 Okay, very good morning folks. It's Tuesday 23rd of November and finally the wait is over. Jerome Powell has secured another four-year term as they head the Fed chair position at the Federal Reserve. So, going to have a look at the charts and digest exactly how the market's reacted. As you might have seen, the NASDAQ sharply underperformed yesterday despite the initial knee jerk reaction higher. So, I'll run through some of the rationale of why that happened, why tech stocks were hurt the most and why we saw then a bit of a continuation of the sell-off there. But ultimately what does this mean long-term? Is this a top for equities or is this just a short-term pullback before we then resume the upside trend and I'll go into. We're also going to talk about oil news. Quite a lot coming out obviously yesterday. We've seen from around this time a month ago oil prices are down in excess of 10% or so from where we were trading. Lot of talk and pressure that the US is putting on eastern partners about potentially tapping strategic petroleum reserves in order to offset then some of the inflationary pressures coming from high energy prices. So, I'll give you the latest on that. And then we'll talk about geopolitics, more tensions brewing. Dual-fog really for Biden at the moment, some more tensions with China irrespective of old friend kind of dialogue that emerged from a virtual meeting from last week. Friction still pretty high on a potential military flexing of muscles side of things. And same case with Russia as well at the moment and the issue of Ukraine. And then we'll look at the calendar for the week ahead, the day ahead I should say. Not forgetting that I'm filming this around seven o'clock in London and actually we've got the various flash PMIs coming out. Probably by the time you watch this we'll already be out. Just for future reference those data points, the flash readings are always super important. Generally for the service manufacturing sector they always tend to have a potential influence in the European for France, Germany to move the Euro and European assets, the UK at 9.30 likewise for Stirling. And then we'll get the US number probably lower hanging fruit for the US because the PMI from the ISM really dominates on that side of the pond. But nonetheless just just going forward the morning of a flash PMI you should always have your wits about you if you're a participant in the intraday market. But having a look at the overall charts this morning and we've had a little bit of a pullback of around a third of the gain that was seen in the dollar yesterday after the announcement of Powell. And so getting a little bit of light reprieve for the major currency pairs Euro dollar and cable just coming off their lower levels. You can see here cable just coming up to the top end of its area of kind of consolidation that was seen overnight. The APAC session finding some resistance that around the pivot which as you can see here was also that low we printed back at the end of last week. Euro dollar pretty similar setup as well top left as you can see just coming back up to around that previous area of inflection in the short term price action from yesterday as the dollar just pushing back a little bit. Overall though we did see dollar strength and yields move higher yesterday. Overnight swaps jumped would be indicative now of the market pricing in a 25 basis point rate hike from the Fed and the earlier timing of June meeting with a second rate hike now priced into November meeting of next year. So sort of the rationale here just before I look at the equity reaction is the idea then that Powell is the continuity choice but in summary he's seen as a little bit more kind of inflation minded or be it he's far from a hawk. He's just not as dovish as Brainard perhaps could have been and thus then the reaction effect short term at least yesterday was relief first and actually if we think about relief equity markets in a uniform fashion actually rallied initially as you can see here. So that's your relief trade. I call it relief and realization if you like if you want to call it that because then the overall trend overall on the session certainly for the NASDAQ has been lower after we initially shot up. So there's relief continuity the uncertainty is over and even though it was a two horse race and they're fairly similar generally more broadly speaking the idea is then the kind of confirmation of it was a sigh of relief. The overall sell-off then came because of this more idea of the it means the Fed can pursue then its current guidelines of tapering. We've had lots more comments. You've had Fed member Bostick speak overnight. So this was another of the latest Fed voting voting members and he said last night the US Central Bank may need to speed up removal of monetary stimulus in response to strong employment gains and surging inflation allowing for an earlier than planned increase in interest rates. And remember this follows the lights at Clarida, Waller, Bullard all that spoke at the back end of last week. So the Fed is shifting and becoming more hawkish with some of the inflationary prints that we've had and we've got things like PCE coming out this week, which of course will be incredibly important. But we have the CPI of course more recently at that elevated 6.2% multi decade high. So the market's perception now is that the rate hike kind of trajectory has got quite aggressive for me perhaps a little bit too aggressive. We seem to have been here again and again and again in regards to the idea of pricing in rate hikes too quickly and it's almost like a knee jerk reaction. So then kind of fade that pricing a little bit as the Fed are going to tighten but perhaps not at the pace that the market expects. But obviously tech stocks feeling the brunt and as that actually finished out one and a quarter percent the Dow was flat. The S&P was only down a third and this goes to that point of how growth stocks tech stocks which tend to be more benefit benefit better during a low rate environment. The fact that yours were popping high really weighed on that sector in a technology space. One thing is if you flip the NASDAQ onto a daily chart, I think it's really important to just look at context as much as aggressive a move yesterday particularly into closing Bell and Wall Street might have felt. If you actually look where we are in the NASDAQ I think we could easily come down another one and a half percent and I don't think that is still any grave