 Okay a very good morning to everyone Monday 29th of July. I hope you all had a fantastic weekend Definitely as per usual we're going to run through everything to look out for for this week So as you can see from the calendar to the side of me at the moment If this is a bit small it is something that I tweet from my own personal account which you can see Got my hand all that beneath my my image So you can access that if you want to see it And we'll print it out to have it on your desk But I'm going to run through here some of the main highlights But before I do a quick look at the general setup for the morning Things relative to be quiet as you would expect a very big week coming up We have the main event which undoubtedly is the commencement of the Fed rate cutting cycle Very much anticipating a rate cut of 25 basis points But importantly then communication around where do we go from here will be will be very important for financial markets across assets We've also got the Bank of England Bank of Japan. They both have their rate decisions this week Which we'll have a look at in a second Then you've got starting on Tuesday the Recommencement after a three-month hiatus in face-to-face talks between the US and China So I'll give you some thoughts and what I think of that We've also got more economic data significance both on manufacturing non manufacturing coming from China, and then we've got the sum of 168 S&P 500 companies reporting this week So probably the most busiest week in that respect seven of the Dow 30 coming out So with that in mind today's calendar From a Monday perspective is particularly light. We've had a couple of European earnings out UK as well So centric up about 3.6 percent Sanoffi on the biggest French companies up about 2.3 Heineken they're down about 4% on the back of earnings But otherwise a fair reflection I think of the lack of real big news developments over the weekend very much So it's more about looking ahead towards the main events for this week And in particular that Federal Reserve announcement and not forgetting of course got non farm payrolls on Friday as well So rather than me look at these charts. I mean one of the ones That does stand out I was going to say I'll leave the charts to Sam, but one is with Sterling Want to make a quick comment on this just from a top-level view over the medium term You can see on the daily continuation. We've broken quite a key area Which was that low that we printed only around two weeks ago and Now technically I think that just given my baseline belief that Boris Johnson's plan is to line up a general election I do think that the narrative. He's trying to build is going to be one of very much Again, let's take back control and let's get our confidence back And it's kind of very much emotive response rather than the details in order to conjure people around this national sentiment of Getting a strongest position possible for for a general election and as such The more he talks up the prospects and real credible threats of a no deal and we've seen over the weekend in this morning He's kind of given the very much So the the green light to cabinet officials to go ahead and start prudently planning for a no deal So gee Javid the new chancellor saying he's opened up another billion pounds worth in order to explore those options Michael Gove saying similar at the weekend So I do think that there's more downside here for cable over the coming weeks I think technically now we're through that level. I personally don't see any reason why we don't continue to move down towards the 121 handle and Which puts us of course in close proximity to the post e referendum low that we printed Back in Q3 in a retest in Q1 2016 2017 That's not to say that I think that will break that level because Then we start going down this General election route, which I do think is very much being as part of her the Boris plan penciled in for Autumn albeit this all speculative at this point that isn't the baseline case for the moment at least but yeah, just wanted to quickly comment on the pound because I do think that Combination of the economic data deteriorating as we've seen with the PMIs in particular recently But I also think that given the political strategy of now the conservative government I think that they will be talking up no deal the prospects of that then needs to be priced in More than already has been the case which has seen cable come off a good what eight points now since we knew really Boris Was going to be a clear winner in that race and I do see further downside materializing over the coming weeks For the moment This of course come in context of the Fed of which I think the Fed have got a lot to do in order to add a Dovish surprise to the dollar so that dynamic fundamentally I think that the sterling currency will out weaken the green backing in that respect But let's go straight into a couple of news headlines As I said Sam's going to do the the technical look around and we'll start with the Fed This is a graphic looking at the futures implied odds of the Action to be taken by the Federal Reserve this Wednesday evening just to reiterate right now Both Sam and I will be here to cover the full FMC event live on our YouTube channel Sam's going to publish a Kind of a live holding page where you can just click on that and add the notification bell And you'll be alerted as soon as that session becomes look becomes live. So again, we will be doing that live Absolutely free on YouTube. So do check that