ATH As US-China Sign Phase 1 Trade Deal

Very good morning to everyone. Thursday, 16th of January. I hope you're doing well. In terms of what I'm going to talk about is a little bit on updates in regards to the signing of the Phase 1 of the US-China trade deal. Where do we go from here? A few thoughts on that. And then a look at the calendar. But that's pretty much it from me because it's pretty quiet from a news headline point of view. Not a great deal of things going on now that that major macro event has kind of passed. But definitely Sam's got something he wants to get off his chest. Uh, walked in this morning, was just getting his coffee, started brandishing some pretty bullish noises. About US equities, and I don't want to stitch him up too much, but I definitely don't disagree with his view. And so he's going to come on, spend perhaps a little bit more time on the mic to give his two pence or two cents, depending on where you are. But in terms of the charts this morning, in reaction to the trade deal signing, it was, was pretty much as anticipated. Most people have already really factored this in. The details had already come out prior to then the actual symbolic conclusion of that part of the event. And so limited real reaction. If anything, US equities again just, just about touching fresh all-time highs. So kind of a perfect storm for Donald Trump in terms of the way of which he can express the success of that deal. The next part now, of course, is about what happens with, with Phase 2. It's been a little bit mixed between the two sides about exactly when that's going to begin. Following on from yesterday's Phase 1 signing, which the US President Trump said work on Phase 2 is to begin as soon as Phase 1 begins, VP Mike Pence remarked that Phase 2 work has already begun. But the Chinese have said this morning that it's unwise to to rush into Phase 2 negotiations, stating Beijing has little interest in immediately doing so, adding, we may get nothing if we rush Part 2 before completing Part 1. So as we were kind of suggesting yesterday, I don't think that's, uh, any of those comments particularly that shocking. I don't really think Phase 2 is really going to get underway, personally, my, my view, for another several months because Everyone's going to want to see the legitimacy of really, can China remain compliant to their commitment to buy, what, $200 billion worth of a variety of different imports from America over the next 2 years, which we'll look at. So overall in the market, sentiment is— we classify it as positive. We're kind of in a bit of a neutral gear at the moment. We're kind of lacking a little bit of emphasis on the fundamental side. So with that being said, then Markets do need something to take their cue from, and typically then this is where people might put greater emphasis on the technical setups of the various different assets that are trading with the kind of distinct lack of fundamentals. Corporate earnings season, I don't think it's going to provide that trigger point. There's no one really that substantial or significant, or is there that much of a volume of corporate earnings hitting the market at the moment? Earnings season doesn't really start to ramp up until next week and the week beyond that. It's just kind of the, the banks at the moment, and we already really know generally what the situation is there, having had already quite a few of the, the main Wall Street names report. So yeah, I definitely would be looking at this trade story as, as, you know, I wouldn't have it as a, a real directional driver for saying you want to be long, short different assets. at this point. It's kind of more, um, just looking at key technical levels, I guess, is what I'm saying. Um, from a trade deal point of view, I did just briefly mention it, but I did want to show it on a graphic. Just make it one notch smaller so you can see it. Just give me one second while I scroll to it. This was the detail behind Beijing's 200 $1.5 billion buying spree kind of promise in order to get this deal done and over the line with US President Donald Trump. And you can see here the two colors denote the breaking of year one and year two of the kind of phased-in element of the buying of four different areas of, of imports from America: agricultural, energy, manufactured goods, and services. Manufactured goods being the most but it's just quite phenomenal really, just the, just the size of this. And certainly from an American point of view, not only have you got a fairly accommodative monetary policy where they're kind of in a holding pattern at the moment, and on the balance of things you would say if anything they're more likely to cut than, than hike, in combination then with the likelihood probably of quite aggressive fiscal pledges as Trump goes into trying to cajole sentiment into the second term. And now with the underlying commitment of China buying copious amounts of goods from America in fear of reprisal if they do not, now that they've signed this agreement, it is all looking a little bit gravy over the medium term for, for America and Donald Trump. This, of course, coming amid the House still looking to persevere with their impeachment of the president. But again, as we've said over the, over the last couple of weeks, I don't really see that as just political noise on Capitol Hill rather than anything influential for prices day to day. With that being said, there was something from the Chinese side that I did see. Just giving you the highlights here. This was coming from an official overnight who said that the People's Bank of China, the Chinese central bank, will keep liquidity at reasonable, ample levels by flex— flexible or flexibly using monetary policy tools like the reserve requirement ratio, the medium, uh, the lending facility that they have, open market operations, and basically just continuing to do what's necessary to avoid any kind of disruption in their local economy. But a lot of this stuff, particularly liquidity injections at this time of year seasonally, do coincide with the buildup to the, the domestic mainland shutdown that you get over the, the New Year period. And Chinese New Year