Amplify Trading Market Predictions for 2020

A little bit of a wide, wide screen. We don't go— we don't do this too often. It must be a special occasion. Um, but you get two for the price of one, so to speak. Christmas giveaway. But, um, yeah, this time of year, for any of those who've not familiar with what we normally do, is normally grab the head of trading, Piers, beside me, and I kind of pick his brains about what does he think about some key themes from a macro perspective of what's coming up in 2020. And then we'll look to try and probe and push him for some calls about where does he think things like the S&P will finish, oil, the euro, the pound, and these sorts of things. And then we'll hold him fully accountable in 12 months' time. Did that turn out to be true or not. But do you remember last year we had a special guest with us?

Oh, we did, yeah. It was— wasn't it Theresa May?

The cutout of Theresa May. Does that still exist? Probably not. It probably got binned when she got binned. Yeah. Unfortunately, we don't have a Boris cutout.

Missed a trick there.

Yeah. But actually, can you toss me the The hat, please. Not that hat. The proper hat, please. We do have one thing that when we get to a certain topic, I'll slip it on and you'll see if you can notice it. But okay, so look, to make this session as kind of useful as possible, I've picked 4 main areas that I thought would be key themes that's going to be really influential for markets across asset for 2020. So we'll pick up some questions as we go. I'll alert Piers as and when there are some of those questions. He's going to flick between some charts, some graphics to help explain as well some of his thoughts. But first things first, rather than go through all 4, let's kick off with the first and main one. Going back to the charts, got the S&P 500 here. Piers has just hit fresh all-time highs right on cue for us, uh, to set us up for the big question, which is where do we go from here in terms of the S&P 500? What I want to know is not just a potential year-end call, but what are the driving forces that are gonna, they're gonna happen, they're gonna create that end call.

Yep. So yeah, we've got the chart here. So this is actually on a 1-hour chart. So as Ant was just saying, we've broken higher again, yet again today. This is like cementing that break above 3,200 that we had earlier in the week. But you know, for this kind of outlook for the whole of the next 12 months, we don't want to be looking on such a short timeframe. We need to be looking much longer term. And if we have a look at a weekly chart, just to get this whole thing into perspective, and let me just tidy this up. I'm just going to get rid of everything here. So, you know, when you look at a chart like this, it's, you know, that's pretty high. When you're literally just looking at charts like this and then you're thinking about next year and you're thinking, this looks seriously high. You know, can it, can it go higher is obviously the big question, and I think, I think it definitely can. I think it's, it's gonna be an interesting year. Obviously we've got some, we've got an election in the US at the end of the year, and I think that will be definitely a big influencing factor on this market, on all markets, not just in November. But I think more so in the run-up to that. And so obviously Trump, the Trump factor, is certainly going to be a big influence. I think kind of outside of that, we, you know, why is this market rising is the thing to first ask. And then those reasons, are they still there to force things further higher in 2020? So, you know, if you, if you go back to the start of this year, 2019, it was actually quite reasonable amount of pessimism about this year as a whole economically. And, you know, you had people speculating, are we gonna see a recession, global recession, by the end of the year, and so on. And that, that this box here that we've just drawn on the chart is kind of showing that Q4 big sell-off that we had. I know we bounced as we started 2019, but this time last year things were looking pretty dire.

That was Boxing Day, right?

We hit the bottom. And then it's— so I think things are a lot different 12 months on. I think people are actually looking into 2020 reasonably positive and thinking, right, well, the big change for 2019, the central banks have changed direction. I mean, that's certainly the big call. So the Fed have cut rates, the ECB have begun to— or sorry, restarted their QE program. And, you know, this has been a big shift. One of the big reasons for the sell-off at the end of 2018 was the concern that growth momentum was slowing, and yet the Fed was still hiking. And so obviously things have changed. And I think when we're looking into 2020, I think that central bank change in direction can still be a positive influence on on things like the S&P, certainly I'd say for the first part of the year. So I think we enter 2020 reasonably positive. I think the other thing to also be mindful of in the longer term when it comes to this market is understanding another kind of driving force behind why people are buying. And that's actually related to, yeah, partially to the Fed and monetary policy, but it's also about inflation. And it's also about negative yields. And I think a lot of people are buying stocks in a way to get yield through, through dividend yield, and that's because there's no yield anymore in, in the debt market. So that— so in 2020, the debt market, negative yields will still be the case. That's not going to change. So that's another thing that's supportive for things like the S&P. Also thinking about corporate earnings, because as we go into January, we're going to have the, the US corporations announcing their performance for Q4 2019. And what's expected is actually, you know, even though we're rocketing to new highs here, we're actually expecting earnings to have declined in Q4. So at the moment, forecasts are at -1.3%. And actually what we've seen in the whole of 2019, every quarter corporate earnings have dropped, their profits have dropped, and it's actually the first time we've had 4 quarters in a row of declining earnings growth since 2015. But it doesn't matter, markets are still pumping higher. One of the, one of the things to understand is with this stock market. And so Apple's a good example where Apple are going through what's called a share buyback program, and they're— and as are huge numbers of large US corporations. And so they're using some of their profits to buy back their, their own shares. Now this actually has a positive impact for price. I mean, firstly, from a supply point of view, there's less supply, and so price kind of moves higher. But also it's about And so I'm showing you the graphic here, and this is looking at the number of Apple shares and how they've been declining over the last 3 years— sorry, over the last 5 years, I should say. What's crazy as a fact is that Apple, if they continue buying back their shares at this rate, by the time we get to 2030, there'll be no more Apple shares. They'll have bought them all back. But this is one thing that's supportive for price, and And that's because of the supply thing. But also it's kind of leveraging, it's kind of engineering. If they buy back and reduce their number of shares, then their earnings per share stats look better. And so this is something that's supportive for, for stock markets. However, we have seen at the end of this year the rate generally, not just Apple, but the rate of share buybacks has just marginally started to decline. So that's something maybe I think for towards the end of next year, if we continue to see the rate of share buybacks decline, then I think actually that's one of the key support mechanisms for this market being reduced and then perhaps removed at some point further down the line. So I think share buybacks end of next year might become a bit of a hot topic, and that would— should drive volatility. But look, that's the end of next year. I think— what do I think about the S&P as we go into 2024? $20. It's on the up, and I don't see any reason why it shouldn't continue to rise. I think, you know, we've had obviously the monetary policy thing, but also obviously the US and China have done a little bit of a deal on phase one.

