation And that is core PCE now that is due out later this week or in March In fact first of March we don't have that we don't have that on the calendar because it says February 2017 So if I move that to March we can then take that over here And we can see that this core PCE index here is the feds key measure of inflation I'm expecting that to edge higher to around about 1.8 percent What we've also got out later this week is latest flash PMR not PMR flash CPI numbers from European Union and Germany and There's been an awful lot of speculation about What the ECB is going to do with respect to a taper? Personally, I think that the pressure on Mr. Draghi to Bring in a taper before the end of this year will continue to increase and that could limit the downside in euro dollar at the moment Let's look at the key levels in euro dollar We can see on the daily chart here that the euro is going nowhere fast Trading in a range has been trading in a range for quite some time We can see that it's can be enveloped between around about one oh four fifty and one oh eight fifty a four hundred point range Yes, it's trading lower So at the moment what we need to see is a move back through one oh six to really target the one oh seven area But it is finding a certain degree of support around about one oh just below one oh five and at one oh four fifty So for me, I think with euro dollar It's very much a play the range play in the context of the overall move I don't think we're going to see anything substantive or anything substantive with respect to euro dollar over the course of the next few sessions The dollar index now let's talk about that because the dollar index has been trending higher Since we bottomed out around about the beginning of February But it's finding a little bit of a top all the way through here around about one oh one seventy And if we can just drag that all the way back there Like so we can see that there's a good area of resistance through that one oh one seventy area and if we actually look at the dollar index on On a Bloomberg chart This is something that I talked about last week, and I'm going to continue to draw your attention to the potential a potential head and shoulders formation forming here with a left shoulder here a head here and a Slightly more a regular right shoulder here But what's important I think with respect to this particular right shoulder is that we don't take out the one oh one seventy the one oh two area which is on the left shoulder here all the way through there and also There is this very decent area of support around about 9950 so again We're trading in a little bit of a rectangular consolidation here apart from obviously this little bit of price action at the top We pushed up to just below the 104 area at the moment We're trading sideways and it's likely that we will continue to do so While we are below 102 if we if we go through 102 then I think there's a distinct possibility That we're probably going to go back to the peaks that we saw around about 104 on the flip side of that If we do go through that 102 expect euro dollar to drop back towards the lows that we saw Earlier this year around about 103 40 103 50 Now the pound the pound is down now the reason the pound is down Well, there's a number of reasons to it. There's been some chatter about the prospect of another Scottish referendum doing the rounds in the headlines and You know, unfortunately for me, I'm I'm a little bit skeptical about this because this is nothing new The the Scottish National Party are going to be pushing for a referendum come what may for the next 50 years The whole reason that the SNP exist is for the purposes of gaining independence from the rest of the UK So why this is a surprise to anybody is really a mystery to me So we're getting a little bit of weakness in the pound against the dollar, but thus far That's far. We haven't been able to take out this very key support area of the last two to three weeks around about 123 80 so I think while we're above This series of lows through here around about 123 80 So let's try and and it is a bit of a messy consolidation. It's not ideal I'll admit that and it does make it very very problematic when it comes to trying to determine where the cable goes to next But you can certainly put throw a blanket over this range over the course of the past two to three weeks around about 123 60 on the on the downside 125 80 on the top side Until such times as we get any evidence to the contrary Then this is the range that really I'm looking to see hold over the course of the next few sessions And obviously we also have some very important UK data out later this week, which should be Fairly supportive of the pound. What's driving things at the moment with respect to sterling is more political risk than economic risk The economics while they're looking a little bit weaker than they were in Q4 They're still pretty much on track to deliver at least a decent decent Decent slug of economic growth in Q1 Certainly the January PMIs were fairly positive the PMIs in Europe have been fairly positive for January and initial PMIs for February I've also been fairly positive for Europe in February so the expectation I think for Manufacturing PMI on Wednesday the 1st of March is For a number in the region of what we saw in January around about 55 and a half 56 Construction is expected to hold up fairly well. We may get a slightly weaker services PMI reading that wouldn't surprise me Because of the fact the UK consumer has been slightly weaker And was slightly weaker towards the back end of 2016 but certainly anecdotal evidence from UK retailers does appear to suggest that while footfall is falling Online revenues appear to be holding up fairly well So there are problems in the services sector of the UK, but nonetheless, I still think that Now there's more optimism than I would say pessimism I think another reason the pound may have weakened today was because of a weekend story in the Daily Telegraph that Theresa May could well introduce curbs on freedom of movement At the same time as she comes to trigger article 50 at the end of March Now the EU doesn't want us to do that. They want us to wait until we exit in 2019 but That could that could prompt a little bit of towing and frying and