 Okay, good afternoon ladies and gentlemen. Welcome to this week's Monday market webinar which will be a brief look at this week's market events with me Michael Hueson. I will be recording it just in case you need to go back and listen to any of the points or comments that I make over the course of the next half an hour. But first and foremost I have to put up a risk warning for compliance purposes. So if you could just take your time to read that then we can quickly crack on and look ahead to what is going to be a particularly busy week for markets. We've got a whole plethora of economic data this week and I think there's certainly potential for it to cause certainly a significant amount of volatility over the course of the next few days. Obviously we are looking quite a way ahead on Friday where we have the non-farm payrolls, the U.S. non-farm payrolls and those of you who want to listen into that and cover that live, my colleague Colin Svazinski and myself will be covering that live by virtual webinar around about 1.15 to 1.45. You can sign up for that on the education section of the CMC markets website. It's fairly easy to do just as easy as signing up to to this one and that should give us further indications as to the timing or otherwise of a Federal Reserve rate hike. I think there's going to be a whole host of economic data this week that's going to give us some clues with respect to that. I think expectations are still for a hike this year. I don't share those expectations and I'll explain a little bit why over the course of the next half an hour. But certainly I think the economic data that we're seeing out of the U.S. thus far does appear to be showing some signs of a little bit of a slowdown. But let's start with the weekend events and the new record highs that we've seen this morning on the FTSE 100 and the German DAX. Those highs haven't been sustained but nonetheless the market, the FTSE 100 in particular, does continue to show signs of progressively higher lows and higher highs. And I think that's pretty much borne out by this four-hourly chart that I've got in front of me right here right now. If you actually look at the peaks and the troughs, they continue to make steady progress higher, albeit very painfully slow progress higher. We've made a new all-time high earlier this morning around 69.74 but we have since then slipped back into negative territory for the day and I think that's been symptomatic of the way the FTSE 100 has behaved over the course of the past month or so. It's little by little by little lagging significantly behind the FTSE 250 which has outperformed it by quite some distance over the course not only of the last few months but also the last few years as well. I think that's really been one of the key divergences that we've seen over the course of the last few weeks and months. How the FTSE 250 has actually outperformed the FTSE 100 and it's not really hard to see why when you look at how the FTSE 100 is made up. It's made up predominantly of mining companies, oil companies and banks and all of these key companies have actually borne the brunt of the slowdown not only in commodity prices in gold, copper, iron ore but also oil prices as well over the past few weeks and months. That's one of the main reasons why I lagged significantly behind but overall we can slip all the way back to around about 6,880 without actually undoing the current uptrend that we're currently in over the course of the next few trading sessions. The German DAX by stock contrast continues to push higher but it is looking very, very overbought. That's not to say that it can't continue to go higher but certainly if we look at the price action over the previous highs that we saw at the beginning of February, we traded a little bit lower to fall stair casing higher again in pretty much the same way that we've done on the FTSE 100. Certainly we can give a slightly different view on that on this four-hourly chart here where once again we remain significantly overbought and certainly when we draw the trend lines on this chart that really does it really does bear it out even more starkly. The fact that the oscillator can remain significantly overbought while at the same time continuing to track higher. Now on this four-hour chart we've seen what I call this is a gravestone doji and that suggests to me that there is potential for us to slip back towards this trend line here that I've drawn in from the lows in the middle of February from the 11,400 level which we're currently trading at now and come all the way back to around about 11,000 to 250 still keeping us within the overall uptrend but overall basically you need to pick you need to pick your moment for getting into this market we can see that the high this morning is 11,454 if you look at the way the DAX has moved certainly over the course of the last couple of months and certainly in the last month or so we've come from 10,600 to 11,400 so we're well overdue a pullback and maybe this week's decision by the ECB to start its QE program the ECB meeting is on Thursday and we're not really expecting any move on rates this week though but we are expecting the bond buying program to start this week and let me remind you about that the ECB took a decision to start pumping in 60 billion euros worth of extra