 All right. Good afternoon, everybody. Welcome to this month's non-farm payrolls webinar with me, Michael Houston, on Friday, the 7th of April, 2023. And this is Good Friday. And I think it's going to be one of those numbers that is probably going to not be particularly instructive when it comes to the market reaction. An awful lot of the markets are closed today. And the ones that are open will be closing very shortly after numbers are released. So I can't stress this strongly enough. Be very careful if you're looking to trade any of these moves that come about as a result of today's numbers. The reason I say that is because US markets, which are currently trading on our platform, will be closing or will cease pricing at 2.15 UK time just over an hour from now. Just for future reference, if you want to find out the trading hours of a particular instrument, just go to this option here and then select product overview. And that then gives you the trading hours at the bottom there. So you've got midnight bridge summertime until 14.15 for the trading hours for the NASDAQ. On FX, we're also closing pricing down early as well in line with our peers and our competitors. Again, 16.15 UK time. So that's 4.15 and that's three hours from now. So unless you're happy with running something over the weekend, just be very nimble if you do decide to trade what markets that are open this afternoon. So the numbers, right, where do I start? I'll tell you what we're expecting. We're expecting a number of 230,000, which will be down from the 311,000 that we saw in February. But since those February numbers were released, the market has moved on quite considerably in terms of what to expect from the Federal Reserve over the course of the next six to nine months. The banking crisis has really, I think, changed the picture when it comes to expectations over Fed rate rises. And that's really borne out in this two year yield chart. Prior to the collapse of Silicon Valley Bank and Signature Bank, US two year yields well above 5%. Obviously, the fallout of that, the bailout of Silicon Valley Bank by JP Morgorn or the takeover of Silicon Valley Banks by assets by JP Morgorn and HSBC and what have you. The picture has significantly shifted. And the big question now is whether or not this banking crisis, as it is, is going to be considered transitory in terms of the short term effects on the market, or whether it will have significantly lasting effects on the US economy. And I would suggest it will have effects. Tightening of lending standards from banks will inevitably bleed through into the US economy. But prior to, obviously, the events of the last four weeks, there had been an expectation that the US economy was actually doing all right. January retail sales bounce back strongly by 3%. Headline inflation is coming down. But core prices are very, very sticky. Case in point, we've got US CPI next Wednesday. And obviously, we've had today's, we've got today's payrolls report. But let's just do a quick praisey of what we've seen so far this week. We've seen a disciplined, well, we've seen markets react to the disappointing economic data this week, starting with ISM manufacturing. So headline number came in at 46.3, which obviously is below 50. It's in contraction territory. Obviously, that's bad. Manufacturing in contraction is bad for the US economy. It's a negative. It suggests that the Fed tightening is having a significant effect on the US economy. Well, actually, I take issue with that interpretation because manufacturing has been struggling globally for the last six months. It's not just the US. If you look, if you look in Europe, we're seeing sub 50 manufacturing PMIs. So nothing new in that it's been struggling since November. And yet since November, the Fed has hiked rates twice. So what about prices paid? Well, that's slipped 49.2. So slightly disinflationary. The employment component of the manufacturing ISM, that was disappointing 44.3. If we look at services, services have been doing that much better. And this is, I think, for me, where the key test lies. Now, the ISM services number for March came in at 51.2, which, again, it's not a bad number. It's not a great number either. But services have been strong for the last 12 months, except for December, when it dropped to 49.6 is a consequence of the cold weather during that month. Price is paid. It's still quite high at 59.5, dropping from 65.6. And employment is still an expansion of 31.3 to 54. Obviously, we had the ADP payrolls report that was 145. That missed expectations. But ADPs missed expectations before it was at 106 in January when non-farm payrolls was at 503. So there isn't particularly good correlation between the two. Then you've got the job openings. Those came in below expectations, dropped below 10 million for the first time since May 2021. But it's still trending well above the levels it was pre-pandemic. So