How long before Trump turns his focus on Europe?

Okay, very good morning. Anthony here from the desk Amplify in London. It's Thursday, 30th of May. Hope you are well. Going to cover a couple of different things. Update on the trade war, nothing specific I would say direct from China or the US, but some interesting articles in circulation like this one on Bloomberg. in reference to Europe. And so we'll have a look at that. Uh, also going to have a look at the Conservative Party kind of leadership race. Where does that reside at the moment? Uh, and also importantly, is it or not having any impact on the pound at the moment, which we can discuss. Also going to have a look at some comments that came out of the head of Morgan Stanley and also one of the world's biggest hedge funds, Ray Dalio. And then also API Crude Oil Inventories, I can update you on as well. As some interesting comments coming out of Iran last night which have captured some attention as well. So that's what's on the agenda. Let me just flick over and give you a flavor of the general setup, cross-asset, of how things are residing at the moment. And it's a relatively muted open. It's pretty flat overall. Currency pairs, reflection of the fact that Dixie is, is basically unchanged. Uh, as I'm going to explain, there's a lot of news about this Tory leadership race, but ultimately none of it at this point moving markets, and quite rightly so. But definitely need to keep on top of the news flow as it comes. Equity-wise, after what was quite a negative day yesterday, obviously just given the elevation in rhetoric coming out of China, we've had a bit of a natural pullback of sorts, albeit if you look at the, you know, the kind of sessions Um, over the last couple of days we're still down, but a little bit of a moderate recovery of sorts, uh, that kind of seen overnight in Asia-Pac and feeding through to the open this morning. So index futures a touch higher, uh, both in Europe and the US. Oil, you can see down at the bottom, also seeing predominantly a, a sizable move that came late yesterday evening, uh, just around the kind of 6, 7 o'clock time, but also, as we'll see, oil inventories as well, just helping keep prices elevated. But we'll have a look at that 6 o'clock move in a second. And as a consequence then, given the decent rally we'd seen in fixed income futures throughout yesterday's session, given the, the relative risk-off tone, now that the kind of dust has settled, both bunds and treasuries have pulled back a decent amount. So the US 10-year down about 8 ticks this morning, but I'd say more of a function of just profit-taking on the longs from yesterday more than anything else. All right, well, let's jump straight into the news, and as per usual, Sam will come on afterwards and talk about the charts. But yeah, this is one of the, the things that Bloomberg are running as their, their main kind of headline story, talking about US-EU trade talks are stumble— or stumbling, threatening new trade war front. Now again, it's quite interesting given the fact that you know, the trade war, if you like, has been so focused on that of the US and China. And so one of the things is, well, why is that? Why has Trump pretty much neglected Europe as a whole? We know that he's delayed the auto tariffs, which were going to have a very meaningful impact because Europe's largest economy, Germany, is highly dependent on the exports of vehicles, particularly to the US market. But why has Trump been so kind of relaxed about this issue? And one of the main things is I was having a look at— this is a fantastic website for any of those who, who've not come across it before. My colleague Saif Ali came, came to me with this, and it's a fantastic research tool or to develop your knowledge, and it's called the Economic Observatory, essentially. And you can punch in different countries' names and it gives you a kind of a top level, but an ability to go to a granular level of what exactly are— you know, when you talk about trade from one country to another, what exactly is it that they're trading? So what type of volume? And you can get it all the way down to kind of different layers, to specific products. But one of the things here is Well, who and what countries does the US import from? Now, to give it some context, this will help explain why the, the kind of negotiation is so geared towards China, because the top import origin into the— from the US point of view is China, to the tune of around $476 billion. Whereas if you look who's second, what country does the US import from in second place? It's then Mexico at $307 billion. It's then Canada at $274 billion. It's then Japan at $125 billion. So hence the reason why he's been in Japan this week. He's obviously had pretty close ties anyway with Shinzo Abe, the Prime Minister of Japan. But not only is Japan important from an import point of view from the US, but obviously politically as well, just given the tensions at the moment in the East China Sea and geographically where it's situated with North Korea and also with China. So that kind of makes sense as well. But, you know, clocking in at 5th place, even though Germany is one of the largest economies in the world, from an import point of view it only ranks 5th at $111 billion. Again, this is in comparison to nearly half