out Looking at this graphic though. What we can see here is there's been a distinct shift Towards really the market pricing in the prospects of a 25 basis point rate cut not 50 now 50 Still could happen. There's about 18% of the market which is pricing in that for a potential outcome but what's happened is a combination of a little a few signs of some more positive economic data on perhaps what was a more of a Negative developing thing that we had seen and importantly we saw Comments being rolled back. I think it was feds Williams at the time the New York Fed spokeswoman came out to correct saying he Wasn't explicitly talking about the July meeting he was talking about the bigger picture and in the most dovish member of the voting FMC members James Bullard came out Basically said 50 basis points would be too much So I find it incredibly hard to see the Fed doing 50 given those two mentioned events so The question mark of course is going to be how do they follow this up? Because of course every now Federal Reserve meeting has a press conference And so we'll be looking for your own power to add clarity about the future direction of policy Is what we're going to be anticipating and which will be key The other thing that I did see and and really you can you can just make whatever you will of statistics But I thought this was quite an interesting one. This is a chap. I believe the firm is LPL financial But this guy's quite closely followed on Twitter He's definitely the stats man and he was looking back at a collection of numbers Looking likely that we'll see the S&P 500 within 2% of all-time highs, which we are at the moment And he was looking at the last time we had a rate cut with equities at around these levels and it's happened 17 times before since 1980 and Every single time that's happened i.e. the S&P 500 has been within 2% of an all-time high when the Fed have begun cutting Then every time at a 17 previous occasions Dating back about 40 years the S&P is 500 is finished higher every single time To give you an idea about the numbers on average the S&P's finished higher by 15% So a sizeable gain now, of course Context has to be applied and just because this pattern is very clear that doesn't necessarily mean it will repeat itself But nonetheless, I thought it was quite a compelling Set of numbers suggestive that you know from here even though we're trading north of 3000 and the S&P and 27,000 and now this would suggest that there's still plenty of appetite For upside when this type of thing has happened before we shall see Elsewhere the other big thing that people are looking at of course the trade secretary Robert Lighthizer and The treasury secretary Steve Mnuchin they head to Shanghai And they're going to be there from Tuesday and Wednesday with a two-day talks face to face now As I've said, this is the first time they're meeting face to face in about three months. This comes after that G20 temporary freeze if you like that they had on the US imparting further tariffs on the remaining of goods on China Now the key thing that you're really looking out for here is China essentially has three main demands in order to progress and move things forward on this agreement number one is the immediate removal of all existing tariffs one of which you can imagine were a main as severe sticking point because I really find it hard to believe that the Americans will agree to that number two is the Chinese want a balanced agreement Now the Chinese have very much Said before that really this is a one-sided relationship where the US is getting a lot. They're demanding a lot and if anything Given the cultural differences as well This is very unpalatable for the Chinese officials to bring back domestically So point number two is they the Chinese want a balanced agreement and then point three the Chinese also want realistic targets for additional purchases of American goods now you remember Part of the G20 agreement from the US side was they demanded that China commit to upfront a specified amount of purchasing of of agricultural goods And that's been particularly onerous on the amount and volume of which China has to buy So they're really three things I'd say you want to look out for over the Tuesday and Wednesday talks the immediate removal of all existing tariffs a balanced agreement and realistic targets to be set forth from the US on the basis of Purchasing of American products now all three of those I think the US will not budge on them and quite interesting comments out of trump at the weekend And I do think that it's in trump's own Um Favor if he is to delay this as long as the market isn't in a state of negative shock and selling off Which it isn't at the moment I think trump will want to prolong this as much as possible in order that he can then come in as the white knight and cut a deal closer towards more like 12 months time Possibly six months time where he gets the maximum impact then for right in the heat of the political campaigning period going into the 2020 election So my overall Outlook for this meeting is that they will continue to continue to talk I really don't think anything of real concrete nature is going to materialize could that be destabilizing I think net net will end up pretty similar to where we are at the moment on this trade issue alone In terms of market reaction is my overall view Um One important thing that china said at the weekend in state media Was that no achievements would be made if the us sticks to existing stance during the