I would argue that, yes, we are seeing a slowdown in the US economy, and certainly there are pockets of weakness. But are we slowing down as a result of a significant tightening of credit conditions? Or are we seeing just a bit of a slowdown as a consequence of an overhiring during the pandemic. And now that effect is starting to rebalance out. Weekly jobless claims was a little bit concerning. Yesterday, that jumped to 228, which was well above expectations. But I think what was slightly more worrying there was that the previous four weeks were also revised up from below 200,000. They were around about 190 to 195. And they were all revised up to well over 225, 230 and 240. So there's some significant upward revisions of 30 to 40,000 a week for the last three or four weeks. Now that could be as a consequence of obviously events that took place in March, the collapse of those small regional US banks and an awful lot of uncertainty as a consequence of that. So the big question I'm going to put to you is if we get a good payroll report, would it make that much difference to market expectations of a potential Fed rate cuts later this year? Because ultimately, that is what markets are looking to price. They've made up the minds of the markets. You can see that in the way the two year yield has collapsed, we've gone from five to three and a half back to 4.2. And now we're at 3.85. So in a space of four weeks, we've gone from pricing one or two more Fed rate hikes to one or two Fed rate cuts, which is right. I suspect the truth is somewhere in between. And today's payrolls numbers probably won't make that much difference. If there are a good set of payrolls numbers, you'll probably see a little bit of a spike higher in the dollar, euro dollar will go down. But ultimately, I think we are much closer to the end of the Fed's rate hiking cycle than we were four weeks ago. At the very, I think at the very least, we can probably expect another 25 basis point rate hike on the 3rd of May. If we get a poor number, then all that will happen there is we'll get a sharp drop in US two year yields. And I think a poor number will just reconfirm the market's bias that the Fed will need to cut rates later this year. Now, I don't buy that narrative. I don't think the Fed will be cutting rates this year. But the market has made up its mind that this deterioration in the data could well be sustained. And as a consequence of that, the Fed will be forced to cut. Well, that assumes that inflation starts to return to target. So let's look at that 5.6% is currently what core CPI is out of the US. So we've got an inflation target of 2%. The Fed's own expectations are for the unemployment rate to be at 4.5% by the end of this year. It's currently 3.6%. And we're in April. Well, we're in March, well, we're in April, but we're looking at March. So by the Fed's own targets, they expect the unemployment rate to rise by almost 1% between now and the end of the year. They expect that to happen. And Powell said at the last set of at the last meeting that there will be no rate cuts this year. So why is the market pricing in rate cuts? I think the market is indulging in a little bit of wishful thinking. I think that what we've seen with respect to the banks has obviously spooked an awful lot of people. And the bigger question now is, you know, how quickly does the market overshoot to the downside? Because what we've seen is it overshoots the upside on the two year yield. And I think potentially it's overshooting to the downside. When it comes to pricing in of rate cuts, why would the Fed cut rates when headline inflation is at 6% core inflation is 5.5 and core PC is at 4.6%. And core PC is the Fed's key inflation targeting a measure. So that's the big question. So let's look at some of the key levels when it comes to the markets. Quite a bit to mull over. I'm doubtful that we'll see a significant reaction. And even if we do, I struggled to come up with a premise which suggests that we will see the S&P 500 take out the highs that we saw in February. Currently, it's finding a little bit of a top around about 4150. We are, we know we're 50 to 60 points away from that. I'm not expecting to see a significant move one way or the other today. I think the big reaction, once we get these payrolls numbers out of the way, we'll shift to CPI on Wednesday next week. And let's not forget we also had Fed Minutes, the release of Fed Minutes next week as well. So you might get a little bit of short term volatility today. But I don't think that the moves are going to be particularly instructive when it comes to the overall direction going forward. What I do say, and I notice you've asked me about $1 yen on the first question here, I still favour $1 yen lower. Why? Because at some point, I think the Japanese, the new Japanese central bank governor, Wader, will signal that he's shifting on yield curve control. That's not