 Good afternoon, ladies and gents. Welcome to this weekly market update with me, Michael Houston. And I'm going to be looking really at a very, very big week from a macro point of view. Markets are up today, European markets are up today, largely on the basis or on the back of renewed merger and acquisition activity. And it's pretty much a follow-through really from the events last week. The FISA bid for AstraZeneca, which has now been confirmed. And a whole host of other M&A factors following on from Glaxo last week and the asset swap with Novartis. We've also got markets are looking ahead towards a whole host of macroeconomic data this week. We've got so much data, I really don't know where to start, but slightly more positive bias. But I think one thing is notable and I think it's very, very important at the moment. We're having just as much good news as we are bad news. And at the moment that's really keeping markets trading very, very sideways and very, very schizophrenically because if you actually look at the overall trend and the range of what the markets have been doing over the past four to five weeks, we've been pretty much trading in a pretty broad trading range. Certainly, if you look at the UK 100, we're back retesting the highs, but certainly nowhere near the highs that we saw in February, despite the fact that we're supposed to believe that the economy is recovering, the UK economy is recovering. We've got UK GDP data out later this week. We've got US GDP data out later this week. We've also got the FOMC, the latest rate decision on Wednesday. The two-day meeting starts tomorrow, of course, the Fed meeting, 28th and the 29th of May. We have the, sorry, the 29th and the 30th of May. We have the ISM manufacturing data from the US for April. We've got unemployment data, normal farm payrolls on Friday, ADP on Wednesday. We've got German, Italian, EU and Spanish unemployment data due out. We've got Spanish GDP. We've got Italian, French, German and UK PMIs for the manufacturing sector. So we've got a whole host of data to digest. All in a while, we have concerns about potential further Russian sanctions with respect to the geopolitics that's currently going on in the Ukraine. And markets seem to be shrugging concerns about that. They're putting them to one side. And for the time being, that does appear to be the sensible thing to do. But however, I still think that remains a significant risk. It certainly remains a significant geopolitical risk. Certainly the scope for a policy mistake is very, very high. And I think as such, that's really what's tempering upward momentum in some of the equity markets that we've been seeing over the past few days and weeks. Key levels on the S&P remain around about the 1888 level. I highlighted that in last week's webinar that we could well get a retest to the March highs. We certainly did see that at the back end of last week. We're getting a bit of a rebound today in the pre-market. Slightly higher, 1872, the S&P, up from the Friday closes. But as we head into the weekend, we always need to be aware that there's going to be a certain amount of what I would call position squaring because given the very fluid situation that we've got in the Ukraine right now, I think it will be very unwise if investors go into the weekend overly long of equities. But certainly the reversal pattern that we saw in the middle of April has so far been borne out. But now there's potential for a little bit of a pullback and we're seeing that in the context of the peaks that we saw in the middle of last week, 1888. Obviously, U.S. earnings season is in full swing. That has been the earnings expectations that we've seen so far have been somewhat mixed. No surprise that Apple posted better than expected numbers, but there was a significant technical reason for that stock bouncing last week. We can see that with respect to this chart here. We were very, very near key support and I posted a note on that on Tuesday of last week. Near the 200-day moving average, near support, we've broken above this resistance level here and now we're back near the highs of December around about $575. Obviously, we've got the stock split that's coming in on the 9th of June. Talk about the Apple being admitted to the Dow Jones Industrial. Once it becomes a $70 or $80 stock as opposed to a $575 stock. I think one of the key points with respect to that is it makes the company that much more attractively valued for the smaller investor. I think that's really why you've seen the move higher that we've seen so far over the past couple of days. Certainly, the prospects for the company seem fairly positive and of all the tech companies that are out there, it is probably one of the most attractively valued. If you look at Apple's on-off-price earnings, it comes in around about $13 which compares very, very favorably to say a company like Facebook which trades on a forward PE of around about 40 times earnings. They posted some fairly good numbers last week but as can be seen from this