shanghai talks And as I said, I don't expect the us to change that stance at this point Um, one thing that people have been looking at is the state of the chinese economy Um, it continues to weaken further in july Early indicators show so growth remaining tepid weak demand, of course As this uncertainty of the trade cloud Remains this is something that bloomberg Often put together which is basically like an activity measure looking at several different components in order to ascertain overall forward-looking Expectations over chinese activity and as you can see it's tipping in the weaker direction Even no stronger in major onshore stocks and key property stocks and iron ore prices small business confidence Sales manager sentiment factory inflation tracker These are all things that should be indicative of still The prospects of continuation of contraction of like we've seen in various different things like manufacturing and the pmi data of late From china pmis which will be looking to get confirmed on wednesday night going to thursday morning from china Which is signed to look out for On the energy front quite interestingly if people are still a little bit Worried about the precarious nature of the overall global growth situation Well, you've kind of got a two-part thing So that may be potentially a question mark on the demand side But on the supply shock front obviously the Tensions in the persian gulf have been Absolutely at the forefront of energy traders minds. However over the weekend you had pretty constructive talks Amongst a lot of western nations In regards to Meeting face-to-face with iranian officials for talks called in response to the escalation intentions between the iran and the west So present in these talks that the weekend to try and find Some sort of way of working around this in 2015 agreement they had in place before the u.s. Kind of blew things up britain germany france plus russia and china were all there trying to have constructive dialogue with iran Which i think is very important for peace in that particular region and so therefore as a by-product of this I do think that potential flare-ups or headline risk surrounding the strait of hummus has decreased slightly um This of course didn't involve the u.s. The u.s. Who's really stoked that issue with that recent cancellation of the exemptions to the terrorists a few months ago So oil prices a little lower this morning not by a great deal But down around the 56 handle trading negative about 19 cents Other things you've got this week. I mentioned you got the bank of england Markets now expect a quarter point cut in interest rates this year At the time of the may mpc meeting and the reason why this graphic is the may The blue line is because this thursday bank of england We're not expecting any rate cut in this meeting But importantly we get the latest quarterly inflation report And so any changes to growth and inflation outlook is going to change then the perception of the interest rate policy over the medium term horizon typically over two years and what we've got here is the The overnight index swaps would imply then a rate decrease happening by the end of the year Remember rates in the uk commonly reside at 0.75 percent if we're to go to Essentially the end to the beginning Kind of q1 of 2020 markets are priced for rates to be at 0.5 percent. So 25 basis point decrease How much clarity are we going to get in the qir? I would say Probably not too much but overall it might sound a little bit more dovish given the comments that we heard from Michael saunders last week the outlying hawkish member turning much more dovish Given the threats politically Certainly under the cloud of the The threat of a growing risk of a no deal under some of the rhetoric coming out of boris johnson and the administration at the moment One interesting thing I did see at the weekend was a number of the latest polls And this was one there was several actually by delta poll and it had the conservatives This was for west minster ahead by 10 a pickup of 10 points And opening up a lead of five points over the labor party. So a dramatic turn as Boris johnson effect. They're calling it in the press the boris bounce He really has captured or struck the right note to really resonate with those who are slightly disenfranchised by the kind of stuck in the mud situation of Theresa May and even though boris is in exactly the same situation That's not the point. It's this kind of trumpism approach to politics, which is talking up a really You know mighty return of of britain to the fold, which is really played out in the polls and and certainly Uh, that has reflected quite well One thing that was quite interesting though I did see as a side point that That as a secondary number if labor were to drop Jeremy Corbyn as their leader The same poll would suggest that labor would shoot into the lead at 34 with the Tories at 28 So quite interested to see if if Corbyn remains under pressure as well at the moment Even just to lead his own political party would be particularly interesting Um a few other things this um, I won't go into this in in great detail You've seen these before this is kind of the where do we go from here next decision tree? And here obviously the pursuit at the moment as far as the government rhetoric would have you believe is No new deal That would then lead us all the way shooting down to it. Can the MPs block a no deal? If they can the UK and EU agree a delay Europe, I would say most likely would say