 Okay, very good morning to everyone. Happy Friday, the 4th of October. Non-fond payrolls of course coming up in a couple of hours time. That's going to be one of the main focal points of what this briefing is going to contain. But also there's a couple of other things to share. Obviously the build-up of the employment indicators that we've had this week that gives us a bit of an idea of how payrolls might perform and importantly how markets might react. We're going to have another review kind of to bookend the week of where we started to where we are now in terms of the markets positioning and expectations around the October rate cut and how that has been changed. Then we're going to have a look at some news out of Apple and an update on Brexit. That's my side and then Sam's going to come on and talk about the technicals a little bit. But first of all just having a look. I was off the desk yesterday afternoon but I'm already up to speed in regard to the things that have been going on and it almost as if the pennies now drop that given the fact that the ISM non-manufacturing was also weak following on from what we've had an ADP and ISM manufacturing a continuation of yields declining. So I can see the T-notes saw a pretty decent kick on the upside yesterday. As we'll look at the expectations now priced in and nearly 90% of a 25 basis point rate cut from the Fed in a couple of weeks time and therefore equities finally responding. Interestingly though just looking at the S&P 500 we did look at this chart yesterday from the technical setup in regard to that that Sam North trend line. I'll call it. Although that had a bit of volatility yesterday initially I imagine at the open we're at whipped through quite aggressively ultimately the level holding and we just continued to recover some of the lost ground that had been seen in the first back-to-back 1% plus consecutive day sell-off the only one that we've had in 2019. So you know we were kind of talking about this right at the beginning of the week the idea that you know, I think the worse or it gets there comes this inevitable point of which then the market tends to respond in the equity space at least it's about finding then the appropriate I think there's always let the room if you like for the market to pull back But then ultimately finding that area of where you get a pretty decent Responding people and have to be come in short-termist of course looking to just buy the dip at that point I think now given the move to happen yesterday I'd say people are probably more likely to just sit on their hands and wait now for non-farm payrolls before committing any further But if non-farm payrolls does come out on the weak side, let's say a headline figure sub 100 and Lower average hourly earnings more than not just that the Fed got a cut in October Then they've probably got a squeeze at December cut as well And then we break this current communication line of a mid-cycle adjustment to something for meaningful to easing and Therefore you've got to think under that circumstance equities might well just pull back a little higher again If that did happen Obviously the you'd be just flipping basically what the argument we were talking about the downside areas of significance to the upside And be targeting around that 37 to 46 that zone that we were eyeing on the initial break That was really initiated after the ISM reading back on what Tuesday Then the ADP and the eventual break that came as the kind of near-term areas of significance on the upside But away from the SMP. I know Sam will go into that more detail in the other indices for this morning Dollar index is basically flat. That's completely Regular activity. I'd say ahead of the major labor report So both euro dollar and cable are in a bit of a holding pattern. That's usually the case going into 130 elsewhere oil just up a touch 18 cents Pretty quiet overnight in Asia, of course China still remains closed for that 70th anniversary, which has impacted their Their markets all week the US 10 year just creeping up a little bit The whisper number has been circulating this morning for non-farm payrolls and it's around the 125,000 mark So it's substantially lower than the consensus estimate of 146 that's on the street at the moment all right, well, let's go into a couple of things then and I'll look at the fundamentals from a top level. I'll leave the technicals to Sam shortly first off talking about the ISM Manufacturing number we had earlier this week and of course this was the real this was the big one really because it really was The first piece of meaningful information that we had this week And just let me show you what that meant for markets expectations of the probability of Action happening from the Fed in October. You can see here on this white line. This is marking the implied probabilities of a rate cut of 25 basis points and it exploded Yesterday after we had the ISM services one It was a similar reaction effect that we saw if I was to have this extended It was a move from 40 pretty much to 65 ADP had a little bump as well And then another 20 25 percent up to 95 percent at one point yesterday immediately after the data so with the ISM manufacturing that came in at 47.8 and That was of course weak and expected the latest reading pointed to the steepest contraction in the manufacturing sector since June of 2009 so these ongoing Trade war with China and other counterparts globally has meant that we're seeing continued pressure on Manufacturing activity in the States. You can see this isn't like a one-time shock. This is a continuation of a deterioration In this situation and getting further into contractory territory Of course having had the last two numbers get below 50 and as I mentioned the lowest in basically 10 years got to go back all the way to the kind of depths of the financial crisis obviously it was Considerably worse than where we are at the moment having broke that lower bound right at the beginning of 2016 puts us back down to June Oh nine lows now the other number that we had The kind of fit fitted the narrative was ADP This is often given quite a large weighting