a little bit of Disagreement with EU leaders before talks even get underway But again, that's put more politics than anything else. So I think if we break through this one twenty three 80 one twenty three fifty area then of course you're looking One twenty two and a half which are these series of lows in the middle of January through here I don't expect the pound to fall off a cliff famous last words, but Essentially given its performance over the course of the last few weeks. It does appear settled in a fairly decent range The one the one area of concern. I do have Is in euro sterling I've been looking at this for quite a long time I still think that there is a complex head and shoulders reversal Taking place here on euro sterling We can see that with the left shoulder here the head here and the right shoulder here now We do have fairly decent support around about 84 Also around about the 50 week moving average if we then drill down into the daily we can see that there's decent support there We did break below the 200 day moving average. We weren't able to sustain that move lower So in the interim I think there is scope for us to go back to the series of highs around about 85 70 85 80 Which is this series of highs that we saw in the middle of February Currently, but we do appear to be starting to look a little bit overbought on the oscillator And I would suggest that if we do get back towards this 85 70 80 level, then I think we'll struggle to get much above 86 so certainly I would I still I still favor a strategy of Selling euro sterling on rallies until such times as there's a clear and the and there's there's any clear indication that that That overall trend that we've been in since January Has started to come to an end and I'm just going to try and draw a little trend line in through there Change the color of that Make that blue to differentiate it from the other lines Certainly looking at client sentiment towards euro sterling Position value would appear to suggest that people are quite happy being short euro sterling at these sorts of levels That's not to say that it can't go any higher. In fact Given the fact that shorts are six percent higher today on On our top clients and they were On Friday that would appear to suggest to me That the trades getting a bit crowded and we could actually go a little bit higher and squeeze those shorts But certainly I think there's a good indication of the way the markets are thinking with respect to Euro sterling on a short-term basis over the course of the next few trading sessions Let's look at dollar Swiss to get an overall direction of where we think the dollar might go we've seen a little bit of a Little bit of a pullback in dollar Swiss over the course of the past few weeks, which again It's finding resistance around about this 50% retracement level around about 101 Has been has struggled on at least two to three occasions to really push Significantly above 101 and while it does so then I think the likelihood is that We could potentially test lower, but we mustn't rule out the fact that it is trending quite nicely higher So any downside on dollar Swiss is going to find support on the trend line support on the four-hour chart Around about here. So really I think where it is at the moment It's it's touching go which way it can going to go at the moment the short-term trend is up Which would suggest that if we do drop to here We could get a rebound, but if we drop below this trend line support here, then we could drop back to 9970 which was basically equivalent to this second point on the trend line through here. So Maybe we'll have another test of 101 and the previous highs Before coming back and retesting the trend line from the lows that we saw at the end of January in dollar yen Slight risk aversion story going on here. This is less about dollar strength and more about I think What us yields are doing and certainly we can see from this particular daily chart? We've got really huge support on dollar yen at 111 60 So 111 60 for me is really the big level and dollar yen at the moment We we're currently just above that and we can see that one two three touches three Three three touches on the daily chart that suggests to me there's big support down there So any long position on dollar yen really your stop loss needs to be around about 111 30 111 20 On any move towards that particular low because if we do drop below there Then I think the next level really is going to be one ten twenty on the downside That tends to be that tends to look much better if we take the lines off and we look at it through a prism like that Everyone's talking about the prospect of a higher dollar yen at the moment this particular chart does look a little bit top-heavy We got this double top here We are now starting to trend lower and every subsequent rebound appears to be running out of steam So until such times as we take out 115 we're breaking we're breaking through The cloud support or we have the potential to break through the cloud support that could that could prompt a potential unwind And then the cloud would then act as resistance for a move lower So certainly in the context of what I'm seeing here I'm a little bit concerned that all this Bullishness about the dollar could be slightly misplaced and actually we could we could see a Potential test lower if we look at sentiment indicators on dollar yen Very much geared towards the top side though It is noticeable that sixty percent position sixty seven percent buy position is down five percent So some people are taking profit on Some of their dollar yen positions at this particular low But if we do break below the one eleven sixty then certainly a decent chance that we could well see a Significant move lower. So certainly keeping an eye on one eleven sixty on dolly and that's one to watch As is the one twenty three eighty level on cable So what are we looking at the US stock markets because we've got asked about US stock markets at the moment It's pointless trying to buck this upward trend. The trend is your friend You really I think would be ill advised to try and Short this that's not to say that we can't come lower particularly if there's a significant disappointment around what mr Trump outlines later this week, but since we broke