chart here, it's struggled to really make any headway from its current valuation which is around about, just drop below $60 a share on Friday evening. Certainly, Facebook has some way to go to justify the rich valuation that it's currently trading under. Certainly worth a look for later this week is Twitter. We've got Twitter tomorrow. If you think Facebook is richly valued, then it's got nothing on Twitter because if you actually look at Twitter's valuation, it's trading on about 1,600 times earnings. Given the pop that we've seen in tech shares over the past few months and the correction that we've seen over the past few months, I would suggest that Twitter is probably the most vulnerable to a significant drop lower. Certainly, you can see the volatility in that particular stock from the December highs of just above $70 a share is now back down to around about $41 and to my mind that's still too high. Certainly, potential for a retest of the April lows around about $40. Certainly the lowest levels that we've seen were in November last year around about $38 or $39. I think it's very likely that we could well see a further drop in the Twitter share price over the course of the next few days, particularly if the losses that the company is currently operating under don't start to diminish an awful lot more than they have done. That's really the key levels on the various charts that we've got there. Again, similar sort of chart on the Dow Jones, very, very near the highs thus far. For any number of reasons, I would suggest that the upside is likely to remain fairly limited in the shorter medium term until I'm convinced that we get significant indication that we're going to see a pickup in earnings growth over the course of the next six to nine months. We hear an awful lot about the prospects of further upside in the S&P and certainly you can make a case for further upside in the S&P and the Dow Jones and equity markets if earnings valuations or forward guidance for earnings starts to get revised higher. However, if companies are raising concerns about the fact that earnings guidance is likely to come in line or even slightly lower, then really you've got to raise the question as to whether or not current valuations probably need to continue to trade sideways for quite some time. Now, for the past few months I've been saying that the S&P is significantly overvalued relative to its long-term mean. We can see that probably more borne out by the 200-week moving average than the 200-day. Let's show you the 200-week because over the course of the last 20 years we can see that the S&P 500 has only been slightly once ever traded more than this big distance away from its 200-week moving average and that last occasion was in 2000 and we all know what happened after 2000. The S&P came down very, very aggressively and no market can ever go up in a straight line and eventually all markets have to revert to the long-term mean. Now the long-term mean for the S&P 500 is always going to be the 200-week moving average or the 200-day moving average or whatever mechanism you use to value a market and at a moment that price distance to the 200-week moving average remains remarkably stretched. Yes, we're in an uptrend and I certainly wouldn't argue with the momentum on that chart. What I would argue with is the gap between the 200-week moving average and the current price action. What am I going to be keeping an eye on? First and foremost, I'm going to be looking at this long-term trend line through these lows here. It's very, very easy to do this particular one. If there's anything, as I go on, if there's anything that anyone wants me to cover in specifically, please feel free to drop me a message on the chat and I will basically go through the technicals for that particular product. This is not just about me talking to you guys, it's also about you guys talking to me. If you've got any questions, feel free to fling them my way, more than happy to accommodate any requests that you may have. We can see from this chart here that the long-term trend remains higher. We're getting higher lows and higher highs. For the uptrend to continue, we need to see a break of the highs earlier this year in 1900. More than that, we need to see a break above the two peaks, either side of that head, around about the 1888 level. I'm of the opinion that at some point we need to start to take a pause. Maybe we're going to get that pause over the course of the next few days and weeks. Also, remember that old Maxim selling Mayan Garway doesn't always work, hasn't worked for the past couple of years, but I think as we head into the summer months, it's certainly worth keeping an eye on. That's the S&P, that's the long-term trend line in the S&P. We can close that down there and go back to the Saved chart, which I've got right here. We can see that long-term chart there. We've also got a shorter-term trend line here coming in from the June lows last year. That comes in around about 18, 13, 18, 15 there, which also coincides with those peaks in November and those lows earlier this month around about the 18, 14, 18, 15 area. Then below that, you've got the 200-day moving average. We're starting to become a little bit overbought on the daily oscillator, but that's not to say that we can't continue to go higher. For me, the key level remains on the upside. 