Boris Johnson Says 'Too Early' To Say When Lockdown Ends

Okay, very good morning to you. It is Friday, 22nd of January, so welcome to the end of the week. I'm going to get you up to speed on what happened on the closing Wall Street. Obviously here we can see the heat map of the S&P 500, and we're going to talk about one of the main things to look out for for the day ahead. If you are watching this on Amplify Live, obviously it's just gone 7 AM now, so you're getting this early doors. But if you're watching this on YouTube delayed, don't forget to like and subscribe to the channel, really appreciate it. Leave a comment if you have any questions at all, and also check out Amplify Live on the link below. But look, let's look at the, the close on Wall Street here, and there's a couple of green hotspots and also red if you were looking at energy, a bit of a reflection of the latest policies and the executive orders issued on the first day in office for Joe Biden, particularly more negative in some respects for the energy sector. But on the flip side, yesterday again NASDAQ outperformer, and the NASDAQ has outperformed really for 3 consecutive sessions to see after the second half of this week. Closed up 0.8% in the NASDAQ 100 last night, comparative to basically flat at the S&P and Dow. Apple was up about 3.7%, came after a positive broker upgrade from Morgan Stanley. Then you also had another standout here as some of the chip makers which was Intel. They had some strong numbers as well, which we'll talk about in a moment. They actually pre-released their earnings just before the close on an apparent hacking of their corporate website, but nonetheless they had positive numbers. They were up 6.5%, and you can see that reverberate across the other chipmaking space— NVIDIA, AMD all moving considerably higher as well, both around 3% each respectively. So continuation of the NASDAQ moves, big tech as well, Amazon Facebook obviously helping lift that index to, to outperform the others. Otherwise, just looking at the broader context of the asset class mix this morning, equity index futures, if anything, I would say this is a little bit of a period of consolidation in some respects, or if anything, profit taking. Just going over the news, which I'll talk about in a moment, I think overall I'm pretty neutral, I would say, in terms of directional biases. I don't really have a definitive kind of positive or negative outlook as far as the intraday is concerned. Concerned. But just a quick cycle through some of these charts, and I think they'll explain then from a technical point of view, um, what I'm looking at. And here we've got a— we've got really, this is the NASDAQ 100 future, a kind of area of what I would say is consolidation. Now perhaps it makes more— it's more appropriate to put it on a 90-minute. And this is reflected across the other US indices really. And we've had such a, such a good week for the equity market. I mean, if we go back to where we were right at the beginning of the week, you know, trading down really, um, from a percentage point of view, if I go back to the beginning of the reopening of trade on the 18th, 19th, we were right back down there, um, here at the low to the high, we're looking at about a 5+ percent gain. So to see us just leveling off a little bit and just starting to consolidate on the upper bound of that move, I think is absolutely probably appropriate because there hasn't been really much in the way of singular catalyst. It's been more of this kind of shared view in markets about the cohesion and collaboration that we'd like to see between the administration in the form of Biden and Yellen as the Treasury Secretary with that of the Fed. And that's what's really cultivated this move throughout the entire week, really, irrespective of things like COVID still obviously being a fairly precarious situation in terms of death counts and pressure on infrastructure in terms of hospitals and so on. This is reflected across elsewhere. And, you know, the NASDAQ has held up a little bit better. I guess in the case of the S&P, I don't think it would be surprising at all to see a little bit of profit taking Uh, this is obviously the all-time high seen here. This was touched, um, actually in the very early hours of yesterday's trade, looking on the 90-minute candlestick here. So we've kind of drifted south. We're down about 12 points this morning, nothing dramatic, nothing really too much to mention in the overnight Asia-Pac session. If we drift back down, be looking for a key area of kind of support to come in, uh, down at around that 38, kind of 17, 18 level, which would encapsulate the highs that we've seen back on the 8th. And again resistance on the 14th, 15th of this month. So I don't feel particularly apprehensive if we did have a negative day, um, you know, we come down half percent, a percent, I think we'll find support lower down, all things remaining equal for the time being. Otherwise elsewhere, gold has come down to a fairly interesting near-term technical level of support which the market did respond to yesterday. Just marked it up here with a colored rectangle which was going back to the end of last week. It acted as resistance a few times before we broke through that. Middle of this week, it acted as a nice area of support alongside the pivot level. Yesterday took a decent bounce on the back of that. We've just had a failed break again this morning, so I do think that pressure is building on that level. Definitely worth keeping an eye on any breach of that then could open up a decent move to the downside, probably looking to target the S2 on the day, which would bring in some of these relative highs that we've seen around 1850 type area, which would be right on that S2 level. Um, the oil markets, they broke down a little bit in the overnight session. Again, no real major news to, to kind of trigger that move other than what I'd say is probably a technical breach. This is where we had the API inventory data earlier in the week. We haven't had the DOE's yet. We've had a kind of dual delay to that release given the Martin Luther King Jr. Day holiday on Monday, then the inauguration we had midweek. So we've broken down in the overnight session through what had