 Good morning. Welcome to CMC Markets on Friday the 17th of April and this quick look ahead of week beginning the 20th of April And it's only been a very interesting week in terms of how equity markets have been doing relative to The data that's been coming out because let's not be about the bush The data that's been coming out has been pretty diabolical When all is said and done the equity market seemed to be fairly relaxed about it We've seen the major US banks report their latest first-quarter Lee numbers and by and large They've been fairly decent, but what has been notable from these banks has been the fact that They've set aside huge amounts of first-quarter revision provision for Significant amounts of credit losses in total around about 20 to 25 billion dollars worth Which is roughly about the same amount of money They were setting aside on a quarterly basis in terms of buybacks Last year last year US banks set aside around about 108 billion dollars Which they returned to shareholders in the form of buybacks Which is just over 25 billion dollars a quarter in this particular quarter They've set aside that 25 billion dollars Which they were hoping to return to shareholders and set it aside in respect of credit losses So that's JP Morgan whilst Fargo city group Bank of America and Morgan Stanley and Goldman's The biggest amount of those provisions has been between four banks Namely JP Morgan eight billion was but Fargo four billion and city group and Bank of America around about I owe nine billion between those two so significant amounts of capital that have been set aside in respect of a Huge tsunami of potential credit losses as US unemployment Jumps sharply in the month of March We've seen from the jobless claims numbers that we've seen over the past four weeks that 22 million Americans have filed for jobless claims Which makes the first of May payrolls numbers Going to be a particularly interesting webinar to do When we cover those numbers on Friday the 1st of May So what we've seen today early on is equity markets gap higher You can see that on this S&P 500 chart here We've broken above the 50-day moving average after closing on the up On the back of this story that came out after US close on Thursday night That Gilead Sciences was getting positive results on COVID-19 patients from its Experimental viral drug remdesivir So this is just a bit of a report Markets have seized upon it You know almost on the basis that it's some sort of vaccine it isn't It's just a treatment that has been on trial Has been having clinical trials in a hospital in Chicago. So Markets have seized upon that and it's overshadowed some pretty horrible Chinese first-quarter GDP numbers that came out this morning a 6.8% contraction in Q1, but what was particularly notable about that was that Was the retail sales numbers the retail sales numbers for February when the economy was in lockdown Showed a decline of 20 and a half percent now. There was a limited reopening of the economy in March But consumers stayed at home. There's a 15.8% decline in retail sales in March And that suggests to me that for all this week's optimism From equity market investors about the fact that some of European countries are starting to do limited Relaxations of their lockdowns that Economic activities somehow magically going to return to normal is how should we say it's a little bit? Yeah, it's a little bit harder to believe because whatever you say about what's happening And what's happened over the past four or five weeks Normal service will not be resumed for quite some time social distancing will be with us for quite some time The UK lockdown has been extended for another three weeks France has extended its lockdown to May the 11th and has already said that restaurants and bars won't open until July So that suggests to me that any thoughts of a sharp v-shaped rebound is pretty much pie in the sky Yet markets are pricing that in and I think That they could soon come to ruin that optimism, but we'll see, you know There is some form of Federal Reserve put which is helping to put a floor under equity markets So the big question is which side of this push-pull scenario is going to win out over the course of The next few days the next few weeks the next few months Is this a I've started a new bull market rally or is this the bear market rally? Is this a bull market rally? Is this a bull market rally in a new bear market that we don't yet know So that's something to really think about but at the moment while we're below the 200-day moving average For me it's very much a case of sell the rally Certainly on a long-term basis and we have broken hire on the S&P 500. We are certainly outperforming Every other market in the world broken broken above the 50% retracement level could well retest 61.8 which was the levels that we last saw in in March this 29 30 level 29 40 and the 200-day moving average Which is just above that, but while we're below the 200-day moving average You have to be a little bit suspicious of this current rebound and certainly US markets are slightly disconnected from Pretty much markets everywhere else particularly in Europe where we are seeing markets struggle to overcome the previous highs that we've seen earlier this month And that's particularly notable in the DAX and the FTSE 100. I'm going to start with the DAX Because that's as good a place as any to start but we can see that from the move lower We're still below this very key resistance level here 50% retracement. That's 10,880 10,900 also the 50-day moving