 Good afternoon, welcome to CMC markets on Friday the 2nd of October and thank you for joining me Michael Houston to this webinar where we will be where we will be covering easy for me to say the latest US payrolls report. Of course, this morning's news that President Trump has contracted COVID-19 rather complicates the market dynamics but nonetheless, I think it still offers some trading opportunities. If we're careful enough before I before I dig into that. Let's just get the paperwork out the way. The, the risk warnings. This goes without saying. I can't tell you where to buy where to sell what I can do is hopefully supply you with the tools the risks the areas of support and resistance, which might prompt a market reaction in the event of a number that either misses expectations here expectations or prompts a surprise market reaction at the moment. I have to say I've lost my capacity to be surprised by what the markets can support the markets can throw at me in the case of a particular month. An awful lot of the narrative around October was of, would there be an October surprise. And I think the surprise about an October surprise is it would be a surprise if it wasn't volatile because for as long as I can remember. The equity markets in October have had a tendency to be rather choppy in the extreme and very volatile certainly since the financial crisis 12 years ago. One of the staples of October has been significant increase in volatility and I don't expect that to be any different. So we got the latest US employment report for September by and large market expectations around that are broadly in the region of around about around about 800,000 860,000 jobs to be added in September. That is significantly lower than the 1.37 million jobs that we saw in August. And obviously that in itself was a slow down from July is 1.7 million jobs. I think if the numbers do come in as expected and certainly this week's ADP report was fairly positive in that regard. We will still remain about we will have only regained around about half of the number of jobs that we lost in March in March's numbers in the combined February March numbers where we lost around about 21 million. So weekly jobless claims have continued to come down. They don't tell the whole picture. Those of you have read my morning note this morning will see that I've made mention of that. And the fact of the matter is that despite the fact that the US unemployment rate is currently at 48.4%. And is expected to come down to 8.2%. The under employment rate is much much higher. And there's also the complicating factor that according to Fed Chair Jay Powell, the unemployment rate could actually be up to 3% higher. So this shock to the global jobs market means that all of the data that we're currently seeing needs to be taken with a huge dollop of salt. So what does that mean for equity markets going forward? I think it's important if we look at some of the key levels on the key indices because ultimately for me, whatever this morning's number this afternoon's number comes out at the likelihood is that it may not have a significant effect on the range that we've been in over the course of the past few days. And what do I mean by that? Well, if we look at what the S&P has done over the course of the past month. This is a four hour chart that I'm looking at here. And at the moment, we found if we look through the price action over the course of the past month, and I always find this is a useful tool for me to find out where the inflection points, where the support and resistance levels are in the short and medium term. That's particularly important if you're trading on a much shorter term basis. If you're trading on a much longer term, then ultimately you're going to be you're going to invest for the long term. So your time horizon is going to be different if you're trading different ball game. What we've seen from what I'm deducing from this chart here is that every time we popped up anywhere near 3400. We found a whole host of sellers and kick in and drive the market back down again. So that's significant. That suggests to me there's little appetite to drive the market significantly above the highs that we saw at the beginning of September and the end of August. And ultimately, I think you've got to ask yourself what would drive markets higher? Well, since the Fed disappointed, Federal Reserve disappointed by not being as dovish as I think markets were expecting. The fact of the matter is central bank stimulus as is coming right now is not likely to come before the US election. The Fed couldn't be seen to be acting significantly aggressively just before a US presidential election, unless they be accused of being partisan. So what does that mean? What essentially means that markets are going to be range bound. I think they're going to be range bound for the next three or four weeks. But they're going to be choppy, and that gives us opportunities. So looking at this chart here, I can see that there's decent resistance anywhere near these peaks here around about 3400. But also, apart from a brief thrust to the downside in the middle of it towards the end of last month, it's found decent support the S&P around about 3300. And I think that will still continue to be the case. The markets will want to test the