Biden Sets New Vaccine Target Of 200mln In First 100 Days

All right, very good morning to you. It is March 26th, 2021, and of course a very important day for markets. It's my birthday. So if I can ask you one thing before I really get into the briefing, if you're watching this delayed on YouTube, don't forget to hit that subscribe button. And also, we've got the latest Market Watch Amplify Live podcast. Myself and head of trading Piers are going to put that latest episode out later this morning. So if you're on Spotify, just remember to hit the follow button and you'll get an alert as soon as every episode goes out on a Friday. That would be super appreciated. But let's get straight into things and talk about what's going on in markets right now. And equity index futures are seen quite a bit positive actually. The, the DAX, quite a phenomenal turnaround from the initial move that we saw yesterday after we dipped, uh, going— breaking through technically what was quite a key area here. You can see these three kind of spike tests almost on a failed attempt to break down in price, and that really did come to the forefront late yesterday morning. Before then, we hit the eventual low, which did coincide close to the lowest point that we printed back on the 15th, and then we had this really strong recovery And now we've just got a bit of a platform for the DAX in price from the, the previous kind of range high that was in play, um, from the beginning of the week. Equity index futures generally, US side also slightly higher, NASDAQ up about 90, S&P up about 16.25. The rationale behind this and the positive trade in Asia came despite a relative mixed performance on Wall Street. The S&P and Dow finished positive, the NASDAQ did underperform a touch, down around 0.1%. Overnight, main rationale has been a little bit drawn towards what Biden was saying about his aggressive targets for vaccinations. We'll talk about that in a moment. And also large-cap banks in the US traded higher in aftermarket trade after the Fed came out and basically said that after stress tests and their capital levels all being well, then they can resume their dividend increases. and the financials were liking that as well. So a couple things in play, um, elsewhere in the other asset classes, both major currency pairs relatively flat, very minor divergence where the continental currency is underperforming slightly, the British pound. The dollar index roughly flat, still up at around these very high 4-month high elevated levels in the Dixie. So still very much just keeping an eye on the dollar index, uh, and just dollar movement overall for these currencies, uh, markets at the moment. And also, uh, on the lower bound of the euro, um, given the breakdown in price that we saw yesterday, uh, the low point in the futures, 1.1780, uh, that was seen, uh, yesterday. And technically where we closed today I think is quite important. This is just looking on a daily chart. And you can see here we did actually close yesterday, uh, importantly below 118. Uh, that level was a level that was in play towards the mid-back end of November, and we found a bit of resistance again at that same level. And so on the downside then, that does open the prospects of trading fairly heavy. And obviously fundamentally you've got the difficulties being faced at the moment with the vaccination rollout, um, in combination with the general strength in the dollar So some potential headwinds still in play for the euro, generally speaking. Otherwise, elsewhere, um, the, the T-note been responding quite nicely technically to this kind of triple top of price movement, uh, going back from the 18th, 24th, and yesterday. We did have a bit of a flash move lower as yields momentarily spiked. We had a fairly lackluster 7-year auction last night. That auction in itself was nowhere near as bad as the 7-year that we had in February. Um, however, generally speaking, the last 2 weeks worth of auctions we had out of the US have been okay, relatively successful. This one was a little bit more disappointing, so we did get a bit of initial reaction to that, but overall, um, we still remain generally higher on the week from where we were trading right down towards the kind of $131 handle even just a few days ago. WTI crude remains pretty choppy, quite directionless really at the moment after the initial push down that we had and the breakdown in price going towards the back end of last week. The Suez situation is ongoing. I'll give you an update on that, but again, I don't particularly see it as, as too influential for price at the moment. as far as the WTI intraday activity is, is concerned. But look, let's jump into some of the headlines. I'm going to talk about firstly the situation with the EU vaccines because European Commission President von der Leyen was speaking. This is kind of part of their two-day talks they're having at the moment via video conferencing of European