through that twenty thousand level. We really haven't looked back We've gone up 800 points in the space of two to three weeks Which is around about a three percent move higher if we go all the way back to November There's an awful lot of good news already priced in I don't think The mr. Trump is going to be able to deliver what markets are pricing in but we'll see I Still expect to see some form of correction unfortunately trying to time it can prove to be a little bit painful and Certainly proved to be the case over the course of the last few weeks because every time you think there's a top in and we thought There was a top in here. We suddenly move higher again and get squeezed out So at the moment. I've seen no evidence of a top in the US markets However, the same cannot be said for European markets despite the fact on valuation basis. They're an awful lot cheaper This is a particular. This is a particularly interesting chart. This is the German DAX and actually it looks fairly similar to the Dow a few weeks ago if we look at the Dow a few weeks ago We got a little bit of a pop higher above the previous highs that we then drop lower We were unable to take out the support there so by By definition if this level holds here around about eleven thousand six hundred ninety eleven thousand six hundred eighty We could well see the DAX do what the Dow did Earlier in February and we could see it unfold earlier in early March so You know, it's worth it's worth keeping an eye on you know Is the DAX acting we're the one-month lag on the Dow? It's a it's a big question And I think that the real test will be if we break back above eleven thousand nine hundred if we break back above eleven thousand nine hundred and take out this twelve thousand level and I think there's a decent chance the DAX Could revisit the highs that we saw in 2015 Twelve thousand four hundred and that's these levels all the way back here twelve thousand three hundred and ninety two at the Moment on the basis of the weekly candle that doesn't appear to be any momentum to do that But I think as long as we hold above eleven thousand six hundred ninety four That's the key level that I'm looking for eleven thousand six hundred eighty in round numbers really if we hold above that Then we could well have a good pop higher if we break below eleven thousand six hundred and eighty Then there's a good chance. We'll probably revisit the eleven thousand five hundred level for me trading these markets It's all about levels you pick your levels, right and keep your risk low Then ultimately even if you get it wrong, you're not going to take a massive hit on your P&L It's basically waiting and timing your entry and exit points into the trade So for example If you're looking to put a trade on here Your stop loss on a short position is going to be have to be all the way back above this Eleven thousand up around eleven thousand nine hundred area Well, that's just way too far away when you consider where you'd be looking to pick them back up again around about eleven thousand seven hundred You might as well flip a coin So it's really about how much you can afford to risk in terms of your stop loss And I certainly wouldn't want to be risking more than say forty or fifty points on any short position So I'll be looking to sell as close to eleven thousand eight hundred ninety as possible I'm making sure the stop loss was around thirty point was above eleven thousand nine hundred by at least ten or fifteen points Which means that your entry point needs to be as close to that resistance line as possible For a move back to the support line and remember obviously to take your profit because in these sorts of markets range Bound markets, which these are you need to take your profit It's it's fruitless way. It's pointless waiting for the big move because as anyone who knows anything about the technical analysis and Dow theory Markets tend to range seventy percent of the time the other thirty percent of the time they they trend So on the basis of that calculation you always have to remember to take your profit and When you take your profit you make sure that you run your profits So you don't take a thirty point take profit when you're running a fifty point stop loss That's just a recipe to basically lose money because I'm sure that Pete I'm sure that none of you out there take a stop loss early. You always run it into your stop loss So you should always run it into your profit always have a clear idea of where your profit you take profit is As if to signal why I think European investors are worried about European markets. Let's look at gold because gold is Probably one of the best performing assets along with silver since the beginning of the year Despite the fact that US markets are very buoyant despite the fact that markets are pricing in the prospect of Multiple Fed rate rises gold has continued to push higher and it's continued to push higher in a fairly orderly fashion It's currently pushing against resistance on the 200-day moving average Which currently comes in around about 1260 1260 but certainly the direction of travel is positive I talked about this 1220 area last week in my webinar last week and the week before and It's likely to remain a very key support level on any move lower So I think with gold. It's really a by-the-dip mentality I think the potential for a move through the 200-day moving average is there at the moment We've got a little bit of divergence negative divergence on the slow stochastic That's not to say that we can't go higher, but we are now pushing in to resistance at the 200-day moving average and this trend line resistance from the July peaks just below the $1400 an ounce level around about 13 1380 so certainly in the in the context of Where gold has the potential to go to we are starting to push towards the upper end of The recent range so we need to keep an eye out on that but certainly in terms of what silver's doing silver's really outperformed and I remember getting asked about that last week and At the back end of last week We were able to manage to hold above The 200-day moving average and we've now pushed well above it So I think with respect to silver if that's a leading indicator of gold Then I think the prospect is that we could well