kicks off in about 9 days now, so none of this is too surprising. But, you know, this is another thing about that overall general outlook still remaining relatively positive, not just because of all the reasons I just discussed there with America and Trump, but from a Chinese point of view, the deal also does then put a bit of an end, at least in the short term, to some of the negativity which obviously was a real risk factor to one, you know, the largest emerging market in the world last year, which was the significant economic pressure that they were experiencing through the escalation of tariffs and And now this is kind of on hold for the time being. There's kind of a mutual agreement here that the lack of escalation with the additional stepping up of the PBOC and the natural fiscal forces in China. Yeah, it's hard, it's hard not to, to be fairly now upbeat about the future despite some of the obvious risks that are out there. Um, that's it really from me. Uh, nothing really too much. Obviously the conversation is all quite high-level, uh, top view macro rather than anything so much specific intraday. I definitely would be more interested to hear what, what Sam's looking at as key levels to watch across the different asset classes. From an actual calendar point of view, this morning not really too much of interest. You do have the ECB minutes coming out at 12:30 London time, but ECB minutes by default are, are dated. I don't think they're going to be of particular relevance or have much in the way of market-moving potential later on today. Then in the US, regular weekly jobless claims at 1:30 alongside import-export prices. You've also got Philly Fed and US retail sales, so perhaps then a US focus session in regards to potential catalysts that could dictate some of the sentiment when, when the Americans come in and the general volume overall starts to pick up. Speaker-wise, Fed's Bowman, voter neutral stance, speaking specifically more on the housing market. That's going to be at 3 PM. Then ECB's Christine Lagarde is also speaking at 6 PM. Obviously, the ECB president always worth monitoring. Uh, Bank of England's Haldane is also speaking at 6 PM at an event in London. And from an earnings perspective, as I said, there's nothing really too substantial, at least from an index trading point of view. From a single stock perspective, you have Bank of New York Mellon though reporting ahead of the opening bell today. All right, that is it from me. Let me hand you over to Sam. Any questions though, feel free to leave a comment on the video on YouTube. And if you're watching this and you're not subscribed to the channel, make sure that you do subscribe. Uh, we'll have these daily updates, of course, but we'll also have live events, of which we'll also be covering the Fed on the 29th of January live via the YouTube channel. So hopefully I'll see you then, if not before. And have a good day ahead. Thanks very much, guys.

Yeah, hi guys, hope everyone is doing well. Feel like I've got the big build-up here, so hopefully I'll give you something useful. We'll start off with stocks, as that's what I was talking about when I was coming in this morning about— well, let me just bring this into picture. And obviously you can see, just as of a couple of moments ago, made a new all-time high in the S&P. Can anything stop this market this year? Well, if we have a look on the longer timeframe, you can see last year you had in May where the Phase 1 trade deal was looking less likely. We came down for a couple weeks, went higher, and then in August we had the devaluation of the renminbi above 7, and that led to a week or so of downward move. But I think it was another decent push higher. If you look from that low from the 26th of December 2018, it's incredible move. And if we think about this year, they may well not start phase 2 for now, but they're going to, and there's going to be bumps in the way, but they're going to get a deal done. So it begs the question, is every dip here now just an opportunity to buy? You've got Trump, who is the favorite to to win the election. So unless the polls indicate otherwise, then, you know, this market is going to remain elevated and he's going to do everything he can to get this done. You've seen his tweets before where he says, you know, this, uh, you know, if the Fed were this, if the trade deal was done, it's going to put X amount of thousand points on the Dow Jones. And, you know, he's not lying. He will do what it takes to get this market higher and higher. Global slowdown doesn't slow this market down significantly and is again another opportunity to get long. I was just saying, if you were paying someone to invest for you and they weren't in US equities, you'd be like, what? Why on earth not? I'm not saying right from this moment it's going to go. We're above 3,300 on the S&P. We're above 29,000 on the Dow Jones. It didn't take long from 27 to 28. Can we get the 30,000? Can I bring my 30,000 Dow Jones hat into the office? It seems a bit of a formality for now. If we want to start to the year we've had, if you think of the Iran situation, then we are on the all-time high right now. So my opinion and bias for this year is to get long at the best opportunities, which are going to be any potential dips. And that's what happened at the back end of last year. And of course, you know, when this market does properly come down, there's a long way for it to go. But this year you're going to have Phase 2 deal going to start, yes, with the bumps, but they're buying opportunities. Trump most likely to win the election, the Fed very, very rarely make a policy change during an election year. So that is, you know, going to be on the pause. And they're definitely— and Trump is definitely not going to be happy if they were to raise rates. So if there was a change, it's going to be, uh, to, to put to a cut, or any decisions would be made, you know, next year. So yeah, I favor that this market is going to drift till November for that election on the 3rd. Having a look more intraday, uh, opportunity-wise, I think, you know, now we are just pushing higher, uh, certainly looking for areas of support to, to get