Brexit Deal Vote Goes Down To The Wire

Okay, very good morning to everyone. It's Tuesday, 22nd of October, so I hope you are doing well. Going to talk about, as you can see, updates on Boris Johnson and his plans for Brexit. There's quite a few developments and timings to look out for throughout the day and the next coming days, so I'll try and keep it as clear and concise as possible, if that even is possible when we talk— when you talk about Brexit. Also going to talk about Trump sounding a little bit more optimistic last night on the US-China trade situation, giving some hope about a deal being signed in Chile when they meet in a month's time. We've also got expectations about the oil inventory data for this week, where it is anticipated for another build for the 6th consecutive time, which would be the longest string of builds for approximately a year. We also had Canadian elections overnight, but very small move seen in the Canadian dollar. But I can quickly get you up to speed what the headlines are there. And then we've got a number of earnings reports to come out ahead of the US Open of some magnitude in regard to larger market cap stocks today. So that's what's on the agenda. Quick look at the the charts overall, just from a, a general sentiment point of view. Obviously Sam will run through this, uh, in more detail with specific technical levels, uh, but generally speaking, a positive close on Wall Street. As you can see, um, the S&P 500 having a little bit of an extension overnight, having traded above that psychological 3,000 toward the close, uh, yesterday evening. So overnight in Asia, kind of generally following suit. European indices been pulling back a touch since the European players came into the market, but the DAX for the moment still holding on to moderate gains. Elsewhere, it's pretty quiet. FX markets basically flat in the major pairs, reflection really of a relatively subdued dollar. Gold prices reflecting that as well, just finding some resistance near-term at the pivot level. Only trading up about $1.50 for the time being. And then crude oil a touch lower, $0.17. So overall, um, just relatively quiet. No real major headlines developing overnight, more so just a bit of a positive finish to proceedings last night on Wall Street, predominantly surrounding some optimism around the trade dialogue between the US and China. But before we get to that story, let's just jump straight in on Brexit. And what are we looking out for today? Well, today, as you can see from these headlines, MPs will come together at 7 PM London time for what's known as the second reading vote on whether Parliament agrees with the general principles of the bill. This will then follow various other proceedings which I'll show you now. So this is the kind of graphic that the BBC obviously do often, and it makes it quite an easy way of looking at what is next to come essentially with this whole situation. So a speaker has ruled out a meaningful vote, that happened yesterday, and now the withdrawal agreement bill has been introduced, and that's either going to be a case of pass or fail. Expectations, I'd say, on the balance here are that it will pass, but then we The idea is about then the next stages beyond this is about the hearing of major amendments, of which then one which we'll discuss is going to be predominantly tabled by Labour about remaining in the customs union, which could sculper the entire deal for Boris Johnson, essentially, because it would mean then that his meaningful vote becomes meaningless in that respect. One thing then that we can look at is this, which is— and I can share this in the Trading Live chat room, it makes life easier— but this is literally a line-by-line, um, kind of timings around each part of this significant proceeding. So a couple of points here just to, to, to make clear. So an analysis of MPs' previous votes and statements do suggest that Johnson probably has enough support to win the vote, the vote on the withdrawal agreement bill. But it will be immediately followed by a second on whether MPs agree to his rapid timetable for pushing the bill through. So this is this one at 7:15. That will come immediately after, if all being as expected, that passes at 7:00. 