 Hello and welcome to CMC Markets on Thursday the 22nd of August and this quick preview of the week beginning in the 26th of August And it's been one of those weeks for equity markets where the direction of travel has been a little bit difficult to ascertain up one day Down the next and today is one of those minor down days certainly on the FTSE 100 German DAX is slightly More muted, but nonetheless stock markets this week appear to be trading water ahead of the main event which has really been the Fed minutes and the central bank symposium at Jackson Hole in Wyoming, and there weren't really too many surprises from Last night's Fed minutes What we did find out was that the Fed Voting committee is very split on the future course of US monetary policy And we might get some further clues When Jerome Powell speaks at Jackson Hole On Friday obviously as I'm recording this video. I don't have sight nor sound over of those comments but what is What does seem clear Is that barring a deterioration in the data And we may have got some evidence that that might be happening with the latest services PMIs and manufacturing flash PMIs For august you can see it up here in this intraday insights US manufacturing went into minor contraction in august of 49.9 And services PMI dropped from 52.8 to 50.9 Then in the absence of a deterioration in the data I think it's going to be very very difficult to price in the prospect of a 50 basis point rate cut In september certainly after the minutes the markets are starting to price out 50 basis points and go to 25 nonetheless Jerome Powell is going to have to navigate a very tricky path against A background where the economic data might Continue to deteriorate further and we might get some evidence of that the next payrolls report the beginning of september And a recalcitrant recalcitrant president trump who continues To question the feds competence. So how president How president trump deals with Jerome powell's Comments at jackson hull could well determine whether or not He dials up the rhetoric or dials it back So there is an awful lot riding on the powell speech on friday As we look ahead To the upcoming few days. We've got a g7 meeting at the weekend and berets in france And there'll be plenty of topics on the agenda At berets, so it'll be interesting to find out whether or not the g7 leaders issue a policy communique Some of the topics up for discussion are likely to be China us trade president trump will also be meeting boris johnson So it'll be very interesting to see what the relationship dynamic Is there pressure will be brought to bear on german chancellor angela merkel To implement a fiscal stimulus because if we don't If we can take anything away from the data that we've seen out this week from germany the manufacturing sector still remains permanently stuck In recession with a slight improvement on the previous number coming in at 43.6 again You can see that in this insights column on the right hand side So we've got the g7 meeting Going to be leaders are going to be wrestling with a whole host of problems italy brexit the prospect of fiscal stimulus Set against the backdrop of an ecb that's likely to ease monetary policy In september any us federal reserve under pressure to do the same thing In the coming week, we've got some important global gdp and cpi numbers From 27 to the 30th. It's an important week for european and us gdp numbers france germany and the us Set to relete their updated numbers against a backdrop of concerns about slowing economic growth As i said germany's numbers will be of particular interest Given that they're given that they're likely to be confirmed as minus 0.1 Um and um the front the front the front the fringe economy if i can get my words out Um is likely to show a slight improvement and the us economy is Gdp numbers expected to be confirmed at 2.1 and a number of us policy makers have said that as long as gdp growth comes in Around about 2 they soon they see no reason to ease rates further What could be a very interesting? Particular data point will be us consumer confidence That is due out on the 27th of august and i'm very interested in that in the context of what happened in july in july We saw us consumer confidence jumped really sharply from the numbers in june to the best levels this year And certainly we've seen from the earnings numbers from target from amazon from walmart from nordstrom That the us consumer is out there spending money So why am i interested about the consumer confidence numbers for august? well It was in the second of august that president trump announced tariffs on a whole host of chinese goods From the first of september changing the entire dynamic for stock markets one In in space of one single tweet now the effect that could have on consumer confidence It could well be very significant if we see a big drop in us consumer confidence In august then that could really set the Set the ball rolling in terms of a significant slowdown in us consumer sentiment We've had the fed rate rise. We had those weak services pm i numbers now They could be a reflection of a slowdown in the us economy which has affected the us consumer So those are going to be very very important us jobs and pay growth us jobs growth is Continuing to show fairly decent levels job gains wages are very very still very very robust But that consumer confidence number could be an important bellwether of a significant slowdown in q3 What else are we looking at? Well, we've got the german ifo business climate For august which was moved to the monday and that's likely to paint a very disappointing And downbeat picture for the german economy. So that's on bank holiday monday We also have