stimulus on a month-by-month basis over the course of the next 12 to 18 months starting the 6th of March that in itself actually does present the ECB with a bit of a problem because what it what it can't do or what it's probably going to be reluctant to do is to buy bonds with negative yields and who in their right mind would want to buy a bond that means that you have to pay the person you're selling it to to take it off your hands but it also presents banks with a problem as well because the banks are at the moment being encouraged to build up their capital buffers the best way to build up their capital buffers is to basically hold on to sovereign debt because essentially it's perceived as the safest of safe havens and as such it's the highest quality paper in terms of asset to boost their capital buffers so they're not going to want to sell that paper to the ECB and pay a negative rate on it and to give you an indication of the problem that the ECB currently has with respect to buying sovereign paper we can actually look at a Bloomberg chart of two-year yields which is on the screen in front of you right now at the moment you're looking at the relative yields of the 10-year paper let's look at the two-year paper if you look at the two-year paper we can see that across the board we have got looking at the Eurozone right there Austria currently has a negative yield Belgium has a negative yield Finland France Germany Netherlands all have negative yields so essentially really the only the only short-term paper that the ECB can buy are Italian paper which yields 0.18% Portuguese paper 0.2% Slovenian paper 0.165 and Spanish paper 0.112 so really not much to go on there if we change that to five years similar sort of problem though not to the same extent again Austria and paper is negative finish paper German paper France is just about hanging on to positive territory but Netherlands is also negative and this really I think underscores the problem that the current ECB or the new ECB program will have essentially yields are already at record lows so this contrasts to the Federal Reserve and the Bank of England when yields were much much higher when those central banks started their easing program so you know we've seen we have seen an improvement in the economic data out of the Euro area and that's certainly that's certainly encouraging but there are still black spots to the data Ireland posted its best manufacturing PMI number since 1999 but in stark contrast that France and Greece continue to remain sharply in contraction now you can argue that the reason the Greece is in contraction is that largely as a result of all of the political uncertainty that came about as a result of you know the recent election but also the so-called negotiations between the Greek government and the Troika and those negotiations are continuing a pace this week Greece got its bailout extension approved by the German Parliament on Friday but what that didn't give them was any extra money and I think that really is the worry at the moment the capital outflows from Greek banks the fact that the ECB you know could actually find itself ordered to cut Greece off at the moment that doesn't look likely but it certainly does expose the Greek but not the Greek banks the European Central Bank to any capital risks if Greece does leave the euro and that remains a significant risk over the course of the next few months given some of the antics of the Greek government and Greek politicians in looking to push the boundaries of what they can get out of the euro group so that's certainly worth keeping an eye on but overall I think you know when you're analyzing what the markets doing it's best to just focus on the price action and less about and less about the political noise that comes out of Europe but certainly I think if you look at the unemployment data that we all some of the data that we've seen this morning the Italian unemployment data fell back on a month-on-month basis to 12.6% even though the quarterly unemployment rate actually edged up to 13% or importantly than that we actually got a fairly encouraging PMI number and that PMI number did suggest that actually the Italian economy was starting to add jobs but all be it from a fairly from a fairly low base certainly looking at the Germany 30 or the DAX again it remains in a bit of an uptrend but there does seem to be some evidence that maybe we need we are due a little bit of a sideways consolidation and maybe a drift back lower moving on to US markets US markets are starting to plateau a little bit and I think that's largely as a result of concerns that maybe the data that we've seen out of the US thus far has probably been about as good as it gets we'll have to wait and see we've got the ISM manufacturing data due out later this afternoon but we've also got the latest inflation data the PCE inflation data and it's important ladies and gents that that's the that's this afternoon's number is the Fed's preferred measure of monitoring US inflation you can talk about CPI you can talk about PPI you know you can talk out talk about all of the other measures that the Fed monitors but the Fed's preferred measure of targeting inflation is the PCE measure of inflation that comes out this afternoon and we are expecting that on an annualized basis