 Okay, very good morning to Monday 20th of April. I hope everyone had a great weekend Going to go through not just the the kind of situations that stands right now But have a bit of a look over the week ahead. What are the key things that we're looking out for? to the side of me here you can see a Blog called the macro menu so anyone new to this channel Please do like and subscribe to the video first of all for daily updates for me and the team But also every Sunday. I basically publish a report called the macro menu Which is my kind of fundamental view about the week ahead and some of the key issues that I'm looking at so Some of the things just to give you an overview that I've looked at This week is the economic reality kind of hitting home in regard to more economic data coming out this week Specifically the PMI data. I'm quite interested to look at and that's coming out from pretty much every major Economy around the world this week including the US and the Eurozone as well as the UK And then we've got initial jobless claims people are still going to be looking at that And I was reading a couple of things over the weekend and what I thought was you know I just a quite striking number was the Oxford economics We're talking about in their research report that they're looking for Non-farm payrolls for the month of April so that we'll get at the beginning of May They're looking for a number of around minus 25 million Obviously mathematically does make sense just given the the scope as this graphic would suggest There's a kind of averaging of the initial jobless claims that we've had but again a quite stark Contrast to what we had in the global financial crisis where the worst one-off print was only around 800,000 The number we can expect for non-farms in a few weeks time could be a negative 25 million which would be Absolutely unprecedented at that type of scale a lot of that stuff though I guess is priced in as sensational as it is so Forward-looking things that are going to be quite key are the manufacturing service PMI numbers We've already seen those in the Eurozone last month pretty much drop off a cliff So it's about well how how pessimistic are people about the the future going forward? Also some other things I touch upon in this which I think perhaps could be quite interesting to have a look at Was I kind of talk about this slow path back to normality This idea about the kind of elimination of a quick bounce in a V shape It's going to be much more long and protracted than that And I think the kind of balance at this point particularly when the focus now is about unwinding the lockdown I think keeping a track on the testing volumes in different countries and there's different ways you can look at this But I guess here I've got a chart of total tests For COVID-19 per 1,000 people rather than an actual cumulative total obviously different in Population sizes and so on Some other things again Donald Trump kind of politically I talk about some European stuff and in oil And that's going to be a bit of a focal point for what we're going to talk about in the briefing this morning Because we've got the expiration of the May contract coming tomorrow. We can expect more volatility going into that expiration Prices we'll have a look at in a moment because we're in quite extreme contango at the moment and I'll explain what exactly that means But the main thing is oil is down and Certainly we've maintained a pretty bearish view ever since OPEC struck that accord what It's two weeks ago now we've always felt that the the kind of immediacy of the Huge supply shock that we're going under given the the lockdown was so immediate globally The OPEC's action was going to do a little to offset that at least in the near term So yeah, that's coming to fruition a little bit now and and it's something we can we can delve into a bit more So yeah, this macro menu the other thing that's probably quite useful There's an earnings kind of snapshot of who are the key people coming out And then we've got a calendar of events which will we'll have that here now And we'll circle back and we'll close with this for this briefing this morning And I'll run you through a few highlights, but if you need that obviously my Twitter handle is here I do post out on Twitter on Sunday afternoon generally when I get it out And it can mean a nice thing to compliment your just general technical analysis that you you do getting ready for the week ahead also as well for those Interested the Amplify now kind of e-learning portal. I'll put a link into the video description But Sam did quite a cool thing yesterday that he's going to do going forward Where he did a basically like a weekly trade setup Video and so that's going to be particularly useful as well to kind of compliment what I talk about on the fundamentals He's going to be talking about so here. He's kind of weak ahead outlook I think he did the S&P and the euro so something to check out as well But let's have a quick look at the charts before we get through the headlines and Fairly muted open to be honest compared to some of the big gaps in price that we have been seeing over the last couple of weeks Equity index futures a little bit mixed overnight in Asia U.S. Stock futures trading a little lower this morning Without about 122 in the Dow 13 14 points in the S&P the DAX office most extreme Levels on the upside it has pared down a little bit albeit still up about a hundred sitting just above its pivot at the moment But just running into a little bit of resistance At around just before Europe came in kind of a double Touch on that level just short of