How Did The Market React To The Latest YouGov Poll

Okay, a very good morning, Thursday 28th of November. Happy Black Friday, if that's a thing that I can say. But, um, in the briefing this morning, going to talk about really two subjects from, from my side. The much and highly anticipated poll from YouGov using their MRP model which Boris Johnson is set to win the biggest majority in more than 3 decades. We're going to have a look at that. Pound higher this morning. And then we're going to look at the S&P 500 because indices have moved the opposite direction. Quite a decent drop in US futures seen on the back of latest developments where Trump has essentially given his backing and signed legislation supporting Hong Kong protesters, and that throwing into jeopardy then the likelihood of a Phase 1 deal being concluded, with the threats still remaining at this point of those tariffs due to come in in 2 weeks' time should we remain at an impasse in those negotiations. So there are 2 main things I'm going to talk about, but before I do, I did do a poll on our YouTube channel yesterday and just wanted to clear up a few things. One is, if you ever are regularly watching these videos, well, first of all, thank you very much for watching. If you do, do remember to subscribe to the channel. But the other thing is that we— if you click on the description of the video, we timestamp all of the different chapters of the different things we're talking about. So if you ever just want to listen to what we say about Brexit or Trump or the technical analysis from Sam, you can just click on that and drop down and click a specific specifically on those areas. So just to make life a bit easier for you guys. Anyway, let's crack on and let's talk about, first of all, the charts this morning and what, what are things looking like. And pretty quiet overall. Those two news items are really the definitive forces that are moving those respective asset classes at the moment. So really the pound and, uh, US index futures reflecting a little bit of risk off. So gold up $3, top right, T-notes up 3 ticks, bottom right, and WTI crude moving to the downside at the moment. Actually, in fact, just touching fresh session lows as I'm speaking, down 43 cents. So coming in close proximity, about 12 cents away from this S1, which would coincide with around the low point that we saw yesterday following the oil inventories and the DOE when we moved decidedly to the downside in the post kind of price action. So a little bit risk-off there, but obviously the pound is one of which most people are looking at this morning if you're based in the UK. Why? Well, let's discuss that in a bit more detail. We had this big jump in price last night because one of the major polls that came out was this. If I transition my screens, this was the— you remember, this is one we've been talking about for a while. This is this MRP kind of methodology adopted by YouGov, who correctly identified the hung parliament situation of the 2017 election. So a lot of people were looking with greater emphasis on this one. I think the sample size that I read when I was looking at the details was 100,000. If you think about it, the other surveys that we've had typically average at around 1,500 for a sample size. The MRP model also it identifies different types of voters predicting their behaviour, allowing YouGov to work out how many of each of these voter types there are in each electoral district in order to produce a fairly detailed forecasting for each individual unique constituency. And what it came out with was this: Boris Johnson is set for a 68-seat majority, and that would be in fact on track for the biggest majority if that were to come true on December the 12th in 3 decades. Um, it put then them up 42 from the previous election. Um, and in terms of the other performances, Labour then, the specific numbers: Tories 359, Labour 211, SNP 43, Lib Dems putting in a shocker. Uh, I think that would be +1. So despite, you know, how popular they were, you remember the polls before the election was called, they were pretty much neck and neck with Labour at one point. And they were really trying to go after— well, Labour was almost on the defensive, if you like, trying to hold on to a lot of the voters that could have gone that way, particularly on the issue of Brexit. But so far, that has severely backfired according to this data for the Lib Dems and would be a massive blow for Jo Swinson, who you would think, again, we could go through the conveyor belt over the next Lib Dem leader if that was to be the end result. But a couple of things I just wanted to comment first about the mechanics of how the pound reacted last night, then I'll give a bit of a view about what I think about these results. So just go back to the pound chart, a few thing— few things here I wanted to have a look at. This was— this is putting the sterling future on a 1-minute. Now remember, in terms of sterling futures, of course, the market