to remain at 1.3 percent unchanged from the previous month but the monthly figure is just as important given given concerns about embedded deflation repression and that is expected to tick higher from 0 percent flat to 0.1 percent not really expecting you know too much of a change there and I think that's the real concern I think the ISM manufacturing number which comes out at three o'clock this afternoon is going to be particularly important and that actually could elicit a reaction from markets because you may recall on Friday we saw a very disappointing Chicago PMI number and that number collapsed it collapsed from 59.4 in January to 45.8 in February it slipped into contraction territory and that was a really significant surprise now there's an awful lot of people who are suggesting that that could be a one-off and they could well be right but the ISM manufacturing closely correlates with that and expectations for that are for a number of around about 53 from 53.5 do not be surprised if that misses to the downside and actually goes below 50 and the 50 level signifies stagnation anything above 50 there's expansion anything below 50 is stagnation so don't be surprised if we get a miss on that number given how poor Friday's Chicago PMI number was obviously we also got a revision lower on US GDP on Friday from 2.6 to 2.2 that was slightly better than expected but overall inflation expectations in the US are I think slightly overstated given the recent actions not only by the ECB in easing monetary policy but also the weekend events from the Chinese central bank as it looks to try and alleviate deflationary pressures in its own economy and in doing that what they're going to do is they're going to export that deflation out of China but also into Europe and into the US as well. It's unrealistic to assume that the deflationary pressures that are currently affecting China and Europe won't somehow infect the US and I think people looked at last weeks last months rather non-farm payrolls looked at the average earnings data looked at the sharp jump in average earnings data and concluded that wage growth in the US is starting to pick up. We have to remember that that average early earnings data was skewed by significant uplifts to the minimum wage in about 20 odd US states so those are going to be one off factors going forward. While no one is dismissing the fact that wages have improved there was a significant skew to that average early earnings data last month and what I would be looking to hope to see later this week on Friday with respect to that data is for that improvement in average early earnings for February to be sustained so the January number was 2.2% and it jumped up from 1.7%. What we're looking for is a stabilisation around about 2.1%. Certainly looking at the S&P 500 this chart here we can see the way that I do my analysis I staircase it higher the peaks that we saw in the middle of February should now act as a bit of a base so around about 2,101 should find a little bit of support. Certainly the oscillator on the 4-hour chart is starting to look a little bit oversold so certainly I think it'll find it very difficult to get through these series of lows through last week but also at the beginning of this week but if we do it then brings us back to around about the 2,080 level and then below that the big those series of peaks around about 2075 so certainly looking the highs and lows looking at where the areas of support and resistance are and then basically basing your trading strategy off those highs and lows because generally if you look at the way the S&P has traded over the course of the past few weeks it has been fairly organised in the way that it staircase higher. Moving on to the small cap index it's a similar sort of story with respect to the moves higher and lower so once again we're in a steady up trend certainly we're finding good support around about the 50 event moving average on the 4-hour chart so certainly keep an eye on that but also look at this aggregation of lows through the 1,230 level that could well act as a little bit of a support level in the short to medium term as we look to see whether or not we've topped out on this particular market as well and the Dow Jones the similar sort of story we go down into the 4-hour chart in the same way and we can see that there and again the low that we saw there is probably likely to act to support on the way down but once again the oscillator is starting to look a little bit oversold and could actually pick higher. Now I think one of the things we need to focus on if we do get a bad number on the ISM this afternoon the knee jerk reaction would be to sell the US markets but bear in mind that a bad number makes it less likely that the Federal Reserve will look to raise interest rates and as such it would mean that interest would remain lower for longer so after a spike lower we could well actually find that buyers start to creep back in to the market. It's the old bad news is good news scenario. What it will do though is it could well undermine the dollar. Now let's look at the dollar and Euro dollar in particular. Now if at any time you ladies and gents want to basically fly a question over my way please feel free to do so using the chat facility. What I'll do is I'll just type in questions here if you feel the inclination and I can expand on any points that I may want to make going forward. Now what we have seen is we've seen a significant push or monthly close below 112 at the end of last week which would appear to suggest that we could well see a move lower in Euro dollar towards the lows that we saw in the middle of January around about 110-19. Now the 112 level was key I think for me in the overall scenario of a lower Euro dollar simply because it was the 61.8 Fibonacci retracement from the all-time lows that we saw at the beginning of this century around about 82-30 to the all-time highs that we saw around about five or six years ago around about 160-20. 