downside on the back of this news. But to my mind, Trump getting COVID doesn't really alter the overall pricing dynamics of what the markets are doing. And he wouldn't be the first world leader to get coronavirus. Bolsonaro in Brazil has caught it. Boris Johnson caught coronavirus. And apart from a little bit of weakness in sterling. Initially, the pound bounced back, assuming that Trump is able to shake this off. The biggest blow, I think, for the markets or not, depending on whether or not you think Trump is good or bad for the markets, the biggest hit will be to Trump's re-election campaign, because he won't be able to campaign in the way that he normally would have. And he is a strident campaigner. You know, he is very loud. In two weeks, he's going to have to sit in his box and basically just tweet to its house content and maybe rant over Zoom, because that is all he will be allowed to do. So in the event of the markets not really liking the number, we may see the S&P test retest the 3300 level. In the short term, I would expect that to be a potential buying opportunity for a rebound. I'm not expecting a significant move towards the downside other than what we're already going to see when US markets open. Let's not forget the S&P closed at 3380 last night. It's now at 3333 in the pre-market. So the potential for downside is fairly limited and limited to the lows that we saw on Wednesday, in my opinion. Obviously, if it breaks below that, then we have to reassess. But ultimately, it's really about reacting any time a price hits a certain price point. Similarly with the NASDAQ here. I'm actually surprised that the NASDAQ has come off as much as it has because of the fact that an awful lot of the tech stocks have had a little bit of a safe haven bias towards them. However, we are starting to look a little bit stretched on the upside. And if we look at the NASDAQ, it's fairly similar in terms of where the resistance levels are as the S&P, again, for our chart. Now we've come back and we've tested lower and we could retest these lows that we saw earlier in the week in and around 11180. But ultimately, I just expect the possibility that we'll probably get another thrust towards the downside as we head into the weekend. I'm not really expecting too much in the way of fireworks, unless the number misses by a big deal or a big amount. There is another factor to this. Trump will be hoping for a good payrolls number. Why? Because he's pointing to the economy. The US economy is a strong point. But somewhat perversely, a very good number could actually be negative for equity markets. And why do I say that? I say that for the very simple reason that it makes any prospect of a fiscal stimulus plan being agreed between now and the presidential election less likely. Now, I don't think a fiscal stimulus package is likely irrespective of what the numbers are. I think Nancy Pelosi and the Democrats and the Republicans are playing some sick game with the US economy and the US labor force. You've had the US airlines coming out and saying that the expiry of federal aid at the end of last month will mean that because they can't keep all of their staff on furlough, they're going to have to make them redundant. So you've got the potential for 40,000 job losses in the US Airlines industry on top of the 28,000 job losses that were announced by Disney earlier this week. Now, if that doesn't concentrate minds, I don't know what will. But at the moment, the actual data that we've got coming out is showing that the US economy is still looking fairly decent consumer confidence rebounded strongly in September, which would appear to suggest that maybe hiring is picked up quite considerably. And as such, we may actually see a number that comes in closer to a million on non farm payrolls than not. Certainly early indications in terms of September hiring by US employers suggest they are cautious. And to be quite honest, they're quite right to be cautious. We've got rising infection rates. I'm not only here in the UK, but also in Europe. You've got rolling lockdowns, localized lockdowns. New York yesterday posted the highest numbers of new infections since May. Now, obviously, when you hear headlines like that, it's always quite a sobering headline. But ultimately, the reason they're probably seeing higher infection rates now is because of testing more. And if you test more, you're going to get more cases. In March, April, May and June, all countries are testing an awful lot less than they are now. So when you see a headline, or it's a record high infection rate, well, of course it is because you're testing an awful lot more. If you're testing a million people a week, then you are going to get a higher percentage of positive cases. And I think that's what you have to really bear in mind when you're reacting to these sorts of numbers. So for me, it's really about the price action. Yes, the noise is disconcerting. The news flow is disconcerting. No, more so if you're having to trade Brexit headlines. As we've been doing all of this week, deal on, deal off, deal on, deal off, cable up, cable down, cable down, cable up. And it's been like that for pretty much all of this week. And you can see that in this half hour chart here. I mean, it's absolutely incredible the way that the cable rate