in the market given. It's fairly correlated or should be Nature to the overall government's labor report that we'll get later on today. This is of course looking at private payrolls This came in at 135,000 expectations were for 140 but It was also recipient of a downward revision to the prior month as well So again indicating some weakness in the jobs market and then we had the services PMI confirmed at 50.9 Well, this was actually the market figure I'll get the ISM one up shortly But the idea being that the US services sector grew at its slowest pace in three years During September so all of that contributing to that number, which we were just looking at It did hit a 95 percent highest paired back slightly The Bloomberg measurement is always slightly More higher percentage than the actual CME Fed funds futures Which is the main one the market will look at but again residing at eighty six point one percent probability now That rates will be taken to one and a half to one point seven five percent in a few weeks time This is that very useful crib sheet that I always Kind of use or look at and recommend you guys do the same in the build-up to non-farm payrolls Some of the guys at the moment on the career training program In the very first stage of your your development in the coming weeks I'll start to give you some more advanced lectures in regards to how to interpret and how to prepare for major economic data but to give you a bit of a top-level summary and Non-farm payrolls is due on the first Friday of every month barring an exception if there was a bank holiday or something like that What happens then in the build-up to that Friday report is that in the preceding few days we get a number of US economic data some specifically on jobs and some like ISM manufacturing or non-manufacturing that Contain a variety of different constituents of those constituents. You probably saw with ISM yesterday You have things like new orders Infanteries prices paid but employment can the employment constituent is the one that's particularly interesting Because it gives us a bit of an insight as to on a broader national level for the manufacturing or non manufacturing sector What was the underlying employment conditions for those areas this then overlaid by things like challenger job cuts Which to bit comes out midweek on a Wednesday as a prelude to ADP that tells you the number of job cuts within specific sectors in America then you have things like the jobless claims so Initial and continuing jobless claims to see how many of those who are actively seeking employment and how many of those are looking to then Take benefits from the government University of Michigan how confident our consumers are all all of these numbers basically a wrapped in to give you a more Accurate sense because they're all monitoring the same survey period that the government report We're going to see later is also looking at so if anything if we can Understand how all that data this week has come out we can then start to gauge on The balance are we expecting the headline change known fight non-farm paras to be more favorable to the upside to outperform Market expectations that being of 146,000 jobs created In the headline figure today or is it going to be more to the downside? And this is how we then start to calculate this this thing that's called a whisper number now whisper Number is not a mathematical formula to calculate it. It's just a rough kind of guesstimate of in this case if we look at it ISM and Manufacturing and non manufacturing both were big negatives the employment index in the service area And if you remember the composition of the US economy, you know very much consumption driven. So the US consumer is key and That came in at 50 spot four That was against and that's a decrease against a previous of 53 spot one As far as that data is concerned around a three-point drop is large as far as that component is concerned The manufacturing employment sub-component in ISM Disappointed for a second month in a row. It printed at 46 point three So way into that contraction kind of territory the conference boards consumer confidence index negative ADP amiss Job job openings amiss. So all of these things have although there's been some slight Positive points maybe challenge a job cuts or the University of Michigan consumer sentiment index on the balance They've been negative and hence what we've seen so far This week that's meaningful shift in the fixed income market in regard to what the Fed are gonna do the equity reversal yesterday And so on and so actually the whisper number today as I said is is tracking at about 20k below What the street consensus is? This is a very important thing then to take on board when you are interpreting the numbers as they come out today Because the consensus now no longer matters because if we hit the consensus of one four six And we're talking about the headline alone that actually is a strong number Because the market is positioned for one two three one two five type area if that makes sense I'll go over all of this again I'll do a more in-depth thorough preview Encompassing the charts and what assets to trade and what levels to target Accordingly when we get closer to the release at 130 But hopefully that's a bit of an overview of the kind of procedure if you like and I'm just gonna put this link Into the chat room now and trading live so you can see it. All right, let's move on Another story probably helping the technology sector out a little bit and worth keeping an eye on Apple later today You'll remember the iPhone 10 for Apple was a huge disappointment and If anything they had to cut back the supply because of such tepid demand for that that particular model Well, the iPhone 11 has been a resounding success at least so far Apple has told suppliers according to Japanese press overnight to increase production of their latest iPhone 11 product line by as much as 10% to meet stronger than expected demand for their new handset. This of course is kind of the innovation here It's very much centered around the camera feature it does Calculate then a 10% increase into around 