does shut for 1 hour, so So if you're looking at the spot, obviously a little bit different. And the thing though I wanted to draw attention to is this price movement here. Now the poll did not come out until 10 PM, and yet check this out. This, this candlestick here was at 9:54. That was at 9:55, 6, 7, 8, 9 into the close. Now one thing that was happening, if you were As I said, this was a highly anticipated poll, so if you were vigilant on Twitter, uh, this is definitely where if there is any rumor-mongering going on prior to a big event, it almost certainly comes from Twitter rather than traditional newswires who aren't allowed to report unauthenticated kind of news. That's the beauty of social media in that sense. And there was this guy, Christian Callagy. I'm not gonna say how you say his name precisely, but he got retweeted. I mean, this is a guy who certainly I don't follow. I mean, his bio, if you just went on that, is a little bit suspect, but he's connected to Guido Fulks, who anyone who follows UK politics, this is probably, the most influential political website. I mean, these guys have got 300,000 followers. They are basically— they break all of the inside scoops when it comes to UK British politics. And Guido Fawkes retweeted this, and it came, you can see here, almost an hour before the actual result came out. And if you see what this chap said, he said, I'm hearing 211 for Labour predicted seats from the MRP YouGov poll. And then go back to the article. What did Labour get? 211. And so he then followed up. There was a secondary tweet that this chap made that then got retweeted. This one came out as well. He was talking about the fact that Tories are heading for 50+ and so on. But right on the money. Now, the question I want to cover here that I get is, well, how tradable is this type of information? And I'd say it's, it's almost, it's almost highly untradable in that sense, because if you were looking at the market, I mean, look, look at the pound here, it's not moving at all. But it doesn't move really if, you know, if there's a chap on Twitter who's— I mean, that Christian has about 7,000 followers, so it's not It's a decent amount but not a great deal. Uh, Gardo Forks though has over a quarter million, so when that gets the retweet, that's where the action happens because then it see— it hits more eyeballs. But if you were just going to go blindly just trusting what is a, I guess, an unqualified rumor, then if you got long there, it would have looked great for a moment, and then you would have been on side a decent 25 pips and then it just would have swung right back and you would have got stopped out, and then it would have gone your way. And then obviously the poll came out and we could— in the futures at least, yeah, we gapped up to reflect some of that move. But yeah, it would have been highly speculative trade and you're basically taking a bit of a punt on whether or not you want to believe what's the rumors are saying. So yeah, just interesting to see that price action. Uh, you could have easily have got pulled into that. I think just going into it, and probably as well, I mean, if there's any intraday traders, probably liquidity is pretty bad. You're going into Thanksgiving, people are not wanting to leave an open position on the back of that poll given it could have swung wildly in either direction, and consequently the pound could have gone down as well as up to the tune that it has. So that probably helped exacerbate some of that choppiness. Having a look back at the chart where we are at the moment, you can see bit of seesaw price action. I mean, we've kind of identified— Sam will go over the technicals more, I'm sure, about what he views from the setup here. But you can see we gapped up, came back down, and it's kind of a traditional kind of technical play here with finding a bit of support on the initial— on the futures at least— where the market closed, pushed back up, back up to the original top, and then we've come back down again. There is at the top of this rectangle here If we start broadening, broadening that price action out on the 120, you can see there's a descending trend line from mid-November encapsulating some of those areas there that you've got the high on the 18th, the 21st, and that's kind of that triple top and where the market's reacted as well on the trend line. It hasn't confirmed that break yet, maybe just restricting some of the upside price action. So that's, yeah, again, I'll leave the rest to Sam on that fold. But having a look at a few other things I wanted to mention, um, this was looking then at YouGov model estimates about the Conservatives would gain a net 42 seats if an election were held today. This is quite an interesting breakdown. It basically looks at the Conservative margin by percentage points. So here you can see Barrow and Furness Much higher, looking at which is over 15-point majority. So here, these are ones of which I would view as, you know, kind of, uh, somewhat