Morning Briefing Live - Stocks Choppy Following Mixed Trade Talks Overnight

Hi guys, just testing the mic. Let me know if anyone can hear. Okay, I'm just going to share this stream quickly. Hi guys, let me know if, uh, if coming through okay and you can hear. Hi Dennis, hope, uh, hope all's well. Ilya, Paul, okay, good, nice one. Okay, we'll, uh, we'll get started in, in a couple of moments. Let's wait for some more people to to tune in, and we'll run through the, the briefing, uh, from this morning. Get started in, uh, in a couple of moments time. And then I just sent you a Gmail. Morning, Jim and Alex. Hope it was well. Nice of you to pop in yesterday, Alex, and get the picture of the Shard. Okay, well, we'll, uh, we'll get started now. Uh, it's Thursday, 14th of November, just gone 8 o'clock here in London. We'll have a quick look over the markets, how we're trading, what's got us to this point, and then we'll have a look at some of the the stories from, uh, overnight. Overall in Asian trade, uh, stocks were mostly choppy. I'm just going to bring in the S&P here and just having a look from the back end of last night's session. We're pretty much bang in the middle of that range. There was some conflicting, uh, trade comments that did come out. I was in the office, uh, until, well, probably about half 7 yesterday, but just before, uh, 7 o'clock we got a comment from The Wall Street Journal suggesting that US-China trade talks have hit a snag over agricultural purchases. It seemed like we were just waiting and waiting for one of these comments to really come through. If we have a quick look again at the, the longer term chart here on the S&P, it's just been on a gradual grind higher. We said yesterday it hasn't had 2 down days in a row in over 25 sessions. Uh, it just needed one negative comment to come through, and well, we got one, but not the biggest reaction in the world. Ideally, you know, this would have been perhaps just after the US cash open, more volume in the market, and you would have got a bit more exaggerated move. However, uh, just, uh, well, really from that high of the day, which we were trading at the time at 97, the move only got down 12 points and we've recovered since then to mid-range of that. We also had some positive comments from Trump as well, saying that trade talks are moving very rapidly. It seems like that November the 16th, uh, so Saturday deal is looking now probably unlikely as the location still hasn't actually been sorted out. But this was the first sign yesterday that we have perhaps seeing a bit of an unwind as we get down to the crunch part of that Phase 1 deal. Also overnight, we had some Chinese data which was worse than expected. It's bringing in here the, uh, those figures. You can see the industrial production came in at 4.7% compared to the 5.4% expected, and retail sales was also worse. Investment has grown here at the slowest pace since 1998. So another, a further slowdown in, in China's economy last month, signaling that efforts from policymakers to boost output are having limited effect. So everything building up this morning seems like we could start to see the turn of stocks, but well, you could have been saying that for a long time, and the S&P has just gradually pushed higher and higher and higher. So when looking at this this morning and seeing us pretty much where we open the day, but also mid-range from yesterday's choppy price action. I'd almost start to draw up a line in the sand on this. And looking at those lows of the day, you can see we've tested it a couple of times, uh, and that for me, you know, below there, that's where I'll be comfortable looking to get short. The highs that we're trading, also a bit of a breakdown area from around 2:30. Uh, really, we're now in a bit of a point range, which is a 6-point range, and I'd almost let the market tell me what's actually going to be going on. Also recently coming out, just transition the chart again, from Europe we had— or from Germany I should say— at 7 AM we had the quarter 3 GDP reading. So positive news out of Germany as they have avoided a recession here. So of course the recession, technical term for recession, to quarters in a row of negative growth. And thankfully for Germany, they have avoided that. The 0.1% increase there, led by consumer and government spending, while investment in machinery and equipment fell. The contraction in the second quarter, of course, which sparked these fears of recession to come now, was revised from 0.2% from 0. 