7 to 8 million more handsets than they were anticipating also, I think one of the parts of the reasons that led to the The weak response to the 10 was about the new contract changes given the high price point of that particular model Meaning that people weren't due for an upgrade whereas I guess now that is slightly different So maybe some pent up demand as well on that respect But worth keeping on Apple later when Apple has good news This does reverberate across a lot of the different component supply makers as well So if you were a single-stop watcher worth bearing in that in mind Moving over to Brexit Couple things here to point out the one thing firstly is that the pound isn't moving But there's obviously plenty to chew over in terms of the current state of play with Brexit So I'm gonna do my best to summarize a couple of points that I picked out out of various sources this morning So this is the headline Boris Johnson gets one week to improve his Brexit offer or face a delay Now why are they talking about this one week or delay? Well, you remember there was of course the so-called Ben Bill passed by lawmakers in British Parliament in mid-September that obliges the Prime Minister that if he doesn't have a deal by I think it's the 19th then he has to go to the EU to ask for an extension of article 50 Now, this is why Boris has been very vocal about this kind of more like 11th of October deadline He basically needs to get something done in the next two weeks Or otherwise he has to go Cap in hand to the EU for that extension That's according to the law that got passed before however Some law makers are concerned that the government may simply refuse to send that letter You know, this is Brexit after all and since when is this ever followed the plan? It's it's always been subject to last-minute changes. Now, how would this work? Well, the PM could decide to resign Rather than ask for a delay thereby requiring a swift formation of a caretaker government to come on board to ask for that extension of article 50 remember If Boris was to ask for an extension of article 50 that would be a horrendous outcome for him Given he's pinned his flag on do or die We must deliver Brexit if he then goes cap in hand to ask for this extension Obliging the Ben bill then that means he's gonna lose massive amount of political support Likely to then the Brexit party and he cannot allow that to happen. So we're in this Kind of weird zone of a brinkmanship going on at the moment so a couple of other things then to be aware of if Article 50 extension is perceived by many voters to have been forced through though by opposition lawmakers Or by judges and say the Supreme Court as we've seen with that Scottish rule ruling Recently then actually that could claim to the hands of the Conservative Party because then it it completely Supports that idea of the people versus Parliament. Let's get Brexit done all of that stuff that Boris was Drumming into the crowd at the Conservative Party conference at the end of the week So I don't definitely think it's the latter strategy But obviously there's a massive tail risk that if something doesn't give No one kind of Makes a concession at the last minute then there is still this possibility that we could crash out with a no-deal non-transitional disorderly Brexit and obviously that would have Huge immediate ramifications on the way of which asset classes would need to react Even with that being said I am gonna have a stern conversation with Sam later this morning and If we did have that Case and if the pound did see this quite aggressive reaction and let's say over a course of a day or days We did fall. Let's say 15 points for example so significant under those scenarios I would be talking to Sam about taking let's let let's put some serious money into a long term Long position. I definitely think that I Still think at some point This isn't for the intraday market. I think for a for a long-term trade I think the pound is massively undervalued if you X out Brexit And I still think Brexit no deal is a very limited Scenario, but even if that did happen I still think that the market inherently will overreact to that initial knee-jerk reaction And I would definitely want to get long at that point if we did get down to what that kind of 105 type area which a lot of people have kind of banded about is what we could see if we had a disorderly no-deal Brexit Anyhow, I digress looking going back to a couple of final points Boris Johnson is believed to be holding meetings With European officials over the weekend What have European officials currently said as the current status quo for their interpretation of Boracys and the government's plan for brexit, which he unveiled about two days ago Well, Donald Tusk spoke with the Irish Prime Minister and they've said that they're both unconvinced Yonka has said it's problematic and had grave concerns now. I saw an absolutely excellent short 10-minute video explaining really Concisely what Boris's latest plan is because it is quite confusing because there's a difference between the the customs border and then this Irish sea border and To make sense of that I will put in the the chat room and on the video comment section on YouTube a link and I highly suggest you watch that over the weekend to make a bit more sense of the current Conservative plan so definitely there's going to be more comments over the weekend I'm sure is there going to be anything meaningful in the in the form of a breakthrough. I don't think so I think this now goes down right to the limit of as I said in the next two weeks or so right down then just before The EU summit to discuss specifically brexit which happens on the 17th and 18th He then has that deadline of course from that bend bill on the 19th So a lot has got to happen between now and then but I would say given We're on the fourth and that's all kicking off on the 17th I wouldn't see anything meaningful happen until around between the 10th and the 15th to give you some idea Okay, I'm not even gonna look at the calendar. I'm gonna hand you straight to Sam because you know what the main drill is for