Just on that point, yeah, phase one. So at the moment, you're aware of that trade cycle that Trump tends to utilize? Yeah, playing the market almost. So at the moment, phase one looks good. But I was reading this morning that the analysts were looking at potential meetups of where Xi is going to be present, of where Trump will be. And I can't remember what key platform they're all meeting at, senior leaders. But basically Xi said he's not going to be there because traditionally, because it's Chinese New Year, he spends time going around localized regions within China showing face. To the people of China as part of his own political management. And they were saying, actually, so when is actually this deal, Phase 1, gonna get done? And I just wonder whether— one thing I was talking about earlier, some of the guys, was has Trump artificially manufactured Phase 1 in time for record highs for Christmas, for then the inevitable, as we have seen multiple times before, before, it doesn't quite come to sealing the deal. All of this, in my mind, to prolong this period, to keep things basically where they are. Because even if he does secure phase 1, phase 2 will be exactly the same as phase 1. And he can use that as drawn out as possible. Yeah, to keep the rhetoric on China, but also keep the market.

So here's, here's Trump's challenge. So he wants to get reelected. So how does he achieve that? And I think in his mind he's got two things he wants to try and achieve, but they're a bit contradictory. Because on the one hand, he wants the S&P to be smashing all-time highs throughout this election campaign into the election, because he thinks that's going to be a positive. He can refer to it in his tweets. He can say, aren't we amazing, the US economy's on fire, blah blah blah. However, I do think at some point during this election campaign, he's gonna turn his rhetoric towards China will start to get more threatening and aggressive. And that's because he wants to play, you know, that act of being— I'm the strongman standing up to China. Yeah. So, but the problem is, if he does that, of course, that's negative for the S&P. So he's got to balance it off. And I think, as you're right, I mean, it could— well, I wouldn't be surprised if by the election we haven't— there's no phase 2. Maybe not even on the table, never mind signed. But so I think you're right, we'll go through this cycle of progress being made but then no deal actually being agreed. And so fine, this is what will create the volatility, but I think definitely in Trump's mind he's gonna try and play that so that in the end stocks are still at their highs come the election. So I actually think positive for quarter one on the S&P. Next year, I think when we go through the summer, this is where it might get a little bit more rocky. Yeah, Trump starts to try and be that strongman.

Yeah, I was gonna highlight this kind of period here. That was when we had that whole— I mean, because, you know, obviously we had a downturn at the kind of Q— beginning of Q2. However, it was the severity of the downturn that occurred at late summer, end of July, August, and that was when that yield curve inversion started to, you know, you turn on Bloomberg and all you hear is recession, recession, and then that almost self-fulfilling then exacerbates or accelerates that selling pressure. So do we on the climb— I mean, we haven't got to the point of where do we think it's gonna finish, but if we do continue north, do we have similar moves? Does Trump need the Fed to be kept honest?

So yeah, so I think the monetary policy side of things are now positive. Can they get more positive for stocks in 2020? Or to put more simply, will the Fed cut again? And we'll have a look at the interest rate chart. At the moment, Anthony's just setting that up, but you know, we've had 3 interest rate cuts in 2019, okay? And that, that's certainly more than anybody was expecting at the start of this year. Now the question is, will they continue to cut? Um, just thinking about election years, normally the Fed don't change rates in election years because they don't want to be seen to be influencing any kind of election outcome. Obviously the, the sitting president would like to have rate cuts because that's, you know, people perceive that as being positive in terms of the amount of money they're having to pay on their debt interest costs, and it's supportive for the economy. But, you know, that's— normally the Fed don't move rates in election years, but I actually think, forget that, I think, you know, Trump for the whole year is going to be aggressively criticizing the Federal Reserve every chance he possibly can, trying to force them to cut rates. Yes, the Fed are supposed to be independent, but, you know, in the face of that barrage of sort of abuse almost, you know, inevitably it has an effect. So I think we will see a rate cut or two from the Fed next year. I don't think it will be 3.

So keep in mind as well, the current Fed dot plot for 2020, yeah, is zero.

Yeah.

So you're saying then that that trajectory is gonna be moved? I mean, the dot plot has been wrong pretty much spectacularly wrong entirely since its inception.

