New Bank of England Governor To Be Revealed

Okay, very good morning and a very Merry Christmas. It's 20th of December, Friday. Briefing for this morning, not really too much for me to talk about, to be honest. From a news perspective, this is quite typical for this time of year. Things are pretty quiet, so A little bit of a review of the stock market movement. Record all-time high again yesterday, and so Trump certainly delivering that Christmas cheer and the usual seasonal kind of Santa Claus rally. Like yesterday, the Dow finished up 137-odd points, and just having a look at the, the graphic to the side of me at the moment, this is looking at the kind of bull run of the US equity market, specifically the S&P 500. Looking at the annual price gain. And as you can see, 2019, despite the big macro risks that have always been present— dangers, if you like, for markets— like the escalation of the trade war, significant risks of a global slowdown, the inversion of the yield curve that we had, which has obviously taken a steep reversal since we saw that in around August-September time. 2019 equity performance-wise, you know, we're clocking over 25%, up to around 28% on the year. And actually, if you look back over the course of, uh, really the last 10 years, that's the second best performing performance that the S&P's put in. Almost the worse it gets, the more we think central banks are going to reverse course for the first time in best part really of a decade since the depths of the financial crisis and kind of reversal. And looking at the year as a whole with the Fed doing 3 rate cuts, you know, if you think about the RBA, the RBNZ all doing the same to the same degree, renewed now quantitative easing in Europe and the ECB. And of course, Trump looking to get this last-minute Phase 1 deal over the line, getting a good seasonal timing, of course. For a stock market rally into year-end. So yeah, I just wanted to put it into a bit of context. Obviously a stark difference from where we were this time last year. If you remember, December was an absolute bloodbath, epitomized by literally Christmas and Boxing Day, I think, is when we hit that inevitable low, which then was counteracted obviously by the biggest rally we've had in the best part of 3 decades at the beginning of 2019. So Yeah, so different from this time last year. But looking at the charts this morning, as I said, at the moment things pretty quiet. I mean, if I look at the S&P 500, it's just come off a touch and pretty sideways during the Asia-Pacific session. This is the center-right chart, and I don't really think it's too surprising given the rally and push higher that we had yesterday. And so, you know, global index futures pretty flat overall. The DAX basically unchanged. Also same in the Euro stocks despite a little bit of fluctuation as per normal at the, at the cash open a short while ago. Gold pretty sideways, just hugging pivot similar to the US 10-year. Both are down slightly, uh, just given some of this, the general correlations with the equity market being relatively firm at these levels. Gold down about $2.50, the 10-year down about 7 at the moment. Does come as well with, you know, yields being at levels we haven't seen for multiple months, uh, so finishing the year, uh, in a very different perspective about people's fears, uh, about the near term, uh, comparative to where we were at the end of the summer for sure. Uh, but with that, I'm not going to talk too much broad brush about the outlook because Piers and I— Piers Anthony Cheung, for anyone who doesn't know, is Amplify's head of trading. He and I are going to do our outlook for 2020 at 3 PM London time this afternoon. We will record that session as well and make it available thereafter, but we're going to talk probably for about 45 minutes or so over some of the key themes like the outcome for Brexit and its implications of the pound. Can we sustain a continued move higher in US equities? Can OPEC continue to underline support for crude oil prices with their production cuts? And can the ECB and new president Christine Lagarde mitigate the ongoing downturn being experienced in the eurozone? So the four factors we're going to discuss, and I'm going to put Piers on the spot, get some year-end calls and what he thinks the catalyst will be and the real pivot points of macro and price action over next year. So, so that'll be later on this afternoon. But as I said, overall this morning things, uh, fairly muted. Thing that has been obviously in the press, Boris Johnson, uh, just going into the Christmas period, he's obviously trying to rush everything through in order to wrap Brexit up for Christmas. Is what he said yesterday, almost like a Trumpism if you like. And he— well, the process he needs to go through is the bill, his Brexit bill, which we know has been kind of strengthened on the kind of the idea of non-agreement to transition for an extended period, looking to put a bit of pressure on from the negotiation with getting a European deal. Sooner the better. But this obviously creeps in then the renewed risk of a no-deal Brexit, and that's what we've been seeing influencing the British pound. So what's happening today is it's the first vote in the House of Commons looking to push through that legislation, obviously to execute that delivery of the initial exit on the 31st of January. That being the exit— when I say exit, I mean the Article 50 is going to implementation. The vote is going to happen around 2:30 London time this afternoon, but likely to be a formality of sorts given now the 80% majority that he's managed to capture from the, the recent UK election. The legislation then will be set to go through various stages of progress. The, the way the UK