1888 and then the 1900 peaks that we saw in April earlier this month. I've been asked to do some technical analysis on the NASDAQ. More than happy to do that. Here we go. It's a similar sort of story on the NASDAQ. The only difference is that we're starting to trade in a downward momentum. However, we have very, very strong support through the December lows, the February lows, and the April lows around about the 3,400 level. The fact that we're getting lower highs from the March peak suggests to me that the current upward momentum that we've been sustaining over the course of the past few months is starting to diminish somewhat. Certainly, if you're looking at the US equity markets and you're looking for a potential warning that maybe we're starting to run out of steam, the NASDAQ is as good a place to start as any. The NASDAQ 100 does appear to me to be showing signs of what I would call a little bit of sagging momentum or waning momentum. We can see the 200 day moving average. We can see how that's actually the support on the way up. It's starting to get a little bit stretched. The market is starting to come back towards it. As long as we stay below this trend line, this downtrend line from the March lows here, then I'm of the mind that we could well get another retest of the lows that we saw earlier this month around about the 3,400 level and the 200 day moving average. If we blow that out slightly further, it actually looks much more compelling on the weekly chart than it does on the daily chart. We've also got a similar sort of story playing out on the small caps, the Russell 2000. Again here we've got what's potentially a little bit of a top forming, but again the downside support currently comes in just below 1,100 at 1,075, 1,076. Blow that out into a daily chart. We've got a similar sort of story there, slightly different. Let's put an oscillator on that just to give us an idea of whether or not we're overbought or oversold. I always use a slow stochastic. For me it tends to be a lot less sensitive than an RSI, but it gives you a much better guide. Again we've had a bit of a bounce off the 200 day moving average, so once again in a similar way to the NASDAQ, 200 day moving average is going to be I think key on the Russell 2000. We did try and break below it earlier this month, but we were unable to close below it. I think really that's what we do need to see here. Once again lower highs, lower lows. If we take out this series of lows here then I would expect to see a little bit of a correction lower. You've really got to start looking at earnings valuations now against a backdrop where the Fed is likely to continue to taper its asset purchase program. I think that's really going to be the key item to watch this week. We've heard an awful lot of chatter from Fed officials about the amount of spare capacity in the US economy. Inflation again is a very thorny subject for a lot of central bankers at the moment, but we can see from US inflation it remains around about the 1% level. Given the fact that European inflation and UK inflation also remain fairly benign, I don't think inflation is really going to be a factor going forward. There are certainly a number of concerns that the Fed has with respect to its easy monetary policy. I think what it wants to do is to pull back from QE and really just talk about its forward guidance and keeping rates low for longer. I think that's probably going to be the main message that could well come out of this week's data because if we look at what's expected this week, we're not really expecting any significant weakness from any of the US data that we've got coming out this week. Starting with pending home sales this afternoon, we've already seen from last week's home sales data that generally the US housing market remains a little bit lackluster. On Tuesday, we've got US consumer confidence. We saw on Friday, Michigan confidence is starting to tick up again. We're expecting April consumer confidence to increase to around about 83. Then it's really the key data for the week really starts on Wednesday. It's the US ADP employment report expecting an improvement on the 191,000 that we saw in March to around about 200 to 205,000. The US first quarter GDP has expected to be much weaker than the Q4 number of 2.6%. Markets are really making a bet that the slowdown in Q1 is purely weather-related and nothing more. We're expecting a number of 1.2% for Q1 GDP. Anything underneath that is obviously going to be a little bit of a negative. Certainly, I think the stock markets because I certainly don't think even if we do come in less than that, it's going to change the outcome with respect to the tapering program. We