1, uh, as well. So having a look over at the euro, as you would expect, a decent push from that. So we spiked higher at 7, it gave an opportunity to actually come back down and test the low of the day again, incredibly, uh, before pushing up. And then we're now trading on its high of the day. Euro is almost like the opposite of the S&P in recent times, and that's just been on a gradual grind lower the last few trading sessions. Having a look at this Now, how would I go about it for the day? With news like this, certainly for the morning, I think you've got to be favoring, uh, a euro long. Where from? Well, let's just have a quick look, see if we can get any kind of trend line that's been broken. Well, I would now, looking at this, quite like the idea of any retracement, uh, back down towards— and the futures around 1.1023.5. We're just testing that current high of the day, so I wouldn't be looking to get too too aggressive now as we're just testing that area. Yeah, Alex, exactly, nice push from Euro, uh, to be fair, as Germany avoids recession. So again, you know, you've got some poor news from China, some positive news from Europe, mixed trade signals. So risk assets again are going to be a bit undecided. Gold is trying to push, is testing those highs from yesterday, but not just these highs from yesterday. Overall, this is such a massive an important level for gold and safe havens in general. Putting this onto the 4-hour chart, you can see we're testing back down towards— or up now— the low that we had on the 1st of October. Whether we can close above here will be absolutely massive. The failure to do so, uh, yesterday and also on the 8th as well, led to a further push down. But we come back now to test it, and if we start to see an unravel of these positive trade talks and it starts to go a bit more hawkish in that respect, well, gold could be a great opportunity to buy. Not just gold, you've got silver, which again, bringing this into picture now, looks very much the same as gold, doesn't it? That low from the 1st of October, 30th of September, we're now trading back above there. T-notes, another safe haven, good day yesterday, now back above what was such a, a key point for from the, the 5th of November. Remember, remember, so positive move from the beginning of yesterday to last night, uh, following the, uh, the mixed trade signals, uh, shall we say. Also coming into this session, some other data that we should be aware of. Just having a look here on the 15-minute chart of Aussie dollar, uh, doesn't take a genius then to guess that this data was worse than expected. So bringing this in, uh, UK time, half past midnight, the employment change forecast for 15,000 came in -19,000. So that number there really weighing on things. The participation rate was pretty much, uh, as expected but slightly worse. So that there led to the move lower, and the Aussie dollar, as you can see, falling quite drastically now near that low of the day again. But putting this on a longer-term chart just when you thought the US dollar was weakening and these currencies were going to have a decent end to the year. Well, not to be, uh, and the, uh, the Aussie has actually weakened itself here, but the overall— the last couple of weeks, uh, the, the US dollar has been strengthening. Important then to look at where we've, uh, just broken through here, the low of the 25th, pretty key level. Can we close the day below? There will be significant to the downside. I'd be looking at the low that we had from the— from the morning, I should say, of the 17th, before getting to some more interesting levels back below. Putting it more intraday, you can see now it's also near that high that we had on the retracement following that push. To be keeping a watch on that. And if we could, ideally you'd be saying S1, yesterday's low, as another place to get short. So Euro, you've got it, a positive spin on things following Germany avoiding that recession. The Aussie is negative at the moment following its employment change numbers. Stocks mix, but I think the fact that we just started to get a negative comment come through might just start to see things unwind a touch. Bringing in the DAX here, you can see if I bring in— well, I'll just draw an arrow where 7 o'clock is for the German data. You can see a decent actually spike higher. Maybe the euro strength has weighed on things as well to bring the DAX under pressure. Of course, a lot of, as we know, companies in the DAX, big exporters, so stronger euro will hurt. But also the fact that we have had these comments from overnight, are we now starting to see Europe digest that information and, and stocks therefore start to come down a bit? It'll be a one to wait and see. However, of course, over in The S&P, like I was saying, I'm giving it that 6-point range. I'm waiting for Ivar Orr to give to really tell me what the markets are thinking as well. So a lifeline for Germany, going back to the headlines there, avoiding recession after a 0.1% increase quarter on quarter. Unbelievably getting excited about 0.1s. So yeah, summary from overnight really, stocks mixed Following, uh, the, the trade talks and just going on that, uh, that comment that really sparked things perhaps into life late last night was, uh, that China and U.S. trade talks have hit a snag over agricultural purchases. So be one to keep a watch on for the remainder of the day. Of course, as we head into the back end of the week now and over the weekend, you know, it wouldn't be wise to say to certainly hold positions over that weekend. And, uh, you know, if we, if we were to have some further negative comments come