really priced in at the moment. I think there is an expectation that could happen maybe in the summer. Obviously, the first meeting is in April later this month. So it'll be interesting to see how he sets out in stall when it comes to monetary policy. But in terms of quickly get this chart in because I just noticed I've been talking for four minutes away. We look at $1 yen here. This cloud is currently capping the upside. Now we have seen a nice reaction of $1.29.5. It's gone back to $1.34. I still favour a move back below $1.30 towards this trend line here to around about $1.26, $1.25. I still think $1 yen will be lower by the end of this year than higher. Let's have a quick look at the NASDAQ before we get cracking. Again, we've got a similar sort of situation here. We've broken to the top side, broken above this $12,850 area. That's now going to act as fairly decent support on any move lower. And obviously, we have resistance $13,200. What's interesting about this move is while the NASDAQ has managed to rebound quite strongly so far this year and outperformed the rest of the US markets, it did it from close to its October lows. The S&P never got close to its October lows. And an awful lot of this move has been driven by three stocks, NVIDIA, Meta Platforms and Tesla, I think. So they're the three best performers. And that's what's really driven the NASDAQ entire. I'm not convinced of the merits of a further upside with respect to US markets because while I don't think we'll get rate cuts this year, markets aren't pricing in the prospect of an extended pause. They haven't made that distinction. It's binary. Do we get further rate hikes? If we do, it'll be 25 basis points. If we get a disappointing jobs report, we may get a pause in May and then rates are likely to stay there for quite some time potentially towards the end of the year. Markets aren't pricing a pause. They're pricing a binary outcome of a 25 basis point rate hike in May and the potential for a cut in Q3. There is no middle ground. So Q1 stock earning results will have an effect on the dollar. Absolutely. We've got JP Morgan on Friday. I'll cover them after the fact. But let's just quickly go through what we're expecting for payrolls. So I think anything below 200,000 or close to 200,000, the markets have made up their mind. If they get anything in line with expectations, then you could well see two year yields start to drop off. Even if we get a beat, we might get a bit of a spike in the dollar. But that will potentially be an opportunity to sell the dollar on any prospect of a decent number. So 3.6% on wages, 4.3%. We're expecting average hourly earnings to slip from 4.6% to 4.3%. Also be paying particular attention to the participation rate, which rose to its highest levels since the pandemic at 62.5%. Just a reminder that it was at 63.4% in February 2020. So there is evidence that people are returning to the workforce. Anyway, the numbers are now due to hit the tape right now. And here they come. 236, they're pretty much in line with expectations. Are there any revisions? I'm not sure that there are. 118, 0.3, 4.2. So wages have come in lower, 4.6 to 4.2. But a participation rate has gone up to 62.6. So more people are returning to the workforce. And what else am I seeing here? And the unemployment rate has dropped to 3.5%. So all in all, there's some good in that. And there's some not, well, I say, there's nothing particularly, there's nothing particularly that stands out in those numbers. So let's just dissect them. Let's see what's happening with euro-dollar. We talked about that a little bit. So getting a little bit of a push down, which you would expect on the back of the fall in the unemployment rate. But what's interesting is that we held that trend line from these lows through here. So we've got euro-dollar, a bit of a spike in the dollar. Let's have a quick look at what the two-year yield's doing. All right, two-year yield has just jumped 11 basis points. So it was around about 382. It's now 394. Let me just show that to you. Let's bring it over. So pre-payrolls, payrolls. So fairly, fairly positive. Dollar up. But I think by any stretch of the imagination, a positive payrolls report, positive for the dollar. But by the time we get the numbers next week, people will suddenly realize that they still like the narrative of the potential for a little bit of a Fed rate cut later in the year. But given the low levels of liquidity that we're seeing at the moment, we're probably likely to see a potentially outsized move as a consequence of these numbers, which by and large are fairly decent. Right. Someone's asked me about ASX 200 moves. Right. Let's try and make, let's just try and just keep an eye on that trend line in euro-dollar. See whether or not that holds. But let's quickly look at ASX 200 for you, Thomas. Let me see if I can just find it. There it is. Okay. Right. Well, again, we've