 Good morning and welcome to CMC Markets on Friday the 17th of January and this quick look at the week ahead beginning the 20th of January 2020 and once again We're coming off the back of more record highs for US markets the S&P 500 has now managed to push through 3300 as we can see from this chart here and the likelihood is as long as we stay above 3300 that there is potential for the market to move even higher and we're also Investors are now starting to talk about the prospect of Dow 30,000 we've also seen Google or Alphabet become the latest in the latest line of US companies to move a past the trillion dollar Market cap trillion dollar baby. So we have now got Amazon. We've got Apple and we have Alphabet so the three a's are all pushing or all have pushed up above that trillion dollar barrier and Well, there is some concern that we could we'll we could well be looking a little bit toppy. That's far the trend the current trend doesn't appear to give any indication whatsoever that we're likely to end we've come off the back of the Convocation in the US Senate of US MCA, which is likely to get signed off over the course of the next few days by President Trump that gave the US president his second win of the week in the wake of the signing of the phase one China trade deal, which I think in terms of Overall expectations was pretty much as markets expected No further escalations still a whole host of tariffs still remain in place But overall the low-hanging fruit do appear to have been harvested when it comes to US China trade So what does that mean for European markets going forward? Well, we've got a whole host of event risk coming up over the course of The next few days and we're going to start with the German Dax German Dax is still knocking on the door of 13,600 that's our next real target going forward for the Dax and We'll be looking or paying particular attention to these series of highs that we saw all the way back in 2017 2018 Those are the previous all-time highs and those those those are those are the key Those are the key levels that I will be keeping my eye on over the course of the next few days This high here around about 13,600. That's the big barrier on the upside When we look at the Germany 30 also, there's a significantly There's a significant resistance level also on the FTSE 100 Slightly more bullish on the FTSE 100 than I am on the rest of European markets we're looking at the highs here that we saw back in the end of the summer last year July 2019 but more importantly, there's also the highs that we saw all the way back in 2018 around about 7,900 my long-term target for the FTSE 100 this year is to have a crack at that 8,000 level I still think that there's certain certainly potential for UK equities to go up and test that 8,000 level By the end of this year So that's the the key indices. It's also We're also looking at the Davos World Economic Forum next week We've also got a whole host of UK data coming out. There's increasing speculation About the Bank of England and whether or not they are going to cut rates on the 30th of January At the end of this month when they meet for the first time this year. It also be Mark Carney's last meeting as central bank governor and UK wages and unemployment are the key UK data item in the week coming up on the 21st of January Now we've heard whispers in recent weeks the Bank of England officials do appear to be leaning towards the prospect of another cut I was concerned about a slowdown in the UK economy and when you look at the data I think it's really quite difficult to argue the case for not cutting rates, but I am going to do that because Ultimately for me, I think it's difficult to argue what effect a 25 basis point rate cut would have we've seen Disappointment in terms of the retail sales for November and December both Very negative numbers But what that tells me is consumers are starting to cut back and that's by no means a bad thing Consumer credit is still at very elevated levels. The last thing you really want to be doing at a time When consumers are cautious about spending and consumer credit is high is cutting interest rates by 25 basis points six weeks before a Budget where a new government could well embark on a fiscal stimulus I certainly think there's merit in the Bank of England looking and waiting until March and See what the budget unfolds and I still think there's potential for a January rebound in the wake of the general election win from December the 12th because while UK consumers Have started to rein back their spending certainly business optimism has started to increase in the wake of The Conservative Party election win and that could actually manifest itself into a little bit of a rebound into the first quarter of this year Some of the slowdown that we saw at the end of last year was largely as a result of uncertainty political uncertainty Over Brexit but also the prospect of a Labour government and to be quite honest If you're faced with the prospect of a Labour government given their manifesto You're not going to be opening the spending taps when it comes to investment that risk has now gone. So I Certainly think caution is probably the better thing to do rather than cutting interest rates from 0.75 to 0.5 But unfortunately the reaction function of the Bank of England is if it first you don't succeed Try try try again in the hope that you'll get a different result. I'll give you a clue. You won't So that's UK wages and unemployment. They're still wages are still Trending at around about 3% unemployment is around about 3.8 percent close to 40 year lows So real earnings growth. We're still getting real earnings growth with inflation