average. So that's quite a big barrier We've seen an impulsive down move here of support at 10,180 So that's that's a decent area of support on the downside It also respects this 38.2 line that I've talked about here But on the 50% level that's the key level on the upside if we want to see further gains in the DAX We've really got a bust through this level here It's a similar sort of story on the FTSE 100 and we can see that borne out on this chart here That has really underperformed the rest of the wider market It's not hard to see why when you look at the oil price But certainly I think this 5,920 area on the FTSE is proving to be a little bit of a tough nut to crack If truth be told and we can see that borne out in this this chart here And we've also got the 50-day moving average above that So 55,900 and then 6,235 So if we are able to really thrust through this level here at 5,920 There is scope for us to move back towards the 50-day moving average Not completely holding my breath at this point in time But as with any of these rebounds that we see In in bear markets, they can be quite vicious and they can certainly overshoot towards the upside So those are the key levels that I'm looking at on the S&P, the DAX And the FTSE 100, the NASDAQ would you believe it has actually managed Quite amazingly to basically wipe out its losses for the entire year In the up move that we're currently seeing in the futures markets But let's now start to move on to next week and look at what I'm keeping an eye out for Over the course of the next few days And it's very much UK centric We already know from the US that we've seen huge amounts of job losses Over the course of the past four weeks in March Well now we're going to get a look at the UK Because we have UK jobless claims for March Which are due out on the 21st of April We also have the unemployment numbers for the three months to February And the wages data for the three months to February To be honest, ladies and gentlemen, we can completely disregard them They're old news, they don't matter Unemployment rate was 3.9% It certainly isn't that now Wages were trending at around about 3.1, 3.2% Again, that doesn't really matter When you've had over a million people file for universal credit So even though the February jobless claims Showed a rise of 17,300 I think we can safely assume that March jobless claims Are going to be much, much higher With the only question being by how much So let's look at the key levels on the cable We can see that the 200-day moving average Is acting as a little bit of a barrier on the upside We can see that there is around about 125, 30 And as acted as a double tap on the upside there In these two kernels here Which suggests that we could get a little bit of a pullback That's almost a bearish engulfing day Not quite, but it's good as So that does suggest that in the short term There's a little bit of a near-term top-in Which could suggest that we might see a drift back So around about 122.40, 122.50 But I don't expect us to see too much of a vicious sell-off Unless the dollar rallies quite strongly Because I still think that the pound should outperform The euro because however bad the UK data is And we also have retail sales for March out on the 23rd And they're likely to be disappointing as well With expectations of a decline of 2.3% If you include fuel in that Because in lockdown, people don't go anywhere They don't drive anywhere, they don't use any fuel And while we will probably see a surge in food And other supermarket sales in the lead-up To this retail sales number Other sales could well fall off quite sharply In terms of clothing and other types Of other consumer discretionaries Online sales should do quite well I've been buying bits and bobs online But certainly haven't been spending an awful lot of money So that would suggest that March retail sales Could be a bit of a shocker 23rd of April, that's chew out We've also got the latest flash data For manufacturing and services Now, manufacturing hasn't actually been that bad It's all been to the low to mid-40s And we're not expecting a much of a drop Below 40 on the manufacturing side It's the services side That's likely to be the weak link Because that's very much consumption-driven Hotels, services, hospitality Bars and what have you So that's likely to fall Below the levels that we saw in March Which was 35.7% Is probably going to be in the mid to high 20s 25, between 25 and 30% So that's going to be a little bit of a shocker And they chew out on the 23rd But however bad the UK PMIs are likely to be The France manufacturing French and German manufacturing and services flash PMIs Are likely to be pretty much in the same boat And that would suggest to me That really it's a question of the least worst option When it comes to looking at euro and the pound And at the moment I'm fairly bearish euro sterling Bullish sterling, bearish euro So that would suggest to me That now we've broken below this 200-day moving average And those of you who are fairly regular listeners Of my weekly updates Will know that I've been pretty bearish on euro sterling All the way down now That we've broken below the 200-day moving average As long as we stay below these two moving averages here The 200-day and the 50-day The stop-loss is around about 88 We could well see a move back towards 86 And even 85 in the short term Because the disjointed policy response from the EU With respect to the more badly hit members of Spain And Italy when it comes to the pandemic I think is likely to weigh on