a trillion when you're talking about China. So in terms of the, you know, the importance of these relationships, if you look at it by numbers, it's way more important with China, with Mexico, with Japan than it is with countries like Germany, for example, which might go some way to explain why they've kind of, uh, it's not really been a dialogue that's been happening. Now what this article is basically suggesting is a couple of things. One is that basically then, given all the things I've described, the talks between the US and Europe have not moved at all. And apparently some trade negotiators from the US were speaking to their counterparties in Brussels recently, and to flex their muscles, they basically whipped out a binder, 150 pages worth of negotiated legal documents that they've done with China, trying to kind of bully Europe into saying, well, look, you know, we've not even begun yet, so you better start making some concessions to get the ball rolling. And so the secondary factor that's going to make this potentially quite complicated is that, as we saw from the recent European elections, we've got a pretty fragmented European landscape politically now. The kind of bad performance of the traditional kind of established parties and the rise of, say, the Liberals, but also that of a more populist movement, has meant that actually negotiations now between the European whole and the US, it's probably going to be even more complicated. So yeah, although this isn't really moving markets right now, definitely this is somewhat another worrying macro factor to consider, and certainly one that must be addressed by Donald Trump. Obviously, he's got a, he's got a definitive timeline where he needs to start running for re-election for a second term that we know at the end of 2020. So he does have to do something with Europe at some point, but obviously got bigger fish to fry, uh, in the form of China at the moment. So I thought I'd mention that. I thought it was quite interesting to have to look at that website that I mentioned, uh, is pretty good because look, if you go down to here, you can see all of the types of exports that the US does. And if you're looking at imports, quite an interesting thing here is, you know, what is the main import that the US has? US is the largest importer in the world, and the main product to which they import is cars. So even though if you actually bump this up to exports, exports comprise of 4.5% of the $1.25 trillion per year of goods that the US export. Well, you know, you have, you know, General Motors, Ford Motor, and so on, but German, Japanese automakers, they really dominate the global scene when it comes to manufacturing of cars. And the US imports the most at 8.3%. So you can see here why countries like Germany economically have been suffering so much, because not only they have kind of a trifecta of issues domestically, um, kind of the political developments that have been happening, the loss of power from the CDU/CSU the Merkel era fading and the rise of kind of nationalism and populism has been impacting the government's power. You've then got the uncertainties around Brexit, of course, and the neighboring relationships with Britain. And then you've got this situation where, you know, the largest sector contributor, if you like, from a, from a composition of their index point of view, is the automakers, which are, which are the biggest. And so the ability to export is pivotal for a country like Germany, which is why they have recently flirted with this technical recession and why, you know, we've maintained heavy contraction when it comes to manufacturing. So yeah, a little bit of background, I guess, from, uh, kind of how things reside. And definitely is going to be interesting. This is looking at the share of US imports of car and car parts, and again, it really kind of ratifies the point that I'm making. Mexico number 1, Japan, Canada, then Germany comes in. And obviously, from an import point of view, there's lots of other things. It's not predominantly car parts and vehicles that China are producing, it's all different types of things. But definitely from these other countries, it's key. One thing also, just to make this, you know, these briefings are not only supposed to be an update on markets. They are supposed to be educational as well. And one thing I did want to make you aware of is that Reuters do these excellent, um, what they call an explainer series of articles. Now typically they'll produce these maybe 2 a day, I would say, and they can be on any subject. And for instance, the one that they've published overnight is about rare earth suppliers. Now, I did discuss this at length, so I won't go into all the details about rare earths or what it means for trade negotiations. But the point being is, before about 2 days ago, I knew close to nothing about rare earths. But just by spending, I would say, an hour reading a few different articles— but these explainer series articles can save you that hour into 5 minutes from a trader's point of view, you can get absolutely in or up to speed with what exactly rare earths is, how it's used, where does it come from, where might this trade war then by default go to next, what could the next elevation be, you know, what could be an alternate country the US could import