see further gains now. I notice there's a question from Nick You need to address Them to this message that I'm about to send out here so Just send that to all of you if you reply to that message Please reply to that message and I will try and answer your question because Nick I cannot see your question in the way that you've addressed it Just now So looking at silver prices if we do get a dip back to around about $18 and I certainly think that there's potential To move back towards $19 but as with anything with silver I tend to steer well clear of it I think simply because it's just way too volatile for my taste Right just been asked aren't the golden bomb market signaling a risk-off rotation What is the history of what these signal for future season in stock returns the golden bomb markets at this this signaling? I think a concern basically the signaling that investors don't trust the current stock market rally and I think that for me is The key question You know who's right a bomb markets right or a stock markets right at the moment when we up when I look at stock markets I look at US valuations and they do appear a bit pricey But ultimately none of the normal correlations are working because of the amount of central bank stimulus that's sloshing through the system and ultimately I think given the rich valuations of US markets at this point in time and The concerns about political risk in Europe Investors are essentially paying up for assets that are already quite expensive How else can you explain investors buying a German two-year bunds? Or to the German two-year two-year paper which has a negative yield of minus naught point nine five percent When German inflation is running at two percent You're taking a real yield loss of two point nine five percent on your savings That makes no sense to me whatsoever. So That gives you an indication of how difficult Markets are at this point in time Been asked about Bloomberg charts. I have a Bloomberg terminal sitting on my desk That's how I am able to gain access to Bloomberg charts unless you're a professional investor Then it's very very difficult. But if you want any information about a particular chart I'll always try and help if I can You can tweet me at m. Houston underscore CMC at m. Houston underscore CMC and I will try and help out Obviously, I won't be able to fulfill every single request. But certainly I think in terms of you know, if it's particularly Important then it's certainly something that I would I would be able to give you an answer to Outlook for copper. Yep. The outlook for copper Look at that That we had a bit of a failed breakout on copper and this is a little bit of a worry here for me Looking at this chart. We should have gone higher on the break of these peaks through Early through in early February the fact that we didn't and the fact that there's potential for us to break back down again Does appear to suggest that maybe we could see a little bit of a downturn I think also a good leading indicator of what commodity prices might do is iron ore and iron ore prices We're initially have have have gone to Significantly elevated levels and I can show you the iron ore chart there So iron ore and copper are a decent bellwether for demand There does appear to be a little bit of a topping out around about $90 a ton on the iron ore prices. I keep an eye on that as Chinese iron ore Index futures so keeping an eye on that at the moment that does appear to be Potential for a little bit of a head and shoulders there. I have to see how that plays out, but certainly I think Base metals are starting to show a little bit of evidence that potentially we could see a bit of a rollover Mining stocks aren't reflecting that at the moment. There's a chance they could well do Also crude oil crude oil is still Struggling to break through those range highs that we've seen over the course of the past three months It's still chopping around until such times as it does so Then I think the weakest side still remains to the downside the market is very long of crude oil I think there's still an expectation that OPEC cuts will outweigh Shale increase in output on shale the rig count on Friday went up from 751 to 754 Which was only a very small increase in overall US rigs So maybe there's a little bit of leveling out in terms of the increase in the rig count but until such times as we get a very strong break of these peaks in the Brent contract and The peaks in the WTI contract then I would be very cautious About being overly long of crude oil at these sorts of levels Simply speaking, I think the vulnerable side still remains the downside and again We're ranging here, so there's not an awful lot to really get our teeth into other than play the range on crude oil So I think the overall outlook for this week. We've got a whole host of data out. Obviously we have US GDP US inflation numbers on the 1st of March. We've also got the latest ISM manufacturing and non-manufacturing data for February which could well gives clues as to what the Fed might want to do with rates in March if we get very strong prices paid Components in those ISM numbers then that could well tilt the favor or tilt the balance in favor of a potential Fed rate rise in March But again, I think the key thing to focus on this week is going to be Tuesday night's Speech by Donald Trump to the US Congress How the market reacts to what mr. Trump has to say after promising Phenomenal tax cuts and infrastructure plans will determine where we go to over the course of the rest of the week As I say, we've also got UK data. Keep an eye out for that But overall, I think the key thing will be Trump tax reform US data keep an eye out on that that will tell us where the dollar is likely to go over the course of The next few sessions. So that's it for this week Non-farm payrolls is on the 10th of March not the 3rd of March There will be a seminar for that which you can sign up for a webinar for that which you can sign up for It's already on the website under the learn Under the learn section of it and that will be that will be at 1 15. So Thanks very much for listening. I will post this to YouTube in the course of the next hour or so and Thanks very much for listening and I will talk to you all same time same place next week