7:15 will have the vote on the programme motion. This is basically the timetabling of what Parliament are debating. If it doesn't pass that hurdle, he could still deliver Brexit, but he'd have very little chance of doing so on time, which is obviously his commitment to get it done by the 31st of October. Now, one thing just to bring to your attention is that actually the government released a 110-page withdrawal agreement bill along with a 125-page little notepad explaining what that means. Uh, they released that at 8 PM last night, expecting MPs to have read through all of that overnight to be in a position to be able to make judgment on what is arguably one of the most important proceedings in UK political history. So you can see where I'm going with this. Likelihood is there's going to be a lot of disgruntled MPs, uh, and this is where the idea is, well, maybe he can't get that hyperspeed hearing through looking to do it in multiple days rather than what would take a much longer time period in more normal circumstances. So there is potential hurdles to navigate here. If the program motion passes, so we'll know that about 7:30, then first committee stage votes will happen at 10:30 PM, so a late one for the MPs in Parliament. And then the committee stage continues with votes every 3 hours with amendments on keeping the UK in the customs union with the EU and calling a second referendum are likely to appear. Again, these are amendments to the withdrawal agreement bill before then it later is— would be ratified in additional hearings. So that's not going to happen, going off the Bloomberg timetable, until the sessions that we'll see tomorrow afternoon. But obviously, to get to that point, we have to just make sure we navigate through some of the ones later on this evening. Now, a few other points here. Um, again, I will share this with you, uh, so you can read it all in a bit more detail in your own time because it's quite a lot of information. But to summarize, a few other points. Now that Johnson has sent the letter asking for Article 50 extension, there is talk that the government could have another stab at a meaningful vote, which is the top left-hand box. However, The likelihood here, as what we saw yesterday, is that the House Speaker Bercow will— it'll be highly unlikely he would allow that to go through. You can safely bet that there will be an amendment, though, put forward, as we just discussed, if we get through these initial proceedings, to make ratification of the deal conditional on holding a second referendum. This has been Labour's kind of plug. But despite the Labour Party giving their blessing, most don't think this has enough numbers in Parliament to get through. So the amendment on the idea of a, uh, confirmation or second referendum, although some might want it, it's unlikely to get the backing necessary with the numbers to go through as a, as a pass for that specific amendment. The one that's the one to watch is the one to try and force the government into negotiating customs union access as part of future trade talks. Last time this was voted on, it was called the so-called indicative vote, if you can remember. That was back in the spring, and actually that indicative vote, that was one of the closest ones that we've had. That was defeated by 3 votes at the time. Now, back in April, 89 lawmakers abstained, but a fair chunk of them may be minded to vote for a customs union this time round in order to break up the ambition of Boris Johnson. If the customs union amendment passed, the assumption is the bill would lose the support of the 28 kind of pro-Brexit Conservative MPs, or those so-called Spartans, which had previously given their backing to Boris Johnson, of course. And that, given the lack of support he's already got— or he hasn't got from the DUP— would mean his whole thing just blows up. At that point. Uh, and then, and there were a few options we were talking yesterday, uh, all routes seemingly are still leading down this avenue. It just depends on how and when that ultimately, probably the resolution to all of this could still well be a general election, which all things being equal perhaps was Boris Johnson's strategy all along. I guess though what Labour will be mindful of is they will want to put off a general election as long as possible to make it look as bad as possible, that Boris hasn't really been able to get it over the line as soon as possible. But one very small tail risk is that Boris Johnson could technically call a no confidence in himself, as ridiculous as that sounds. Meaning then that it gives 14 days for opposition parties to try and club together to form a credible, uh, kind of opposition. But the problem is that that would need to be a cross-party alliance, which comes with lots of difficulties because, uh, no one really wants to team up with Labour. And the Lib Dems have said they don't want to team up with anyone, given that they're far extreme angle of revoking Brexit all along, or as its endgame. Meaning that then Boris could well be in a position, well, look, um, I need to stay as the interim caretaker Prime Minister, we need to have a general election. And then at that point, all polls still remaining equal, the average poll of polls still gives him a distinct lead at the moment, as much as we need to take that with a pinch of salt. So that's the latest, that's what's going on at the moment with Brexit. Hopefully that's as short and sharp as I can keep it, uh, as as this type of news flow goes. What I will do is when I finish this briefing, I will share this graphic and this graphic and this graphic, uh, all in the chat rooms. Uh, I think I've tweeted most of them anyway from my Twitter account. You can see