from. All of these factors which definitely for a short-term intraday trader are pivotal if you're going to react to news, to know. Now again, it's just a great way of accumulation of knowledge over time, you know, doing the job that I do. This is the way I would suggest for new people to learn, and what I mean by that is let the market be your guide and also be inquisitive. Now, you know, when this— things like rare earths come up, it's an issue right now, and it will likely not be an issue again after the trade war is settled in the months to come for another 10 years. But guess what? It will come back at some point, and you're already a kind of semi-expert in rare earths, enough so that you can contextualize whether or not it's going to have a meaningful impact on the trading strategies that you're making. So that's the point. So again, these explainer series on Reuters, they come out every day. They cover a variety of different things. Not that you need to go away now and start reading all these things, but just to be aware of, you know, the accumulation of knowledge takes time. But instead of trying to read everything, which is going to be an exhausting exercise, be more precise. Target it in this way and develop that knowledge, and you'd be surprised how quickly you start to learn a little about a lot, which can make you highly effective in interpretation of news. All right, enough of that, let's move on. Let's talk about this guy, Mr. Boris Johnson. So, an update on the Brexit situation, and I must stress immediately, the pound is not reacting to any of these news stories. But inherently, who does come in, depending on the severity of how hard they argue for Brexit or not, um, is going to have potentially a meaningful impact. So it's something we do need to monitor. Now, a couple of different things here. Boris Johnson, we heard the news yesterday, is to face a court hearing, uh, basically alleging he repeatedly lied and misled the British public as to the cost of EU membership. There's a particular reference to— you remember the famous scene of him stood in front of the bus and that he was going to save the UK sending 350 million a week to the EU and it's going to go to the NHS. And obviously that was not, not the case. But timing is obviously key. This is politics. There's a few people asking me about this yesterday, you know, is this a bit suspect with timing. Of course it is. This is how politics works. You're going to see a lot of mudslinging going forward in the coming weeks. This is just regular activity that happens. If there's any skeletons, they're going to come out the closet because this is just how it works. Regardless of the fact they're all supposed to be, you know, batting for the same team, that doesn't matter. This is politics, and these are people that are serving their own political gain and agenda more often than not than putting the best interest of the country. That's just the way it is. Reality check. So does this impact Boris's chances? I don't actually think it makes a great deal of difference, to be honest. But, you know, Sam and I were talking about Boris, and, you know, he's such a divisive character. Can the grassroots Conservative members really take that leap of faith and risk, given that he was a decent London mayor but an absolute catastrophe as a Foreign Secretary? Upping the game and the ante into the prime ministerial role, is that just a step too far? Will be yet to be seen. An interesting thing that, that's being calculated, I know this is a bit small, but This is a running checklist of the MPs of Conservatives, uh, so the 300 or so who form in Parliament, and who they've thrown publicly their backing behind. And actually, from a Conservative MP point of view, even though this is actually to do with Conservative memberships who vote for this, Michael Gove is actually the favorite. Only by a whisker, granted, but Michael Gove is number 1, Dominic Raab is number 2, and then Boris Johnson is actually number 3, followed by Jeremy Hunt, who's taken a bit of an opposite side to Boris Johnson of late, um, in regard to his stance about, you know, the threat of no deal. Interestingly though, as you can see here, there's no mention at all of this lady, Andrea Leadsom. Kind of the, the nail in the coffin for Theresa May when she stepped down the day or two before the eventual resignation of Theresa May. But essentially what's happened here is she's being urged by colleagues to pull out of the race and basically throw her backing behind one of the candidates, and for her to maximize her chance of becoming Britain's first female chancellor. So I would say that's probably going to be the case because, you know, logic would say there's no point running. I think she's only had 2 people back her publicly. You know, we've just seen the numbers for those other candidates, so she's not going to win. So by default, does she already start playing more of a strategic game to get a position of power, uh, and therefore embed in the likelihood of becoming chancellor? The other thing, of course, is if is this chap. He is still alive, I'm told. He hasn't disappeared off the face of the planet. But all jokes aside, Jeremy Corbyn, of course, is another pivotal player in this, this situation. And the big thing coming on the back of the, you know, the