yes If there is a delay, then where does that lead down? And if we do go down this general election route, remember that will more than likely entail given The the legal process of inactioning a general election will mean that october will get delayed, but obviously Boris could probably survive that if it was under the remit of holding then a general election So that's that's the baseline I'm going for at the moment But obviously if that did go through that's that risk of no deal But I don't really see that as possible at this point I think the gusto is to set up the sentiment for the general election rather than anything else And then the other options here again if you want to look at these graphics in more detail I did tweet them at the weekend Moving on different subject matter We've had 44 percent of the S&P 500 report so far For this Q2 2019 earnings season In terms of the earnings the percentage of companies reporting actual earnings per share above street estimates is at 77 percent above the five-year average so Certainly on that metric a fairly decent performance overall for the moment This week we've got 168 companies reporting Just to give you a bit of a flavor of some of the bigger ones not really too much going on on monday But tuesday you see the likes of proctor and gamble merc fizer So certainly some of the larger pharmaceutical names in american reporting And aftermarket on tuesday you get the biggest company And the tech giant apple reporting Wednesday general electric probably one of the highlights alongside qualcomm And then on thursday verizon general motors And then on friday you get the energy majors exon mobile and chevron So I will share in the chat the full kind of breakdown of that so you guys know exactly what's coming out And when so yeah, that's That's pretty much it so again just a very quick level summary The major event will be the the fomc rate decision The cut outside calls for 50 baseline is for 25, but then where do we go from here? Don't forget market pricing is for about 100 basis points worth of cuts into year end Is the market too dovishly priced even though the fed cut do we get this this kind of more? um Almost like a hawkish cut scenario if you like where markets by function of its pricing even though the fed are cutting and sounding quite Dovish, it's just not dovish enough for how the markets are set up and we get a bit of a hawkish reaction We'll go into that of course more on wednesday You've also got some important u.s data with non-farm parallels being on friday You get the adp employment change coming on wednesday you get ism manufacturing and you get the whole build up coming throughout the week Then you've got the trade talks so tuesday and wednesday bank in japan interest rate decision will know overnight With the bank of england to follow on thursday, and then you've got littered in throughout the week all of those corporate earnings So plenty to get your teeth stuck into So we'll be here of course to guide you through all these different events And and hopefully we'll be able to join us live on on wednesday night. All right. That's it from me Let me hand you over to sam And i'll uh, i'll catch you in the chat room. Thanks guys All right guys. Good morning. Have we all had a uh a good weekend? I guess no better place to start than uh the pound here, which is Just spiked again through the s1 and i'm in a bit of a relief rally if you like from That area of support. I just posted this in the chat got uh You know trying to pick support on this market is going to be relatively tricky But we're just coming up to a point here where This trend line would come into play and a couple people were looking at this as well You can see the low from the the 18th Uh 17th and then just hitting this now If you look for a further move that's going to have to go and looking longer term Now on onto the weekly chart It doesn't look too good for for the pound here and and bringing in this this trend line that's been well respected For well since it started here 2017 and we've got a really nice test of it back in the last year and coming in closer to A few weeks ago. What an area of support bounce through closed below and yeah, it's not looking too good So opportunity wise i know you've got the fed and obviously that could could see us back at you know 125 very quickly Come wednesday and depending on on how that comes out But certainly from a technical point of view just for the the pound against the us dollar a retest of this trend line Could be a decent opportunity Levels below and and here we're we're looking really going back to I guess you could say one Well, almost where we're trading now 120 What's the low that we 123 65 on the futures and if we get below there, then you're probably looking more towards 123 and the next real key Support point 121 31 on the the futures not looking good for the pound is the summary of that and not just against the dollar But against many other pairs as well looking Intraday at the pound as mentioned if we can get a retest of that trend line The the weekly one that's coming in around 124 12 You know, I'd like a bit of that as well and you can see on friday We had a decent break of a trend line not going to say we're going to get up to 124 80 But something to keep an eye on later in the week as well should we we come in so already a decent move lower Pricing in of the no deal. I think it's going to be the main reason behind this So we're keeping an eye first and foremost around 124 11 