of a done deal. What I'm more interested in, and I thought what was a very interesting statistic, is that there's at least 30 seats of which the Conservatives have a less than 5% margin, is what I was reading last night. And so that for me spells, although the headline would suggest a resounding victory for Boris Johnson, there is still some of those within the kind of catchment area that could be susceptible to swings. Now, one thing that I thought was quite telling and actually very prudent was Dominic Cummings. Dominic Cummings really has like a blog website, and he blogged yesterday which was quite telling, I thought. And he said, voiced his fears about complacency. Now I think that's a very strong move by Cummings, because what this can lead to is a little bit of Theresa May 2.0. So what I mean by this is people hear a poll, it's a resounding victory for Boris Johnson, and all of a sudden Tory voters, like they did with Theresa May, given a similar type of setup that the polls are indicating ahead of 2017, go, "Do you know what? Don't need to even bother. Boris is gonna walk it." And by default then, you've got a potential calamity on your hands, as we saw in 2017, whereby, again, literally complacency has led to that. So Dominic Cummings, rightly so, Anthony Cheung, as the Conservative strategist, has come out to try and mitigate that head-on. He basically said that a hung Parliament remains a, quote, a real possibility. So a lot of this, I think, is just, again, tactical to cajole sentiment in order to keep these Conservative voters engaged, because every vote is going to matter in order to really see this come home into what was reflective in the MRP poll. Now, one thing with this MRP poll that I would like to add is that there was another poll that came out last night. Um, so even though of course the attention is on the MRP poll given its, its methodology, but the other poll was for ComRes for the Daily Telegraph, and that suggested Labour is narrowing the gap on the Conservatives, with the Tories on 41% down 1 point from the weekend, and Labour up 2 points at 34%, at the expense of the Lib Dems, who are down on 13%. So one thing to be clear here, the size, scope, and complexity of the MRP poll is backward-looking. I've heard it's a couple of mixed reports between 1 to 2 weeks, whereas the groundwork, the fieldwork done with the more recent polls is obviously capturing much closer sentiment. So I was saying yesterday, the MRP is inflexible in its ability to capture any late swings or changes in sentiment. And this ComRes poll for the Daily Telegraph fits the exact same narrative of what we've seen from all of the polls that have come out since the beginning of the week. So what I'm saying is, is that the MRP polls captured a moment in time which at that moment in time the Conservatives were ramping ahead, or romping ahead, in every single poll. That has changed. So what I'd be more interested in is if MRP poll from YouGov, if they rerun another one between now and then 2 weeks' time right before the election, that would be way more interesting. At that point, I could— I'd say you could be much more strongly of belief that that would be the end outcome, because 2 weeks obviously is an incredibly long time in politics. And so yeah, my initial view here, if I'm talking purely on fundamentals, kind of disregarding a little bit some of the price action, is sure, short-term speculators have bumped the price higher, but I think the market will be a little bit less assured to just power home the pound and get long on the fact that this is now a done deal. Um, and I still believe, as I said yesterday, that polls coming further forward will, as the ComRes one has shown overnight, continue to show this narrowing storyline. Uh, and that I think is going to have to, um, see the pound fade going forward over the next 2 weeks. I still, still maintain that view irrespective of the pop that we've had overnight. Okay, final part on the Brexit side, or 2 parts. One is this: following the result of that, that poll last night, BBC News are reporting that Labour is going to change its strategy with 2 weeks to go. So basically, insiders say in the first half of the election campaign, a key error was that the Liberal Democrat threat has been overestimated, while the willingness of Leave voters to switch from Labour to Conservatives was underestimated. So if you remember, the Lib Dems were seen as an absolutely credible threat, but as soon as the election has been called, Liberal Democrat support has just tanked in the polls. And rather than focus head-on the issue of Brexit, which has obviously been the objective of Boris Johnson, Jeremy Corbyn's kind of been emphasizing different areas, particularly on the NHS, for example. But now, given what we've seen from this poll where it's looking like Conservatives have been able to really target some of those Labour leave areas, the tactical switch now from Labour apparently for the next 2 weeks