through, and then again on the weekend, why can't we then, you know, perhaps get a bit of a gap down? Also from yesterday, well, overnight, we had the, uh, the API oil inventory. So due to the, the bank holiday in the States, uh, on Monday, this was pushed back 24 hours. And you can see here, decent reaction actually for, for API. I'm going to circle it now. Usually, uh, you probably only get on average, I would say, about 10-15 pips. Uh, and here, a decent push from trading on the announcement around 5720, getting a push up 30 ticks or so to 5750. And we've continued that from today. So going back to those headlines, we're expecting a build of 1.5. A -0.5 draw coming in, cushioning -1.2. Gasoline and distillates were a build, however. Also yesterday, oil, decent push, it has to be said, during New York trade. You can see before we started to go higher, we'd started the day drifting down. We were trading near the low that we had back on the Monday, so the lows of the week, and then oil really did get a boost. It got a decent swing from that low to the high. 1.3%, uh, was the official reading from that low in early trade to 1.3% after falling 1.1%. So the advance for the first time in 3 days, uh, for oil. Um, a couple of the comments before this move were saying it was looking starting to, to get quite ugly, but having a look at this chart, you you'd say really from the, the 4th of this month, this market's range-bound. Not too much to get too worried about if it's coming to the lower part of the range, just like you would say not too much like on the 12th to get excited as it was coming to the top part. But anyway, the headlines are right themselves, and we did get a bit of a swing round yesterday, which of course could now lead to the markets looking to push that high. Um, and the, the reason this, this coming through um, after reports that OPEC sees a potential reduction in supply from outside of the group, outside of OPEC, moving, uh, obviously that 1.3%, uh, in, uh, in New York trade. Apart from a sharp cut in projected output from non-member countries next year, the organization, the, the OPEC, also sees a possible upswing in forecasts for demand growth, uh, according to Barkindo. So this yesterday when these headlines dropped. Putting on that 5-minute, you can see a decent push, uh, really starting from after the open at 2, nicely timed for a push to, to test these highs. We're now pretty much bang on testing the top end of some of those ranges. So for oil, worth keeping an eye, literally where we're trading now, and be happy to, if you are still long, to perhaps stay as long as one of these trend lines starts to, to hold. And if that does then you could expect perhaps more upside, uh, to come. Yesterday as well, we had Jerome Powell speaking. I feel like for, um, the, the scheduled things this week that would have excited traders— and here I'm talking about Trump on Wednesday and Powell yesterday— they're kind of disappointed Uh, and Powell pretty much just reiterated what he was saying in the October meeting, and the reaction, as you can see from the charts, is, is pretty limited. There's been no massive strength or weakness in the dollar. Stocks have been moving off trade comments. The headlines this morning very much were focused on trade and nothing to do really with Jerome Powell. So he was pretty much sticking to his view that rates will probably remain on hold. They've had 3 reductions last— or this year, like, like the, um, the RBA and the RBNZ. Those 3 very much, it seems to be working in tandem, uh, and we could be looking for, you know, next year, as we were saying, to have a year where there's no monetary policy change, which would be the first time in 10 election years that that would happen. Of course, in 13 months, anything can change, and I'm sure it will, but at the moment that's what the markets could be looking at. So Powell pretty much saying, uh, the same kind of things. We see the current stance of monetary policy is likely to remain appropriate for us, uh, as long as incoming information about the economy remains broadly consistent with our outlook. Of course, we've heard all this stuff before, no real trade opportunity from that. He also told lawmakers, um, that politics played absolutely no role whatsoever in the Fed's policy decision. And this is when we start to talk here about negative interest rates, which we know Trump has been saying, and he did say this on Wednesday. Clarida, of course, came out and denied Trump actually maybe even wanted that. But Powell went on to say, um, that negative rates would certainly not be appropriate in the current environment. He also finished off actually quite positively, and he was saying the, the outlook is still a positive one. There is no reason this expansion can't continue. There is a lot to like about this rare place of the 11th year of an expansion, and we're certainly committed on doing what we can do, uh, or we— that we can to expand it. So for now, all pretty positive, it has to be said, on that front, uh, if you're you know, not looking