our one At around 10 764 Failing at the moment and we're just within that kind of that's the top end of the range Also encapsulating some of the highs that we saw the back end of last week and the downside to pivot at the moment FX markets the Dixie's a little bit firmer we're up about a third of a percent at the moment Which is putting a little bit down to put pressure since Europe's come in on the major FX pairs Consequently both just managing to just break out of that kind of consolidation hugging the pivot level in the futures overnight So a bit of a follow-through to the downside here and both Euro dollar and cable Gold not too much movement again pretty quiet in the overnight session and just hugging 1700 before then just a little bit of downside just seen here more recently teen oats up about five ticks But crude probably a little bit of a focal point And we're going to start with that in terms of a bit of a conversation This is the headline people are looking at I'm going to run through a few different things The headline on Bloomberg obviously Bloomberg are going to want to make this as sensational as possible So often when you're reading media at the moment, they are referring to the May contract not the June contract But from a trader's point of view The the role has already happened So the effective front month, which is where the volume is now is and has been June for a little while now So you really should be focusing more on that than the than the main print Because if you actually look at it at the moment If I go back to my chart, this is the June contract, which is trading It's had a little of a bounce here. We saw some quite extreme volatility in the overnight session You can see that extremity of the wick here actually printed down at a low of twenty two seventy one But we're just recovering up towards twenty four at the moment, albeit still down just over a dollar So that's trading at twenty three eighty seven in June may is trading down as you can see it has been training down sub 15 So quite a big disparity between the two contracts Can tango structure at the futures market where contracts end for the for the latter months Delivery trade at a premium premium to the the current First contract which we may at this point the main contract for WTI I mean trading about well, you can see it there It's about an eight dollar lower than the June contract near the record eight and a half spread between the first and second months That was set back in December of 2008 So a couple things to bear in mind here then with oil to explain what this could mean from a trading perspective one The headline saying that while the markets set for extra volatility as contracts expiring near now The extra volatility could well be in part because of the fact that you have got such a big divergence between these two calendar months crude stockpiles at Cushing so Cushing is that main kind of hub in Oklahoma where it's the delivery point then upon exploration of oil and the problem we've got there is that stockpiling at Cushing is Jumped about 48 percent almost 55 million bowels since the end of February According to the IEA so this market over supply situation of which has led to this action from OPEC Isn't a new thing. It's been happening for a while Remember there were concerns as well about trade war and and so on before we got into this latest pandemic situation So concerns continue to mount those storage facilities in the US will run out of capacity So if you think about it then everyone looking to get out and set out of their May contract And that's just forced that that first calendar month contract lower and widened then out the the spread between the two contracts Hence the reason why you know, this is happening at the moment another interesting stat here though crude explorers Shutdown about 13 percent of US drilling fleet last week as the swelling worldwide glut of crude spurred drastic Cost-cutting and project cancellations among drillers and you know, this was one of the things here I'm just going to flip this to this chart This was previous annotations from a conversation I was having with a with a group a few weeks ago And as you can see I've got these three hours or four hours here and you know when we were having the conversation a few weeks ago This was back in March And this is when we were testing that lower bound level of around the Fed And you remember the market was responding to a technical point support a little bit but we always thought that you know just given The this size and scope of the demand shock on the back of the coronavirus that We felt that OPEC even if they were going to implement as they have done a record agreement is probably going to do little in the immediate period to offset then this this In balance between supply and demand surprises have come down and the big point here now is that we managed to get our heads Below then that November 2001 low, so I'm looking at monthly continuation now here And this then does bring in that that front month or or nay contracts And that's why you can see that break then of that key level here but the idea being that You know as we go down now Technically one point is when we break these long-standing levels that can exert then further downward pressure And that can then if you look here There's not a great deal of the next kind of clear point doesn't come down to you know kind of a 1035 Area, which doesn't eliminate that from becoming a possibility But one of the things I talk about in the macro menu one of the things that I'm quite keen to watch is This idea and I talk about it here if you're