Yeah, so I think that— I think we'll see a cut, but I don't think you'll get 3 cuts like we did this year. And actually, so I wanted to extend this because yes, 2019 was about central banks becoming more supportive, okay, with their dovish policy. 2020, I think it's going to be more about the fiscal side. We've seen Japan roll out massive fiscal stimulus program a few weeks ago. Boris is, is in Number 10 and he's rolling out a big fiscal stimulus program for the UK. In an election year in the US, Trump's going to be promising stuff, handouts left, right, and center. So I think we'll get a positive influence off the promise of more fiscal stimulus from the US. And that kind of— so I think all this is positive, right, for markets. What I'm worried about is Europe. I think I pretty much said this last year as well, if I remember. I was quite bearish on Europe last year. And so if 2020 is about fiscal stimulus, then Europe's my one concern. And that's because there's a big reluctance in— from the country that pretty much is the one that has any ammunition to roll out proper stimulus, and that's Germany. And so if we talk about— and I guess we can now talk about the euro, and we can talk about maybe the ECB, because obviously there's been a big, a big change on the ECB side. But look, this is just looking at a chart for now of one of the key measures of German economic activity, and this is their manufacturing PMI, and it's just on— it's on the floor here. It's so far below 50, it's not even funny. And if you look at a 10— let's go back 25 years here, you know, we're right down at levels we haven't seen since the crisis. This is the worst it's been for 10 years. And so economically, it looks like Germany should be pulling the trigger, right? Let's really ramp out some stimulus here. Their debt-to-GDP ratio is lower than pretty much— well, it's the lowest out of all the major economies. They don't have a deficit, so they've got plenty of room. But they've been reluctant. And I'm wondering whether the change in leadership that we're seeing in the eurozone— I see this as a big concern. Because if you think about it, Merkel is now one foot out of the door. In terms of her leadership of Germany and the German economy. And then Mario Draghi's left the ECB, and so you've got Lagarde coming in. And these are two big members of that team that managed the eurozone post-crisis. And I'm just trying to think of analogies here because we've seen two long-term, very influential leaders step down in a different arena. and that's football. So I want to bring this and talk about Alex Ferguson and Arsène Wenger. It's like Merkel and Draghi, right? Now what's happened to Man United and Arsenal?

You do realize that we probably have Americans who are thinking, "Who on earth is Alex Ferguson and Arsène Wenger?" These two—

well, I'm just talking about big influential leaders. Ending their reign. And what comes after that is a vacuum of leadership that almost always results in, you know, underperformance, quite a messy, chaotic transition to then a new era. And so that's where Europe are, really. You know, Wenger and Ferguson are gone. And so, you know, as the Merkel transition comes in, as the Lagarde, as she steps up on the ECB, I think that brings uncertainty. So All I'm worried about for Europe is if Germany don't pull the trigger on fiscal stimulus, I think they're going to be left behind because pretty much everyone else is pulling the trigger on that. So thinking about the euro, and I might just switch my screenshot to the euro against the dollar here. And actually, there's an article, I think it might have even been today, in the FT about how most of the big banks have predicting that the euro will appreciate in value in 2020. And I have to say, I definitely don't agree with this for the reasons I'm just saying. I think economically Europe will underperform because of the lack of appetite from the likes of Germany to pull the trigger on fiscal stimulus. Now, banks are saying— and let me just— just going to tidy up this chart. Actually, let's just remove everything, start again. So So this is a long-term chart looking back over the last few years. And so 2019 has been a really positive year for the dollar generally. A lot of the themes coming out of the Bank's 2020 views is that the dollar will weaken next year and that the euro will strengthen. I, I actually have a different opinion. I don't think the dollar will weaken. I don't think the euro will strengthen. I think we're in this— we're in a very nice sort of downward trend channel. Here. And if I could just— oh yeah, so this is the bank view. There's this FT article talking about how the banks think things are gonna move to the upside for the euro-dollar in 2020, you know, moving up to 1.16 handle. It is— who is that? JP Morgan. Anyway, you've got one bearish bank in here. I think that's Barclays, isn't it? But so my view is, if we kind of switch back and have a look at the chart, then I'm just going to draw a few lines because we definitely got a very important sort of trend line that we're kind of looking at. If you draw roughly, draw a line here and look at the last 2 years, then we've certainly had a downward trend. If you kind of connect the bottom of this and at the top, you know, what's happened this week, we kind of tested this kind of key area. If you're looking at the tops from September '18 and June '19, and so I think there's obviously quite a nice consistent shape to the way this is moving, and I think that will continue, you know, in terms of the key price points. If we, if we, if it does continue, we're gonna need to see a break of that September low, and, and I think that will happen, and I'm actually eyeing up levels that we have seen for a few years, which is more like down towards the 1.04 handle, which was a key low back in 2017. And so I personally don't agree with a lot of the big banks who think dollar strength and euro weak— sorry, who think dollar weakness and euro strength. I've got a different opinion. I'm worried about Germany, and I'm worried about them not being, or being reluctant to pull the trigger on fiscal stimulus. I'm worried about the ECB under a new leadership and whether or not— you know, the thing about Draghi was he was a big character, he owned that central bank, and he was a big massive dove, and he wasn't afraid to get the bat out and properly try and stimulate. And I don't think Lagarde is going to be the same as that. I'm not saying she's hawkish, she's not. But I don't think she'll be brave enough in the early part of her career at the ECB.

Yeah, because he, I mean, he comes at it, or he came at it a very different route, didn't he? Because he was already part of the Governing Council.

Yeah.

First, I remember the first meeting in, cut rates.

Cut rates.

After Trichet hiked rates twice. Second meeting, cut rates.