is going to be, right, let's just, let's just try to battle then these key areas. on the issue, uh, of Brexit, because it looks like Lib Dems are no longer a credible threat in terms of the referendum issue on the, on the Brexit side about the Remain and so on. Um, there are some more TV debates happening. You do have, um, tonight, uh, the one tonight's probably a little less impactful overall. It's the Emergency on Planet Earth: The Debate. Um, then the more important one, I'd say you've got the BBC election debate which is happening tomorrow night, so Friday night at 7 PM. And then there's a few more to come before the actual day of voting, so, so 5 more in total as you can see there on that screenshot. Um, the other thing to mention on the macro side is we've had a dip in global stock indices overnight in the Asia-Pacific session. Uh, that came after, as you can see on your futures chart, uh, late yesterday, kind of commencement of the Asia session, US futures got hit. So let me just show you what that looks like. Here's the S&P 500 future. You can see a drop right on 11 o'clock, um, as the markets reopened. Obviously we closed from 10 to 11 in the futures. As soon as it reopened we pulled back all of the gains that were seen in yesterday afternoon's session. So pull back off those all-time highs. Now, why did that happen? Well, this is that, that storyline that's been ongoing for a while. Some were perhaps a little bit still open to the possibility that perhaps Trump didn't want to jeopardize the ongoing trade negotiations. So despite the kind of bipartisan agreement in Congress to push forward pretty much unanimously support for the pro-democracy protesters in Hong Kong. Donald Trump did in fact come through and sign that legislation in support. And what's happened overnight, the US ambassador, I think, in Hong Kong has been called to speak to Chinese officials. Chinese officials have come out and threatened retaliation. All of this, of course, is coming just as they're about to sign a Phase 1 trade deal. So this new law passed expressing support, US support, for these Hong Kong protesters— does this put a bit of a spanner in the works for conclusion of these, of this deal, which obviously has been a key component of helping equities push up to these record high levels? One thing I would say with the S&P, you know, let's not take it too far out of context. Yes, we dipped a decent 10 points overnight. But I mean, just look at how— where we are in the longer-term picture. I mean, here I think that technical chart on the dailies is quite telling because we are right bang on that trend line, as you can see, going back from what the May-July test, the early November or mid-November test, and then we're right back on the pullback to that level there at the moment. So it's a pretty strong area of support that you've got there. On the dailies around 41, uh, and that would coincide with some of that price action that you can see here when you start kind of zooming it down onto a more short time frame. Uh, so yeah, again, it's kind of one of those where these push higher consolidation, push higher consolidation— I think that's still very much a, uh, a prudent kind of approach to these pullbacks. I still don't see what's happened as an overall, uh, signal that we're in for a sharp correction in markets. I think that move all in all is relatively small, perhaps a bit reflective of the fact that a lot of American participants of course out the market celebrating Thanksgiving. So even if we did come back, the point being I still think that the market is still in a phase of consolidation, if anything, but a pretty solid support level there to keep an eye on. Uh, calendar for today, what have we got? So very much a, a morning-centric day, and I would say a lot of the move perhaps has already happened. So if you were in the market early, then sure, perhaps the best trades have already been done, kind of digestion and reaction to the two events that I've said that have unfolded late last night. Otherwise, for this morning, a couple of things. You have had the first German state CPIs. Saxony's come in -0.8%, previously was +0.1%. The year-on-year, though, 1.1% against previous 1%. So the other German state CPIs will be coming out littered through the morning. I've had a headline out of North Korea while we've been delivering this briefing— launched an unidentified projectile, according to the Japanese coast guard. It appears to be a missile, according to Yonhap. I mean, that sounds like pretty sensational, but it did likely fall outside of Japan's exclusive economic zone. So again, it's very interesting that as soon as Trump signs these deals, as soon as the trade war becomes— looks a little less likely it's going to get done, North Korea start firing missiles again. So again, for me, it totally is in fitting with the North Korea pickup in activity is directly correlated with putting a bit of pressure and leverage on this latest situation, on