interested now I just explained that crude explorers shut down 13% of us drilling fleet last week alone since mid-March Basically us rig count has dropped about 250 it's probably even more than that by now and that's around 30% So around well over now 30% of operational rigs in America have just come offline as a Natural reaction to the fact that these drillers need to cut costs It becomes no longer economically viable to operate and so therefore naturally us oil production is going to decrease quite rapidly My feelings of why I've remained quite bearish is that that is true and that was a statistic to monitor But ultimately that takes a little while for it to really kick in and so These arrows I've got here is Ultimately, I think then once these oil producing country. I think OPEC compliance is going to be strong because it's in their interest for it to be that way but then I also think that the natural Reduction in production is going to see Prices in the second half of this year So I think it's going to be in the next two three months It will start commencing and thereafter we will get a distinct bounce in prices So if you are thinking about that longer-term opportunity, it definitely is coming And I think you definitely will see a meaningful recovery and to think about it if we're trading down at $10 You know and move back to 20 bucks. Well, I think you're looking more like a move like 26 or back up to Kind of $40 would be more of a longer term target, you know to 26 You're looking at a hundred and thirty seven percent gain back up to 40 You're looking at a gain of two hundred and sixty three percent So now these could be great long-term investments if you were looking at say cash equities a couple of oil majors Exxon for example, or if you're just running out you know kind of a Structured trade in reflection then from the macro view that generally oil is going to respond in Time as we get over the worst of the coronavirus and that situation starts to improve going forward So yeah, just so I go into that in a little bit more detail Obviously any questions just let me know in there in the chat room or on the video I'll be happy to help All right, let's let's get on with a few other things then so that's oil And I definitely think oil is it could be if it does continue to see more Aggressive downside a bit of something to watch for equity traders Given the fact that you know, we've kind of been in a fairly bullish mood recently Could that be the straw that breaks the rallies back in that respect? So something to just be aware of Quick update on the coronavirus This is that FT graphic looking at the kind of daily deaths with coronavirus on a seven-day rolling average And you can see here quite a lot of these European hotspots continuing to come lower Fewer daily deaths reporting Italy Spain and the UK I'm glad to report the New York governor Andrew Como said the state may be past the high point of the coronavirus deaths and obviously that's an important one as Well, because that's the kind of epicenter of the outbreak in in North America One article that it did come out of the weekend and did Catch a bit of attention was in the telegraph. They were citing the World Health Organization He was saying that there's no evidence that people who have survived coronavirus have immunity now This is quite a significant thing if it is proven to be true because if you remember even what the UK government's Stance was at the beginning. It was you know Boris was of that mindset of kind of herd Protection it was like everyone should get it and then therefore there will be casualties. I'm sure he's regretting saying these things now But he was saying then we can build up a herd immunity and we can move forward much quicker and therefore we can Get the economy still working and that's gonna mean lesser people losing their jobs It's going to be less economic impact and so on but obviously, you know Things have changed radically for the UK government because of the cost of life that has been seen So antibody tests may be Ineffective at showing if a patient is immune to the virus or for how long antibodies might give protection So this is definitely something to monitor because going forward and one of the things I talk about in that week Ahead kind of blog is about this idea of now How our company or how our country is going to unwind the lockdown? I think that's the next big talking point that's gonna come Now Boris Johnson obviously coming out of intensive care. He's now kind of getting back into these meetings now Has it's been kind of chaired here by Dominic Raab and his replacement over the last couple of weeks But Johnson does face quite a stiff challenge at the moment Because there was a couple of reports I'm not sure if you saw in the Sunday times and the FT that were very critical of the government's Handling of the coronavirus at the beginning under his stewardship because if you remember Boris I think was on holiday with his girlfriend at the time when everything was outbreak in China was happening Generally the UK was one of the slowest to respond in terms of some of the measures that were taken a lot of the productive gear as well Well, it's very late coming. We actually sent quite a lot of that to China and originally We only request we only requested help from other businesses to provide that type of equipment in April And obviously I was very late in the game when they offered assistance two months earlier So yeah, there's a lot of negative press reports about the government's handling But I guess what's important now then is about what do we do going forward and