do expect to see on Wednesday evening the Fed to cut another $10 billion off its asset purchase program to $45 billion a month. Chicago PMI is expected to pick up in April to 56.5 from 55.9. Then on Thursday, we've got weekly job lists. ISM manufacturing is expected to come in 54.2, better than the March number. Then obviously, the big number on Friday, which for those of you who want to listen in, I would be doing a webinar on that. You can sign up for that webinar on the education section of our website, non-farm payrolls, expecting an improvement from the 192,000, which was a bit of a myth if you recall. Markets were expecting around 225,230 for the March number, which always struck me as slightly optimistic, expecting a number in the region of 210,000 for April payrolls, which strikes me as rather strange given how bullish everyone was about the March number. You would expect that having seen a lot of bullish expectations with respect to the March number, the fact that the weather has started to warm up, you'd probably see those expectations shifted out to April, but they haven't. We're only expecting a number or unless we're only expecting a number of 210, so maybe we get a better number. Maybe we don't. Certainly, the unemployment rate is expected to slip down from 6.7% to 6.6%, just above the Fed's old and no longer used guidance threshold of 6.5. Those are the key levels, and yet we are still expecting the US dollar or a lot of people are still positioning for the US dollar to strengthen, and that really is not happening. Why isn't that happening? Well, there's a number of reasons why the dollar's not strengthening, and one of those reasons is the fact that a lot of people think that the ECB will not or cannot cut rates any further than they already have done. I think there's a perception that the appetite's not there, but I also think there is the prospect of this asset quality review. You're seeing a lot of European banks repatriate capital back home to bolster their balance sheets. You've obviously got an awful lot of positive capital flows coming in with respect to mergers and acquisitions. You've got General Electric looking to buy Alstom. You've got this Siemens story this morning as well, and that's driving capital inflows into Europe. You've also got the fact that if you look at Spanish, Italian, Portuguese, and Greek bond yields, yields there are certainly much higher, and with an expectation of a deflationary outlook, there's an awful lot of investors who misguidedly I think are buying European sovereign bonds on the basis of yield alone. I mean, how else can you explain the healthy uptake in Greek bonds, which are yielding 4.95% over a couple of weeks ago? Personally, I wouldn't touch Greece with a barge bulb. The economy is still in dire straits. Unemployment is still eye-wateringly high, and yet, if you dangle a yield of 5% in front of an investor, you nearly get trampled in the stampede. Essentially, I think is what's underpinning the euro at the moment. Now, we've seen this morning that a number of ECB officials have been trying to talk the euro lower, and unfortunately, they're not having much luck. When we look at what economic data we've got coming out later this week, it's going to be very difficult for Mr Draghi to argue for a rate cut or any type of further easing when you look at some of the data that we've been getting out over the past week or so. German Manufacturing and Services PMI last week came in much better than expected. The IFO was much better than expected. All this against a backdrop of concerns about Chinese growth of Russia going into recession, both key export markets for Germany, yet investors and businesses appear to be looking past that. I think on the basis that the Ukraine situation won't degenerate any further. Certainly not an unreasonable expectation, but as we know, only so on so many occasions, sometimes market expectations are always way out of kilter with actual reality. What have we got this week? Starting tomorrow, we've got Spanish unemployment data for the first quarter, and we're expecting to see that come in around about 25.85%. That still remains very, very high. On the flip side of that, the Spanish economy does appear to be picking up, but 0.4% growth for Q1 GDP on Wednesday, they're going to need a lot better growth than that to get the unemployment rate down. We've heard an awful lot from Mr Draghi about inflation expectations in the Euro area, and the fact that the Eurozone is in deflation or is approaching deflation. I think if the inflation numbers that we've got out later this week edge higher, I think you can basically rule out any further form of stimulus, and we could well get a move back to the highs that we saw in March later this week. We're looking tomorrow, first and foremost, at the German CPI numbers for April. We saw 0.9% for those numbers earlier this month. They're expected to rise from 0.9% to 1.3%. On Wednesday, we've got the EU CPI equivalent numbers, and they fell back to 0.7% earlier