And rolled out LTRO. So he cut— he, he arrived and he got stuck in. So Lagarde's not from a monetary policy background. You know, Draghi was head of the Italian central bank. You know, he had a lot of pedigree. I think Lagarde is a different type of leader, and I think there'll be a little bit of a vacuum in 2020. Where transition— she's trying to find her feet. I think during that period she's not going to be aggressive with policy. And I think if Germany don't fiscally stimulate, then I think Europe will lag everywhere else which is fiscally stimulating. And maybe the US, if they cut rates a couple of times.

What would be quite an interesting chart— I know we haven't got it prepped here— would be what's the general value, like the real intrinsic value of companies that operate, let's say, within the S&P compared to European equities? Is there more value in European equities, albeit more risk, as you say? But when you're looking at relative value, I guess.

Yeah, I mean, for sure, the, the US stocks are all-time highs. Let's just take the DAX as a kind of example here, and we'll just quickly put this on a weekly chart. The DAX is almost up there but hasn't made new highs. So you go and you look at that kind of 2017 top as obviously a very important target that we haven't yet reached. So relatively speaking, yes, European stocks are trading at cheaper values than US stocks. But they're still up there, you know, the DAX isn't far off its all-time high. So I think that— I think international investors will be more confident or less uncertain about the US picture than they will be about the European picture. Despite this— yeah, fine, this, this kind of value gap. Yeah, I still believe the US will be— will outperform Europe in 2020.

How about the idea that I was reading the FT the other day and it was looking at fund managers' outflow out of equities? There's been that— come on, there's like a several-year larger size outflow out of equities at these levels. Is that— how is that going to play out? If, if then, because the market we've seen in the speculative futures positioning through a lot of the last two quarters, the longs are getting fairly exhausted. Yeah, but the market keeps going higher. Now all these fund managers, let's say, are getting out at these levels? Are they gonna have massive FOMO if the market— if Trump—

well, I mean, are they getting out? I mean, this market's smashing new all-time highs. I don't think— I don't think the institutions are getting out of equities.

I'll have to bring up the chart. Yeah, because the chart would disagree with you that they're— I mean, where that cash is going. Yeah, I'm not so sure.

But yeah, I mean, if— and that's what— just whilst we've got the S&P here, let's have a target, shall we? What do you think? And what's your end of— end of 2020 call?

Can I see it? What are you going to see?

The—

I want to see the moves that we've had. There you go. God, from that low, I think I measured it earlier, so 30, 38%. Oh right, from, from the low this time last year, right? Yeah, yeah. I would confidently say that that's— I don't think that's going to happen again.

No. Um, I think what's one of the big things that's driven this move this year are the big tech stocks. Stocks, you know, you look at Microsoft, it's up 50% this year, right?

Apple, it's up after—

I remember 30+%.

I remember here, market— Apple's market cap was down $280 billion in this period, and everyone was going, 'Apple,' and panicking about lack of innovation. The usual meal comes out, and then like you say, you put in 50%.

The big— these big tech stocks make up such a big chunk of this index. I don't think they can have another good year like they've done this year from a share price point of view.

Yeah. And also, I mean, at some point, at some point this year, will it not become— once the election is done and Trump gets a second term, markets by then would have already priced in his fiscal pump.

Yeah.

What happens then, like end of the year? This time next year, right? Because we're kind of— we are due them, overdue some kind of economic long-term downturn.

Yeah, I mean, this is— this— if I had to put some numbers, I, I would— I'm thinking I'm positive on the S&P for the first 6 months, and, you know, something like 3,500. If you follow Sam North on Twitter, he posted a picture and he's already bought his Dow 30,000 cap. But I think first half of the year we can continue to see the upward trend, the same shape we've seen for the whole of 2019. I think we trend higher. I think once we get into the summer, you might get pullbacks then, and a key, a key level would be kind of back right the way back down to the 3,000 handle. So I think we're going to operate between 3,000 and 3,500 next year. And I think we'll prob— and to be honest, I think we'll close maybe not too far off where we are now, um, maybe slightly higher end of the year, maybe, I don't know, 3, 34, 3, 34. But, but I think positive to start with, but for sure we've got some risk. There's definitely risk, there's definitely uncertainty. You know, got the big themes like the trade war. Okay, Brexit, at least partially we've moved on with that in terms of the election being such a massive result for Boris. But you know, obviously now it's gonna be about the trade agreement. And so, you know, there's going to be ups and downs for sure as, as we go through 2020 on the, on the trade. That's the UK-Europe, UK-EU trade agreement. But yeah, so in terms of the S&P, that's kind of how I'm thinking.

I did find that article, by the way. I just saw it here. This is the one, came out a couple days ago, right? No, this was— no, this is the old one because this was last year, which makes sense. This isn't the one I'm thinking of. But right, let's move on because there's some other areas which we haven't discussed.

Yeah.

And let's just keep it to just two now. Let's talk about Brexit first. So let's get the pound up. Let's have a look at that.

So we might— this is where we might have a difference of opinion. Anybody watched Ant's livestream through Brexit— sorry, through the election night— will know full well Anthony Cheung's stance and his views on Boris and what he thinks Boris can or cannot achieve. This is my view. I think that the first half of 2017 20 is gonna be. So we're looking at cable here, and you know, obviously what's happened most, most recently with the election, obviously we pumped higher and then we've had a quite, you know, the high was on election night up at the 135 handle, and then we've dropped since. And obviously that's part of the, you know, that you might say the no-deal Brexit risk has gone up a little bit in the last week as Boris has, you know, been given some extra sort of confidence from his majority and has said he wants to make it, you know, remove the idea of an extension from the table. Now, I actually think that's a— I think that's the right way to play when it comes to trying to get a trade agreement done in a super short period of time. I think you need a deadline that's hard. You know, we saw it with the Brexit, you know, as the deadline keeps slipping and slipping, it kind of removes that sort of cliff edge. I think we need a cliff edge. I know it's playing, you know, it ups the stakes, but I think actually it forces the— I know trying to do a trade agreement in 12 months, it would be record-breaking in the history of trade agreements to get it done that quickly.