112 was around about 61.8 retracement level of that. So we closed below that which technically doesn't really bode that well for Euro dollar but we are looking over a 15-year time frame. So just because we closed the week in the month below 112 doesn't mean we can't ratchet all the way back to 114.60 over the course of the next few weeks. So in the interim we do have resistance just below 112.60. Now why 112.60? Simply because it held on a fairly regular basis between 112.60 and 112.70 over the course of most of February before we broke below it late at the end of last week and have since sustained a move below it. So if we do get a short squeeze in Euro dollar we need to push beyond 112.60-70 to retarget the highs that we saw at the end of all throughout last week around about 114.30. So those are the key levels in Euro dollar 112.60 on the upside which coincides with these series of lows through here. If we move back through there that could trigger a little bit of a short squeeze back to the highs that we saw last week at 114.30. Certainly looking at this oscillator here there certainly does appear some evidence that we might see a little bit of a squeeze to test into that window between 112.60 and 112.70. That's certainly supported by the fact that despite the fact that the Euro was able to make new lows for the week last week the cable pound against the dollar continues to remain fairly well supported and that sort of feeds into the narrative that as long as we stay above this support and resistance line here. Now you could argue that this is the beginnings of a bit of a head and shoulders reversal off the lows that we saw at the end of January around about 150, around 149.80. At the moment we are in an uptrend from the rebound from 150. If you actually look at where we've come from over the course of the last few months we have come an awful long way. We've come from the peaks of 171.45 to the lows around 149 and we have managed to push through 154.80 albeit very, very briefly. I'm still feeling particularly positive about the pound but I am a little bit concerned about this negative daily candle that we saw at the end of last week. Now that is a key reversal. It is a worry and that does seem to suggest we could well test this lower line here if we are unable to take out the peaks that we saw on Friday. So for the time being looking at the oscillator here that does appear to suggest on the daily chart we could actually test lower in the short to medium term but and this is the key thing here but as long as we stay above this level here which is around about 153.20, 153.30 then we could well get a rebound back towards around about 154.5. Now that's assuming that this is a head and shoulders reversal. This is the left shoulder here. This is the head here which means we need to form the right shoulder on the four hour chart. If this doesn't fold as I think that it might then as long as we don't go above 154.80 and we form this right shoulder here then the likelihood is we will get a test of this neckline here and potentially test lower. What I don't expect is for us to make new lows from the levels that we saw at the end of January so we could get a downward correction if we break below here but as long as we stay above here then the potential is for the pound to continue to trade higher. So there is a word of warning. We have had a daily bearish reversal. As long as we stay above this trend line here then we're likely to continue to trade sideways before ratcheting higher again. If we look at euro sterling. Euro sterling is also showing some evidence of a bit of a rebound certainly on the four hour chart here we've seen a rebound. Let's see what that looks like on the daily chart. Now this looks like a key day reversal on a bullish basis. What we need to be able to do is sustain this rebound. Ideally we want to take out the high that we saw on Friday. Now that high is around about 72.98, 72.73. So what I would want to see here is a break above 73 on a daily basis to test the trend line, the downtrend line from the highs that we saw earlier. And it's these highs here currently coming in around about 73.40. So certainly looking at the rebound that we've seen here we need to break through 73 to target a move to 73.40. On the four hour chart that does appear to suggest that maybe there is some momentum behind it. Let's see whether or not that continues to be the case over the course of the next few trading sessions. Dolly Yen, slightly different story here. We've continued to staircase higher here but it's very painful and it's very slow progress. It does appear to be a little