this, this legislation. Otherwise, that's pretty much it. You've got some 10 o'clock data which on your calendar looks pretty important. It's the kind of European suite of sentiment readings, but they very rarely have ever move the market. So perhaps just keeping half an eye on the German state CPIs would be prudent. But otherwise, there's nothing coming out in the afternoon, of course, because of the holiday in the US. Early closures, um, so electronic trade is going to close early. So if you are trading equity, interest rate, FX, energy, metal futures on Globex, on the CME, they're going to close at 6 o'clock London time. Instead of the regular, uh, regular 10 PM close if you're in London. CME pit, NYSE floor both closed today. Speaker-wise, the only one really took out for a couple of ECB speakers later, Coa and ECB's Lane, late in the evening. Okay, that is it from me. I hope that was useful. As I said, remember, just today and going forward in future, we timestamp on YouTube all of the, the topics that we cover. So hopefully that makes life a bit easier for you guys watching in future. All right, thanks, catch you later.

Hi guys, good morning. Happy Thanksgiving to those out in the States. A quick look over the euro to begin with before we talk about stocks and that RSI divergence, which is obviously the reason we've come lower. Um, having a look at the euro, and I was just eyeing up on my own charts, I quite like the look of any sort of retracement a bit higher up today. But given the, the volume likely to be a bit lower, whether we could get up towards the R1 area or not, I'm not too sure. But that is a, as a general point, I do like the look of, uh, you've got maybe a tiny bit higher as well on here, looking 30 minutes, 1.1033. I got the high from yesterday around 3 AM in that breakdown area. I would like the— I would like it to come there for a place to get short. It's whether we can get up there anytime soon. I think if today is going to be a case of waiting on your hands anyway, having a look at those lows, you can see we've got a relatively well-respected trend line which could potentially break later on and lead to a move lower down. I think that's always something to to keep a watch on. But yeah, if we can get up towards that point, that would be of interest. Just having a look, before we were to get there, you'd have to get through 1.1026, which was a good opportunity, it has to be said, yesterday. You can see we broke through and then came back to test it a couple of times around 7 and 3 o'clock. Of course, always looks easier in hindsight, having a look at this as a potential place to get short. And then on the 2.40, just having a look here, you can see Obviously the significance of that failure to maybe close above— close below, I should say— that low that we had from the 14th. Just how significant will that be? We'll have other bulls giving it a go here and into the end of the week. Volume lower. Are we actually about to see a bit of a push on? So where we closed the week, as we said yesterday, for the euro, the pound, and the Aussie on these— or what were these lows— will be obviously quite important. Support, and a break of that 110, and then you are looking down to those October lows from the 8th and the 1st respectively for the euro. For the pound, of course, this time yesterday we were right on that low and it came down with the S1 literally kind of when we were doing the briefing, only to reverse. And what will be will be for the rest of that day, or what will be what was, I should say. But, uh, yeah, this trend line holding things up. You obviously got quite a bit of noise above if we were to break through the R1 and then each of those highs. And of course that really significant 130, uh, which of course if we were to break that, that point would be, uh, an area it could be attracted to. I would say to the downside, you know, looking for a better opportunity, better value to buy the pound today would be perhaps wise to, to go about it. Where could that be? Well, 129.23, a bit of resistance. You can see was also on the 25th, give or take a couple of ticks. And obviously that initial high from yesterday before that spike through, uh, would also be, you know, that low of the day. So a bit of profit taking come in, that could be a nice area to get in. And also the pivot if it was to come down even further, but by then, you know, that'd be a full retracement and more. You'd have to start asking what's really going on. If that's the case. So 129.23, a key line in the sand that you'd think the bulls would want to protect. The trend line to the top is definitely worth keeping an eye on. As you can see, that's already, uh, circled and marked out. Having a quick look over at the Aussie, uh, we are— as we put this onto a 240, you can see we have now closed— well, looking like we're going to close below that low of the 14th and yesterday. So how significant will this be? The Aussie under some pressure. I would say we