But I was looking at the legal Yeah, timeline. And actually, he needs to do it basically in Q1. Yeah, he's basically got 2 months, not 12 months, in order to get then the passage of all the appropriate stuff to be done in time.

Yeah. So here's what I think. I think the first half of the year, we're gonna be positive. I think the pound can be— I can appreciate in value value from where we are now back at the 130 handle. If we maybe— I just want to zoom in a little bit. We'll come back to this longer-term view in a second, but for 60 on that tab on the left, I want to actually— no, I want to look at this daily. Yeah, so I think that we can, you know, from the 130 handle, I, I'm quite— maybe we can drop 128 areas, quite an interesting kind of price point looking at the November low. But, you know, 130, such a big level here, that key top on the 21st of October. We've tested it just before the election and then, and now just in the last couple of days. So 130 is definitely a massive area. But I think the first half of the year can be positive because don't forget about the fiscal stimulus that, that the Conservatives are now gonna pump. Into the system. So I think that can see the UK economy pick up a bit of momentum. I think the negativity from the trade agreement stuff will come second half of 2020, where, yeah, sure, it becomes a little bit more, you know, the fear ramps up. Oh my god, we're not gonna get this done in time, and then we're gonna have a no deal. So I think no deal risk is will elevate in the second half of the year. I think the first half of the year, it's like, oh, that, you know, relief, you know, at least a lot of the political uncertainty that's been holding back the UK economy has for now gone. It'll come back, but I think there'll be a bit, a bit of relief. And I think people are just quite keen to just get back to living life, spending, investing, you're gonna get fiscal stimulus. So I actually think I'm quite positive on the pound. So if we go back to that kind of long— I'm gonna go to a weekly chart because where can the pound go here? And, and so one, you know, so from the 1.30 handle, can we drift higher? I think 1.35 is obviously the big one. That was the top on election night. I don't know, maybe you look back in 2018, we got above the 140 handle briefly. I'm not, not saying that, but I think maybe cable can, can spend some time in the 135 to 140 area in the first half of, let's say, as we go towards the summer. But then I think second half of the year, that'll probably be the top, and we'll start to perhaps get pegged back to the 130 handle. And obviously, if we get close to the end of the year and there's no— and it's clear that there's not going to be a deal done, and we're gonna know that well before December, then fine, there's gonna be some no-deal negativity. And fine, and we'll see, I mean, whether we get back down. I mean, this is the weird thing about human beings, I find, because if you go back, like, go back— let me go back— when we voted to leave, where are we? When we voted to leave— let me go to a weekly chart and I'm gonna zoom in a bit on that. When we voted Brexit, we crashed, okay, and look, down to the 120 handle. And why? It's because people were worried about the economic impact of leaving the EU, okay. But now everyone's positive. It's a relief because Brexit's going to get done, we've almost like, we've forgotten about the actual Brexit thing itself and about leaving the EU and about the economic consequences that might have. That's almost been forgotten about. It's just, it's been the uncertainty that's been the big influencing factor, and that uncertainty has just been removed. And I think there'll be a honeymoon period where we just kind of forget back the Brexit risk and we have a relief, but then second half of 2020, I think risks will ramp higher again.

There you have it. I guess the— I don't— I mean, when you're talking about those levels, 135, 140, I mean, it's not a great deal higher than where we are at the moment. No. So I don't think that that's unreasonable at all. And I do agree with the idea then that of the honeymoon period. I like that kind of phrasing because I think that's appropriate. I think January is definitely peak honeymoon because we saw today, as was expected, plain sailing through with his now majority.

Yeah.

And so the rest is a formality, really.

Yeah.

For the 31st. And again, it's that kind of Boris management, which, you know, Boris or Trump, as much as I do talk about them in The Briefing, I mean, go back to that graphic I had, I had it kind of prepped for Trump, and you know, Boris is taking it directly out of the Trump playbook, almost to the tee. Because it's a tried and tested method, right, that yields a real tangible result. I mean, this kind of preemptive framing, diversion, deflection— I mean, this is how you get the job done in 2020, I would say. And you know, on that note, it was interesting as well that— was it Steve Bannon got involved when Boris was first running for PM? Lo and behold, and then Boris Johnson opens up and starts becoming more active on his Twitter account in the run-up when he became Prime Minister. I mean, I was just having a look and I just wanted to give you a stat. So this is— Social Blade is a social media management tool. You can look at different social accounts. And so this is Donald Trump. Donald will be particularly happy that he's been given an A A++ score. Doesn't get better than that. We're not talking A+ setups here, we're talking A++. That deserves the hat as a minimum. But the point being here is, I mean, on the 13th of December, so about a week or so ago, he did 124 tweets in one day. Thank you. That includes retweets. He did 124 today. So far he's done 71. He did 69 yesterday. You can almost map then, I would say, the impeachment hearings around— if you had a little volume chart, whenever— so he had the impeachment obviously 2 days ago, and you can see it just stink pick up in his tweets. And again, this goes back to the diversion deflection strategy. But yeah, going back to the Boris thing, yeah, my black swan event here—

gone—

is that—

let's have it.