heads of state. And von der Leyen said that AstraZeneca must meet its commitments for supplying vaccines to the European Union before it would be allowed to export any doses. I think I talked about this with, with Mike in our community, who's kind of a specialist in this area. And, you know, a few months ago we were talking about the contractual details around what these pharmaceutical companies had with these nations. And it's very rare, my understanding, for a company to explicitly kind of table contractually a fixed figure it's normally that they will have potentially a figure, but it'll be caveated by they will do their best intention to hit these targets. So I'm not sure the legal footing of what, um, in actuality that the European Commission has to make such a statement. Um, obviously we know that this is much more politically driven, uh, just given the fact that the AstraZeneca drug being British-made. So, um, still We're trying to find a solution here of more concrete nature. And I think at the moment, Europe are just keen to keep the pressure on to ensure that AstraZeneca are just doing what they can. And this reciprocal relationship nature of what Britain is doing with the EU with ingredients and so on. Macron came out and he also said it would, it would be incorrect to block all vaccine exports. He stated that Pfizer and Moderna respected their contracts with the EU, but, but basically AstraZeneca has not. And again, I think you've got to read a lot of that politically, just given the, the kind of basket of vaccinations that Europe is geared towards, Pfizer and Moderna, and also the British connotations of the AstraZeneca drug. So yeah, it continues to be a bit of a talking point, but I wouldn't say it's anything particularly new here that we're saying, but definitely, um, still potential headwinds, I'd say, for the euro to some respect. We had Biden's first speech, of course, yesterday. Hard to think actually it's his first kind of proper solo outing on a major platform. And, you know, one of the headlines here being run by the FT, of course, and perhaps added to some of the positivity just generally being observed in markets at the moment, albeit not sure how much I do buy into that given that this number has been spoken about before. So if you remember, Biden, when he first came in, had a goal of 100 million vaccinations in 100 days, but he pretty much done that in half the time. So doubling up on the target is, I don't think, a great deal of a surprise, but would be definitely positive both from a, a health crisis point of view and also for the kind of positivity for markets and the reopening expectations. A couple of other things though that, that did come out of this, and obviously from an infrastructure point of view, which is the next big thing, the stimulus package and so on, there's not a, not a great deal of detail on that. They've still got to really flesh that out to a certain respect in the coming days and weeks. But a couple of key areas on the geopolitical front. For one, Biden compared Xi Jinping to Vladimir Putin. Um, whenever I think about the Trump approach to China, um, Trump was always, um, very cautious not to go after Xi, um, in terms of the management of that relationship. So it's quite interesting to see this, uh, this type of commentary. I think, I think the, the media is kind of flipping the comments and slightly sensationalizing them, but Um, yeah, culturally, being half Chinese, being called out, keeping face, things like that are very important. And it was a strategy that I think at the time of when they were getting along, uh, Trump and China, I think that was a carefully orchestrated and managed relationship in terms of penalizing China but keeping Xi on side publicly as a face figure. That Trump did. So already we are seeing retaliatory effects on pretty much on a daily basis, but I'd say relatively low level in terms of sanctioning certain kind of companies and individuals at the moment in the UK and Europe. But it'll be interesting to see how certainly that plays out after what he said yesterday. Excuse me. Um, the other thing here is to just soften the comment that Biden said about Xi specifically. He did say that they're not looking for confrontation with China over differences on trade, uh, the democracy and situation in Hong Kong, and also the treatment of the Uyghur Muslims and the military buildup that's being seen at the moment. So kind of having a pop at the leader but then saying actually, we, you know, we don't want confrontation on these other levels. That's almost the reverse of the strategy that Trump had in in some of these initial conversations. So yeah, I'll be, I'll be keen to look out for any further commentary that might come out of China today and this weekend. Given what he has said though, North Korea have continued to, to be somewhat active. They've tested a new tactical guided projectile now on Thursday. That was