for rate cuts or anything to do with that, you know, you— for next year it does seem that we're now looking at that pause. And the next step really, if we start to see some positive US numbers, could well be to get back on course. But with the election year ahead, usually it doesn't actually affect the Fed, but the way they're saying is that we could be in for a relatively quiet one on the monetary policy front in 2020. Euro, just got a comment in the chat, so have a quick look at that. It's just testing that high of the day again but breaking through. So here I'd be looking, you know, can we get maybe a 15-minute close above that high? And then you certainly be more comfortable looking to get long. I mean, from the analysis I was doing earlier, if we don't, um, I hold this. I would still like the idea of a long back on this trendline retest. So on the futures, that's coming in around 1.1025. Other headlines from overnight to go through. I saw a comment earlier, earlier in the chat saying pound up and down like a roller coaster. It is absolutely stuck in a range. Um, forgive me for using an article from The Sun, but the headline uh, that was sort of coming through, which could have absolutely been, uh, a game changer if accepted by, um, Nigel Farage. He was offered a last-minute election pact by Tories in which Brexit Party would target just 40 key seats. So we've already had that concession earlier in the week, which led to the pound moving higher. Bringing that into picture here, you can see where that was. We pretty much pretty much reversed a fair chunk of that. In fact, the next day we did, where he removed 300 or so seats of the 600 he was planning to run. And we have reversed a bit. I was saying yesterday, I'm actually a bit surprised the pound isn't pricing in the fact that Farage is running. This is a negative if he was to take away some of these Labour and Lib Dem seats. That coalition idea increases, which is negative for, for the pound on the idea that hard Brexit or the change of the deal, you know, while DUP have been problems, why are Brexit Party not going to be an issue as well? I think something, um, if the polls indicate that maybe the Conservatives aren't going to get a majority but they could get the minority in coalition with the Brexit Party. This is, for me, is, is, uh, is a pound negative. Anyway, uh, he rejected this, this deal. Uh, he went on to, to say, I've made a massive concession, they gave me absolutely nothing in return, I've done everything I can do. So he's still gonna to target those, those Labour Remain seats. We'll see how well that goes, uh, of course, and we'll Really, today at 4 PM is actually the deadline for the upcoming election for candidates to submit whether they are running or not. So one to mark down, 4 PM. Is there going to be a little surprise? Is Farage going to go back on these words that we've seen in The Sun? And also, he was speaking earlier and I've just seen that he has changed nothing on that. So therefore, opportunity-wise, we're not pricing in Farage at the moment to only be running the 40. If he was, the pounds are buy, and I say we get back up towards that high that we've had for the week as well. Having a quick look over the calendar before we spend a bit of time going over the, the technical setups, as mentioned, Chinese data overnight was worse. Australian data overnight was worse, coupled with some mixed trade headlines. It was a bad start to the day data-wise before GDP in Germany surprised to the upside, avoiding a recession. This is positive for the euro. Have we seen, seen a bottom? I wouldn't be too sure. A lot of the comments, as with anything, have still been on the Germany front and with other central banks is it remains still a key point, the, the US-China trade talks, um, as well. So a lot depending on that. The danger of US levies as well on, on European automobiles is still not off the table, suggesting manufacturing momentum will remain subdued. Consumers will also become wary. Households' assessment of growth outlook is at a 7-year low as well. So while this is certainly positive, it is by no means, you know, out of jail. I'd still be keeping a watch on developments in Europe because of course euro-dollar-wise we're still pretty low. Going into the, the morning from now, you've got retail sales out of the UK, always one to keep a watch on for that initial volatility, but really it is just that Brexit is going to be the main thing here with the general election that's going to move markets. We say it every time. We had data out yesterday, uh, the inflation numbers, which if anything you could argue are slightly worse on initial reading. We spiked, uh, down to then come up as it was pretty much in line with what the Bank of England were saying. All in all, no reaction, and expecting the same from retail sales at 9:30. European numbers, uh, at 10 as well. So if you are in a euro position, whether you would want to unwind or not by 10 o'clock. I guess would depend how well that is going. Into 1:30, into the afternoon, initial jobless claims coming out in that weekly slot. As we know, not real mover. The DOE, uh, at 4 PM UK time today, uh, so rather than its Wednesday 3:30 slot, as we know, on a Thursday moved, uh, to 4 PM. We have a fair few speakers as well to keep an eye on. You can see from the calendar there, a big selection. You've got a fair few European in the morning, and then you've got Fed speak really from 2 to 8 o'clock. 