the euro going forward And as a result While I can certainly see the scope for euro-dollar To test quite a bit lower I can't really say the same thing With respect to the pound Simply because I think That the UK policy response for all its faults And there are many At least it's joined up You've got the UK Treasury talking to the Bank of England There is a bit There's a much more harmonious relationship When it comes to a policy response On the fiscal side Than there is in Europe So the key level on the downside in euro-dollar I'm looking at 107.80 On the downside it coincides with these lows down here Looking for a retest of these lows that we saw In the middle of March Okay, so got weekly jobless claims out of the US It's likely to be another bad number But really it's not really going to be reflected In the payrolls report on the 1st of May We know that the payrolls report from the 1st of May Is going to be an absolute shocker I'll be covering that in a webinar Then so please feel free to sign up to that That'll be happening between 115 and 145 On Friday the 1st of May In terms of earnings There's a couple of items that I've got a particular eye on One of which is Netflix Now Netflix At its most recent earnings update There was plenty of speculation That they might get knocked off course By the combined challenges of Disney plus and Apple TV While investors don't seem to think so Not judging by this chart here We've hit record highs for Netflix I'm over the course of the past two or three days We've also done the same thing with Amazon They've also hit record highs over the course of the past three days Two or three days And for me the key I think the key data point that I'm looking out for With respect to Netflix is their subscribers They were expected They were hoping to add 7 million new subscribers In the first quarter of this year Now I will be surprised if they don't break that Because when they made that prediction In January There was no talk of lockdowns There was no talk of people staying at home There was no talk of people basically binge watching box sets So these should be a fairly decent set of numbers for Netflix And there has been some talk That they might actually be able to beat on profits and revenue With the very real possibility They may be able to achieve a goal of a positive cash flow By year end Well, if something like this can't get them to achieve a positive cash flow by year end Then I don't know what will It's all to play for for Netflix Can they justify their current sky high valuation? That's the big question As we look towards their numbers Which are out on 21st of April We've also got Unilever Big blue chip on the FTSE 100 They've got their first quarter numbers out on the 23rd of April And it's not particularly been a great six months for Unilever The shares are well down from the peaks last year It's a global food and staples company Well, food and staples are selling like hot cakes at the moment No pun intended But they should be doing an awful lot better Despite the fact that they've got challenging conditions In all of their markets They reckon that they would get first half growth coming in Just below 3% So we'll have to see whether or not the sale of generic brands Has hurt the sales across its divisions I would suggest it probably won't We'll certainly see a pickup in personal and home care division in this half Due to panic buying on these types of products But it really depends on whether or not You feel that a company like Unilever is a decent place Or investors think a company like Unilever is a decent place To put their hard earned capital to work So just quickly round this up by looking at Brent crude oil That's taken a little bit of a pasting over the course of the past few days But certainly not in the realms of WTI Which has hit the lowest level since 2002 We are looking to retest the lows But it is proving to be slightly more resilient Than say for example, it's WTI counterpart Nonetheless, at the moment the line of release resistance for Brent crude Because of the collapse in demand is towards the downside But there is decent resistance around these highs At $32 a barrel, $33 a barrel Simply because the perception is the production cuts That were agreed by OPEC Plus aren't considered to be anywhere near enough You can talk about 10 million a barrel a day production cut As much as you like If your demand is dropping by 20 million barrels a day Then you've got a bit of a problem And I'm actually surprised that Brent isn't actually lower And hasn't followed WTI low Because at the moment the gap between Brent and WTI Is around about $8 a barrel Which is actually fairly wide When you consider what the spread has been in recent weeks and months Let's finish up with gold That's made another new highest level since 2012 Starting to see a little bit of a pullback From the new highs that we saw over the course of the past few days We could slip all the way back to around about 1650 But overall I'm still maintaining that gold will probably Year $1800 an ounce by the end of the year Given current market conditions So that's I think it pretty much for this week Hopefully you found this brief summary fairly instructive And I hope you all enjoy your weekend consuming your Domino's Pizza Which is also releasing its first quarter numbers on the 23rd of April Next week and binge watching on Netflix Otherwise I'd like to thank you all for listening Wish you all a very nice weekend And see and speak to you all Same time next week Thanks very much for listening