fairly low So I don't think there's any rush to cut rates quite yet. We've also got another Central bank decision next week a raft of them. We've got three Bank of Japan rate decision on the 21st Bank of Canada rate decision on the 22nd and an ECB rate decision on the 23rd So let's look at dollar CAD first and foremost That's just broken out of this triangular consolidation from here We've tried to move back above it the big resistance level. I think for me for dollar CAD is 131 Very much a case of sell the rally here We've broken out of this downtrend or this this this triangular Consolidation which would appear to suggest that we're probably going to get dollar dollar weakness and Canada strength over the course of The next few months this pattern could take two or three months to unfold I would only throw in the towel on a lower dollar CAD if we move back above 131 Looking at dolly end dolly ends looking very well bid at the moment very strong dollar. We've moved back above 110 we've broken this downtrend line here from the highs that we saw all the way back here in 2018 and that has the potential to open up a move back towards 111 50 112 and this larger long-term downtrend line here from The highs that we saw all the way back in 2015 so certainly it's a very much a case of buy the dips in Dolly end based on the break above the these this series of highs through here at 109 7080 and The the upward move in dolly end would only be mitigated if we drop back below 109 70 That could take us back to the middle of the range around about 107 and a half 108 It's also ECB rate decision as well Now I'll be Christine Lagarde's second ECB Rate decision as president. We're pretty much in a range on euro dollar. It's pretty much like watching Paint dry trading euro dollar very much a range trade looking fairly well supported around about Just below 111 and I think the key things I'll be looking for on the ECB rate decision Will be what president Lagarde is likely to sketch out in terms of the scope of any Strategic review that she's looking to undertake into the central banks overall remit she's She may she may want the ECB to do more But I think there's a certain number of members of the governing council who are opposed to doing any more Than they did at the last meeting or the last meeting that they acted all the way back in September We've also got a manufacturing and services flash PMIs Coming out on the 24th and those will be particularly important not only in Europe in terms of France and Germany and the continuation of the rebounds that we've seen in them But also in the context of the UK economy as well UK manufacturing and services PMIs did we get a bounce in the wake of the 12th of December? General election poll win of the Conservative Party if we do get a rebound at the moment Markets of pricing a Bank of England rate cut at around about a 70 75 percent probability if the if the PMIs are decent that could come down but market pricing is certainly Leaning very much towards a 25 basis point rate cut by the Bank of England At the end of this month as I say I still think that Probably a little bit knee jerk a little bit premature But nonetheless if the PMIs are poor then it's going to be very very difficult I think for the Bank of England not to cut rates even if you can argue as to the wisdom of them doing it Also got the Davos World Economic Forum. There'll be an awful lot of media coverage of that There'll be plenty of pledges from business leaders and politicians to come up with measures to help boost the global economy As well as trade as well as deal with the challenges of climate change I think the reality is that for all the heat and light to paraphrase William Shakespeare It will be probably much ado about nothing as it has been for the last 10 years in terms of earnings We've got a quite a quite a few high-profile Earnings announcements coming out over the course of the next few days. We've got easy jet Share easy jets done really well Since the summer We've seen share price gains from easy jet of around about 76 percent certainly some decent gains there and One thing I will be paying particular attention to is whether or not They will outline further plans with respect to their easy jet holidays operation In the wake of the collapse of Thomas Cook given that easy jet have already paid 36 million pound for the collapsed holiday companies slots at Gatwick Airport and Bristol Airport, but it does look a little bit toppy at current levels So I certainly think there's scope for disappointment there on easy jet We've also got Netflix Netflix is always worth talking about it's always worth having a look at It's seen a decent rebound as well over the course of the past few weeks and months The launch of Disney plus and Apple TV plus in the last quarter could well have impacted Netflix subscriber growth Over the Thanksgiving and Christmas period. It's had a decent rebound It's starting to get a little bit sticky and around these sorts of areas here around about $340 after the lows is just below 260 in October Netflix raised another two billion dollars in debt To fund new content I think management will be hoping that the addition of a host of new content coming online Including the second series of Lost in Space and the recent success of Martin Scorsese's the Irishman will have helped boost its subscriber numbers They are aiming to 7.6 million new subscribers in Q4 If they fall short of that then you could well see a bit of a reaction towards the downside So that's it for This week. Thank you very much for listening any questions. Please drop me a tweet at mHusen underscore CMC Otherwise, have a great weekend and happy trading