I was watching the news the other night and it was up north in the Labour heartlands, like call them the Labour heartlands, the once former entirely Labour heartlands which have now turned Conservatives. And they are, they are sold hook, line, sinker that Boris Johnson is the savior. He will deliver Brexit, people will open up their wallets, start spending, and boom, he's gonna fix everything. So my black swan event is When that does not materialize, when he starts to stumble on the various roadblocks of the actual nuts and bolts of the actual trade deal, he comes under some— or a great degree of political pressure. At the same time, Labour, Labour take the course of action which is to completely remove the left given their diabolical performance. And, you know, this isn't an attack on Jeremy Corbyn. He is but a person, but he represents an ideology of a way of which policy should be set, which has spectacularly failed.

Yeah.

And I think socialism being implemented in any country in the world has had its struggles. And so we come back then, we with an alternative.

Tony Blair.

That alternative is Tony Blair. And Tony Blair, by the way, 500 to 1 at the bookies. Me and Sam have got some money on that. Take that at 500 to 1. And so yeah, as much as this is a black swan, it's minimal, minimal, nonexistent. Well, what possibility? But yeah, I guess the trigger point then is within the next 12 months you've got to have some kind of event which is going to have to create then another general election, which—

yeah, unfortunately I'm going to break it to you, but Labour are now out of the running. They're not going to be running a government for a minimum of 5 years. Okay, there's gonna be no event that leads to an election. And more than that, Boris has just been given the full endorsement from the nation to get Brexit done. I— and this is where our view will definitely differ— I think that election result will see him take a no-deal Brexit if it's needed. I think that at the end of next year we're leaving. There's gonna be a deal, most likely, but if, if it's getting to the point where negotiations aren't running, I, I do believe he's prepared to take the no-deal path. So, and I think the nation— doesn't matter what your personal views on Brexit are— the nation as a collective will fully support that.

Yeah, I mean, the other thing here is, you know, don't get me wrong, I don't think Labour centrist return is my base case view, because as per looking at the Trump tweets, the point I was making there is that— and which supports your view— is that, you know, this is the guy that said a million to one I'd shoot myself, I would be honest to my wife, be honest to the British people. He has lied and failed, and But the point is, like Trump, that's almost a method to the madness, is you create this buffer. And I think he's done that. And I think even if I'm right and he does struggle to deliver, I don't think that that will actually impact people's view of him. Which means then that he continues down the path. It's just more protracted, longer, but Brexit gets done.

Yeah, I disagree. I don't think it'll be protracted. I think that's it. That election has— but yeah, we'll see. I think the second— it will be the second half of the year that this starts to show, you know, we'll see, we'll see which direction that's kind of maybe heading in. And then the uncertainty will come back, which will drive some negativity. But I think the honeymoon period is the next step for the next few months. And I think the pound, the pound can, can rally. I think it can, you know, use this 1.30 as a platform. If they roll out fiscal stimulus as they were kind of promising in the election, then I think that can get a little bit of those animal spirits fired up, and it can be a positive first half of the year.

And it— what what happens with the Bank of England in that situation?

Yeah, I think the thing is, we— did I mention inflation earlier? I think, you know, in the end inflation's dead. And will the Bank of England raise rates if the UK economy starts to pick up some momentum? They're only going to raise rates if inflation rises. And as we've seen in the US, inflation's just nowhere. So I do think we can have the situation where you're getting positive momentum on the UK economy without inflation, meaning that the central bank don't need to act unless— one caveat— unless they're worried that they have no ammunition for the next downturn, whenever that might be. So remember, actually, the Fed in 2016, it was almost like they're hiking really just to have more room to cut further down the line. I think obviously the UK and then Europe, we're still at ground zero on rates. And so unless they are thinking in that mindset— but so I wouldn't— I'm not worried about— as I said, I think 2020 is about fiscal, not monetary. Monetary policy has dominated this year with the big turn to dovish. I think next year it's more on the fiscal side.

Yep. Right, final, final chart, and then I'll keep answering questions as well, is oil prices. So maybe change the time frame, just look at the bigger picture. So we're looking at WTI crude futures here, and well, this is the last 2 years of price action. So you can see the big sell-off that we had in Q4 of 2018. That's obviously in step with that equity, a huge equity decline that we had. But since then we've really stabilized, and I guess the question that I have for Piers is what is the outlook to look for prices going forward. We've had OPEC come out more recently and they've added another half a million to their agreed quota for the coordinated OPEC contribution to cuts. OPEC+— or Russia, I should say— still adding their piece. Is how long can they keep that going? And if, if there is fiscal from the US, or pledges of that at least, markets going to hang about and growth expectations still remain robust, then, you know, does oil in combination with OPEC's action— can they, can they keep— is this a fair price where we are at the moment, or do we get back up to pre the downturn when we had the Khashoggi death?