today It's not fun payrolls. So let's get Sam on see what he has to say. Thanks very much guys If I don't speak to you before have a great weekend Hi guys. Good morning. I Will doing Doing well just gonna start off with the the S&P you can see almost coming back into that zone We were talking about a few days ago still marks up here and I was just having a look at the charts from from the week from well from the The pictures or the charts of the screenshots of the charts you put into the weekly strategy and actually the charts have been so Technical this week. It's it's incredible really See that test to the third test that Chenlein was was good an S&P the false breakout got down towards 2850 Found support almost hitting the the level from 28th of August and obviously we're now back above interest and see where we close the week See trading pretty much bang on 2900 at the moment see here. There's more in today and and that itself is a big level Can we get back up to 2937 the close above there would be would be massive and Obviously a big push from where we're trading or where we were trading yesterday after that data release So yeah, we're keeping a close watch on on that come the close of the day also just round today on the pivot 2892 looks pretty key and I would say s1 as well Just because obviously we had that spike through that trend line There was also the low which was the longer term trend line that we had from Wednesday Good price action again on a bit of support point previously. So those two levels below where we're trading Certainly be somewhere I'd have marked up the high of the day. You can see the importance of that was also a previous low from Wednesday as well So these markets as I said have been acting very technically and just having a look as well We had the euro dollar to bring in that into a picture one second Put this on a longer-term chart. You can see Let's get rid of the pivots. Just the importance of previous highs and lows in this market You it's couldn't get the break above yesterday The previous high a previous low I should say that the 24th that acted as a really good level of Resistance the pound as well was stuck within this range similar level You can just see the importance of that again similar days to those euro lows and now also we Well, we've come down a fair bit already from the 80 ticks or so and again the failure to make the low below The fifth of September so for the pound stuck very much within this range here Certainly against the the euro and the significance of this level here 124 46 to the upside of break by there later weaker U.S. Numbers or positive Brexit comments and of course a decent push higher could well be on the cards and to the downside You could imagine it could open up with a close below 122 60 and And then there 122 and below comes in quite quick More intraday on the pound of course non farms is going to be the dollar side of the driver We've had a decent break above this Area yesterday didn't really Confirm it though, which is you know slightly worrying for the bulls and obviously we hit the top end of that range as we mentioned However, you have got some previous Highs from yesterday and Wednesday evening That have acted as support so far 123 50 the area I would I would still have marked up there also from those lows the trend line Here is that going to be respected potentially later on something I would have on to to almost predict where that third test could could well be As well, you can see this trend line here Offering a bit of support around 123 50 so pound and euro to some decent levels in the mix another chart that has been well respected technically of course is the Oil Chart means move these out and we were looking beginning of the week at the the trend line on the 240 Not 24 minute 240 minute chart from those August lows Let me just bring this into a clearer picture once that broke. We we got a retest not quite to the tick but to the zone and Just bring that in There we go and since then it has has drifted lower in waves come back and retest and some good opportunities Once we've got down to 51 think quite make the 50 50 a decent recovery yesterday as It turned out bad news actually is good news again and not the other way round or whatever looking at this more intraday for oil when We come into the latter part of the day it could be that we do have a bad number and the whole global slowdown Fears take over again and oil comes under a bit more pressure pivot is key I would say intraday all really just a bit above that 52 17 low of Wednesday decent reaction Yes, they all through that and obviously the 52 dollar handle and pivot just below the higher the day is Important and I would have this more as a zone now The low from Tuesday The high from Wednesday evening first day's highs as well and today and 53 dollars a really key level That if we were to get back above there in clothes, that would be a pretty significant attempt Trying to a further retracement here for for the balls Is there any trend lines? I'm going to a quick look to see if there's anything of Interestist over the last few days and you can see this one here from starting on the 30th to the second And then it's coming into that 53 dollar handle as well and those highs we just mentioned So some key points for oil the balls and want it above 53 at the closer play And I think if we go anywhere below 52 17 and pivot today, then 50-50 will be the target along with yesterday's low relatively quickly quick look over The Dax is coming under a touch of pressure 36 minutes into the open now and that pivot the first test held well If we get below there, then it could I would say it actually get quite choppy I mean just looking at yesterday Around that price point you can just see quite undersided so for the Dax I mean I like the idea of a short a bit higher up But again, this would be Okay, so probably waiting to sort of see a false break higher I think for directly something like this before actually taking that trade on any questions as usual Please do let us know And like and mentioned if you don't speak to you hope you'll have a great weekend