has chopped around. And it sort of made me speculate that maybe EU and UK trade officials have cable positions. And when they want to get out of a long position, they talk the prospects down. And when they want to get out of a short position, they talk the prospects up. But what's notable about this particular range on cable is it's very defined. And 128 is fairly well bid anywhere anywhere near 130 is fairly well, it's fairly well offered. So that in itself gives you a potential trading opportunity. And you can see it on the daily chart here. And it's actually notable that every time equity markets tend to be fairly well supported, usually when equity markets tend to be well supported, cable tends to go up. That's not the case today, but there's been an awful lot of Brexit headlines today. But ultimately, I think for this afternoon's session, I'm inclined in terms of equity markets to buy the dip, which is probably a dangerous thing to do. But ultimately, you can at least clearly define your exit parameters of any long position on a trade. It's a little more difficult to do that on a short position. But if we look at the price action for cable, for example, over the course of the past few weeks, it's fairly well supported anywhere near this 200 day moving average, as well as that Fibonacci support around about 12760. You've got a window of opportunity there. And really trading the markets is about identifying windows of opportunity and windows of support and resistance. And it's no different here for euro dollar. Again, we can see if there's anything you want me to cover before the numbers come out, please feel free and fire me off a question. Because we've only got another four minutes. But in terms of euro dollar, we can see straight away here that this rally off the lows that we saw all the way back in at the end of September is starting to falter anywhere near the 118 area. And if we actually look at again before our chart will drill down into it, we can see it here. But what's significant is that we are looking as if we could run out of steam. So move below one 1680 on euro dollar could actually see a move lower and I'm actually on the on a long term basis. I'm bearish on euro dollar because this looks like a potential head and shoulders potential reversal. And if we measure from 120 or the way down from 11760 that puts us in around about 115, 114 and a half as a potential long term target. We do need to stay below this trend line this pullback line here and the 50 day moving average for that to unfold. And that that limitation towards the upside would appear to suggest that while we can go higher, it's likely to be fairly limited. If you draw a link, or you draw a line through these peaks through here. So just as a quick summary, let's have a quick look at the dollar and the CMC dollar index because I think that is actually quite a useful tool. When it comes to analyzing what's going on in the markets. And really it's all about currencies and what we've seen here is people have been talking about dollar going down the dollar being weaker. I don't necessarily buy that narrative I think there's potential for the dollar to go higher. It'll always be the reserve currency of choice there is no other alternative. All these people banding about the euros being an alternative reserve currency. I think I'm sorry I just can't buy into that. The euro is a dysfunctional currency. It hasn't got a common treasury. And as such, it's very very difficult to make a case for it being to be for it to be a bona fide long term contender for the US dollar. Yes, we would like to have a alternative given the way that the US administration has weaponized the dollar recently. But the fact of the matter is, for the time being, there is no alternative or Tina is people like to say that we draw a line through here. We can see there's a nice little trend line here in the CMC dollar index, which also coincides with the downtrend line on the on the euro dollar. So to summary, what we expecting 859,000 on payrolls unemployment rate to fall to 8.2% and the under employment rate to come down from 14.2% 14. So let's quickly bring up the calendar. As I forgot to turn them on. I should have done that. Here we go. So the numbers should come in all the way along here. So for some reason my alerts haven't come along. I have absolutely no idea why we are now counting down with about 10 seconds to go. So I will be quiet. I will also open the euro dollar chart so we can get an initial reaction on the price action as the numbers break. Here we go. 4.70 average earnings. Let's get rid of that. Don't need that. 660 ones that's slightly disappointing. There's a slight upward revision to the previous number of 1.48 million. And the unemployment rates fallen to 7.9%. So again, that's a fairly decent number. Need to look at why the unemployment rate has fallen as much as it has. Given the fact that the actual payrolls headline number is actually below expectations, but not by much because the upward revision in the August number. As you can see on euro dollar, the market reaction has been fairly muted. And I'm really not expecting that to change anytime soon. But let's look at the under employment rate and the US participation rate. So the US participation rate, the labor participation rate has