after ballistic missile tests that they did on the weekend that were reported earlier in the week. So This is another form of, uh, of kind of activity you're likely to see continue, particularly with the type of rhetoric that Biden was saying yesterday on North Korea. Um, Biden said, if they choose to escalate, we will respond accordingly. Um, so that was the latest that he said on, on that particular issue. Talking of the Suez, what's the latest there? I know I went into quite a lot of detail there yesterday, so I'll try and keep it relatively top level here. It remains blocked at this point. The work to refloat the stricken Evergreen has so far been unsuccessful. They've tried a few different things. They've tried tugboats, they've tried diggers to budge the vessel. If containers can be left aboard the Evergreen, the refloat should be completed by around Thursday of next week, aided as well by higher tides which come— were anticipated to come really from really Sunday and through Monday. As well. Should cargo be unloaded, and if extensive repairs are needed for the Suez Canal, then some estimates from energy analysts are suggesting that can take 2 weeks. We've had some source comments come out on the major newswires this morning, and they've suggested that it could take the clearance at least 1 week. As context, context to that comment, that is coming from the salvage company that that's been drafted in to try and solve this issue. Yesterday they were a lot more kind of loose with their forecast, saying that it could have taken days to weeks. They've now committed to a week, is what they're saying this morning according to a source. So something to just be aware of. I did mention earlier about bank stocks trading higher in the US after market close, and what's the rationale there? What large US banks that clear the next round of US stress tests with sufficient capital are going to be allowed to resume their dividend increases according to the Federal Reserve as of the end of June. Um, so, um, that article there I shared in the community earlier if you want to, if you want to take a read. As far as the calendar is concerned, we've already had the UK retail sales numbers come out. Um, the UK retail sales month to month 2.1%, which is actually in line with expectations. A little flicker in the pound, no real move. I mean, we're coming off an incredibly low base here. Um, the prior January retail sales report, you remember the UK was a, was a disaster, -8.2% on the month-to-month reading. That was the worst reading since that catastrophic record-breaking, um, kind of main lockdown that we had on initial onset of the pandemic in those April numbers, which were more like -18%. So we were expecting a bit of a bounce back. It's well within the range. Obviously, the month-to-month is in line with expectations. So nothing too much to read into that, that data, to be honest. German IFO is coming out later. All three metrics, in fact, are set to show an improvement from the prior month. Even if that is the case and if we get an upside number, I'm not sure how important that will be. Kind of similar to pattern to what we saw from the manufacturing and service PMIs, the flash PMI data from Germany, are in the week where typically quite strong. But overall then, things are definitely from a confidence level likely to deteriorate going forward, given the fact that COVID cases on the rise in Germany, lockdowns are being rolled over. So corporate kind of sensitivity to that probably is going to just eat into any optimism that was starting to emerge. So even if we get an upside number, I don't think markets will look at that as a particular positive. Because of the net factor that, um, we're probably likely to see a deterioration of confidence in time over the next month or two. We're going into the US session, um, core PCE index, personal income spending, uh, got the final March University of Michigan number, um, no major speakers today on the docket, um, probably still keeping half an eye out for anything more out of Europe on the whole vaccine side. Any response out of China following Biden wouldn't be too much of a surprise either. How aggressive are they in any particular response would be potentially meaningful for markets. Don't forget as well, UK clocks change, so we jump from GMT to BST. Normal then time differential for the market open going into the Sunday Globex reopening of trade, and Monday morning we'll be back to 5 hours London-New York, 6 hours London-Chicago. Yeah, I'll leave it at that. The technical charts, trade setups, I'll let the guys go over. I'll on the live stream in Amplify Live. Again, don't forget to check out the latest podcast. It'll probably be available from late morning London time. All you need to do is search and subscribe for Market Watch by Amplify Live on Spotify, Apple Podcasts, and so on. All right guys, have a good session ahead and have a fantastic weekend.