Nasdaq 100 Back To ATH As Apple Hits $2trl

K, very good morning to you. Final briefing of the week, Friday 21st of August. So hope you are doing well. First thing, don't forget to subscribe to the channel if you're watching this on YouTube, because Milan Deep from our tech team is going to be releasing a new video about algorithmic versus discretionary trading, the pros and cons of both. So that's going to drop on Saturday, and then we've got Sam's regular weekly trade setup video as well coming out on Sunday. My macro menu will be available as well. My fundamental look ahead for the week, the short 3-minute read, will be on my Twitter account. So if you just follow me, you'll see a pinned tweet on Sunday afternoon. But yeah, let's get straight into it. And what are we talking about then for the session ahead? And I was going to start with the heatmap, a heatmap of the close of Yesterday, and as you can see once again, you probably read now the NASDAQ 100, another record high. And actually, I'll come back to the heat map in a second. If you actually look then at these charts, NASDAQ reversing and some— the entire sell-off that was seen following the FOMC minutes. The S&P has recovered and we are now scratch flat from that FOMC minutes sell-off. And in the currency markets, cables fully reversed as the dollar has now continued to pare some of those inspired gains in that post-minute period. So, you know, if you're listening to the briefing yesterday, this was kind of our outlook of how we thought things would play out, in that the reaction to the minutes was a little bit overcooked as byproduct of market positioning more than anything, and that we would return to trend. And it's kind of what we're seeing at the moment. So equities back on the ascent again. Uh, this comes despite that slight wobble in the jobless claims we had yesterday, moving back north of a million. So it was higher than expected. Uh, but again, that was the kind of one of the main things that holds that view that, look, the Fed are not going to be in any shape or form looking to change policy in a more hawkish way anytime soon. And we're talking multiple years of low interest rates, in my opinion. And also setting us up then for the Jackson Hole Symposium end of the month. The Fed meeting middle of September will be key, and the expectation is, is that they're going to continue to roll out, probably on completion of their review, some new of these policy tools. So all in all, markets are— I've kind of reverted back to the overall trend that's been materializing of late, which is generally supportive of fixed income futures, equities with dollar weakness. Gold has formed a relative range, I would say, over the course of the last 48 hours, defined by 1930 to 1960. Uh, we are though getting a little bit drawn to the upside of that range. So interested to see how it fits in the near term. You've got the pivot level, which is about, uh, 49, which provided a little bit of support overnight in the Asia Pacific session. Then around that $1960 upside to keep an eye on in the more of a tighter $10 range. But yeah, let's, let's have a look at things. So the mega-cap tech names, as you can see here, the biggest blocks on the screen, larger block defining then the bigger the market cap. This is looking at the S&P 500 by sector breakdown. So Microsoft, Apple, Google, Facebook, all putting in a 2%+ type performance. Amazon 1.1%. Uh, big outperformer again yesterday, Tesla. Um, ever since they announced their stock split, and obviously there's this expectation of its inclusion in the S&P 500, their shares have just continued to rally. They were up about 7% yesterday, and their market cap is now $373 billion US dollars. And in fact, Tesla is now bigger than Walmart. Quite unbelievable. The stats keep rolling in. I think it's now in comparative terms by market cap within the top 10 largest companies now. And obviously yesterday, Apple putting in another solid performance. Although it's hit it before, we did actually close the session above now what would be a $2 trillion valuation for Apple. Um, the other thing that a few people have been looking at yesterday as well is the vaccine situation. Um, just to update you with that vaccine news has also helped to a certain degree, just another element to help support things. Pfizer and BioNTech said their coronavirus inoculation is on track for regulatory approvals early as October, assuming clinical success. Some analysts in this article on Bloomberg suggesting then that potentially they could expect a vaccine to be approved by November, and obviously that timing very sensitive because you've got the US election happening at the beginning of that month and It would be particularly beneficial, I would say, for the likes of Donald Trump if he can get that through. I guess what I was looking for in this article, which I couldn't find, so I don't have definitive details, but having it gone through its various clinical assessments and having it got approval is not implementation and distribution. And that latter part is very complicated given the global scale of this pandemic. So It's not like a silver bullet, that's it, come November, that's the eradication of COVID-19. Far from it. But obviously this would be at the short end of the timeline of expectations, being a very quick turnaround in what would normally— I was listening to a couple of podcasts last weekend, and a lot of these medical professors have been very surprised actually. But I guess it's a reflection of the amount of money that governments have put forward into fast-tracking these things. But what would normally take several years, in fact, has actually taken several months even to get to where they've got to at the moment. So definitely a global response has been of the order given the situation. One thing though, a caveat perhaps, The Telegraph have like a rolling coronavirus live updating feed, and I did pick up something this morning where I've highlighted it here in blue. People who caught coronavirus in March may already have lost all of their protective antibodies. This is according to a UK senior government advisor who predicted seasonal vaccines for the virus. So basically, this chap's part of the, um, University of Oxford. He said in the latest research indicates that antibodies which may protect against