1, 2, 3, 4, 5, 6, 7 speakers. Obviously Powell being on the second day of that testimony. But, uh, from a US monetary policy point of view, just be on your toes, certainly in the afternoon. Having a quick look over the charts and how we are currently trading. Let's have a look what the, the DAX has done following that initial push lower at the open. Okay, let's bring that in. Well, here you go. We did push down, we came back to test that recent low from, uh, the 13th. And well, there you go, nice little classic on that. Perhaps targeting the, the other low, uh, the previous low that we've just made now. Uh, so keeping a watch on that. As we said before, US equities, keep a watch on that 6-point range higher. Uh, buyer above here, seller below there, I would say is the way I would look at things. The pound ahead of retail sales, it's range-bound, it's choppy, not much is going on. You need developments here for a significant move. However, technically looking at it, you can see we're starting to get squeezed from both directions. and I'd almost be waiting for that as well. Uh, there's quite a few FX pairs. If you've seen on my, on my Twitter, I'm looking at the, the pound yen, waiting for something similar to this to happen. Ideally looking for the long because I do believe conservatives are going to get a majority, and therefore I would like a positive comment to go with that. We have been pushing higher overall in the pound, uh, so therefore that would suit me better. But if we break that lower trend line just like we would here in the pound, then— well, hang on, we're going lower. Is the way I would look at that. But wait and see approach. Euro, uh, trying to confirm a break above that, uh, that high. We did take out a few stops. I want to see the 15-minute close here. We've got 2 minutes or 1.5 minutes until that. If that's the case, I don't mind a long. Also keeping a watch, of course, on that trend line lower down. Levels to the upside to be aware of: today's R1 is yesterday's high, which is also the low from the 11th and the 8th as well. So Monday and, uh, Thursday— uh, Friday, I should say. So really key point of interest just above where we're trading on the futures coming in at 1.1042. So keeping a watch on that. Aussie dollar negative overnight. Can we get any kind of retracement back to some of these levels to, to get involved in? Putting this on to the 240-minute, that retracement, I do like the, the idea of coming back to is 68.18, also near that retracement following the, the negative employment numbers. If we can get there, I like the idea of a short. I don't think that's, uh, that's a too bad a trade. Having a look at the yen against the dollar here, range-bound, undecided much. Looking at those highs, like gold, like T-notes, uh, on that is— are we gonna see a risk-off morning into the afternoon? We probably need a bit more to come through. Some technical breaks will help but maybe another, another negative comment on the US-China front could see a nice little push there. But that's something I'll be keeping an eye on. To the downside, well, suddenly you've got a nice little range, haven't you? The low of the day is the pivot, which is also the high of the morning yesterday on the 13th and overnight on the 12th, and the high of the 11th. So for the yen, I'll just be keeping a watch on what happens around these points. Don't really favor the range trade, so be a buyer above and a seller below is kind of how I would be looking at that. Oil, decent move yesterday, but it's on the top part of that, uh, overall range that we've been in for the best part of this month. So it wouldn't be getting too carried away unless we break above it. DOE's later will be the main driver unless we get them in any further developments from OPEC as well. Any questions, guys, uh, let me know and I can answer those in the chat. Or if you want a chart particularly looked at as well. So just while there may be any questions, just in, in summary, let's go through the main headlines again. Asian equities relatively mixed overnight following some trade comments which at first were negative. Trump tried to boost them up. China data was worse than expected. Australian data was worse than expected. European numbers were better out of Germany. We do have a data calendar filled this morning. 9:30 retail sales UK, 10 o'clock European numbers as well. Oil pushed higher yesterday, uh, by the top end of that range. A lot of Fed speak in the afternoon. If there's no questions, I'll wish you all a good day, and if you do have any questions later on, please feel free to put those in the chat. Hope you all have a great trading day, and I'll catch you Later on.