apparently the cabinet is very split at the moment basically Michael Gove and the Chancellor Sunak and and definitely you can understand the latter They kind of want to relax the lockdown as soon as they can really because you know if you're the Chancellor obviously you're you're quite economic oriented in terms of your your agenda and He knows that the implications of a lockdown have a severe impact on the UK economy So this quicker we can get things back into into play the quicker we can start dressing That kind of the scope of the downturn on the size of it, but also the speed of the recovery on the opposite side though Hancock has said he wants to wait until the virus is kind of defeated first and apparently he has backings from Dominic Cummings Which we know has some sway Behind closed doors over these decisions that get made on a cabinet level. So yeah, this is what's going to be key to watch a couple things that I've Seen over the weekend This was one when there's a reported kind of in America It's also been talked about in the UK about a three-stage process of unwinding lockdown And this is what some of the speculation was suggesting a red amber green phase And the the subsequent dates so the red phase being that small non-essential shops can reopen Where houses nurseries hairdressers and so on God knows I need a haircut coming soon But that would be on May 11th Then the amber phase being small businesses with up to 50 staff can reopen that might not be until the end of May Social distancing measures are then lifted or some and then the green phase is then when cinemas theaters comedy clubs sports venues reopen pubs So if you think about it those more kind of Areas where they've been kind of mass gatherings in that sense that wouldn't be till June, but Basically Downing Street has been pretty quick to come out flat deny this I think probably the worst thing that they can do now is really commit to specific dates in time because ultimately That's probably not going to be met and I would say my opinion at this point I would say I agree with the approach in a staggered fashion Because we do need to reopen the economy as soon as possible But I think these dates are a little bit optimistic in my view But this is what's going to be quite quite key going forward is the timeline and how this is executed And then how successfully we we hit these timelines as to then The kind of impact on markets going forward from a US point of view Trump's kind of getting involved and the US are looking to throw more money at the issue Relief deal for the US small businesses may come as soon as today According to President Trump at the weekend. So this is a kind of top-up on that That big package that they delivered a few weeks ago, and I did see this and I thought I'd share This is the the fiscal support. I just wanted to give it a bit of context of what we've been seeing just generally This is looking at government spending as a percentage of GDP And it's just quite mind-blowing really when you look at The COVID-19 Response and this is why a lot of people although there is a bit of a split in opinion a Growing number of people getting fairly bullish about equities at this point Given the fact of the unprecedented steps that the Federal Reserve global central banks have taken but in combination with this Fiscal spending which if you look at it here kind of three times the size of the financial crisis and Way more steeper trajectory in terms of injecting its money straight in And it you know You'd be looking at the kind of scope and scale of what we've seen on these these previous types of occasions in terms of percentage of GDP at that point so That and you know another thing to be aware of when we start hearing these numbers everyone's covered obviously quite fearful about how how much of a contraction Generally economies are going to see in the second quarter which is going to take the brunt of this kind of COVID-19 impact, but this is dispersion in GDP quarterly growth forecast the gap between the 25th and the 75th percentile Is massive, you know, it's very hard for an Economics team to basically Calculate the GDP impact when it's just been so violent in the movement in in the data set And it's so wide-ranging and they're seeing such volatile variance. It means that trying to accurately Predict then GDP has led to this monster range that we would be we would normally see In any normal time would be less than 1% and we're looking here kind of up to 17% at this point So yeah, try we know when you hear these these press reports They talk about, you know GDP is expected at X Basically, you've got to give that a very wide berth either side as to where that might come out But that does translate them from a trading point of view It's probably going to take quite a lot to shock the market because the the ranges are going to be very large So it's got to be probably pretty spectacular and either side to really move the needle given we've got a bigger kind of buffer in that sense One thing I did see this morning was this and this was talking about Virus hit Brexit talks, I mean, you know, if you can you can remember there was a thing called Brexit That kind of was the talking point of literally every briefing I gave for the entirety of kind of Q4 a member of last year going into the election But actually after kind of it got parked for several weeks Britain and Europe will restart talks on Monday over the future relationship And officials will meet by video conference for a full week of discussions this week So you might get a few little comments if you like about Brexit Until the end