 Okay, very good morning. It's Thursday the 15th of July. It's just 7 a.m. Now here in London So I'm going to give you an update as to how we close on Wall Street We're also going to look at some of the major overnight news flow which there's quite a bit We had a lot of Chinese data overnight including their latest GDP number We've had the Australian unemployment rate tumble to a fresh 10-year low in June And we've also had some news as well from the Treasury Secretary Janet Yellen about relations between the US and China as Well as some new content coming out of Netflix in the gaming space their shares were up around 3.3% Aftermarket last night on that news And we've also got oil prices still remaining under a bit of pressure as it looks like we're getting closer towards a potential deal between Saudi Arabia and the UAE so Plenty for me to cover I'm going to focus predominantly on the news and the fundamentals and leave the Amphi live community and our traders there to go Over things from a technical perspective, but if you are watching this on YouTube really appreciate it Don't forget to like and subscribe to the channel if you want to get access to more videos on a daily basis But let's just have a look and start with the general overview from a sentiment perspective and Relative calm seen here at the European entrance the dollar has continued its General softer tone that we saw yesterday triggered by the Reiteration of the Fed stance from Jerome Powell the Fed share So at the moment you a dollar and cable just kind of holding on to those moves you a dollar firmly off those lows We had seen more recently gold One product is that continues to reverse really the FNC hawkish To dot plot 2023 surprise move and actually we've only got another 15 bucks or so to have taken back the predominant amount of that particular move that we saw in the middle of June So at the moment we continue to see Despite high elevated inflation numbers the market's belief of it being transitory Riteration from Powell has led to a continued decrease in yields and real yields And that's helped support equities of which US indices of course at the time did touch on fresh record High is again some quite clear distinctive double tops forming in the Nasdaq as you can see here this week and also that reiterated in terms of the price pattern on the Dow as well as you on the S&P Excuse me as you can see from the CPI and then pow following Fleshing out that double top at around 83 84 mark Otherwise T notes remain generally elevated continuing that upward trend that we saw From yesterday we're up around five ticks and pretty sideways though overnight in Asia And as I mentioned oil lower and we'll delve into that a little bit more detail in a moment in terms of the main catalyst then certainly was drone power and I do find it still fairly hard to the to see really the disconnect between markets and and the Fed sometimes because I think I have Back tested and run the data, but I'm pretty sure if you just listened to the Fed as in listen to your own power You'll probably be on the right side of the trade more often The knot because generally the market tends to kind of deviate and over amplify certain moves like You know scaremongering about inflation and then the yields shoot away Or we're gonna start tapering immediately and then actually if you listen to the Fed and your own power He's basically just stuck to the script throughout. I didn't find what he said yesterday particularly surprising You know if you just go back to the briefing it was kind of in fitting with our expectations. And so pow I don't think is at the point of Moving and deviating from that stance given the fact of predominantly the jobs market He said in fact yesterday that the US economic recovery still hasn't progressed enough to begin scaling back The bond asset purchase program so at the so kind of brushing off tapering Which obviously was pretty much at the forefront of most people's minds given the fact that we had that CPI number still remaining Particularly elevated early in the week So government debt rallied the dollar weakened and the dollar softening up again a little bit more this morning So eradicating any gains that have been seen early in the week As far as Asia is concerned. We did have a couple of things for China and First of all a bit of an overall top-level flavor of the the region shares slipped in Japan but edged higher in China overnight and Hong Kong rallied I think there's some reopening on a COVID side that was particularly pertinent for that stock index in the Hang Seng Also predominantly though for China and predominantly for Hong Kong as well was the technology sector We know that technology sector has really suffered of late with the crackdown coming from the state that government out of Beijing But there was a report in the Wall Street Journal that's been circulating about Alibaba and Tencent Gradually opening up one another's ecosystems to work more closely together And they share a shot higher and that helped lift the index From an economic data point of view Chinese GDP year-in-year came in at 7.9% was a little bit below the expected 8.1 and certainly a sharp deceleration from 18.3% but this was all very much largely as expected Industrial production 8.3% stronger than expected 7.8 and retail sales came at 12.1% Above the expected 11% so actually you know if you put all of this together and remember Pretty much this time last week on Friday We saw a surprise cut to the triple R the reserve requirement ratio in China and Generally speaking then this is a prelude to a weaker period of economic activity in China We've also had a little bit more cautious commentary coming out of the government themselves and government state officials So this data if anything might go some way to alleviate at least short term Some of those concerns that might have been mounting about the speed of the deceleration because those data points last night We're actually pretty okay all things being equal So China was up the technology set to outperforming lifting more prevalent in Hong Kong though for that respect So not too much of a read-across for markets this morning for the European Open but certainly a potential ticking time bomb Averted for the time being as far as that could have been a lot worse that Chinese dates are overnight the other thing then that we have had is From overnight sticking with China is the Treasury Secretary Janet Yellen and her Staff have come out and said that there's no plans to resurrect the regular US-China economic dialogue That govern ties between the two nations during the Bush and Obama administrations in typical Trump style he kind of blew that Dialogue apart before of having more structured continuous meetings as he was going through the trade war