this month. They're expected to rise to 1%. If we get a significant uptick on either of those numbers, then I think it's highly unlikely that we will get any form of move on monetary policy from the ECB at next week's meeting. That is more than likely expected to underpin the Euro irrespective of what the FOMC does later this week. Again, the key levels to watch for I think on Eurodollar, around about 1.3780, we've traded pretty much in an 80-point range for Eurodollar over the past couple of weeks, but I would suggest that the downside is likely to remain fairly limited and that the upside remains the vulnerable side to go. Certainly looking at 1.39 initially, which is the April highs, but then beyond that 1.3970 and 1.40, and certainly momentum does look as if it's starting to turn positive on the dailies. We're looking a little bit overbought on the four hourly, but overall, we can see down here between the lows of this week here and this week here, 1.3780 remains a key level. Even if we break below that, we've still got longer-term trend line support coming in not too far below that particular level. It's a similar sort of story on EuroYen as well. We can look at a very key chart support level on EuroYen. Look at the trend line support from the November lows right there. We're just above that on the daily chart. This is a daily EuroYen chart. We can see that very, very clearly. Once again, the upside remains the vulnerable side, but we need to break through 1.42. We're just below that at the moment. Those were the highs for the last couple of weeks around about 1.42. We can see that through these highs through here, all the way back to the beginning of April. If we get a breakthrough 1.42, then we're then looking around about 1.43, very long-term trend line support coming in just below that. The lows actually today, which were 1.41. That looks very much a case of by the dips on EuroYen. What have we got out later this week? It's certainly worth keeping an eye on on Friday. Wednesday is a big day for European data as is Friday. Wednesday, we've got German retail sales that generally don't pay too much attention to them because they tend to be very flighty. They're either very bad or very good. CPI number on Wednesday is a big number. Then we have German unemployment that's expected to come in and remain at the very low levels that it's been out for the past year or so, 6.7%. Italian unemployment is expected to remain at record levels, 13% for March. On Friday, we've got Euro area unemployment, which is expected to remain 11.9%. On Friday, we've also got manufacturing PMIs from Italy, France, and Germany. Really, the only disappointment there is really the French data. Again, everyone knows what the problems are with respect to the French economy. There has been some pickup there and even that should come in around about 50.9 after we saw the flash number at the end of last week. We've also got Chinese manufacturing data later this week as well. Keep an eye on that data. We're looking for a bit of a pickup there. That was particularly disappointing last week with the flash number. Came in around about 48.3 looking for a bit of a pickup there, but certainly in respect of China, not expecting any significant further deterioration, but we really do want to see a bit of a bounce back. There's certainly no evidence so far that we're going to get a very strong bounce back, but certainly further deterioration does appear to be at this moment unlikely. Let's look at the UK economy and the pound against the dollar. That once again continues to slowly grind higher. It's finding, despite the fact that this remained very overbought for the past four weeks, it continues to test key resistance levels. The next barrier is this series of highs over here around about 168.75. That's the highs in November 2009. Let's look at this chart here. We can see that. Let's zoom it all the way out. It's these peaks here, November 2009, and then behind that 170.45, which was the highs in 2009. Again, you can see that despite the fact that we've been overbought for quite some time, the pound continues to go higher. It continues to ratchet higher. We're going to get the highest level. We look to be set to close at the highest ever level for the pound against the dollar since 2008, 2009, or when we end the month on Wednesday of this week. That's going to be very, very important in the context of the longer term trend for the pound. Really the key level that I'm keeping an eye out for on a monthly close is the 170 level. It's certainly one level that really everyone else really needs to be very, very aware of. If we look at this chart here, we can see straight away how important the 170 level is on a monthly close. If I extend this line back here, ladies and gentlemen, you can see how important it has been. It's acted as support in 2005. It acted as resistance in 2003. It went straight through it like a knife through butter in 2008 post-leamons, and then acted as resistance in 2009, mid-2009, and has struggled to get back there ever since. If we change that to a line chart here, we can see how significantly important it is. We can see that we're on the course for the best monthly close since mid-2008. If we do break above those November 2009 highs, it will certainly be very significant in the context of the overall move that we've seen since the 148 lows that we saw in 2013. 