dropped from 61.7 to 61.4. So that fall in the unemployment rate is actually not a good thing. Because what it means is that there's an awful lot of people dropped out of the workforce. If you're, if you're unemployed in the US, you have to claim unemployment benefit. If you don't bother, you drop out of the numbers. So actually that's probably a disappointing number in terms of the dollar. The participation rate falling to 61.4% is disappointing. The under employment rate has actually fallen from 14.2% to 12.8, which is good in a way because that means it's coming down. But the participation rate and the fall in the unemployment rate is actually not as good as perhaps you might first think at first glance. So it's a bit of a mixed bag. It'll allow President Trump to basically say, yeah, this is a good report. The unemployment rate is coming down. But once you dig a little bit deep below the surface and scratch a little bit deep below the surface, it's a pretty much meh sort of number. It doesn't really blow the doors off and it doesn't really add anything to the overall picture of the US economy. And what's actually quite significant is that we had a drop of 216,000 in the government payrolls numbers. So I think that is down to the fact that temporary census workers were hired in August and they've dropped out of the numbers in September. So that in itself is probably a net-net cancellation of what happened because there's a census that's supposed to wrap up on October the 5th. So the census bureau will have seen 216,000 government workers drop off the payrolls. So that figure while alarming is probably not as alarming as you may first imagine it will be. In terms of the overall picture, Euro dollars actually off the lows of the last loads of the day. Looking back through here, I would suspect that it's probably going to head back down towards the downside, given the fact that it was unable to push higher in the short to medium term. What does that mean for the FTSE 100? Well, let's have a look at the FTSE 100. We can see here that it's still in its downward trend has been quite some time. Those of you who are regular viewers of my weekly market update will know that I update these charts and talk about these charts every Friday. That gets posted on the website every week at the weekend. In the news and analysis section of the website. I can show you where that is right now. If you're interested in having a look at some of the insights that go that go on the site. So you can scroll all the way down here and look at our US election section. But also you can see the week ahead. So a week ahead is right down here. And that will basically outline what I'm hoping what I'm looking at in the upcoming week. And as I said, I recorded that about two hours ago. So obviously I will make mention of the fact the US payrolls reports come out. But that's in the it's in the insight section of the CMC markets homepage. Go to insights and there is news and analysis and commentary from likes of myself and my colleagues. Now let's go back to the markets. So downside support on the FTSE 100. Fairly solid around about 5770. I don't expect that to give way anytime soon. If it does, then essentially we're looking at a move back towards these lows down here around about in May, which is around about 5660 5650. In terms of the S&P 500 have already done that through the German DAX because I know an awful lot of you and trade that as well. And as you can see, we've got another corridor of uncertainty or current corridor of certainty if you like or uncertainty, whatever you want to call it. And yes, you're right. There isn't much movement in Euro dollar compared to the last two non farm payroll releases. And, you know, to be quite honest, I think it's difficult to argue a case either way, because of the Trump news this morning. I think market participants are a little bit caught in the headlights because ultimately they don't know what it means in terms of how well is he will he be able to make a will he do as his doctors tells him to do. Take it easy for the next two weeks. And if he does, then I'll be bouncing back on the campaign trail very quickly or will he do what Boris Johnson attempted to do, try to work through it, not rest, make himself worse. He is very much at risk in terms of his age and his weight. So I think he'd be advised to go against his doctors, but he doesn't strike me as a type of man who likes taking other people's advice. So who knows. And I think that's why markets are reacting in the way that they are. I think there is an awful lot of uncertainty over the course of the next week or so. As to what this means what does this mean for the US election what does this mean for the debate next week between Vice President Pence and Democratic Vice Presidential nominee Kamala Harris will that take place. Will the 15th of October debate between Trump and Biden take place. You know, has has Joe Biden contracted Coronavirus he was on stage with President Trump at that so called debate earlier this week, and Trump was doing an awful lot of shouting yes, Biden was a long way away, but Biden was not wearing a face mask. So it hasn't really, it's not really affected poll numbers, but it's just that extra element of uncertainty in the face of a gridlocked Capitol Hill, and