and the tip for tax that that led to and and Biden keeping the same stance. So again, we've seen this right from the beginning really the You know peers and I have talked about this on the Amplify podcast in many episodes about the idea that Biden has inherited this this current relationship status with China, but he's not going to move the needle Trump moved that in the more assertive direction and Biden's like to keep his foot on the pedal at that Same speed all the way probably up until the next 12 18 months until we have the midterms next year And the point being then it allows him to be more focused on more domestic forces like Infrastructure bills and so on so forth the post pandemic recovery Situation again people back to work because that's going to have more political payoff for him come the midterms next year And he needs to appear as well still in an assertive way against the stance of China on the trade front So none of this I find particularly surprising to be to be quite frank I think it's just the ordering of the priorities for the domestic focus from the administration So something to just be aware of because the tensions between the two nations still remain fairly Tense at this point in time. The other thing in the Asia session You had Australian unemployment rate here at 10 year low and actually on the chart here You can see the unemployment rate is the black line. It's obviously exploded higher on the back of the initial Onset of the pandemic, but it's one of the fastest nations to not just recover It's even better than it was There is a bit of a disparity though here between a couple things one wages Wages are still pretty much on the floor and as far as the central bank looking to Manage inflation. This will be an important metric to manage going forward if unemployment continues to remain In this positive fashion are people going to be paid more as the availability of of workers becomes tighter You have to pay them more and that leads to generally inflationary conditions So that's one thing the other thing is as well in Australia greater Sydney Which accounts for about a quarter of the Australian economy and just over a fifth of the national workforce Has gone into a lockdown and again that lockdown keeps getting rolled over as they a battle to contain the outbreak of the highly transmissible Delta variant so The other thing is Melbourne has come out overnight as well and having had them Just come out of lockdowns. They're going to go back into another lockdown from midnight And so there probably is going to be a consequent impact On these figures going forward society. Just bear in mind that this type of trend is likely not to last Given that situation that's happening and the magnitude of the overall jobs market being Concentrated on the likes of greater Sydney given its larger population The other thing I thought was interesting last night We obviously had UK CPI Yesterday and that did come in above Expectations the market somewhat nullified by the idea of it being transitory used cars. That's a the supply chip The chip supply shortage is a global issue emanating from the pandemic So just like used cars are promoting price pressures in the US It's the same case in the UK as well as energy prices and so forth So people largely were able to look through that to some degree But there were some surprising comments that came out from the deputy governor and as far as listening to the central bankers speak Obviously the deputy governor tends to be like a vice vice chair or vice president the ECB quite aligned with the centrist view of what the governor is thinking and that's the overall you know very important for any definitive changes that the center ground might make for their no ultimate policy and He came out last night I was a little bit taken aback because Dave Ramstein said inflation may peak at double the target in the UK Obviously this came after the CPI print leaped up to two and a half percent in June Expectations were for only two point one and remember the target. Of course, it's two percent in the UK Ramstein estimated inflation may peak at four percent Now the previous communication from the bank have said that it could run up to three and possibly over Three no one's actually said explicitly the number four. So it's getting a little bit more punchy on the upside in that respect He did say that unemployment may end up lower than the Bank of England's forecast in May And wage gross is like to surge again in the report that we're looking out for later today So definitely much more on the hawkish side He went on to say I can envisage those conditions for considering tightening being met sooner Than I had previously thought So his remarks quite in contrast with the mother members of the MPC that we've heard more recently the other being The other deputy governor who's John Cunliffe who gave a much more neutral assessment of June's jump in inflation yesterday So there's a bit of the vision going on here as far as these members are concerned Here's how the hawk dove scale looks like at the MPC at the Bank of England How Dane's now out of the picture as we know he's going to be replaced by Catherine Mann Come next month. So the two guys we're talking about is Ram's din deputy governor here And then cunliffe deputy here. So cunliffe being a little bit more neutral I would say is a little bit more probably Aligned with the governor Bailey as you can see they sit pretty center But Ram's din being hawkish I think you've got to take with a little bit of context He is one of the more hawkish members with how Dane out the picture. He is the last remaining hawk on that board so Stepping out and kind of away from just a headline in itself. Yes, he's an important person as a deputy governor No, I don't think it's quite we should get panic and just go long-sterling blindly on the fact that this is a Ultimate BOE shift to becoming hawkish I think it's partly he needs to assume now that hawkish position given the departing how Dane Who we know was a real outlier just to balance the board because don't forget We are heading in a tightening direction, you know, I know the yields of declining Equities remaining bid at the moment on the premise of we're putting off tapering We are gonna taper the real yields might be falling now, but they will rise in the future So they do need to still strike a semi hawkish tone. It's just the fact of management of the time of tightening It's what's the balance at the minute? Moving on the only other thing I thought was super interesting was Netflix Netflix shares spiked higher aftermarket. They're off about 3% It's they're making their first kind of big bold move away from TV shows and films They're planning expansion into video games and apparently they've been just going around