been an area of support, which was around $52.86 in front-month futures. And the market's just dropped in fairly liquid conditions in the overnight session, and we're trading down around 67 cents at the moment. So I wouldn't say it was any to do with so much COVID developments, people panicking on the demand side. I'd say this is more just a technical-based move than anything else. Does come amid— with gold trading a touch heavier, down $4, a bit of resurgent, um, resurgence in the dollar this morning as Europe's coming to the market. The Dixie's just picked up a touch trading up now 0.1%, just reversing partially some of the losses that had been seen in the prior session. How persistent do I think that that dollar strength will be? I don't think it will be that persistent. I think we are going to resume this downward trend, but for now there is a bit of mild dollar strength. And as such then, it's putting a little bit of weight on some of these major currency pairs. Cable's just coming down to a relative area of interest in the near term. So just having a look here, um, this kind of 37.11 marker was really important. You know, we were looking at the daily continuation this time yesterday about how important it was if cable were to see a continuation and really a decent next push to the upside, ultimately targeting 140. It was really important that this week we managed to close ourselves above what had been that key area of resistance and support dating back to 2017, 2018, and we're now turning away from there. So it might be then that that area of resistance does hold if we remain as we are at the moment. And then EURUSD as well, just backing off a little bit. Just again, not so much sterling, euro-related, a little bit more rebound in the dollar. But worth noting that cable is underperforming that of EURUSD. And we're going to talk about cable a little bit more from a fundamental perspective because there's been some updates on the UK lockdown strategy which would have negative connotations for, for sterling from a fundamental perspective. All right, so look, let's get straight into some of the news flow then. So we talked about this as the overall kind of snapshot of how we finished. We did have some aftermarket earnings, so just very briefly, IBM Their shares did fall around 6.5% after market, so fairly sizable decline. Uh, their sales have now declined or remained stagnant for 10 quarters, um, with no year-over-year increase in revenue. Their cloud and cognitive software, IBM's biggest unit, saw revenues decrease 4.5% from a year earlier. The company hasn't given any specific financial guidance, having stopped doing so back in April of 2020. So yeah, not good numbers at all for IBM, and becoming a familiar pattern there for that particular firm. Intel, on the other hand, they were up over 6%, and as I said, they needed to pre-release their earnings because of an apparent hacking of their corporate website. The net result though was they had some pretty strong numbers. Their revenues did slip 1% in the fourth quarter to $20 billion, but that was in fact $2.5 billion above Street expectations. Just having a look then, talking about COVID-19 and lockdowns, firstly starting with new President Biden. He's unveiled his kind of COVID-19 response strategy, announcing a series of executive actions including stabilizing the supply chain for critical medical supplies and boosting the government's ability to rapid and equitable vaccine distribution. So yeah, already feels like a very different approach to what we had under the Trump administration, which was kind of just almost ignoring the fact that this was going on. And Biden's taking a little bit more of an assertive stance. Well, it's too early really to say whether this will yield dividend. It's one thing committing to a strategic plan, it's another thing executing it. So I wouldn't say this is particularly anything that would move markets. And also, it's not really that out of line of expectations of what people would expect Biden to do anyhow. To give you a bit of context in terms of numbers, the US has administered at least 17.2 million doses of the vaccine so far. That's about 5 doses per 100 people, according to the Bloomberg vaccine tracker. Where does that put the US generally in terms of its rollout? Well, it's behind the likes of Israel and the UK. But it is outpacing people like Germany, Italy, and Canada at the moment. So they're kind of mid-table, if you, if you like. The main talking point though for a lot of the press has been the UK, and as I said, the pound is underperforming a little bit this morning. And you know, this is the one thing I think that could kind of just take a little bit of a shine out of this whole positivity that's been emerging with this whole kind of view about this kind of Goldilocks scenario under, under the Fed and Powell and Yellen and so on. That is the fact that, you know, the reality here is that lockdowns will be extended. You know, I've talked about this a lot on The Briefing. As soon as the UK government came out and said we're gonna, we're gonna review the current lockdown status with an aim then to have administered 40 million vaccines by the middle of February, allowing us to loosen the lockdown. I mean, that was never going to be met, in my opinion. And, you know, the talk of the town now is that the, the third UK lockdown could last until the summer. So let me give you a bit of detail around the kind of reasoning for this. And a lot of this is emanating from reports from late yesterday evening where Boris Johnson has warned basically it's too early to say if England's coronavirus lockdown will end in the spring. Now, him saying that phrase is quite a big U-turn in government communication. Before, they've been pretty adamant at sticking to that. I think ever since Dominic Raab spoke last weekend and he was talking about September time, you know, I think the, the narrative's changed a little bit. Realization is, is that they definitely need to prolong this, particularly given the fact that there was that Imperial College study yesterday talking about the reproductive rate really has had zero change irrespective of this national lockdown. And a lot of that reminded me of this chart, this