system works, that's going to recommence then in January on the 7th, 8th, and 9th. So I wouldn't be looking for any type of market reaction, to be honest, from what we'll see this afternoon. It should go through. All of the MPs of which have now, um, in the Conservative Party have seats within the lower house of Commons have all said they would back the deal. So no real issues foreseen then, and then no real issues either really foreseen for when it comes back to the, the various stages of approval. The real problems, if he's going to encounter, happen thereafter, of course. Now, just having a look quickly at the sterling chart here, let me put it back on a, on a 60-minute candlestick. Just wanted to bring in some of the price action that we've had. Of course, this time last week I was quite tired because we'd been up all night, uh, delivering the UK election, of course. And, and yeah, we, we are lower now than where we were before the, the gap up, obviously on the back of the, the Tory majority. So all of that and some has been taken back, uh, and we trade really now around 130.50, uh, so a decent kind of 4.5 points off where we were on those initial peak that was seen when some of those northern heartlands, uh, for Labour turned blue, and we hit that kind of 1.3550. So yeah, best point of— best part of about 5-point move there that we've had in sterling. On a bigger picture, um, this is just looking at cable on a much bigger time frame, um, and looking at some of the— well, if I put it like that first to give you a bit of context This is the trend line from 2014, 2018, 20, uh, and, and what we've had in 2019 with the, uh, the gap up and breakthrough then of what was the, the election. We've come back down to that trend line, came up and tested it only a few days ago before then coming back down to a fairly significant, at least near-term, level of support. So Whether or not the price has the appetite at this time of year to really break through that or not is really yet to be seen. But you can see that was the, the area of resistance in mid-October. But any move further down, there's a couple of interesting points probably to keep an eye on. That double top that was really the 18th of November, so a month on from that area of resistance and support that we're trading at the moment, that's really the 130 handle as well. And then that opens up a slightly more deeper move if that were to happen, which would be a push down to around 1.2833. So obviously this isn't going to happen today, or in fact probably for the rest of 2019, but this is if this situation continues to develop as it has been. We had things like UK retail sales of course yesterday, which was particularly disappointing. So as the economic slowdown continues. In addition, really, until we get to February, March, when then it's like, you know, we revisit the situation. Has he got a deal or not? And what are the prospects of that happening? Uh, he's probably gonna remain steadfast for as long as he can to keep that narrative ticking along. And the more that happens and the lack of progression I'm anticipating will happen the more downside pressure we're going to get, and the more we move back down again. And these would be the subsequent targets then thereafter: 1.2833, then 1.2630, and so on until the inevitable extension comes, which I still think is going to happen. The other thing over that time period, of course, that you're going to have to be aware of is Mark Carney. Obviously Boris has 31st of Jan very much as his date to deliver, as he would call it, delivering Brexit. And Mark Carney leaves, and obviously this is quite a significant change because he's rolled over his term multiple times. And so, you know, markets like continuity, and would he or his departure spell any type of danger for markets? But the answer to that is Probably not, because the FT have leaked it, and it seems that this is just going to be ratified later on today, probably by either the Chancellor or the Treasury normally. But Andrew Bailey, this chap here on my screen, the head of the Financial Conduct Authority, has been selected as the new Governor of the Bank of England according to the Financial Times last night. Now, a couple things here. Um, Mr. Bailey does have a little bit of a sketchy past in terms of his performance related to a series of financial scandals in recent years and questions about the effectiveness of the FCA and his oversight. However, he is also a former Deputy Governor of the Bank of England, so he's definitely equipped in a sense of he knows the routine, market practitioners are very familiar with him, and, you know, he's— even though he's had, let's say, a number of mistakes in terms of his time at the FCA, he's now leaving that and now he's focusing on monetary policy. And when he was a deputy governor, I can't remember, uh, in my mind or recall any time where he said anything out of turn, made any particular large mistakes when he was acting as a deputy. So as far as I would see his appointment, I'd say this is kind of the, the conservative pick. There was obviously a lot of pressure on the Bank of England to potentially pick a woman for the first time in its entire history, which goes back multiple hundreds of years. They've decided to just basically go for the, uh, the the recycle of the usual type of suspect. And so for markets, I would say this is probably a good thing in a sense of it's not going to be a disruptive factor for the pound in that transitional period at the end of January into February, I would say. Um, looking at the calendar, what is there to come? There is UK GDP, and I've not really touched upon that much because these are final readings. And remember, we're about to turn into January of 