in. Yesterday and the previous days have been quite choppy, uh, but just identifying 32.95 as, as an area, we had some good support in that Asian session. That would be a point of interest. The, the lows from yesterday— I'm just going to bring in a bit of a trend line here, you can see the trend channel— but they've held it up quite nicely. So again, if we were to get to that, that kind of point, I'd be interested. I'd, uh, ideally wait to see how price reacts around there, but if it was to come in, I don't know, an hour or two's time, you're looking 3287, 3288. for an opportunity to get long. And same sort of patterns in the Dow and the NASDAQ, all-time highs. Can we buy lower down? Not much is going to change, uh, the overall picture. And if it does, what an opportunity to get long, uh, a cheaper point. Having a look at currencies, euro yesterday, uh, pushed higher. Last few days it has been, um, those lows sorry, of, uh, the most recent days just getting pushed upwards to highs as well. It's not a great trend channel, but like the one with oil to the downside, probably worth having something similar on. And, and, uh, just looking when, if we were to be more comfortable with price coming lower, or these lows and this trend, trend line has to go as well. Line in the sand today, yesterday's double top, uh, from the overnight on Tuesday and then Wednesday morning. Keep a watch on that 1.1178 on the futures. Below there, I'm a seller, uh, towards the S1 and yesterday's low. If we have a look more closely at the highs, and it's getting this trend line on from that top, you can see we're just now closing, or about to close, above this. 1, 2, 3, now the 4th test through that. So euro bulls may be slightly more happy. Can we get a push towards the high. It's not a big move, 5 ticks or so, 5 full ticks anyway, but that's how I'd be looking at the euro. So some key levels, uh, in and around where we're trading. Much like with the pound, we've got to keep a watch no matter what happens, uh, on that daily trend line which has offered such a good level of support. It'd be interesting to see what happens here, uh, in a month's time. And we're looking at this level— was it a 120? What an opportunity to buy and suddenly we're now trading back at 133 and beyond? Or has it been the right thing to do to be patient, wait for that break lower to target 128? But held superbly, so keep a watch on that. Let's get the pivots on. Let's look more intraday. Uh, you can see similar to the euro, and we are just drifting higher. Bit of dollar weakness has been, uh, present, so keep a watch on that trend channel. We have this morning, or almost this morning, on the futures filled that gap, which is usually obviously the case. So 1.3077, keep a watch on that as another point of resistance. Where would you be happy to get short? Well, I'd say personally you want to wait for this trend line here. The pivot's key, 1.3046, um, but below there then you can start maybe looking to target that overall big trend line on the course the bigger move to the downside would happen there. Other strong resistance points: 131 handle, 131.08 on the futures. You got the lows there from the 8th, you got the highs from the 10th, you got the top of this trend channel, you got R2. Uh, it could be a decent point, uh, a level to, to have marked up there as well. Also in the mix around there, you're going to have that the overnight high on the 31st, you're going to have the, the the 7th high and potentially the third test of that there as well. Have a quick look over at gold and oil to wrap it. You can see likewise with those currency pairs where we've had a bit of dollar weakness, gold is following that, that trend higher, grinding higher. Whether that low has saved us— I've said this before— 1537, 1534, 1535 is a key zone. That's where I'd still be happy to to hold longs as long as this area holds, um, to the upside. You know, I think you'd be pretty comfortable, and it's again, it's a zone of targeting those highs. If we were to get above between 1563 and 1568, give or take, we're just sort of in this range here. Is that opportunity to sell around 1563? You know, if equities keep pushing higher, then maybe Uh, that is a great level to then target back down towards there. Either way, a wait and see. I feel for now, yes, there will be a couple of intraday opportunities, perhaps, you know, looking at those lows from yesterday's and highs, uh, from today, which you can see we're not far away from just testing that now. So obviously the opportunity here could be on a break of that trend, but the overall bigger picture, top end of that range and bottom end of that range. I keep an eye on this one. For this gold as well, along with those previous lows. So above 1555, you feel confident there could be a bit of a push. DoEs yesterday, decent move to the downside and then a full reversal. You think it was a central bank meeting, uh, there in this trend channel. Still keep a watch on that, I would say, for this market. We tested the top end of that this morning and it held quite nicely. And the bottom, I've just got this more of a trend line, but you can see we're in there, and the opportunity for me is above or it is below. What one do I prefer? I don't really have a bias for now. I'd rather let the market tell me what's going on. And, uh, well, we'll have to wait and see for that one there. Pivot looks relatively key, some interesting support around 5775 as well. The high, the top end of that trend, uh, channel is also yesterday's high as well, so it could be a bit of relief if all of that goes as well. As usual, any questions, please do let us know. And also in the, in the chat on below on YouTube, let me know reasons why in November you don't think equities are going to be on their high. It's always interesting to hear the other side. It's just my opinion that Trump's going to win, a trade deal is going to get done whether it has any bumps or not. And they're not going to raise rates, uh, as well. But yeah, any questions, please do let us know, uh, and I'll be on the, on the chat throughout the day. So I hope you all have a good trading session and catch you all later on.