devastating performance that the Conservative Party had coming 5th in the European elections, the worst ever in the history of the party, Labour also suffered as well. In traditional, um, you know, political times, what would normally happen is, you know, it's a mainstream party dominance and power swings from one to the other. But what the current context in the last 3 years has proved is that it's become a lot more fractured than that, and it's the, the center ground that's becoming ever increasingly hard to manage. And what's creating this kind of polarized situation of Brexit, from the Brexit Party to the Green Liberal Democrat view of no Brexit at all. So the kind of pressure is on Corbyn. Tom Watson, the kind of, you know, one of the senior members, has been quite vehement, a backer, trying to capture this kind of center and left ground by committing to a second referendum on the final deal. And so this is where this is heading. Any new Brexit referendum should be about the terms of a deal struck with the EU and not a repeat of the Leave and Remain, according to Corbyn yesterday. And I do feel that this is probably one of the only opportunities that Labour has if they want to maximize on this, is going down the route of a final deal referendum at this point. So definitely saying to to watch. Could he then start to capture some of that kind of, uh, the vote that went to the Lib Dem, which saw a decent increase, uh, in that kind of litmus test of the, um, what we had in the European elections? Can he capture that as well as delivering on the mandate of Brexit in itself? So yeah, a couple of things there. I won't go any further than that of where we currently reside. But I'll keep you updated as and when we get more updates throughout the day. Just wanted to point out this— this was Gorman, who's the head of Morgan Stanley, one of the major US banks, just talking in a Bloomberg interview about the general state of play in the global economy, the risk of trade war, what's his thoughts. And basically he was going down the fact that actually he thinks that the Fed are going to stay on top of it and and actually that stock collapse is unlikely. And even if we went into a recession, if what is being indic— or what is being indicated by the inversion of parts of the yield curve that we've seen even yesterday, the fact of the matter is that any recession would be short and shallow in his opinion. Ray Dalio has also come out as well and kind of talked about the risks associated with this new escalation that we've had with the targeting of technology firms in particular and the response with rare earths in the last 24 hours about this game of brinksmanship and how that could have quite significant negative ramifications for markets if this brinksmanship goes a step too far and it— and there's a miscalculation on negotiation and how negative the implication could be on global markets. So there's definitely a lot of, you know, the kind of voices at a top-level investor point of view about the risks associated with this, and definitely I think Donald Trump would be, would be hearing these types of noises. But again, it's up to him to kind of manage the situation. The reason why I pointed out this article was because for any new trader, I thought he made a really excellent comment. He said, quote, I would not encourage people to move one way or the other on stocks. There is too much uncertainty. There is nothing to be gained from trying to be clever at this point for a retail investor. I think that absolutely is, is right on the money. Now, he's probably talking more about people investing generally in the stock market, but one thing that I have observed for some of the new traders is that definitely, you know, the S&P yesterday was getting very close to quite a key technical point. Now if I just quickly— Sam's going to talk about this a lot more, and you can see the market has responded, you know, very well to that key technical point of support around that ellipse on the right-hand side of the chart, that being the 200 DMA. You got the, the kind of descending trend line that you had for the price activity over the last 6 months. Now we broke through that quite violently, but importantly from the daily close managed to, I think, just pretty much close at the level, and we've rebounded since then. The point being is it can, at these points, at these particular, uh, kind of real key areas, become very tempting to trade, to trade the breakout, to get aggressive. And the point being is, is that yesterday was very choppy, and, and what I did see with some of the newer traders was getting a little bit caught up in the S&P kind of noise, if you like. And I think, you know, Gorman of Morgan Stanley makes a good point. You know, some of the better trades that I saw were the guys that were just sticking to the bread and butter, trading the currency pairs which are making a little bit more sense at the moment. And this is all part of that objective kind of analysis that you do on a daily basis. You know, the conditions— where are we at the moment? And if you know, you're getting an uncommitted market, which I think is slightly the case at the moment with, you know, the equity space, where now we've hit that lower bound technical point. Do we get this kind of fluctuation of consolidation