no prospect of further fiscal stimulus for the foreseeable future. And central banks caught like rabbits in the headlight headlights, a little bit a little bit snookard when it comes, particularly the Federal Reserve to doing anything more. Just in case they get accused of being overly partisan. I mean at the end of the day it's unlikely that the economy is going to fall off a cliff in the next four to six weeks. But what we do know, and I think this is important, what we do know is things aren't going to get any better. Not in the face of colder weather, localised lockdowns and what that does potentially does to consumer confidence and spending patterns consumer spending patterns. That is likely to be, you know, very, very difficult to navigate around, you know, and I don't think there's really any escaping that. And as a result, that's why I think you're going to find that markets will continue to remain nervous. And why I think that we will continue to trade in these ranges that we've been in over the course of the past two to three months, particularly when it comes to the German decks. You may see some currency moves with UK Brexit talks, continuing to ebb and flow cables up. You're a dollar's down. So you're a sterling looks as if it's probably going to head lower on a technical basis. Ladies and gentlemen, I still think there's potentially further downside in euro sterling, because this chart looks really nice from my point of view. We've, we've come down off the highs, we're trending lower, we've got lower highs, we've got lower lows. The momentum is clearly favouring the pound. You look at the sterling index. We can see that as well. Looks remarkably similar to the dollar index in terms of the way that it's based. But again, it also looks very, very similar to the cable. But again, it's about choppiness, but certainly euro sterling, I would suggest is probably a good short position while we're below this trend line here. And this identify, you know, any rebound back to this line here is a perfect shorting opportunity with a stop loss above it. For me, fade euro sterling strength, fade euro dollar strength, if there's potential for further upside in anything, it's in cable. Why do I say that? Well, simply because I think if there is any indication whatsoever that the counterparties can come to a deal, cable would go up very, very sharply indeed. But it's in neither side's interests to run into the end of the year, given the state of European economy, the UK economy. Politicians have a duty to arrive at some form of accommodation, given the impact an ideal Brexit would have UK economic data is actually holding up fairly well we've got services PMI is next week. And that's always been the weak spot. So I'll be keeping an eye on them next week. And that could be the catalyst for further euro weakness, particularly in terms of Spain and Italy. Already this week heard Germany turn around and say that the new pandemic recovery plan is not likely to launch on the 1st of January. Well, Spain and Italy need that money they need it now. And they're not going to get it in January when are they going to get it. Their services sector contracted in August 47 so did France's services sector contracted in August. UK's services sector is holding up much better, largely because we came out of lockdown later. But October is going to be an awful month for economic data out of Europe and the UK. Unless politicians find a way our pound shop politicians find a way of restoring confidence in not only themselves but with each other. So, what will the impact on the US elections be on gold and silver. That's a good question and to be quite honest I think either way. I think the line of least resistance gold is higher. But we do need to take out this downtrend line that I've drawn in from these peaks through here. If we go back to 2016. Everyone was sort of saying a Trump presidency would be terrible for stocks it would be terrible. But it would potentially be good for gold. But it's turned out to be good for both. Why because I think whoever gets in, whether it be Trump, or whether it be Biden will have to embark upon a significant fiscal stimulus plan that will push gold prices up. And I think that means that the downside was a time being she is likely to be limited to this fib level here that I've drawn in from the entire move from the lows that we saw in March to the highs that we saw in August. Now we've broken below $1900 an ounce and we rallied yesterday and we rallied again today. But we haven't gone back above 1920 and we haven't rallied the back above this trend line here, which suggests we may have another push lower before pushing higher generally in Q4 on a seasonal basis gold generally tends to do well. With the wali and what have you. So I will be surprised if gold is not higher by the beginning of next year than it is now. I think the line of least resistance for gold is very much by the dips. At the moment we're undergoing a little bit of a consolidation but if you go back to the beginning of the year, if we go and select year to date here, we're still quite a bit higher than when we started the year. So if I basically use this function here, this tells me that gold is 23% up year to date from the 3rd of January 2020. It's quite a useful feature this feature