Netflix Boosted By Squid Game & Bitcoin ETF Debut Off To A Strong Start

All right, very good morning. It's Wednesday the 20th of October, and as you can see here, the S&P 500 has had a 5-day up streak. And in fact, that is the longest streak we've had since August. What could possibly go wrong? Um, that being said then, we'll talk a little bit about the equities, uh, space. We're also going to talk about Netflix earnings, which got a bit of a Squid Game boost last night. And we also had the Bitcoin ETF debut where volumes topped $1 billion, marking one of the biggest ETF launches in history. We've also got some Fed commentary, update on the reconciliation bill in the US, and we've got oil inventory data, China, what's the latest expectation around a RRR cut. We've also got Rishi Sunak, UK Chancellor, said to be thinking of in the coming budget slashing the tax charge on UK banks. We've already had UK CPI out, which was actually a touch softer than expected. And then we'll look at the day ahead. So that's what's on the agenda. But before I begin with looking at the charts and the overall sentiment for this morning, don't forget, if you're a student, whether college, undergrad, graduate, or master's, check out AmplifyMe.com if you haven't already done so. You can book yourself onto one of our free open public simulations to go through our latest technology as a market maker, sales trader, or hedge fund manager, and to see how you perform based on your performance metrics alone, not your background or where you study or what you study. So really great opportunity to get some hands-on practical experience. I know for students it's kind of a bit of a chicken or egg scenario. How do you get experience when you don't have any experience? So hopefully this really fits that void. And then also you can sign up and get access as well for free to our portal, which on the hub looks a little bit like this. And you can see I did a video last night on the Bitcoin ETF debut, but here there's lots of cool stuff as well that you can access on market analysis, uh, industry speakers that I interview. Uh, and also I've been updating quite a lot on the careers section in the last couple of days. So I did a, a conversation here about what is a virtual assessment center, mock interviews, things of that nature. So definitely worth checking out. Um, otherwise, let's get straight to business then. So what exactly is going on this morning? And pretty flat open for the dollar index, and so that's respected in the major pairs, roughly trading, trading near unchanged. Cables had a little bit of a downtick, as you can see here, as we've gone through 7:00 AM this morning. As I mentioned, UK CPI was a touch softer than expected, coming in at 3.1% in September against the expectation of 3.2%. So just coming back down towards the low end of its APAC range and the pivot level in the futures at 137.83. Otherwise then, equity index futures are slightly negative. You can see here the DAX just down about 50, getting close proximity to testing the lower bound of the opening trade from yesterday morning in the futures market. Um, the NASDAQ, we managed to close above quite a key level which we were watching yesterday, which was that 15,347, that rectangle you can see here on the daily chart. And so be interested to see whether or not now that provides a bit of a floor for price, whether or not we could push higher or consolidate from here. But that was quite a key inflection point, as you can see, over recent weeks trading activity. But looking on a 30-minute, as you can see, we have moderated in the gains over the course of the APAC session and just finding a bit of near-term support around the pivot, which was Asia-Pacific low as well as a support point and previous resistance level from the prior session before the break higher that we saw on Tuesday's trade. Elsewhere, oil just very much in consolidation mode for the time being after that big run-up that we've had. So really defined by $81.83 price handles for the time being, as you can see here, being fairly well respected. We're trading about mid-range of that at the moment. And then T-notes pretty flat, touch lower, down 2.5 ticks, slight uptick in yields seen in the overnight session. But let's get straight to a couple of headlines. I'm going to start off with Bitcoin. I did put out a specific video on this last night. So if you're interested, just check that out on the, on the YouTube channel or on the Amplify Me Hub. Otherwise, in summary, ProShares Bitcoin Strategy Exchange Traded Fund. This was a kind of a watershed moment for crypto. A lot of commentators have been saying it's been well overdue in having a Bitcoin-related ETF, and volumes topped $1 billion on their first day, ranking the investment vehicle as one of the top ETF launches that we've ever had in, in history. Bitcoin then As such, getting a little bit of a bump higher as well. Perhaps some concerns about a buy the rumor, sell the fact type, because this ProShares launch has been in the pipeline for some time. It already had the kind of weekend approval from the SEC, Gensler. And so perhaps there was going to be a little bit of a fading of that run-up that we've had quite aggressively in Bitcoin through October. There was a little bit of that at the open, but then it's continued to push up. And now we're literally within striking distance of record highs again in Bitcoin, as you can see here from this chart. Trading, according to Bloomberg, did appear, though, to be dominated by smaller investors and high-frequency trading firms, noting the absence of any large block trades. So if anyone's new to markets, what that's basically saying is that a block trade is just generally a large order So instead of an individual trading 1 Bitcoin, it could be then an institution coming in and they're buying nominal multiple tens, $100 million worth in size known as blocks. And so you can identify generally the market participants in play. And the fact that there's a lack of large block trades would suggest a lack of institutional take-up on that first day. But quite frankly, I don't find that too surprising. It's like anything, whether it's an ETF, a single stock, Every time a new IPO or product launch, there's always going to be a degree of uncertainty and volatility around the day of release. And so I think— I don't think that's too surprising. It's just a bit of a safety mechanism, I think, on the institutional side to let the dust settle before then committing. But overall, long term, this is a very positive thing in terms of crypto adoption. We've got more launches expected from the likes of Grayscale and Valkyrie, I think, of other Bitcoin-related ETFs. And so I'm sure over the longer term, uh, the Bitcoin bulls will be, will be happy. Um, but otherwise, quick look elsewhere. Netflix, their earnings came out after market, and they did see a bit of a jump initially, about 4%, before moderating that move a little bit. The stock is up some 18% on the year. It has trailed the S&P a little bit. Um, but why did the company move higher? Well, For Netflix, it's all about subscriber numbers