cause for concern quite frankly. I mean that would just bring us back down to the 16,000 psychological level and that kind of route with price action that we had back about 10 days ago in the kind of 11 12th of November and even lower down further support would be seen at 15 750 which at the time would probably feel quite heavy and I'm sure some of the bears will be salivating somewhat on a six percent so in excess of five percent pullback but again just look at the context of where we're at at the moment. I think short term I still don't detract from the point that sure this is a bit of a negative reaction thus far and we could go even further but that doesn't make me feel bearish in the slightest at this point for me personally. As you would imagine then in step with just generally some of the dollar movement and yield movement gold also saw a considerable move lower yesterday. You can see this here from this breakdown in price shortly after the announcement of Powell and we dropped down to really the $1800 level where we thrashed out now a double bottom to keep an eye on as far as support for the period of consolidation we are now in between 18 kind of 03 and 18 12 and a half at the moment on a daily chart then just counteracting some of the recent trend that we've had through the month of November thus far and just pulling back down in that area of what was consolidation through the latter part of the summer period following the Powell announcement. Yes that was the overall take I mean other things I'd say I'd mention are this so as I've just talked about traders are now bracing for a more hawkish rate cycle but one thing I'd say for me you know as the headline suggests Powell pick scene is positive for risk despite knee jerk sell off and I totally agree. I think that the dust will settle on this as I said even if the NASDAQ sees some further downside short term I think overall that this is a continuity play and I think the markets will like it. I think Powell has proven to be very consistent with his message and delivering upon that in terms of forward guidance and execution of that in a policy perspective. Comments at the JP Morgan they kind of summarize it as Powell's reappointment reduces uncertainty and hence should be a positive for risk assets. Historically markets try to test new Fed shares and they believe this outcome now will be obviously avoided. Additionally Powell's experience from the second half of 2018 where policy tightening contributed to a strong market sell off into year end will likely result in a more cautious approach to lift off next year. So he's had the benefit of experience is what they're saying and I agree with that. So yeah overall I think personally I think the move yesterday was maybe a little bit overdone but what I'm saying is that doesn't track from the point that even though the dollar might fade a little bit of the pump yesterday the directionally the dollar probably is still going to appreciate over time and that being because of that central bank policy divergence that we're seeing I mean the Fed the Fed of tightening policy for sure in the period ahead and the ECB are going to remain static and if we go back to the euro dollar chart obviously this is what we're looking at a daily continuation. We have that breakdown from 115 is being fairly one directional in a sense and we're now down to close proximity 40 pips in the 112th handle which was that bottom end of the price action we had in June of 2020 which is the overall area of target for those more medium term shorts that have been in play given the expanding divergence of their policy kind of timing at this point in time. All right some other headlines there to get you up to speed on now we're all clear on power. Before I talk about oil just a quick mention if you go to amplify me.com forward slash market hyphen maker I'll drop the comment in the video in the comment section and you can just put in your email and you'll be automatically added to our distribution list which is a daily email that I put out really short three four minute read but just dissecting say a major market topic of the day and it also give you access as well as shortcuts to the the latest podcasts when they hit as well for Apple Spotify Google and the rest so do check that out and feel free to subscribe otherwise looking at oil yeah quite a few comments of late and oil has will bring up the oil chart as well oil seems some significant movement of late if you look at more short term obviously as we were coming in towards the back end of last week so this would have been last Friday going into Friday morning we broke through this kind of trend line quite heavy selling pressure and we've remained lower still since that point we're trading around the 76th handle just hugging the pivot in today's session on a daily chart which is yeah daily chart first let's say this is looking at the October November price action and actually if you look at where we've come from which was around this time a month ago we have traded down in excess of 10 almost 12 and a half percent so it's been a meaningful move but again just like the equity market I think if you look on a weekly bar so this starts to encapsulate the multi-year picture and you know we've just been on such an incredible run since really November of last year we've come all the way up to now price back at a level that's been quite key strategically you can see going all the way back to 2011-12 also 2018 the peak of 2021 which really helped exacerbate the kind of power of the breakout that we saw in September we're back down to around those levels so a little bit of moderation in price again I don't think is too unwarranted and I don't think is too much cause for concern at this point that oil is going to dramatically set off but all eyes appealed I mean obviously from a demand side Covid is picking up quite rapidly across mainland Europe which is going to impede economic kind of activity and mobility all the way from Germany, Austria, Netherlands, France, Spain, Portugal, Ireland so the whole Euro area is going to be impacted case rates in the UK is still to be monitored at this point and it's all obviously coming in the northern hemisphere as we go into the winter as well which typically would lead to potentially a higher degree of case rates with greater chance of transmissibility of the virus but looking at oil overall what people are talking about then and on the supply side that's going to be very key is