my handle there. So if you need them, do check them out there. Moving on, I did mention about some positive noises coming out of Washington, uh, which helped US indices kind of drift higher yesterday. The S&P is trading back above 3,000 for the moment, and this coming of course in the midst of earnings season fully underway. So what did Trump say? He said China has indicated that negotiations over initial trade deal are advancing, raising expectations the nation's leader could sign an agreement in a meeting next month in Chile. Trump said that they've started buying the This is in reference, of course, to the part of the agreement with that partial deal signed 2 weeks ago about, I think it was $40 to $50 billion worth of upfront agricultural purchases that China pledged to make in order to reach this kind of temporary ceasefire. And Trump very happy that that now has begun. And of course, this is important for him politically to appease his base, given the fact that they, the farmers, are the ones that have been struggling significantly under the pulling out of some of the purchases that China were making as the biggest buyer traditionally of those goods. However, it's not all positive, kind of plain sailing. The Commerce Secretary Wilbur Ross, he said the, quote, actual meat of the agreement could come in two additional phases yet to be completed. So just tempering perhaps a little bit of the president's optimism, a little dose of reality. Don't forget the whole more contentious issues about the intellectual property theft and these types of major sticking points have not yet been addressed. And so hence the reason why some initially were a little bit a little bit flat or neutral in their response in regards to, um, the initial partial deal. So one to watch. Elsewhere, other headlines to be aware of, uh, as we go into the API crude oil inventories later on tonight, 9:30 London time, and then we'll get the DOE's tomorrow. The expectations here is that it's probable that inventories, the headline crude number, will rose for a 6th time, a 6th week in a row, ending the week of October 18th. That would mark the longest run of consecutive builds in almost a year. The number at this point in time is for an expected build of 3 million barrels. Elsewhere, Saudi Aramco continue to just state quite explicitly they're now back to producing crude at normal levels, having raised its output briefly to restock storage depleted after those September drone attacks on their infrastructure. And then the other piece of news that we've had overnight— I'm not going to dwell too much on this because quite frankly the Canadian dollar hasn't reacted at all— but Justin Trudeau overcomes scandals to win second term in his divided country. However, he has seen his power diminish somewhat as he will now lead a minority government I think at last check he accumulated about 156 seats, which puts him short, meaning he has to team up. And the likely probable candidate to form this coalition will be the pro-Labour New Democratic Party, which has secured about 24 seats, putting his government at about 180. But overall, I don't— I mean, it seems as if the market price is taking this in its stride. So not perhaps overtly surprising. And if anything, the fact that he has remained in power, likely to just add some sense of calm with continuity in that sense is usually how it's reflected in market prices. Finally, earnings, more to come. Monday was pretty quiet, actually. It starts to get a little bit more, a little bit more interesting. Pre-market, we've got McDonald's, Procter Gamble, UPS, Biogen, United Tech. They're probably the bigger market cap names to be aware of. Then aftermarket, if you were interested, uh, in any of those kind of social media, or they're more kind of generally tied to or responsive to general sentiment, and Snap Inc. is reporting aftermarket. Um, just as a guideline, and so you're aware of the landscape of earnings for the week ahead, So they're the major ones for today. Tomorrow you get Boeing, the biggest Dow component, and you get Microsoft, largest company in the world, reporting. Then Amazon's to follow after the market close on Thursday. European earnings, if you are looking at them at all, a slightly smaller German software firm called Software AG up about 10%. Novartis, the pharmaceutical firm, up about 2% this morning. Uh, Reckitt Benckiser in London though after their earnings are down close to 6%, uh, if you are looking at some of those UK names. Uh, also just to finish and conclude on my part, I've just seen that EU Council President Tusk has commented while I've been delivering this last few minutes. He said the EU is to react to the UK's delay request in the coming days and he is ready for all scenarios. So pretty much just waiting to see, I would guess, Europe what will what we can do at this point, given that timetable, um, what we can do, what direction we're heading in, before they can really comment about the terms and