bit of an interim cap around about 120. The oscillator again is looking a little bit overbought. You may recall the reaction that we saw the last time we pushed through 120. We got a very aggressive downward reaction and I think the market is a little bit mindful of that given how quickly we came down here. We pushed aggressively higher. We traded sideways for a bit and then within the space of eight hours we pretty much gave up all of the gains of the previous few trading sessions. So certainly worth keeping an eye on that over the course of the next few trading sessions. Now one of the things that is worth keeping an eye on over the course of the next 24 hours is the Australian dollar. The Australian dollar is, I think there is an expectation that we could get a rate cut Tuesday morning from the RBA. Now I think given how the Australian economy is significantly exposed to China and the fact that China cut their rates at the weekend, I would be surprised if the Australian, the RBA did cut rates. Having said that, when they've cut rates in the past, it's usually been two rate cuts in succession or they've acted two months in succession. So I certainly wouldn't rule it out. Certainly if you look at the behaviour of the Australian dollar on the Australian index, the Australian index does appear to be pricing in some form of action. But the Australian, the RBA can give a clue by leaving policy unchanged but then suggesting they'll cut rates in March. And that would be equally as dovish. They're actually doing nothing tomorrow. And certainly looking at the Australian dollar and the way that's behaving at the moment, there does appear to be a little bit of a pricing in of some form of action over the course of the next few sessions. Certainly looking at the daily chart on the Aussie. If we draw in the trend line from the September highs, we're right on that at the moment. So certainly I think even if we do get a short squeeze, it's unlikely that we'll get much of a move above the top of this line here, which is also the equivalent to the peaks that we saw at the end of last week around about 79, 15, 20, as you can see from that image there. And I think what's also quite interesting is how Aussie yen is looking because I think if you look at the Aussie dollar, but you also look at the Aussie yen, sometimes you look for confirmation in the crosses as to what a market may do over the course of the next few sessions. And the Aussie yen is actually showing quite a nice setup as well. Certainly looking at the daily chart here, we've got from the November highs. Let's just zoom that in a little bit there. But also if we take it and drill it down to four hours, that looks even better. So again, you've got a fairly low risk trading opportunity there with a stop loss above a trend line breakout through 94. So looking at the Aussie yen, that looks like a nice little setup there, fairly low risk with a stop loss above the downtrend line from the November highs. The oscillator is fairly neutral. It's around about 50. So it could conceivably go either way. Unfortunately, that's one of the problems that you've got at the moment. Certainly if we look at the trend line through the lows through here, you can see there that we do have what I would call a classic piece of price compression taking place over the course of the last few sessions. And the apex is right here. So we will probably need a breakout either side of this move here over the course of the next eight hours or so. So certainly worth keeping an eye on the Aussie yen. Let's have a quick look at the gold price because the gold price has started to rebound off the lows that we saw at the end of last week. This is a daily chart once again. We've got a tweezer bottom here on the daily chart here. It would appear to suggest that maybe we could start to squeeze higher. You can see the uptrend there taking place. We need to take out the 1230 area, but we also need to take out this trend line resistance from the peaks in January to suggest that the recent downtrend that we've seen in the gold price is starting to run out of steam. So let's quickly just draw a line in through those lows to give us an indication of where the support is there. And we can see that on this chart here. Fairly nice little trend line there. Currently coming in. Let's draw that in. And it currently comes in around about $1210. So $1,210 an ounce support line from the lows that we saw in the middle of February. Let's have a quick look at Brent, crude oil Brent. And again here we're finding a bit of a cap around $62 a barrel. Certainly a significant top there, finding it difficult to get through there. That looks like we could well drift back towards the lower end of this price range that we've been in since the middle of February, $62 at the top, $57 a barrel on the base. And keep an eye on crude oil inventories later in the middle of this week. Okay, so I'm going to wind up this week's weekly market update. Quick reminder about Friday's non-farm payrolls. As I say, you can sign up for that on the education section of the CMC Markets website. So unless you ladies and gentlemen have any questions in addition to what I've already covered, I'd like to thank you for listening and I hope to speak to you all again on Friday to cover the non-farm payrolls.