Silicon Valley Picking out some of the best people from large competitors like Facebook and other areas and electronic arts and so forth and The company doesn't plan to charge for this content But what they're looking to do is trying to expand as a fairly saturated market that they have in the US Which is their biggest audience. They want to keep customer loyalty It's a very competitive space in the streaming world as we know from the pandemic that's been accelerated And even more acute now for the companies to confront the likes of Disney and Amazon and AT&T and so on And then gaming overall as a strategy might well help to justify higher subscription prices in future Which is always a model that tends to play out over over time as well So I think it's pretty interesting move. It's said to to happen within the next year. And so Yeah, I don't follow Netflix particularly closely Perhaps this was talked about but I'm guessing not a great deal because the fact of the share price reaction was quite sharp Last night of over 3% as I said, so something should just be aware of when we get open when we open up later on today And then the final thing in energy markets oil is actually printing session loads as I'm talking right now We're ready to retest in the Asia Paclo and it came after a quite significant down day yesterday We were trading at the high around 75 50 We're now trading down at 72 handles. So we're down a decent $3 or so and it's come on the back of the fact that We although we've had Kind of a lack of deal a lack of rate around dialogue progression on a nuclear deal In a tightening market and that's promoted more elevated prices One of the key components of course was the inability for OPEC to strike a new deal to increase the supply they're bringing to market Because of the fallout predominantly from the UAE in those recent OPEC meetings Well, the latest here is basically that The UAE and Saudi are close to a deal now Agreement could unlock A call to raise production, but discussions are still continuing And one thing I would say is that given that details are yet to be finalized I'd definitely be vigilant and keeping an eye out on the headlines today because oil could see another distinct move Depending on what happens, you know any breakdown of this potential expectation Prices could well shoot back higher again, but confirmation and depending on how much is the concession that the Saudis gives the UAE Could then see some further further weight come into the price The interesting thing I read about this as well This was actually slightly separate was the fact that Iraq Now is reportedly seeking an upward revision to its baseline And I think that just goes to show what a delicate balance and why Saudi Arabia is so reluctant to concede to the UAE's demands Because think about it not all of these countries get on particularly well They have this shared common interest which is the management of the price of oil Which they're all highly dependent on But if you give a concession to the UAE If I missed it Iran, Iraq, Libya, Nigeria, I would say What you're giving them a concession and not me So I want an extra 50k 100k 250k Thank you very much because if you're going to show them some flexibility I want some flexibility because I want to sell more oil as well So this is what Saudi need to be careful of So it's interesting that Iraq has started making some noises now And Iraq as we know is actually a large producer of crude oil It's up there at the top of the table as far as the OPEC members are concerned It has a volume of potential of oil that they can produce So something to just watch at this point in time Double-edged sword for Saudi to manage As far as the calendar goes for today, we've already had quite a bulk of the day to come out already If I just refresh my feed, I can bring to you the UK data that's come out as I've been delivering this briefing The average earnings X bonus 6.6% in line with expectations So no real great surprises there, hence not much movement in the British pound on the back of that Later on this afternoon though, quite a lot coming out at 1.30 You've got the latest initial jobless claims expected to see a decrease to 360,000 from 373 You've got the New York Fed manufacturing figures, import, export prices and Philly Fed all coming out at the same time You also have industrial and cap utilization coming out at 2.15 As well this afternoon. So plenty to go out at the US session in terms of the data calendar From a speaker's point of view, Bank of England Saunders Speaking on the inflation outlook So probably the most topical area to talk about for a central banker at the moment So worth keeping an eye on Saunders, keep in mind those Saunders does sit on the dovish Side so likely to be talking more on the transitory factors as to not spook people about imminent tightening So slightly more Softer certainly than what we had from Ramsden last night would be the expectation Speaking at 11 feds Powell testifies to the senate So for anyone new to markets, this is just basically the same delivery from the house We heard yesterday gets recycled to the senate So it's highly unlikely that he'll say anything new but just to be aware of it's 2 30 feds evans voter speaks at 4 Fixed income supply coming out of spain and france of a sizable amount this morning And you've got a 10-year tips in 20 year refunding announcement out of the us at 4 And then one of the bigger earnings to be aware of today is united health And you know as a reminder The united health is the biggest company in the dow jones industrial average now that might not make sense Again, if you're relatively new to trading Because of the idea that what united health's bigger than apple and amazon and microsoft and so on And it's all down to how the dowel in itself is calculated as a price weighted index What that means is Stocks with higher share prices basically have a greater weight in the index So it's different as to a market capped basis is what we'd see in the s and p 500 for example So united health account for nearly eight percent of the entire dowel jones index and they are reporting pre-market So do keep an eye out for that and then you've got morgan stanley the next of the big us banks to report as well ahead of the opening bell today That is it gonna let you guys get on i know i haven't talked about the charts technically too much But i'll leave that to tim and the guys in the amphi live community So just go there for for more information on that side. He'll have his live feed on all day Otherwise as i said before if you've made it this far, thanks for sticking with me and and please do if you don't already Subscribe to the channel and like the video. I'd really appreciate it. All right Take care and have a good day ahead. Thanks very much