table here. I know it's a lot of text, but I'll summarize it. This came out from Bank of America. I tweeted it maybe 3 or 4 months ago, and it was talking about positive and negative kind of trends that were emerging as we go through the pandemic. And, you know, one of the main things here I think has been kind of threefold out of the four bullet points at the bottom. And the main one being pandemic fatigue, you know, the adherence to the rules, which is the main rhetoric the government have been trying to push. And this increasing kind of penalty fines that people will be paid is because people have become tired of social distancing. They're taking more chances, you know, their willingness to accept worsening public health for the opening of of the economy to try and get back to work and things like that. That definitely, I'd say, is the main culprit of this situation at the moment. Then you've had super spreader events, you've had Christmas, you've had New Year's. All of these undoubtedly are contributing factors to it. And then cold weather and fading fiscal backdrop. But the last one, I think Rishi is really going to have a real pain later on in a few months' time when hopefully we come out of the other side of the COVID situation. Because tax increases, and as he said to MPs yesterday, there is no such thing as a money tree. Someone's got to pay for all this. And that's going to be another tricky point in time to tackle, but something which will be much further down the line that won't really impact the market from here and now. But yeah, at some point the fiscal side cannot support markets forever, and it's got to show itself to be sustainable on its own two feet. So going back to here then, and what, what's happening is basically Johnson's changed the kind of rhetoric a little bit on the timing of the loosening of the lockdown because of the fact that leading scientific advisors, part of the Scientific Pandemic Influenza Group on Modelling, they're called the SPI-M, said it would be unwise to consider reopening pubs and restaurants until May. Now, a lot of what they were talking about was the efficacy rates of these vaccines. Even though they're particularly high at 90%, you know, ultimately then there's 10% of the vaccinated group, and these are obviously the most at-risk, generally older demographic, or those with underlying medical conditions, are still not going to respond to the virus and therefore have an ability to spread and/or also are at more risk of eventual death, and that category puts more pressure on the infrastructure, things like the NHS. So, yeah, I mean, it's always been the same. The sensible thing has always been to act fast, act hard. But obviously that's the worst thing economically, and politicians are caught in that catch-22. So it's interesting to see now where the government go with this. UK government source reported in The Telegraph has suggested a two-phase unlocking plan is under consideration. Now, what this would constitute of is whereby the national lockdown will be stretched out for several months before moving the entire country into Tier 2 restrictions. And obviously, Tier 2, in terms of what the actual virus is performing on a case basis, would be quite a considerable drop in cases at that point before then the loosening can take place. Ministers have gone so far as saying, according to The Telegraph and The Guardian this morning, of considering making a £500 payment to everyone who tests positive for COVID in order to persuade people with symptoms to come forward for a test. So that's how far it's got now. I think the, the maths, back of a napkin, would work out about £2 billion that would cost the government going on the current rates at the moment that you can anticipate the people coming forward then for tests. So yeah, main bottom line here is that again, I saw Easter as more of a timing for the lockdown. This is going even beyond that at the moment. Even it could be a strategy the government uses where they have some degree of loosening over Easter again because of its cultural relevance, and then we return back to the status quo of what we're in at the moment, and then it rolls on for another few months. So yeah, that of course has implications in terms of the, the economic kind of narrative at the moment in the UK and the speed of the, the recovery going forward. So yes, Sterling's had a really good run, a lot of it supported by some dollar weakness recently. So that in combination with that long-term key technical level resistance just backing off a little bit this morning and And if we, um, I do think that we will hold potentially that resistance and we won't end up above that long-term level, which will be technically significant then for the time being. A quick look at the calendar, um, there are some interesting data points coming out this morning. Um, just quickly, the UK retail sales number came in at 0.3%. That was weaker than expected, 1.2%. So just further fuels the flame, obviously, of the already downward trend and underperformance that sterling was seeing. But I think it's a much lesser contributing factor in that respect. The main thing is really is the data coming out this morning. You've got the flash— it is the Jan flash PMI day, and that means you need to have your wits about you. These are market-moving data points. We saw some surprisingly strong numbers actually last time out However, since then we've had further restrictions coming in, in the likes of Germany, Netherlands, restrictions so much so in the lockdown that they're even more stringent than what they were in the spring. So particularly interested to see the German figure. And I guess the anticipation here is that perhaps on the bias to a more weaker downside surprise. and this definitely has the potential to be market moving for the euro, European-based assets, as well across the board. Otherwise, for the US, we get the same. So 2:45, you've got existing home sales, and as I said, you've got the delayed release of the Department of Energy, um, oil numbers as well coming out later. Uh, that is it though. Gonna leave it there. Uh, let you guys get on with the day. I'm gonna wish you a lovely weekend. Take care. And I will see you on Monday. Thanks!