Yeah, so I think, I mean, you're obviously looking at that big monster move end of 2018 in, you know, in line with the equity markets dumping, and this was massive. Okay, now it's such a classic sort of consolidation pattern. You know, you look at 2019, and really this year, this entire year, has just been about consolidation, stabilization after the big monster move at the end of 2018. And I don't see too much of a reason why the same theme doesn't continue for the next 12 months. I think, I think obviously OPEC again have increased their production cuts slightly at their meeting a few weeks back, and that's been the catalyst for this move back up to $60, of course, in the last, in the last kind of week or so. But I actually think it's going to be the demand side that's more price-influencing in 2020. Rather than supply. So I think on the demand side, it's the big question of all the stuff we've been talking about. Will these fiscal stimulus programs actually see an increase in economic growth in our world? And I think if it— if that does happen, then fine, the demand side can pick up and we can, we can continue the move we've seen over the last few weeks and move higher. I mean, in terms of key price points, then you kind of got two obvious ones on the upside, these kind of two important tops from— so we had the key top, high of the year for 2019 is up at $66.60, so that was back obviously in April. But then the more, the more, the level that's closer proximity to where we're trading now is the high that we had in September. So I I think— what do I think? I think that oil can trend higher whilst we have this optimism. It's not massive optimism, but it's quiet optimism about the economic situation in 2020, driven by this fiscal kind of stimulus thing. So I think we can move higher. Can we get above $66.60, which is the 2019 high? Yeah, not so sure. I mean, I think really for oil, I think about 2019, we've basically been fluctuating between $50 and, well, okay, let's just say $66, okay, which is the high. So we've got that $16 range, and personally I don't think— I'm not expecting a move outside of that range in 2020. I think if— I think that the demand side can be positive that might see prices continue to march towards the top end of that range in the next few months. You know, don't forget about the shale, guys. I know it's most— I said it's going to be about demand, but on that supply side, you are going to, you know, if price moves north, then the shale industry will continue their relentless march to increased production, and OPEC are going to stick with, with where they are, which is, you know, those production cuts being continued to be honored. And so I think it's set up for a move towards the top of this range. Do I think we can get to 70 and above? I don't. Do I think we can go below 50? No. I think actually 60 is pretty much the sweet spot. I think that suits everyone. The other thing to say is, and Sam reminded me of it earlier, it's election year in the US. And in the midterms, Trump kept trying to talk down the oil price. Yeah, you know, using his Twitter feed to try and, you know, heavily criticizing OPEC and trying to get them to cut. And so for him, he wants to see prices lower. Yeah, not that he has any kind of direct control of that, but he'll be trying to talk it down. I think if the price gets top of that, top of the range, I think the shale guys will love it. Production will increase, and that'll be a natural cap to upside. And I just— outside, unless we're wrong, you know, this whole fiscal thing, it might not work. And so if we are wrong, if the US-China trade war actually does substantially escalate, what happens if Trump says, you know what, phase 1, forget it, we're at tariffs back up? You know, any, any event where tariffs get marched north again, we'll find this can then see us quickly down the bottom end of this range at $50. I don't think without a serious negative event in 2020, I can't see oil prices below $50. I think there's a natural cap on the upside.

Also, as well, though, supporting that downside, do you think now that Saudi Aramco has IPO'd— I mean, it's just looking at here on this graphic This is, this is the historical compliance of 2019 of OPEC nations and non-OPEC nations. Uh, the more firmer blue is the percentage of the target reached. So here, basically Saudi have almost 180% consistently cutting more than they are have or is required. Uh, and you know, the timing of that IPO of course was when we've had the— we had a— we basically started to ramp up in prices right when they dropped the IPO. There's almost a concerted effort, and I know that there was a lot of background movement upon them looking to change the way of which they were looking for, or the roadshow, keeping it domestic, getting royal family, extended cousins, brothers to start buying into the IPO to prop it up. It couldn't fail for them, I guess. Yeah, but What I'm saying is if the price starts to go south now, like seriously south, south of 50, so a break of that range, I just wonder then, is that another thing where, I mean, Saudi are already extremely overly compliant, but that's not new, that's always been the case. They've always backstopped Iraq, for example, which is the complete opposite for obvious reasons. But are they even now more incentivized I see.

I hadn't thought about it like that. I think you're, you're right. I think that I agree with that. I think they're more incentivized to be massively over-compliant on their cuts. Um, yeah, the last— I think the Saudi Aramco IPO thing was, was just like a global showpiece event. All right, and it's happened, and it wasn't successful, but they managed to engineer it so that it happened and, you know, prices went north. They hit their $2 trillion valuation. And that was, that was his target. He just wanted a $2 trillion valuation. That's done. And I actually think now that that event's done, it's really irrelevant. Yeah. Apart from your point. And I think that if anything, it incentivizes Saudi Arabia to be, to continue to be overcompliant, to act more aggressively if prices fall, because now there's owners of this company, not just the government, it's actual people, important people in the Saudi sort of political network are now directly exposed. So yeah, that gives them a bit more—

Yeah, yeah, thinking about it that way, the very people now that you're appeasing, there's a lot of people to please now. Which is gonna be interesting. But all right, cool. Well, look, any questions in the chat? Let's have a little finish then with some questions. So I know there's been people in there. Tim, hope you're well. Alex, Yoni Mojo, Redox, any questions specifically on anything, whether stuff that we've talked about or anything new? And no Bitcoin Although I did go back to our outlook in 2018.

Oh yeah, and you were talking about Bitcoin and you had that—

what was the company hundreds of years ago that massively spiked and people were looking at it as a Bitcoin reference?

Oh, that the shipping company. Yeah, the Dutch Royal—

it was— and you were— you weren't best You weren't the most confident about the legitimacy of Bitcoin going into 2018. And to be fair, I mean, what have we got? The Bitcoin, we can get the Bitcoin. Yes, here, got it here, haven't we?

BTC.

Let's have a look. But we're looking at the futures here just as a reference. Here it is at the moment.

I don't know, I mean, I hardly ever look at it.

So look, right back then, you were, you know, this is when we were talking about it because you remember, yeah, that was when the futures contract opened, so you weren't far wrong.