reinfection deplete by about 10 to 30%. Each month. So yeah, I thought that was quite interesting. I mean, obviously, although I mean, I'm not in any shape or form probably qualified to comment with real accuracy about a pathogen or a virus, but all I do know is that as much as you can base medical science on testing and knowledge accumulated from past previous types of viruses. In the end, the evolution of it as we go further forward through time is an unknown thing. And so it's definitely something that I'd keep on my radar. Not that I think this is going to move anything, but how this antibody and also the performance of these, these drug trials, vaccines, and therapies perform, and in the timeline on distribution, I think, are the kind of key things I'm kind of watching, albeit at the moment I'd say COVID generally is lower down the order of driving forces that are moving markets intraday. On a COVID-19 front, there has been a few things. Again, a little bit of a disparity of the current focus between mainland Europe and the UK and then elsewhere. When I say elsewhere, I'm focusing predominantly in Australia, where at the moment in Australia things actually have started to improve. Australia is headed for its lowest daily increase in coronavirus infections in 5 weeks, and obviously that is welcome news for that region given how quickly the reproductive rate was moving higher after that outbreak in Melbourne. So that's good news. And then in the US, as we discussed yesterday, we've seen generally declining rates across across the board, declining hospitalizations and so on. In Europe though, things are getting a little bit more apprehensive, I would say. To give you a couple of stats, France recorded just shy of 5,000 new cases in the last 24 hours. That's a level not seen since mid-April. And if you think about where we were in mid-April in both the UK and mainland Europe, that was the peak of the kind of lockdown at that point in time. Italy's had its most cases since the middle of May. And the situation has also been worsening in the UK. Cases in England surged by more than a quarter in the week through August 12th. So yeah, definitely warrants monitoring. And what happened yesterday basically was, uh, these two, the double act of Europe, Merkel and Macron, they met in person as European authorities are weighing imposing restrictions to try and get hold of this new fresh wave of infections that have been seen. What they don't want to do is cut off travel between these different nations. That just impedes then the ability for the, the eurozone economy to recover. So they were discussing about how means and ways to try and counteract that. And obviously what we've seen adopted in other countries is more localized lockdowns to get hold and control of the of things rather than national level, which has the most severe negative economic implications. So yeah, COVID-19 is a couple things here. I don't think any of this news intraday would form, I would say, a decision-making or a key component for, for being negative or positive. I just think it's something to, to be aware of in terms of the current state of play. Something which is probably a little bit more relevant for the open right now is talking about US and China because guess what? China have confirmed that they plan to talk to US officials soon to review progress on their preliminary deal. No date's been set as yet, but they're going to speak apparently in the near term. So again, this is exactly kind of what I was— I thought would be the case. I mean, underlying this the, the Trade Secretary's been talking up, and the Treasury Secretary the same in the US, about how actually China have been picking things up and they're now purchasing higher volumes than they have done, adhering to the deal. So despite all the, uh, the bluff and bluster from Trump, as I said before, he has to do that. That's just his political narrative. He's got to spin in order to frame the situation on China. But all in all, things are going okay. So they're going to meet, they're going to talk, China are buying. Um, the fact that they've— we've moved back to this kind of phase of perhaps renewed open dialogue. Well, then one thing that's happened is the Chinese yuan overnight advanced beyond quite a key level. If we just go to this chart here, this is a look at the onshore yuan spot. As you can see here, this would be indicative then of the Chinese currency strengthening, which would be indicative then of, um, I guess a couple of things. One, a lesser degree of threats from the trade war impeding the Chinese economy and trade. And then secondly, more stabilization and improvements generally in mainland China, which we've been obviously monitoring and tracking, uh, post, post the initial impact of the March, uh, kind of April data that we had So here then, if you look, the yuan's trading at its strongest point, having hit that kind of symbolic 6.9 since where we were right back in January. So this is when obviously some of the outbreak was starting to happen in mainland China, but we're in a better situation than where we were at the peak of the global intensity on that big March volatile sell-off that we had. So for the moment, you know, this trade war, as much hot air there is flying around on the subject between these two nations, —on a kind of political level—actually markets feel and reflect in price relative comfort. And I think that goes somewhere as well of explaining why equities have continued to hold up to a certain degree, because this is a big tail risk, of course, for, uh, for risk. The other thing, of course, when it comes to China and what generally helps this situation is the amount of liquidity that the central bank is providing to the system. Chinese equities, whether mainland or Hong Kong, in the Hang Seng were up overnight. Underpinned again amid the continued efforts from the central bank to add liquidity. They injected ¥150 billion through 7-day reverse repos and about ¥15 billion in 14-day reverse repos overnight. This is the first occasion the central bank has utilized the latter instrument in around 2 months. So they just continue to make the system a flush of liquidity, which is being received positively in their local market. And if their local market performs well, China being such a key component on the global stage