what's going to happen with the US Biden we know is under tremendous pressure to try and offset then rising inflation because inflation so far retailers like Walmart, Macy's, Coles we saw their numbers come out last week and they were pretty decent so there's still demand from the consumer irrespective of heightened inflation currently and rising inflation expectations for the future now that's all well and good that the retailers are performing now and the consumer is kind of making its way through but that's probably not going to last forever if prices remain this elevated and energy prices is a key component of that and so Biden has been heaping pressure on as we know the likes of the Middle East Gulf producers but also others as well and so the latest here is the White House officials last night said there's been no decision as yet about the release of oil reserves and this follows comments we had on Monday that President Biden is set to announce a plan to release reserves from the strategic petroleum reserve the SPR and that could come on Tuesday and be in tandem with the likes of China, India, Japan and South Korea according to unidentified people familiar with those discussions now a Reuters report has come out overnight and they've talked about a so-called swap from the SPR to be announced today and under that swap agreement oil companies would take crude oil from stockpiles but are required to then return it or the refined product plus interest swaps typically offered when oil companies face a supply disruption like a pipeline outage or damage from a hurricane outright then just selling from the stockpile is much less common so that's what's being talked about at the moment. To note then as per this headline on Bloomberg OPEC delegates said yesterday that the release of millions of barrels from the infantry's of the biggest customers is unjustified by current market conditions and at the group i.e. OPEC plus so this is namely people like the US sorry like Saudi Arabia, Russia in particular they might have to reconsider their plans to add more oil production when they meet next week and just to remind you remember OPEC now meets at the moment every month rather than on a six month period as they would do historically that's because they're adapting to market conditions more frequently because of how fluid the situation economically is under the post kind of pandemic recovery and their predetermined path is they're going to return 400,000 barrels per day additional bringing on new supply but in a very kind of cautious manner as they monitor developments and things like you know mainland Europe don't forget that many provinces in China at the moment are taking a zero policy lockdown approach and that also is going to impede the likes of energy demand at this point so there's a lot quite a lot of play there an actuality then we'll keep an eye on things today certainly confirmation of this could well create a little bit of a short-term interlay reaction but the price as you've seen has already kind of repriced from Friday dropping again quite substantially to reflect a lot of the things that I've just been talking about so yeah it definitely is going to put a strain on some relationships and one of those relationships then flips over to the geopolitical front and the Biden administration is reportedly mulling sending military advisors and new weapons to Ukraine this comes as Russia builds up forces near the border and US officials prepare allies for possibility of another Russian invasion according to CNN last night this morning the US said Russia is close to using energy as a weapon in Europe while it imposed further sanctions related to the Nord Stream 2 with sanctions imposed on Russian linked entities and its vessel according to the state department so it's a very complex situation here because this is kind of US-led I'm sure the likes of Germany would be very much more cautious approach to sanctioning of the Nord Stream 2 pipeline because that's one of the things of which Putin's decided to play ball in recent weeks to offset the emerging energy crisis that's being experienced in Europe by opening up the tap and supplying more of which much of mainland Europe is heavily dependent on and then the US are kind of getting quite heavy handed now talking about their military involvement and so on and so forth so yeah definitely quite a few things to keep an eye on on that from otherwise in other news just two other small things that aren't massive but to be aware of the German coalition is set to announce then that they formed an agreement either today or tomorrow Olaf Schultz the SPD's candidate will be the next chancellor and Christian Lindner the head of the FDP is set to be the next finance minister according to sources close to those talks and then overnight as well according to the Global Times newspaper the kind of state bank newspaper in China they talked about the country is likely to adopt another reserve requirement ratio cut before year end to cope with the economic slowdown although the loan the prime rate is unlikely to change at this point in time so that's the latest okay so quick look at the day ahead and in fact I think we've just had some PMI data hit the tape so the actual French November flash services PMI just come out now 58.2 versus expected 55.5 so it looks like a pretty firm reading there on the service side for for France just coming to the calendar then we get the various different PMIs through the morning so the German figure will follow 830 eurozone at 9 UK 930 we'll get the US version of that at 245 and then the weekly oil event trees at 930 from the API as normal from a speaker perspective Bank of England's Haskell speaks at 11 a.m this morning and then you've got the Governor Bailey appearing at the House of Lords hearing on central bank digital currencies this afternoon at 3 p.m with ECBs to Gwendoz speaking in the evening and President Joe Biden is due to speak on the economy inflation today but time to be confirmed at this point so do look out for that and then in fixed income space the main one is 59 billion dollars and 70 a note auction usual time results due just after 6 p.m London time so yeah just to recap the services PMI and France just came in at 58.2 above the expected 55.5 the manufacturing figure 54.6 also stronger than expected 53 as well to look out for the German numbers shortly all right that is it let you guys get on with the day take care and I'll see you same time tomorrow