flash cpi for the eu for august as well now headline and core inflation In the eu area has continued to remain weak the july reading came in at 1 it was revised lower Earlier this week in core prices were stuck stubbornly below that at 0.9 percent Now with chinese factory gate prices in contraction and weak demand It is likely that we could see further weakness in global inflation trends and with the european union and particularly germany Very much an export orientated economy That could well continue to weigh on inflationary trends within the euro area So what am i looking for as the key levels over the course of the next week or so? Well, i've talked about this a lot for me the big level on the s&p 500 Is the 50 day moving average? We can see that from this chart here But also this series of peaks through here, which is around about 2950 2960 If we get back above 2950 2960 then we can go for a continued move to the upside But while we remain below these key levels here Then i think the line of least resistance is for a further rollover for us stocks over concerns about the feds reaction function And obviously the wider global economy in general If we also look at the germany 30 or the dax As most people like to call it we can see once again here this potential For a little bit of a reversal forming here, but once again We need to look at these peaks through here. So if i point my cursor at this particular candle here We can see that 11850 is a very key resistance level for the german dax if we can bust through there Then you could potentially argue that's a Very small reversal reverse head and shoulders perhaps left shoulder here head there Haven't really got a right shoulder here. So i'm not convinced we can break higher initially But certainly 11850 is going to be a key level if we are to break higher similar sort of thing For the footsie 100. Let me just open that chart Here we go again Slightly slightly different with the footsie 100 It's underperformed on the rebound from the lows Which would appear to suggest that there is a little bit of a barrier in and around the 72 30 72 40 area And then just above that at around about 7300 but nonetheless there does appear to be some evidence of a consolidation at these lower levels With potentially with the potential for maybe a little bit of a test higher But what we need to see is confirmation of that we need to see a break higher in the s and p the dax And the footsie 100 because if we don't get a break higher in all three Then the likelihood is that one it'll be it'll potentially be a head fake We've seen a decent rebound in the pound over the course of the last Few hours a big break above 122 10 122 30 If we can consolidate Above 122 then there is certainly potential for us to go a little bit higher But this is going to be very very key going forward It's this key level here around about 122 if we change the time frame on this chart This should give us a better idea of the sort of Time period that I'm looking at with respect to With with respect to a potential break higher So we can see that there's a nice area of resistance just above A 122 which we've now broken through and now we need to consolidate above and potentially target and move higher towards 122 123 And 124 towards the 50 day moving average So we're going to be keeping an eye on the cable over the course of the past few sessions and also euro sterling Euro sterling is going to be very very key Um, I talked recently about a bearish reversal in euro sterling Those of you who follow me on twitter would have seen me tweet this chart A bearish weekly reversal as the potential to really push us an awful lot lower Certainly the oscillator is starting to roll over and look a little bit weak We may find a little bit of support around about 89 80 90 the figure But the fact that we've broken Down here We need to take out the 50 day moving average and look to head towards this series of lows through here around about 89 50 The resistance level on the upside is around about 91 80 91 90 There does appear to be some evidence that we may have hit a short term top on euro sterling And could be about to take a little bit a little trip lower Irrespective of the headlines on brexit and what have you And we'll finally wind that up with the risk story Why am I not bullish Totally bullish on equity markets two reasons one the chinese one. We've broken above 6 98 7 While we're above that then it's going to be very very difficult for equity markets to rally meaningfully If the one continues to weaken by the same token the same argument applies to gold We've had a key breakout in gold prices are above 1480 while we hold above 1480 Then upside for your equity markets is likely to be Limited we need to break below 1480 to signal a further bout of equity market strength because gold Is a safe haven play if gold continues to move higher It's going to be very difficult for equity markets to do the same so Other areas to keep an eye out for the coming week are a number of earnings announcements We've got four year earnings from haze and w h smith haze should give us a good indication of the uk employment market w h smith's uk retail and we've got further us retail numbers out in the form of abacromby and fitch And best buy and those are due out on the 29th of august And if that's all a bit too much for you on the 28th of august We've got brown and thurman the producer of jack daniels And if the markets haven't done that i'm going to have a little bit of a toast On jack daniels in the hope that it's going to be a fairly decent week for trading. So that's it for this week Thank you very much for listening michael houston talking to you from cmc markets