170 is really the key level for me in the pound against the dollar. If we close above that, then I think there's certainly potential to go to 180 or even 190 on a long-term basis. It's certainly worth keeping an eye on for that. Euro sterling continues to be on a downward track. This is a four-hourly chart that we're looking at here, and we can see that it can draw a line through the highs from the 24th of March. Currently comes in around about 82.45, 82.50, and that's really the key level on the top side. We need a breakthrough, 82.40, 82.50, to re-target the highs of earlier this month around about 82.84 and 83. Otherwise, there's a good possibility that we could see that Euro continue to drift lower against the pound over the course of the next few days and weeks. 82.50, finding support around about 81.90, 82 on the short to medium term. Looking at gold, let's have a quick look at gold before we sign off, because I've just realized I've been talking for half an hour and haven't really covered commodities. So we'll look at gold. Again, we had a brief spike below 12.75, 12.80, but we were unable to close below it. I struggle to make the case for a significantly lower gold price. Yes, the Fed is paring back at stimulus, but every time it drops anywhere near 12.75, we run into a fairly steady stream of buyers, and I think there's a number of reasons for that. If you look at the cost of actually getting gold out of the ground, it ceases to become economic to do so. Whenever you get anywhere near $1,100 an ounce, therefore I think as soon as you get anywhere near that level, essentially miners will just stop digging it out of the ground, and that should therefore underpin the price. Also, got very steady buyers of gold from central banks and emerging markets. If you look at the situation with respect to inflation in emerging markets, it's an awful lot higher than it is say for example here in Europe, the UK and the US. Brazil have just raised rates, India have just raised rates, even New Zealand have now started to raise interest rates. If that's indicative of a direction of travel, then that does seem to suggest that maybe concerns about deflation are misplaced. I think that's really the concern of the moment. There's always talk about deflation, but when you actually look at commodity prices over the course of the last three or four months, they've actually not been going down, they've actually been going up. Let's look at wheat, for example, as a case in point. Since the beginning of the year, wheat prices have gone from $540 to nearly $700. That suggests to me that there's certainly some pricing pressures starting to build up in the supply chain, which aren't evident in the annual numbers. I think that's certainly something that really you guys and central bankers need to be aware of. It's a similar sort of story with respect to corn. You look at the 2014 loasing corn, it's up 20% so far this year, corn prices. Corn and wheat prices are up significantly on a three to four month basis. At some point, you've got a thing that maybe we could well get prices start to rise as we get in the middle of this year and the back end of next year. Look at coffee, again, seeing a significant push higher in coffee prices. When people talk about deflation, always look at commodity prices because at some point, if companies continue to find their margins squeezed and there's a good chance they will be if consumers aren't spending, even more spending, then there's a good possibility that the prices of these raw materials going up and commodities going up could well start to feed through into the supply chain over the course of the next few days and weeks. Even copper, which has been under pressure for the past few days and weeks, is also starting to look as if it may be starting to pick up a little bit after posting its lowest levels that we've seen since three or four years. Again, that's probably more down to the fact that maybe the expectation is that we've seen the lows in China in terms of the growth cycle. That's pretty much it for this week, ladies and gents. Just a quick reminder, again, on the non-farm payrolls webinar on Friday starts at 1.15. I usually log the page on round about 1.00 p.m. More than welcome to log into that and I'll talk you over the non-farm payrolls numbers. Keep an eye out for my weekly video, which is Tuesday morning. Also for my colleague Jasper, his weekly video as well, which usually comes out on the Wednesday or the Thursday. Otherwise, that's it for this week. I will post the webinar on YouTube in the next 24 hours. Otherwise, I'll see all you guys again on Friday. Thanks a lot.