can now start to— well, we've almost made through what would have been, I suppose, that first target, the, uh, the 16th, uh, 7 AM high, but then looking for that low which is down at 67.36. So the Aussie has been drifting lower, uh, we'll be keeping an eye on that. Obviously the negative trade comment overnight is not going to help, and the fact that the S&P has been pushing higher and higher and higher off positive trade comments, and the Aussie has done nothing, uh, is a bit of a worry. So any retracement back to that point today I think is definitely worth a go, unless trade comments were to suddenly turn around and get positive on Thanksgiving. Maybe not the biggest surprise in the world if that was to happen. Pivot, another key level, and also that top of that range, R1. So those would be the 3 key points to the upside that I would really be looking uh, at for now. Trend lines seem a bit steep, uh, so yeah, that would be the focus. Having a look over gold, hardly moved really, did it, overnight. Let's be honest, it's not a massive move. Um, and actually, to be honest, the fact that we didn't quite get up to, to test that previous low of yesterday morning, uh, is quite key. I suppose we did really, but 1464.8, that's going to be the key level to the upside before maybe getting towards that R1. And actually looking at the way gold traded yesterday, albeit yes, you may have got, um, taken into a sort of a false break of that previous low, it actually reacted quite well. And there's a couple of good opportunities. So those previous areas of support and resistance, or currently resistance, would be where I'd be keeping an eye on— 1464.8 and 1467. Then to the downside much like with the, the euro and any of these markets that have just, you know, been on a downtrend and starting perhaps to turn around over the last couple of days, getting those trend lines on for potentially bigger move and continuation might be, uh, the favored choice. But right now, you know, with stocks, uh, coming down in the early morning, you could be forgiven for maybe wanting a go at getting long above that 1464.8 Um, but overall, this is still— think about this recent trend in gold has been coming under pressure. Having a look over at oil, DOE yesterday, uh, usual, usual noise, uh, and we're still back into that, that new range that we're on about. We were talking about this yesterday, how we were stuck in one for a couple of weeks, looked like we finally broke out, only to then get back involved, uh, in this area as well. Can we get out of it? I guess the, the close of the week will be key, but, uh, really, is there going to be that much volume heading in, uh, and just to reiterate, up towards those highs? Today on the R1 is yesterday's high, and it was top of that range, uh, and the low we almost getting down to, uh, the S1, but it was also pretty much bang on the low of the 22nd. Those will be the key points. If we lower it down to 15-minute, just above the pivot level is, is going to be an area of note. The closing high yesterday, also a bit of support yesterday, 58.22. Would I be interested in anywhere other than that as it stands? Not really, not unless things started to pick up, and not really expecting that to happen. There you go, S&P come down. We broke through 3150 on the one-third time of asking, pushed higher, made a new all-time high across the board, only to come down very late on. And I guess an opportunity, if you're, you know, favoring this market to continue, you'd be looking at 31,4650. You see the amount of times we have tested that. I think you'd be quite brave to want to go short again there. So a break of that to maybe target really towards 3150 could be a good opportunity to get 4 or so points. Looking at the, the key low, let's call it the high of the 26th, 6th before the push through, then the lows of yesterday. You can just see how important a zone that is. I think we could stay in that zone for, for a while this morning, just considering the overall volume as well. Would I favor the long from around there again? Maybe you'd want to see a bit of a 5-minute close above that area before getting in, but certainly the range trade could be a better option, looking to continue the overall trend of this market. So those will be the key levels looking— let's call it the bottom there, 31.40, and then to the top, 31.46 and a half as well. Any questions, as usual, please do let us know. Worth noting, the, uh, the low of yesterday for the DAX has provided some support, and obviously we did gap lower. So anyone that trades the DAX, obviously keep a an eye on that. As we know, if we were to get maybe above the, the high of today, you could see a further push higher. The S&P then obviously breaks that, that high as well. So one to keep an eye on. The DAX is finding support on what's been a pretty key level. The overall lower part of that range still a fair bit below as well. Hope you all have a good trading day, and I'll catch you all in the chat.