Yeah, I hadn't realized. Yeah, but a big technical event this week. I hardly ever look at this chart, but yeah, just testing that, that low from November down at 6,500.

Yeah, a couple times, isn't it?

Yeah. So gold outlook Piggy, let's, uh, thanks for your question. Let's have a look at gold. Let's get rid of Bitcoin. So yeah, we have gold. The gold's had a really good year. Um, let's go to a long term again like we've been doing for these other assets. I'm going to remove all the technicals and just see if we can clean this up and start afresh. It's been a great year for gold. I mean, finally, um, gold has had a good year. It's been a long time coming. We've been been bumping along pretty flat since the, the heady days of 2011 when, when gold almost hit $2,000. So finally, big, you know, certainly on the technical side, definitely big event came in June. We broke that kind of key double-triple top from 2018, and it really just launched things to the upside. So where can gold go from here? And I do actually want to go back to get that 2011 in, because obviously this year we traded the highest we have for 6 years. So, you know, when you're at these prices, you need to look further back to see how we behaved. And there was a key double bottom 2011, and then indeed the lower 2012, which has kind of killed the upside this year. So anything around that sort of 1520, 1530 area is key technically when you look further back. But I mean, obviously on the upside, you got these big— the all-time high above $1,900 from September 2011. Now, where can we go? So you can see on this chart what I mean about— for several years we've been bumping along sideways, and it's been— for any gold bulls out there, it's been a real long, painful wait for what's happened in the second half of 2019. Now, can it go higher? And I think it can. I mean, obviously it's difficult with gold because it's, you know, the price of gold is influenced by a few different things. Number one, inflation. So inflation is positive for gold, but unfortunately inflation, as I was saying earlier, is kind of dead. And so I don't see the inflationary— well, unless fiscal stimulus comes through, and let's say it comes through and the results of it are up there, the positive end of the spectrum, then maybe it can revive inflation, in which case that's a good thing for gold. But it's a safe haven, isn't it, as well? So you kind of got that contradiction. If the fiscal side does work, then hang on, gold's a safe haven, so shouldn't it sell off? But The dollar plays a large role here as well, but that's been a bit of a contradiction this year because the dollar's been strong this year, but so is gold. Normally, if you look at the long-term correlations, it's normally the opposite to that. They'll have an inverse relationship. So if the dollar weakens this year, which some of the banks are saying will happen, then fine, that might be a positive that can get gold up to, let's say, $1,600. So yeah, I'd say gold can move higher. Not much. I'm a $1,600 man. I'm not, I'm not thinking $1,700, $1,800. And let you know that to get back up to those levels, I think we are going to need to see that crisis scenario. So yeah, I'm mildly positive on the price of gold. With always that, that situation of this being a great trade if the worst-case scenario does happen, which might be the US trade war with China dramatically escalating, for example. Then, then fine, gold can get up to the 2011 levels. But outside of that, I'd be mildly positive gold, but I think we won't see a move like we We won't see a move in 2020 like we've seen in 2019. You know, the lower 20— well, if you go for the lower 2018, it's $1,160, right, up to $1,500. This is a massive move. We're not going to see the same scale of movement next year outside of that big nightmare crisis scenario.

So to finish then, that, that one big risk Although from this discussion, the balance of view is that it's a manageable risk. Yeah, that the one singular biggest risk that could see the whole thing blow up is the trade war.

Yeah, without a shadow of a doubt, that is the biggest item on the table because it's the two biggest economies on the planet.

So if you had to put a percentage probability of that worst-case scenario? I know it's a little bit finger in the air, but to give a bit of context for anyone who might be newer to markets—

in an election year, 1% chance. Trump's not gonna let it happen because it might impact his ability to get reelected.

Yeah.

And I think he will get reelected. Not that I'm a Trump fan, but I do think he'll get reelected. And but to achieve that, he has got to fire up his hardcore faithful.

Yeah.

And to do that, he does have to spend some time aggressively criticizing China. And so you'll get some volatility. Yeah. But there's no way he's gonna let it blow up because then we're going to get recessions. And as politicians through history know full well, a recession in an election year is the worst possible thing that you could ever do.

Well, yeah, that's the transition of political power, more often than not.

Yeah.

Cool. All right, well, look, let's, um, let's wrap things up. What I would say is if anyone who's watching this from a recording of it, then there's an ability to leave comments on the video. So I'd absolutely encourage you to do so. Both Piers and I and anyone else at the Amplify team will pick those up going forward. But thank you very much, Piers.

Thank you. Tony Blair to be Prime Minister by the end of the year. That's the big Anthony Cheung call.

As much as I would love that, I would love that to happen. It's not gonna happen. It's just not gonna happen. Although when you watch him on TV, as I did last night, because he had about a 25-minute interview on TV, and he just owns it. At least someone of the opposition side— oh, you know, the frustration at the moment with the counter to what has become become more politics based on national pride and all these other things, moving more to the right. I think it's probably more to do with how the reaction effect of which a lot of the left is dealing with this change. That's like we said with the impeachment, it sums it up really. He gets impeached, recession highs.

Well, that's the best thing, it's the best thing that could possibly happen. Yeah, yeah, it's like he's written the script.

Yeah, the timing was—

Democrats can't see it, it's crazy.

Yeah, yeah, but how, yeah, how does that— how do they not even see that? But anyhow, cool, thanks so much guys, we'll wrap it up there. Thank you very much for joining us and we will see you next time. We'll see you in 2020.

Yep, absolutely.