of June either side can of course ask for a transition period to be extended for a period of up to two years subject to the other's consent Obviously the economic disruption of Brexit and the coronavirus combined It's probably more than likely they're gonna have to call for extra time at this point given that as I said that the extension request They've already got about another Two months to make that call too further video conference rounds are or have been arranged the 11th of May and the 1st of June But I'd say there's just some such more important Kind of facing issue in the form of the virus At the moment, I don't think the government's gonna be too caught up in the Brexit stuff for the moment Boris obviously playing the card that he has to play and he's been pretty adamant that we're not gonna request an extension He's gonna deliver Brexit But I think that's just then he's gonna have to take this down as he normally does to the wire and I would I would expect that Submission of request to extend probably this summer The final point on that kind of the government side was Central Bank officials have held earlier talks with European Commission and setting up a Eurozone bad bank that would take billions of euros in debt off lenders balance sheets according to the FT this morning This comes after Politico the weekend and Sunday reported that Europe will need to find another half a Trillion euros to finance the economic recovery from COVID-19 this comes after they kind of approved with gritted teeth that previous Amount of around 540 billion euros just a week ago And it's raised this idea of a recovery fund and obviously a lot of that comes then through this idea of kind of shared debt issuance or euro bonds and that's come under very firm resistance And so countries like obviously I heard Spain this morning Requesting some pretty sizable numbers that would have to be kind of backstopped in that kind of eurozone together format Italy probably their Their country in terms of their yields and fixed income BTPs will probably be very volatile to the outcome of some of these Teleconference conversations of European officials that are happening on Thursday Any further pushback on this idea of how they're going to finance this recovery fund or indeed actually getting more funds into the pot from a Fiscal point of view in a coordinated fashion all the more risk there are to to BTPs in that fashion Final thing is earnings During the upcoming week, we've got about 96 S&P 500 companies reporting six of the Dow 30 components You can see here a couple of the the main ones that I'd probably be most interested in aftermarket today You've got IBM tomorrow pre-market Coca-Cola Netflix of course you probably read a lot about them obviously on lockdown a lot of people A lot of people getting involved with Joe Exotic and the Tiger King has been incredibly popular But Netflix will likely be one in the spotlight to see how they've Potentially outperformed in this type of environment with the pickup of their services. There's a couple of airlines stocks, which I think will be quite fascinating to watch as well just given the The ramifications of just the complete halt of global air travel And I want to see what that looks like then on the actual numbers and outlook for the likes of Delta and Southwest airlines. They're coming out Wednesday on Thursday pre-market Then you've got companies like Eli Lilly on Thursday Intel and on Friday Verizon American Express are probably some of the larger market cap names that are coming out But this full table is available in that macro menu And I will put the link to this report in the video But other than that finishing off. What have we got for the rest of the week from a data perspective? So just giving you the summary of highlights So today as per usual, it's relatively quiet on a Monday from scheduled things IBM is aftermarket though From Tuesday to overnight. So by this time tomorrow, we will have the Australian RBA minutes We also start to get some UK data in on unemployment rate and employment change for the US existing home sales Going into Wednesday Data-wise you got UK inflation metrics. So CPI PPI RPI And then Thursday is when it gets kind of more interesting. That's when we start to get the kind of drop of the major Manufacturing the service PMI's and these are the flash readings. They will be important You got Australia and Japan overnight You then get France, Germany, Eurozone and the UK later on on that Morning with the US in the afternoon alongside new home sales and then Friday We've got UK retail sales, of course expecting Pretty much record numbers. I think last week remember the UK or the US retail sales came in at a Minus just over 8% reading quite close to consensus, but still the lowest reading since the records began back in 1991 UK retail sales, although there might be a bit of Kind of infantry building or stock pining that consumers were doing going into the eventual lockdown which came around Kind of mid-March at the end of the day that number is going to be pretty dire. So probably Not going to be too much of a surprise But definitely head headline worthy at that point So that'll be coming with the S&P also due to deliver an update review on the sovereignty of the UK Which could be quite interesting as well. So that is it. That is the briefer for this morning Any questions, though, just let me know be happy to help And as I said, if you are not subscribed to the channel on YouTube, make sure you hit that subscribe button I'll appreciate it. All right. Have a good day and a good week ahead. Catch you guys tomorrow. Thanks