2020. These are GDP readings for Q3 of this year, so it's 3 months out of date now. And markets are very much, you know, where do we go from here? What we really need to know is it's that, that kind of end of Q1 growth forecasting and performance is what's going to be really key, I think. So looking at GDP for Q3, I wouldn't really look for much in the way of reaction or over interpretation of that data today, certainly from any policy implication. Um, that's expected to remain unrevised. It's a final reading, so 0.3% on a quarter, 1% on the year-on-year. And then from the US, we get the same. US GDP expected to be unrevised at 2.1%. So you remember, a little bit of an upside surprise in the preliminary figure, keeping US growth fairly constant around that 2% level, surprisingly a little string of stronger than expected economic surprises from the data sets that we've had from America, uh, of late, epitomized by non-farm payrolls, has managed to secure then a fairly decent performance for, for growth despite people getting very pessimistic about growth conditions there. Canada retail sales, and then we go back to the States for core PCE price index, personal income data University of Michigan. But again, this is final reading. The consumer confidence coming out of the eurozone is really a non-market-moving event. Not sure why that would be bolded, to be quite frank. And then from a speaker's point of view, you do have a Bank of England member, uh, and potentially interesting because Haskell is a dissenter. Remember, 7-2 has been the composition of the vote split of late from the Bank of England. And Haskell and Saunders have been those two characters. So interested to see what Haskell has to say, speaking at 11 AM. And then don't forget, you do have the, uh, futures options for single stock and index expirations. So this is called quadruple witching. It's all happening today, which does then typically lead to increased volume volatility patter around toward the period of the expiration. So do be aware of that, particularly at the New York Stock Exchange open. Could see, uh, even though it's always quite volatile at the open, perhaps even more erratic today given quadruple witching. And then you've got the expirations as well fading in if you're trading those UK European equity index futures. So the FTSE 10:15, Eurostoxx 11, DAX at 12 I try and think, CAC is at 3, I think. So just pop me a question in the chat if there's any questions on that. All right, that is it from me. I will hand you over to Sam, and I will speak to you later for the outlook at 3 PM when I'll be back on the mic with, uh, Piers Current. Thanks very much.

Thank you, Santa. Um, delivered the rally as usual in Christmas. And S&P, Dow Jones, NASDAQ making all-time highs again last night. 32— what did we get to around the top there? Yeah, almost 32, 14. So seems as though we have broken out that range. And actually, just having a quick look at here, we've put a bit of a rectangle on that 3,200. Um, we had a bit of a retest on that R1 as it came back down on the break. So that was a decent opportunity into the back end of the session. I still have that marked up really today. I think if we were to come back down to that point with the low volume, you'd expect it to hold. So yeah, 3203, 3200 is a sort of solid enough area, uh, for a point to, to buy, you would suggest. And obviously below that, that lower part of the range, unless that was to go, you'd feel pretty comfortable still still holding this market, especially as the volume slows down. And it really— I tweeted ages ago, but it really does remind me of 2017 December into '18. If we have a quick look back at that here, you can see just those, those grinds higher. Yes, a couple of down days, nowhere near as big as what we've seen this year, but you can see just grinding grinding, grinding, grinding, and then Q1, uh, we saw obviously a big correction. Are we going to see that this year, or next year I should say? Time will tell. But yeah, for now you've got to be, you've got to be happy holding, uh, this, this position to the upside. And in intraday, be happy to, I would say, look for points to get in around 3203. If you look at where we've just come down from, is there an opportunity with a break of a trend? Well, I'd start to get one of those on. Um, it's not really respected as of yet, but if we were to get maybe the third test up there and also a break of, you know, some of that Asian session high, then it could be a decent enough opportunity. Having a look over at gold, which we were saying yesterday morning, I like the look of, um, a long above 90. Can't quite get there just yet. 1487, uh, 88. To be more precise. If we can get above there, I like the, the look of a long. Um, and of course, to the downside, if we were to break any of those, those trend lines that started on the, the 12th of November, then I'd like a short. But that seems a while away yet. We are now, if we put this back to the 60-minute, perhaps in a smaller range than one to keep an eye on here. To the upside, we hit it again yesterday, just failing to close above. And then to the downside, yes, we spiked below there on Wednesday, but we're still, uh, in, in that sort of area. So yeah, just pushing below the pivot, but, uh, I wouldn't get too excited unless we break out of that. And then more importantly, the 1470, 1487, 1488, 1489, 1490 region. but if we break yesterday's low, you know, that trend line could be slightly more interesting. However, it has been very range found, uh, today. You would expect a bit of support just a bit below where we're trading, 1480, and then we would look to— if that doesn't hold, S1 would be the sort of target point. We haven't got the trend line in play