before the next meaningful move? It's, you know, realizing that that is the case and then choosing the better trade at that point. So yeah, just a few thoughts. Finally, before I hand you over to Sam Just looking at the chart, you can see we've had some pretty, pretty wicked price action in oil of late. I can see here we broke this— these are trend lines I'm sure Sam had on yesterday. You can see when we broke that trend line, we popped lower, decent kind of 40-cent move, came back up, tested the trend line, came back down. Target then on the yesterday pivots, S2, which was the prior low on the 24th. So again, technically working quite well as the market broke down, but it's this recovery here that looks quite potent. And importantly, there were some comments that came out of Iran at around that time frame, and the Iranian Supreme Leader said again, quote, Iran will not negotiate with the US. Iran will use military pressure if needed. And so it's not as if an escalation in the rhetoric from Iran is new. They've kind of already gone in that direction since the sanctions, or the waivers at least, from the US have been— have elapsed and now have not been renewed. They've already started to get more aggressive in their tone, but further comments like this certainly bring about the, the supply side uh, shock risk. That then coupled with this, which came out last night— these are the API crude oil inventory numbers. You had a drawdown of 5.265 million, expectations on the street for a draw of 500,000. So much more bullish headline than anticipated. Cushing draw 176,000. Gasoline though was a build, 2.711 million. Distillates, a draw of 2.144 $4 million as well. And this obviously coming ahead of the, uh, the DOE we'll get this afternoon. Other than the DOE, from a calendar point of view, it's very quiet this morning in Europe. It's a US-dominated session. You're going to get the second reading of first quarter GDP coming out of the States. That'll be your major 1:30 data. You've got core PCE, advanced goods trade balance, weekly jobless claims, pending home sales as well as the inventories coming out from the oil market later. Speaker-wise, a couple things to be aware of: Bank of England's Ramsden is speaking shortly, a bit later on this morning. He's one of the MPC members. You've then got Fed's Clarida, a voter, speaking as well at 5 PM this evening. All right, that is it from me. Hope there was some useful points there. I know not a lot of it is kind of market relevant overall. Really, it's pretty quiet fundamentally. I'd say the market movement this morning is more a reversal as the dust settles from some of the negativity from yesterday, a bit of a natural retracement. So equities higher, bonds pulling back, um, as we kind of push on. Oil a little bit elevated for those reasons we just discussed. All right. Hand you over to Sam. I wish you a good day ahead. See you in the chat room.

Yeah, hi guys, good, uh, good morning. As I mentioned there, you're just getting a reversal of the moves from yesterday, or recent times to be fair. T-NEX is pushing to that low around the S1. I'll just bring the S&P in, uh, to begin with as well as that's pushing up and coming up to to what was such a key level yesterday, and likelihood is it's going to be a key level this morning, uh, and today. So you can see what was the original low from yesterday during the Asian session, 2792.25. We had to see a couple of tests there and just failing to break through that led to that down move there, and the, the 200-day moving average coming into to support price to the downside. And we have then pushed up, and obviously that longer-term trend line I'd just be keeping an eye on 2792. I don't think I would be wanting to, you know, even if it was come down to the pivot, really be looking to, to buy unless we got above that area. Pretty key along with 2800 to the upside. If you are looking for that continuation, you can see we're half following a bit of a trend, and this might be something to look at in the afternoon. I think some of the issue can be trading the S&P in morning when it's just waiting really for its, its bigger move, uh, in, in the afternoon. But stocks, uh, if we just put this onto— well, we can go to a monthly chart. You can see, well, the, the NASDAQ in a big down month, the S&P the same, and, and the Dow Jones of course likewise as well. And actually the Dow Jones certainly on, uh, on a weekly chart you can see is, has come under quite a lot of pressure. 1, 2, 3, 4, 5, 6 weeks where we haven't really had a further push. So I wouldn't be too surprised to see some of these markets just have a bit of a reversal. 