got a little bit. There's really not much in that. This is actually quite interesting. You could argue this is a left shoulder ahead and a right shoulder when expecting to get this rebound here. But certainly I think if you're worried about the trajectory of the global economy and particularly GDP growth and obviously those forecast from the IMF yesterday, then the ASX 200 is likely to feel the draft a little bit in terms of that. Obviously there's a China reopening story that you need to play into there and Chinese economy. We've got China trade numbers next week, so it'll be interesting to see what their important export data looks like. Well, as far as the ASX 200 is concerned, next key resistance is really those March peaks. Hasn't been able to regain them. The FTSE 100 hasn't been able to regain its March peaks either. And I would argue to a certain extent the ASX and the FTSE do correlate probably not as much as other indexes, but they do correlate fairly well. So I think for me, if we can get back above those March peaks, then we could well see a return to the highs that we saw back earlier this year, because if you look at the FTSE 100, it's not quite the same, but obviously you've got a quite heavy basic resource component in the FTSE 100, got a high energy component in the FTSE 100. And we did see a fairly decent rebound on Friday, which could well translate into further gains. And to be quite honest, I'm fairly constructive on the FTSE and it's interesting to see the DAX and the Cat Caron managed to recover all of their March losses. We're now back where we were at the beginning of March, as far as those indices are concerned. So for me, I'm probably more constructive on European markets than I am US, which have much richer valuation. So I hope I knew you would be confused. Yeah, no, I am a little bit, but I think you can draw a fairly close comparison between the FTSE 100 and the ASX 200 in that regard. And for me, I'm quite constructive on the FTSE, so that would lead me given, I mean it is a fairly tenuous correlation, you would expect to be similarly constructive on the ASX 200, given the fact that obviously the RBA signalled a pause. So that could well all go fairly well for Australian banks as well. Anyway, has anyone got any questions on those numbers? As I say, we've seen a bit of a spike up in two-year yields on the back of those numbers. They're fairly positive, but they're only positive until we get the next set of numbers, which is basically on Wednesday, when we get the US CPI for March and obviously we get the Fed minutes. And actually, I want to talk about the Fed minutes to a certain extent, because I think they could shine a light on the Fed's deliberations and discussions when they raise rates by 25 basis points, because there was some speculation among some people in the financial markets community that they might cut rates, which I always thought was wishful thinking. But despite the turmoil rippling through US banking in March, the Fed did indeed go ahead with a 25 basis point rate hike. The tone of the statement was interesting, because it came across as much more dovish, with the removal of the reference to ongoing increases will be appropriate, and it changed that with some additional policy firming may be appropriate. So a little bit of wriggle room there. I think it's also going to be particularly interesting as to whether or not there was a serious discussion as to whether or not there should be a pause in Fed rates in March, and whether in going down that route, it may have sent a signal to the market the Fed was more concerned about the current situation the markets would have liked. Powell did admit that a rate rate pause was considered, however the challenge for the Fed would always have been how to present that without spooking the markets even more. Now he did go on to say the prospect of rate cuts this year was not being considered, which some are still touting and pricing as an option. A cursory analysis of the latest Dopplot chart confirms that Fed officials were not considering cutting rates, even the markets are continuing to price that possibility. So I would expect the minutes to focus on the uncertainty around recent events while also finding out how serious the discussions had about a pause or the potential for a cut. So they could be interesting, but before that we've got USCPI for March. That's been coming down steadily. It's expected to come down again from 6% in February to 5.2%, but look at core. Core is what the markets are currently focusing on and that's expected to go from 5.5 to 5.6%. So what's my opinion on the Fed terminal rate? I think we're pretty close to it. I think we could get another 25 basis points. It's 4.75 to 5% at the moment. I think at a pinch because it's May the 3rd. So it's before the next payrolls report and it's before the next CPR report. So today's payrolls report and