and generally for risk appetite on that level, then that helps overall sentiment. Um, the one thing someone was asking me about yesterday, actually talking of China and these kind of positive things we are hearing about China, uh, was copper. And so copper's not something I would normally look at minute by minute, but, um, I was looking at copper last night. And we're at quite an interesting level actually here right now, which encapsulates a couple of key areas. So if I just put a rectangle, you've got these areas here. I mean, this is a multi-year chart. We're looking at the last 2 years of price activity, but going back to 2018, an area which is basically $3, which has provided a good degree of support during May of 2018 when we broke through around that area it did create, um, directionally a decent push to the downside. That area again providing an area of resistance through the early part of 2019, and we're right back up there here again at the moment. And that level coinciding with around, uh, a trend line going back to, uh, 2019 in the summer, uh, where we were just prior to really the epidemic before it took pandemic status, and then the retest we've had in mid-July. So It'd be interesting to see, keeping an eye on copper. Obviously copper very highly correlated to the performance and appetite and people's forward-looking expectations of economic growth out of China, just given their mammoth kind of infrastructure and demand for these base metals like iron ore and copper, for example, in order to prop up their market in these times of, I guess, pressing economic situations. So yeah, a breakout here around these levels, it's not looking too likely today. We've had a bit of a pullback, but that 3 is something I'd be keeping an eye on going forward in the kind of period ahead, not just today but in the weeks ahead. Any breakout there, you can see there's not a great deal of real clear near resistance until we get right up higher, considerably higher really. And if you look at the way copper has moved, obviously a really strong in tandem with the equity recovery um, as, as it's reacted overall to people's perception that due to the amount of stimulus by the central bank or government spending, that we're going to resume a fairly powerful bounce in growth globally going into 2021. Okay, a few other stories just to quickly wrap things up. Um, Brexit. Yeah, the least surprising news of the morning that I can bring to you here. We've had 7th round of talks take place this week between the EU and the UK, and absolutely no progress. The main sticking points, the fishing rights or access to fishing waters, and then this kind of flat level competition idea, are still the two main speed bumps. And yeah, I just think that from a negotiation tactical point of view, there's no way you're going to be cutting deals this far out when it's October 2nd basically is when the final or the tentative final negotiating round is to be held. And with that in mind then, that's in time for the agreement to be implemented in place in time for the end of the post-Brexit transition period, which is the end of the year of course. So what does this mean for sterling? Well, it means absolutely zero as far as today is concerned. So, you know, I point it out because it's something you're going to read in the newspapers this morning because they can't get enough, a little bit of the Brexit action. But from a market's perspective, this isn't going to bump sterling at all because it's in completely in line with expectations. The interesting thing here, looking at cable, obviously the currency pairs got hit— your major dollar pairs, euro and sterling— yesterday on the back of the dollar strength. But look, this is the recovery that we were looking for the idea then that the, the dollar would resume its trend. And we're right back up there again in terms of cable, uh, looking on the, on the week, having broken out and above then that key area of technical resistance around that 132 level here. Looking at the futures, we continue to remain fairly elevated overall, certainly on the week. We have had some UK data out this morning. Let me just show you quickly some something. UK retail sales month to month for July came in at 3.6%. That was actually above the expected 2%. Quite interesting here, I was just looking at, um, the breakdown of the change in retail sale volume. And as you can see here, kind of still a reflection, a sign of the times, even though lockdown has eased. One thing is clothing and footwear. In general, high street footfall still remains very low, but online purchasing still, uh, very high comparatively. To give you a stat, online retail sales did actually fall 7% in the month of July in the UK when compared with June, but the strong growth experienced over the pandemic has meant the sales are still 50.4% higher than February's pre-pandemic levels. So online retail sales have come down a little bit as people, I guess, go back to the high street slowly, cautiously. But we're still massively up in terms of the behavioral pattern is still there. People are purchasing online and not in person. So it does reflect to me still a little bit of apprehension and just the reality of the kind of protracted nature of getting this economy back on track again. And that's with COVID cases going up right now, if anything. So yeah, the retail sales number hasn't had a really that too big an impact, to be honest. I just wanted to point it out and, and break down some of the data. Looking at the session going forward then, definitely a couple of key data points coming out this morning for sure. So be vigilant. You've got the manufacturing and service flash PMIs for August coming out France 8:15, Germany 8:30, Eurozone 9, and then the UK at 9:30. Uh, US afternoon, uh, CAD retail sales, no 1:30s coming out from the States. US data comes in the form of the respective manufacturing service flash PMIs from Market at 2:45, so 8:45 Chicago. And then you've got European consumer confidence flash reading at 3 PM this afternoon. And also you do have options expiries across the major equity indices as well, just to be aware of. That is it. So hopefully that was useful. Any questions at all, feel free to just drop me a message on the video. And have a good day, good session, and a fantastic weekend. Thanks very much, guys.