and subscriber growth, and they had actually their strongest subscriber growth of the year, thanks of course to the popularity of Squid Game. As we know, 142 million member households have started watching Squid Game, and I was reading at the weekend what it means by started. I think it just means as long as someone's watched 2 minutes at least of an episode, it qualifies then as having watched Squid Game. So that's how that figure is measured. And it does mean then, as we know and has been well talked about, it makes it the most viewed new show in Netflix history. And so company added 4.38 million subscribers in Q3, expectations were for just 3.72 million. The question mark goes then, of course, this is always the way of which Netflix earnings tend to go. It's kind of, you get these big numbers, kind of like when the pandemic set in and everyone was locked at home Netflix subscriber numbers went through the roof. But obviously the only way from there is it to go down, or the momentum to slow at least, because we're not going to permanently remain in lockdown. So unless they start pulling out some squids every couple of months, which is unlikely to be the case, that you have such extreme global worldwide success, um, the company now, again, it goes into that chicken and egg scenario. Do they need to pump in more money to get more chance of then having another successful hit. The one thing for sure is foreign film investment, particularly in the Far East, is probably going to increase for that firm going forward. All right, just going through the other headlines. Fed Speaker Waller has come out and said the Fed should begin tapering in bond buying program next month, though interest rate increases are probably still some time off. And it's the latter that's quite important. Again, splitting out the two so that the market doesn't get too ahead of itself. That meaning that the commencement of tapering, which we're very much expecting in literally 2 weeks, less than that time, at the beginning of November meeting, for that to be formalized, does not mean that they're going to be hiking rates anytime soon. That's still some way off. So not, not really too new in that respect, but worth being aware of. And then US politics— haven't heard much about this in a while, but I thought I'd update you because as you can see Joe's looking a little bit strained and tired at the moment, but White House and Democrats are nearing a deal on a reconciliation package, and it could be announced in the coming days, although the top line number is yet to be agreed. And so just giving a bit of background context on this, both the Senate, of course, and the House have passed a strict party-line votes to budget reconciliation for the full year 2022 that authorizes the budget reconciliation bill of UP to $3.5 trillion. Of course, this is what we've seen before a few weeks ago, but there has been internal agreement among Democrats— there's never been, I should say, internal agreement with the Democrats about the specific and exact size and shape of that legislation. And so Democrats need unanimous support in the Senate and near unanimous support in the House to get a reconciliation bill enacted. Pelosi is implicitly assuming a breakthrough in these— in this stalemate by October 31st, enabling the infrastructure bill then to come to vote. So quite a lot of moving parts here. It's kind of one thing about the passage of these bills. It has to go through various different levels of approval. And although they might have approved it on a top level to that amount, which kind of gives the market a bit of a sigh of relief that these things are moving forward, there's still various sticking points then to get this over the line. So we continue to monitor. The other thing we had last night— overnight, as I said, oil's in a bit of consolidation mode at the moment, and the latest API crude oil inventory data hasn't really had much in a way of a degree of impact. Um, the headline figure came in showing a build of 3.3 million, slightly larger than expected. Cushing draw though, the opposite, down 2.5 Gasoline was a drawdown of 3.5 million, a deeper drawdown than expected. It's a little bit of a mixed bag there, and that will be the prelude then for the DOE numbers we'll get a bit later on today. Um, final two articles to be aware of are headlines. Um, you've got in China, a lot of talk of course recently about somewhat economic slowdown that we've been seeing, COVID outbreaks across different provinces and so on, and that China might well go down the route of further reserve requirement ratio cuts in order to free up more liquidity for banking system. However, the PBOC's house newspaper came out overnight and basically said the expectations for the RRR cut have eased. Financial system liquidity is reasonably ample, meaning that that RRR cut may not be necessary. And the fact that that is coming out of the PBOC's house paper, the way things work in China, they're pretty explicit, either via the PBOC or state-run media. If that's what they say, that's what they mean. There's, there's no gray in between. So looks like Triple R is off for the time being. The Chinese yuan briefly did rise to its highest point against the dollar in more than 4.5 months overnight after the central bank set a much stronger daily fixing for the currency. And then in the UK, finally, the Chancellor Rishi Sunak will slash a tax surcharge on bank profits by more than 60% in next week's budget in an effort to keep the City of London competitive in the post-Brexit environment. Um, the Chancellor will cut the surcharge from 8% to 3% from April 2023, according to people briefed on the budget. So this is not formal, this is what's being speculated according to those familiar with the talks, but As ever, no smoke without fire. And so this is probably very much the case. And so, uh, be interested to see how UK banks perform today. And then wrapping things up on the calendar, uh, we've already had UK CPI data, so the HICP numbers coming out of the eurozone at 10:00, a final reading. So not expecting too much from that. So that takes us into the afternoon. We have CAD inflation but no real major US data. And then we get the oil inventories at 3:30 this afternoon. From a speaker's point of view, ECB's Elderson speaks at 8:20, 8:50. That's London time this morning. And then there's a Fed event on racism, the economy, and the wealth division includes Fed voting members Bostic, Evans, and non-voting members Bullard and Kashkari. And they'll all be speaking at the same event from 5 PM London time today. Feds Quarles and Feds Bullard speak again at 6:00 and 6:45. Fixed income supply coming out of UK, Germany, and $24 billion 20-year bond auction in the US at 6 PM. And then from an earnings perspective, yeah, some of the bigger names in the US, Biogen, Verizon. In Switzerland, you get Nestlé, Roche. You've also got the chipmaker ASML, ASML, worth looking out for as well this morning ahead of the cash equity open in Europe. And that is it. So let you guys get on with the day. Thanks for listening, and I'll see you same time tomorrow. Take care.