25,000, the Dow Jones, obviously a key area to keep an eye on the futures. Just having a look here on the weekly chart, the NASDAQ has got quite a lot of support around this, this point. You can, you could call it the previous all-time high as well that we had at the beginning of 2018. That previous high from that was the support level yesterday. So slight, uh, recovery in markets. And I think just looking at the, the NASDAQ— and again, this might be something just to focus on later— can we get back above what was the low, the 27th of March and also the 23rd of May? And then you might start to see a bit of a reversal in things. Of course, it'd be interesting to see where we close the days, uh, for those markets. Um, having a look into the currencies, uh, the pound yesterday did start to drift lower into the back end of the session. Uh, the, the high of the day, uh, works as a pretty good resistance, and we did drift lower, not to exactly test the low that we had back on the 23rd, but I would just be keeping an eye on that area. And also from the low of yesterday, you can see we'd actually coming under a touch of pressure now as things start to, to pick up. It'll be interesting to see what happens literally where we're trading now, 126.36, whether this could be a potential trend line. And if that was to break through, well, you can see 126 between the S1 and S2, which is that really key level on the, the longer term. If I just bring that into picture, uh, well, you wouldn't put it past it to eventually get tested coming from that 19th of June low there for the pound. So that's something I would, would have marked up, uh, and keeping an eye on, uh, for the pound as we're just pushing lower. The euro, uh, as well under a bit of pressure as the dollar strengthens this morning. Continuation really of the, the recent trend for euro, any recovery it has. And of course this was last Thursday, so last week where we touched that multi-year low to really push higher. It's just given people another opportunity to get short for this market. Um, not, you know, looking at this euro, I think to go chasing it on, on a break of the low would probably be slightly unwise. If we can get retracement potentially later into the afternoon, that might be the, the further— favored, I should say— choice of trade. It doesn't look too appealing at the moment unless we were to have a bit of, uh, a retracement there, I would say. Having a look at oil, it actually was just coming to an interesting level, uh, here. You can see, obviously, other than being yesterday's high point, we've also got a bit of a trend line that would mark up around that area as well. So we see the breakthrough around here yesterday early morning, uh, offered good support in previous sessions. And along with, well, the high that we had back on the 28th, you can see that would come in around the same area, around 59.60 would be a point to keep an eye on certainly this morning. And as with all these markets that had perhaps been trending lower, can you get those trend lines on? And you know, when the volume picks up for oil and S&P into the back end of the session when it should be, you know, more of a priority, that's when you can start to, to look at it. Uh, Aussie dollar, I Again, it's just a case of saying what we've said for all week with it being in the top end of that range, uh, holding firm. The lower end of the, the middle part of that range, remember we said it yesterday, 6909. Well, at 3 o'clock, 6909 was the low of the day. So you're, you're in these two ranges here, bullish above 6909, and of course if we can get above that top end of the range or bearish, certainly shorter term, if we can get back below there. And you've got some interesting targets down from the low of the 24th and the bottom end of that range as well that you would be keeping an eye on. But for now, all things contained there, uh, so, you know, not, not much doing. The yen, unfortunately, the idea we talked about or briefed in— or unfortunately for me, I should say— uh, that happened, uh, late— well, early, I should say, this morning. Break of that trend, failing, you know, to push higher all yesterday around that hour one. And finally the trend broke, came back to retest, and it's now pushing lower as well, helped of course by the recovery in stock. So that correlation still working well there with the risk-on, risk-off. So one to keep an eye on. As Ant mentions, obviously we've got relatively quiet morning, so perhaps not one to, to get too stuck in. into the markets. I think obviously things are, are heating up into the afternoon with the GDP, and obviously got some Canadian data there. If you saw the, the reaction in the Canadian dollar yesterday, which has recovered all that move, as you do often see with a central bank meeting. If there's nothing really that's changed too much within 24 hours, you, you do get a full reversal. And we're pretty much, you know, if we have a look at the Canadian dollar here, exactly right now where we were before that came out. So not much has, has changed, uh, there. Uh, any questions, as usual, uh, please do let me know. Gold just coming under pressure, uh, as we've seen obviously some dollar strength come into, to play here. And obviously with equities having recovered a touch, uh, well, you know, gold, uh, just coming, uh, a bit lower. As we said yesterday, it's been a bit of a tricky market to really predict what's going to get— where it's going to go. I mean, it's looking here on the 240, you can see just the failing failure to perhaps push on to that 1290 again, as has been, you know, very key. And we're now coming back down to the bottom end of this range, so to speak. But S2 offering a bit of support for now. But I hope you all have a good trading day. And of course, anyone that wants to to send me well wishes after Arsenal's dreadful, dreadful performance last night. Please send them in the post. I hope you'll have a great trading day and rest of the week.