on the charts that I'm showing you. And there's a select this button up here. Just below the little three lines. Okay, and this gives you a value window. And then you just mouse over each candle and it gives you the open, high, low clothes, and also the values of each indicator underneath it. So if I point the cursor at the candle for the second of January, it will take the closing price of the second of January, and then compare the change to where the price is now and the price now is 24.75% up from 30 from the second. So that's a fairly decent way of plotting the game on a on any given period just by using the value box. So I'll just turn that off because it does clutter up the screen somewhat. So impact on gold and silver. I would suggest it will both be equally positive because the fiscal stimulus will also put a rocket under commodity prices as governments embark. On maybe big shovel projects. I mean the UK is already doing it with HS2, which I think is a colossal waste of money. But nonetheless, they're still going ahead with it anyway, despite the fact that I would argue that probably fewer people will travel between Birmingham and London, because they can just go on a zoom call, or something, or something fairly similar. Certainly remote working is going to be a much more bigger part of our lives over the next five or 10 years than would have even been conceived of a year ago. You know, I think that's the big thing is you look at you look at oil majors and you look at the oil price in particular. And we can look at Brent crude, and we can see that it's on the cusp of breaking below a very key support level through these lows here towards $37 a barrel. And there's any number of reasons for that one of which is concerns about the economic slowdown but also concerns about the fact that oil is going to become less and less used. Over the course of the next 10, 15, 20 years as renewables become much more in favour, and you can certainly see no better evidence of that. When you look at our baskets or our product baskets, when it comes to looking at how renewables have done or remote lifestyle and renewable energy have done so far this year. If I look at this chart for you. I just get rid of that. We can see here today, zooming that up. The renewable energy has grown quite a bit. Get rid of that. I want to do that. I'm going to have to reload my layout. We go. Share basket. Let's go to renewable energy again. And this is quite a useful feature to find out. What sectors have actually performed the best so far this year relative to other sectors. So if I get rid of that, get rid of that. Change this to a line chart. Look at remote lifestyle. And then look at driverless cars, collaborative technology, big tech. And then we can see the big tech is actually of all these sectors has been the worst performing sector. I mean, still 20% up year to date, but renewable energy, that sector is up 80%. If you want to find out more about these baskets, you can find them on the website. And I'll quickly take you there. Certainly in terms of overall trends and what have you. They're a really, really good way of showing what's trending and what's not. So it's share baskets and this is this section here, and it tells you how they're made costs and what have you. What does it gives you a sector exposure as opposed to just a sector in one particular asset glass. So, so there's, there's, there's renewables there. Let me just get rid of that and just quickly recreate bring back my various watch lists, which are shut down by mistake. Okay, so does anyone have any other questions on any of the topics that I've just covered ladies and gents because if I missed anything out. Please forgive me for a question in my, my direction. I'll be more than happy to answer it. Hopefully I've tried to cover as many of the topics that you wanted me to cover. But if I haven't dropped me an email, there will be that you will be getting an email in the next 24 hours asking for feedback on the webinar or feedback is gratefully received. After all, these are about. These are about your feedback and serving your needs and your requirements. Welcome to the markets. I did do, I did do a gold update. Yes. I'll quickly recap that again. Essentially, I expect gold to go higher over the longer term. But at the moment, it's finding a little bit of a consolidation below 1920. We need to see a move through 1920 to reinstate the move higher from what we've seen thus far this year. It's a long way this year, and we are due for a consolidation of around about two or three months. But I'll be surprised if by the end of next by the beginning of next year, we're not back closer to the highs that we saw back in August. Decent support in and around 1835 1836 still very much of the opinion that gold is very much by the dip trade. So hopefully that answers your question for anybody else. This is being recorded so I will be posting it or be posting it online later. But if everyone is pretty much done. Feel free to drop me an email at the end. When you get your feedback form more than happy to answer any questions that you might have. In the meantime, like to wish you all a good weekend. Thank you very much for attending. I'll talk to you all at the same time, same place probably next month. Thanks for listening.