conditions of the extension, if that is the case that they're, they're going to give. Calendar-wise for today, we have a very quiet morning. There's nothing really scheduled of major significance. There's public sector net borrowing coming out of the UK, but seldom is that really a market mover. And certainly for the pound, there's just too much other political focus that's going to dominate really the price movement of the currency. Later on this afternoon, Canadian data is at 1:30, retail sales, so definitely a market mover if you are looking at the loonie. Otherwise, for the US, existing home sales will come later on, and oil inventories after market. Speakers, it's pretty quiet. There's actually nothing really scheduled at least for the moment. And then you've got those earnings which you do need to be aware of. Also, for any crude traders, uh, well, it looks like you've got the November futures expiry, but I'm not sure that can be right timings-wise, so I'll double-check that. Um, but yeah, with the, the timetable of Brexit, I'd probably overlay this, um, on your calendars. And if you were sticking around I mean, if you're kind of sitting there asking yourself the questions, should I just pack it in for this morning and come back later on tonight, uh, to trade from 7 till 10:30? Let's not forget that in reality, when you're trading come some of these headlines, it is very, uh, illiquid generally, very whipsaw price action, can be quite difficult to really get a handle on, and it's quite high propensity that you could get chopped up. So I would say if you're a more experienced trader, then sure, that can be something that you could trade. Otherwise, if you're new, it might be better perhaps just to kind of leave it alone, try to focus on other products which are movement— moving in a lot more of a kind of normal, smooth, orderly fashion at the moment, rather than quite a jumpy pound. But if there is key moments, obviously around 7 to 7:30, whether he can— where— when we have the vote on the second reading and then the vote on the program motion. These are the key things you're looking out for today. If both pass, that will lead us on then to the amendment, and it's the Customs Union one that will be key, not the second referendum. As a summary, all right, that's it from me. Hand you over to Sam. I'll let him go over some technical Thanks very much.

Hi guys, good morning. Hope we're all doing well, better than Arsenal anyway. Let's have a quick look over. We'll start off with the euro this morning, which is just drifting down, almost getting towards yesterday's low. Relatively small range this morning to begin with, but just in general, this area pretty much where we're trading now is pretty significant. Significant was the high that we had back on Thursday. Nice support on Friday afternoon as well, and we failed to break below there yesterday afternoon around about 4 o'clock, I believe. Yeah, so keep a, keep a watch on here. You could call it a zone really, just put a bit below where we're trading from yesterday's lows, the lows that we had Friday afternoon as well. So it would be somewhere to, to keep an eye on that pivot this morning 112 above there on the futures, uh, almost your mini range now, I would say. So to the downside, I guess if we make this zone a bit more appropriate, we could call that 111.80 and then up to 112. So 20-tick zone, no harm in waiting for the move to really kick on when it breaks either way, or if of course it breaks either way. In terms of trend lines to the the lows, nothing too significant that I would want on. Obviously we know the euro this year has been— it's always been a good opportunity when you've had, say, a trend like this and then you get that break. I mean, you could argue we had a bit of a breakdown this morning, but not too accurate, uh, to be completely honest. However, probably would still have something on, uh, like that just in case we were to come up and find some resistance there later on. But the euro hasn't really been moving too much over, uh, this— well, the morning and yesterday, uh, contained in the range as expected. The pound yesterday, uh, obviously we pushed higher literally while we were doing the briefing, and obviously then it never actually came back to that pivot point. So you'd have to be quite aggressive to have got, uh, well, I guess at the time we were saying initial target to be the initial high from Friday, 128, 189, before then reaching the high we had from last week, which we did. And then, uh, double top there, failure to push on, and we're now coming back towards that area. So I'd have it marked up, 129.70, the previous highs, give or take a tick or two, before we did break through around half 8. So let's put this down to 15 minutes. You can just see if we were to come back and test this area here, and that'd be something I'd, I'd have marked up as a point of interest. Um, and then to the upside, obviously you can see the— we've already got a