next week's CPR report could play a key role in determining whether or not we get 25 basis points in May. I think today's payrolls report keeps that on the table. So for me, the terminal rate is another 25 basis points. So another 25 basis points based on today's payrolls report, but that still doesn't mean that the market won't start to price a cut in Q3, which is what the current consensus appears to be. Again, I don't buy that. It really depends on how quickly headline inflation comes down. So my terminal rate, Tom, is 5 to 5.25. So another 25 basis points. Okay, I got asked about WTI in gold and basically never got around to answering that question and the person who asked it has left. So I'll come to that in a minute. What else? ECB terminal rate. Yeah, I mean, that's the big question. The market for me doesn't seem to think that the ECB will be able to hike by more than at least another 50 basis points. Certainly when you look at headline inflation, I still think they've got another 50 in them. But a bigger question for me is how do they manage any potential stresses in the weaker parts of the banking system in Europe? I certainly think another 50 basis points is on the card. I think the Bank of England has got another 25. I think the Bank of England will do another 25. So another 50 from the ECB, another 25 from the Bank of England, and another 25 from the Fed. So that's my terminal rates in summary. Let me just quickly make sure I haven't forgotten any other questions. Okay, just excuse the silence while I just make sure. Copper. Okay, copper. Here we go. Someone did ask me about that. Well, there's your line on the copper coming in from those peaks back in March. It does. I mean, copper is basically triangulating. It's trading in a sideways move through here. I could probably draw a line through this. It's trading sideways at the moment. I really don't think that we're going anywhere fast. There's fairly decent support in and around those march lows. But what's interesting about this is that I still think on a longer time frame, we'll probably go higher. But for the time being, we're trading in a tighter and tighter channel, and I think that's probably going to be the way of it. We'll probably find support in the 200-day moving average if we break lower. At the moment, we're struggling anywhere close to 420. There's not really that much to see here. I have a slightly stronger view on crude oil, obviously on the back of those OPEC cuts that we saw earlier this week. What's quite interesting about this is that we haven't really conclusively broken out of those series of peaks that I've drawn through the highs from this year. Yeah, we've broken about the 50-day moving average. But for me, I think that demand is probably not going to be anywhere near as strong as perhaps people think it will be. That ties in with a slightly slower rate of growth going forward. I think if prices go too high, and I think this is where OPEC may have dropped the ball a little bit, is if they go too high, you're going to get demand destruction. And certainly looking at the price action over the course of this week, yeah, we've gone higher. But we haven't really taken out the peaks that we saw back in March. I mean, we haven't really done anything. In the short term, and maybe that's as a consequence of the fact that we're leading up to Easter and people really don't have an awful lot of interest. But for me, I can't buy into the narrative of $100 oil price. I really can't because if oil goes to $100 a barrel, that is going to trigger potentially demand destruction. Looking again, U.S. oil prices again, look through the peaks through here. We haven't taken out the peaks. Now, if there was a dynamic for a strong break higher in oil prices, we should have taken those peaks out. We haven't. So for me, I'm still very much play the range on oil, play it from the short side anywhere near these peaks here. We've got the 200-day moving average there acting as resistance, and we've got resistance there. So it's going to be tough, I think, for oil to go significantly higher on a technical basis from currently where we are at the moment. Hopefully that helps in that regard. U.S. natural gas, U.K. natural gas, or EUTTF natural gas? I know it's natural gas for the U.S. Again, we're heading into summer season now. So for me, the line of release resistance for natural gas is lower because generally in the Northern Hemisphere demand drops off quite significantly. And you're certainly seeing that in the U.S. natural gas price. You're seeing it in the U.K. and you're seeing it in Europe as well. So in terms of natural gas, it's difficult to see much upside in the short term. Also, it's important to remember that inventory levels, particularly in Europe, are still very, very high. So demand for natural gas is probably not going to pick up much before Q3 of this year. So for me, the dynamics, the