as it comes in obviously s1 will be an area people would look at Just bear in mind that if we do get you know further push from here, you know, it was a really strong level support So whether you'd want to get short so aggressively On s1 remains to be seen but some decent levels to look to to get in again Euro I mean listen today is going to be a quiet one. I don't imagine there's going to be too much going on But you know, just having a quick flip back to that calendar. You can see of all the days It's the quiet. So I'm not expecting too much From that back to the chart for the euro if we're looking for a more range bound trade You could argue the r1 with fridays highs looks quite nice the the lows Around s1 as well. Maybe a new range has come into play From there that should confine price pivot That means an area isn't it? I don't necessarily think it'd be that good I'm not going to say the only trades are going to be r1 and the s1 But certainly from a range bound Monday morning might be the favorite option to to wait for one of those to really come Into play elsewhere. We'll have a quick look over the other currencies the ozzy, which Just continued it. It's pushed lower. We were talking about this trend line for what seemed like that every Brief and we did finally get there the break of of that the other day And any retest of that in the coming days and weeks will be worth keeping an eye on This market just continuing to push lower. So any of these Levels that do come back into play Yeah, it would be obviously nice points to get in you can see Every time we get a break of these previous lows, we just get a further follow through So well, maybe not today just considering the low volume But we can see we're starting to find this area support 69.13 a break of that You might get that that follow through to the downside one to to have marked up as well the yen against the dollar slightly Well, you can see it's still directionally over the last week or so to the downside but slightly More Choppy I would say over the last couple you can see the area support We had on friday completely makes sense because of the the reaction we had back on the 10th I would really like to see this market give back up to this previous area of support that we did break through on Thursday Can we get to that? You can see the lows the 16th the 23rd and the 24th Any retest of that would be nice enough to to get in We had to push higher in the morning back down to where we started and we're already up Free ticks or so. So again, relatively range bound And with the the monday morning trade probably best just to hold off before getting too aggressive gold You can see almost getting up to the the r1 and yesterday's high and and yesterday's low is on s1 So very similar to the euro in in that respect that we have got this little range in play With help of the pivots that might be worth just holding off on that You know the way gold can move so it might be worth just having a few of these Trend lines on just to see if we can get those third tests at any point That leads to that final push down or push higher either way But for now, you've already got the two tests on those As mentioned by by and we'll get the the weekly strategy out where we look at these levels in a bit more longer term But for gold here if you just we make this a bit more Well, you know longer term, you know, still a 50 minute chart But going back here for the whole of the month you can see it's relatively sideways anyway And that longer term trend line for Gold if I just move everything off that we've talked about in recent Time let me just bring that in here You can see we actually didn't get a retest of it But still holding well and I know a few people are still short on on that So at any point may well be worth keeping an eye on that trend line And of course up to the higher point you can see just how well On the futures on the 240 1432 1430 is as active as a level of resistance Just cannot get above that area Quick look at gold oil Sorry to to wrap things up when we look at the the decks on the the open Just have a look at the last half hour You can see oil quiet as expected and that's probably a summary of how this morning is going to be You've got your range in with the s1 and the r1 friday is high and low Similar to the euro and gold and other markets as well and oil pretty sideways as well I mean worth having on this trend line from the low that we had if I just move this away from the camera Of the 18th just to see how price can squeeze in and then from the upside Well, it's slightly steeper, but really well respected a lot more respected Should we say than the downward one so worth having those on and probably waiting for a break either way And just wondering whether the volume is actually going to be there for that to happen today Or not and look over the decks just trying to creep creep higher Not the most clean open shall we say S&P obviously near those all-time highs as well. We'll have a quick look over the the charts Longer term and get those sent out in the The strategy report and but of course before that any questions that you do have Please do let us know just a quick one on that calendar quiet today picking up Obviously got the fed wednesday, which will be the main thing and then non-famperos friday as well with the bank of england The day before that on thursday So any questions as usual, please do let us know if we don't speak to you I hope you'll have a great trading day and great week ahead