double top from this morning, so 1.3011 as well. If we can get through there, then sure, yesterday's highs can look to come in. And similar to the euro as well, just trying to see have we got any nice trend lines from the lows. It's relatively choppy, which you would expect with the pound at the moment following these comments that are coming out. Obviously we gap lower, filled that gap pretty quick, and, and now we're in a relatively small range. And that sums up really the start of the week. I would say yesterday was a pretty quiet day, uh, elsewhere. Stocks which just drifted higher, uh, we are just coming down, uh, a bit now. And actually this, this area, much like the euro, you've got a high from Thursday, which we're just testing now. So below here, if it wasn't to hold up, 3,000 pivot level, and just below is a relatively decent point. The cash open took us below yesterday morning's high, and we snapped back and then found support there as well. So keep a watch, I would say, if we were to come back down to this level, 29,97. I like the look of as well, but Before that, we would have to get through these trends here. You can see, so if we were to, you know, not find support on yesterday's high or Thursday's high, uh, around about 3,005, which is also the low of the day, that would be a point to keep an eye on as we have just started to drift down. Euro Stoxx, you can see, testing its pivot, and DAX also near enough the low of the day. So key level also for the DAX. If we can push below here, we found support yesterday evening's, uh, lows as well. So keep an eye to see how European stocks go from the, uh, for the next sort of half hour, and that could well drag on US equities. But a bit of support coming in nonetheless. Quick look over at oil. Yesterday we had a decent move lower during the, the, uh, well, just before, uh, the briefing started, and we broke that trend, never came back to retest it. However, uh, what was a previous low of the breakdown point, 53.78, you can see we had marked up, uh, I guess, well, tested late on at 7 o'clock, and that's held since then. Worth again a couple of trends as we are starting to get squeezed, uh, to, to the downside here. Found a bit of support on a double bottom as well. So keep a watch should we get back towards that level. A break of that, then yes, yesterday's lower points could well come in. I have to say, the oil market, not— you know, we were saying this yesterday, for me it's still been relatively choppy and hard to get an overall direction. You can see where we're trading now is pretty much the average price you would I would say of the last, well, month, to be honest. Pretty much in the, in the middle between the range. And, uh, right now you can see a very choppy area as well. So no harm, I would say, in this sort of holding off from that. Yes, the key point you can see still marks up from yesterday, 53.78. So not just the lower point but also a higher— well, a few of the highs from previous. So 53.78 might be, you know, best to sort of wait to see what happens there, or a break of this trend to the downside as well. Getting involved between that, maybe not ideal. Quick look over at gold to, to wrap it. You can see we're actually just finding a bit of resistance now on yesterday morning's low, so keep a watch on, on that, see how that, uh, reacts. Let's have a look at this trend coming up to that area as well. Obviously with stocks just drifting lower, and if equities in Europe are to push lower— Eurostoxx is on the low of the day now, and the DAX Let's have a quick look at a chart on my left-hand side. Is almost doing the same. Then you could, uh, could see gold breaking through. I probably want to confirm break before getting in here, and then you would be looking obviously to go for some of the previous resistance points from, uh, well, what would be resistance now support from yesterday. So keep a watch on this 1490 pivot, previous low for, for gold, and levels to the downside, previous high of the day at 14.89.1, a bit of a mini range to, to keep an eye on there. Equities, which will just drift lower, are going to help that cause. Safe havens up. The Bund, you can see if I just bring this into picture, not far off doing what gold is doing and getting to the previous low of yesterday morning, uh, 10 ticks above where we're trading. T-notes also the same here. You can see kind coming up to a resistance point as well. So you've got that trend line for the S&P. Gold at the pivot as well, so keep a watch on that. The pound actually just now, before we wrap it up, you can see just breaking through its pivot level as well. I'll be keeping a watch around 29.4351 as a relatively important zone as well. Trend lines aren't amazing on this, so I would just be looking at individual support points as well. Nothing come through on TweetDeck as far as I can see, but we'll keep a close watch on that. Hope we all have a good trading day. Any questions, as usual, please do let us know.