demand dynamics for natural gas aren't in its favour at the moment. So I'm in the opinion that natural gas is hopefully likely to drift lower over the course of the next few months. Gold. Now, gold's a tricky one because obviously we're back above $2,000 an ounce. But again, I still think we can revisit the highs, just not today. Obviously, I'm looking at US2 yields and now they're back down again. They're around about eight basis points higher. They were 12. So we're getting a little bit of softening as we head into the end of the day, or the end of the, as markets come to close. But for gold prices, I mean, I think if you're starting to signal a pause in rates as opposed to cuts, then gold may struggle to get much above its previous highs. We've seen a little bit of a pullback in the past couple of days. I'll be very interested to see whether or not it can sustain the moves above $2,000 an ounce. If it can't, then we could, we'll see a drift back down to 1940. But the big level really for me on gold is the previous record highs that we saw back in March and just before that, 2075 here. So you've got a big top in August 2020. We've got a big top there. You're going to need something significant in terms of rate cuts for, I think, gold to break to the upside. And I don't think the market's quite there yet when it comes to that expectation for the gold price. Silver, it's interesting. It's done something fairly similar to gold in terms it's broken out through the previous highs. But it hasn't, at the moment, it's struggling to move much higher. But what is interesting, I think, here is we've tried to get back below $24.50, but we've closed well off that support level. So I think unless it can make new highs very, very quickly over the course of the next few sessions, then we could, we'll see it start to roll over and head back towards $24. At that moment, it looks very overbought, getting a little bit of divergence. At the moment, we need to see it break back below this previous peak here, which is now acting as support in the short to medium term. So the move higher hasn't been as impulsive as I would like, unless we can actually get a move higher from the previous highs of earlier this week, then we could start to run out of a little bit of steam. But again, it's a dollar strength story, that one. Let me have a quick back look here. Okay, Dolly Yen. Okay, before I wrap this up, guys, and get to enjoy the rest of my Easter break, do you have any other questions and was anything not clear? Before, actually, before I wrap up, let me quickly preview next week. We talked about the Fed Minutes. We talked about US CPI. We've also got UK February GDP. That's going to be interesting, given how the pound has performed fairly well over the course of the last few days. But we've also got US Bank earnings, JP Morgan Chase City Group and Wells Fargo on Friday. My key takeaway, I think, from the bank earnings numbers when they come out, and we've also got First Republic Bank. They are due to report their numbers on the 13th. Now, they could get pulled, given the problems that First Republic Bank have had over the course of the past month or so. But it'll be interesting to see what First Republic Bank's numbers tell us, deposit outflows and what have you. How well have the US, the big banks, the big US banks, benefited from deposit inflow? Q1 numbers should tell us that. For me, also, I think it'll be very interesting, I think, with respect to US banks. What they tell us about the outlook for loan demand, business confidence, deposits inflows, provisions for non-performing loans. All of these will be very key areas that I'll be looking for when it comes to JP Morgan City Group and Wells Fargo and mortgage demand as well. On the home lending at the last set of numbers, Wells Fargo, this was lower by 57% in Q4 due to higher interest rates and a more challenging housing market. Evidence of a worsening outlook on consumer credit, delinquency rates had started to edge higher in Q4 for Wells Fargo and write-offs rose to $525 million. Wells Fargo set aside $957 million in respect of additional provisions in Q4. JP Morgan set aside $1.4 billion in respect of loan loss provisions in Q4. All of those will be key areas next week when it comes to earnings. We've also got Tesco's full year numbers as well. It's going to be a fairly busy week. I'm back at my desk on Wednesday. I'm taking Tuesday off, given the fact that I've been working on my bank holiday, but otherwise that's pretty much it I think for this week on this month for the payrolls report. Hopefully we have another interesting discussion when we come and look at the April payrolls report at the beginning of May. I think it's in and around the 7th of May. Otherwise, I'd like to thank you all for your company today. I hope you all have a happy Easter and I'll speak to you all at the same time, same place next month. Thank you.