as of yet, but from the low of the week to the low yesterday, you can start to see where that might offer an area where people look to get in and take some profit. Just having a look at this now as well, you can see from the high that we had back on the 17th to the 18th, broke through, found support once and again twice. Now you can see the market respecting that, so worth having on. And that's of course along with a previous high, so key, key level of support there for gold even in this early hour. Uh, let's move over to euro, uh, which has just continued this drift lower, uh, that trend line that broke from the, the low of December. Let's get that on again. You can see We, uh, we came back to test it yesterday, albeit choppy, which, you know, it's understandable that the R1 and, and some resistance from what would have been the morning of Wednesday acted great, and we have come back lower since then. We'd have a trend line from the 70 to that high just above the pivot, again marking up with some resistance from yesterday as a good point perhaps for this if the market was to push higher for the sellers to come back in again. The low of today is the low that we had back on Wednesday as well, key level. Uh, and even below there, wouldn't get too excited just because you go then start coming in the low yesterday, the 12th, and even the highs that we had back on the, the 11th and 10th. So quite a lot of support. Do we close the week below there? That would be key, and I would then expect a, a further week, uh, to the downside. But for now, really key point of support. You can just see— make sure it's above the camera here— going back from the 10th of the month to where we are now. Solid base. Have a look over the pound, and as I mentioned, it's below where we were last week, which is just remarkable really. I mean, to the, to the high, it's 500 pips lower, which is, is baffling. If you were to have told me that Friday morning. But, uh, yeah, big move lower. Um, saw on Twitter last night a few people think this is a great place to get into to go long. We're currently trading on, on the levels not seen since the 3rd of December, which is also the high on the, uh, this new March contract from the 18th of November. So it is a good technical level, but there has been others like the 12th low that didn't quite hold up. So if you're of the view that there's still a bit more downside to come. 31 handle looks quite good. You've got the low there of the 18th and then the 12th as well, that key level that we did break through. The, the classic short of that, once we got a confirmed break below, was, was a great trade. Uh, and before there, you would be looking really at the pivot point. As with markets that are in a bit of a trend, it's always nice to, uh, have those trend lines on. So for example, here, yesterday's low in the pound, marking up with the low of last night, almost reached it today for that trend. But an opportunity could well be on the break of that. And when the pound, May to, uh, the end of the summer was going down, these patterns were just, you know, so good to, to have on, on the breaks of those trends. So that's something I would look to, to have marked up there. Quick look over the other currency pairs. Aussie dollar not doing too much this morning, but I had found support support on what was, uh, yesterday, uh, sort of afternoon's— no, morning's, uh, high. We came back in the early hours to find support there in a bit of a new range, you would argue, with the, the highs that we had back on the, the 16th of this week. So can we break either way will be key. Couple trend lines as well you'd look to have on that have been well respected from the 18th to that evening, and then yesterday afternoon's low as well there. The yen yesterday— and this is yen against the dollar— had a decent push all day really until, uh, we got to around 7 o'clock and it almost reached what was such a key point. You can see here so much resistance here from the 12th and the 13th, didn't quite make that. Today that marks up with the R1 for a bit of a range trade. I think that's, uh, the preferable option here, uh, but to be fair, on a low volume day, S1 also, uh, we get Yesterday's lows and the lows of the 16th and 13th looks like a, a not a bad, uh, idea to, to look to get in on that. Oil yesterday spiked higher, really, uh, decent push. Looks like it was going to continue, continue before just drifting lower into the back end of the session. Uh, as with oil and other markets, you can see when we're starting just to, to trend here, we look to have some of these trend lines on. And over the last few days As you can see, we've certainly respected this one quite nicely, uh, so would remain bullish, I guess, if we stay above that. And then the $61 handle was in the mix there, uh, as well for this market, in which has just drifted. You can see in the mornings into the early afternoon each week before the back end of the session we have come down. 1, 2, 3 days in a row that it has done that. As with Friday, uh, could always be a relatively quiet one. I don't imagine too many people are gonna, uh, you know, be, be in, should we say, especially ahead of Christmas. But calendar, you got the GDP Q3 reading from the UK, uh, to keep an eye on, um, and then the final reading GDP from the US, retail sales at the Canada, and some lower tier US data as well. So there is some data that could move things. However, I reckon it's gonna be relatively quiet, no overall fundamental change in market. So I would look for a bit of a continuation in things from optimal levels. Hope you all have a good trading day. We'll catch you in the chat for Anthony and Pierre's, uh, 2020 outlook, uh, and I hope you all have a good day.