No Deal Brexit Risk Increases

Okay, very good morning. Hope everyone is doing well. It's Wednesday the 18th of December. Um, quick heads up, Sam is doing the big fat Christmas market quiz, uh, something we do here at Amplify Trading every year. Bit of fun, but these are all market-related questions, and unfortunately I can't take part because I've actually seen and contributed to some of the questions. But I won't unveil yet what some of the big prizes are, but everyone is invited to take part. So 3 o'clock London time, Sam will come on, he'll, he'll run a live feed via our YouTube channel. So if you want a chance to take part and test your knowledge about everything that's happened in markets over the last 12 months, it's going to be a good one. So so join us then. All you need to do is subscribe to the channel, hit the bell icon, and you'll get notified when we begin. Otherwise, just starting with the briefing, it's actually not too much for me to comment on. There's not really any new updates on Brexit-related headlines. There's nothing really going on with US-China trade wars at the moment. They're probably the two hottest themes of the last week or so, but there is some significant equity stories, whether it's a merger agreement in the automotive sector or one of the key bellwethers in the US, FedEx, having a profit warning last night. There are a couple of stories I can fill you in on, but looking at the cross-asset class mix this morning, it's very much reflective of— as I've just mentioned, it's pretty quiet overall. The dollar index, maybe a touch stronger, but only 0.1%, pretty sideways for the currency markets at the moment. In terms of the British pound stabilizing, I was just going to go back and look at briefly that chart we had yesterday marked up. And you can see that from when we delivered the briefing yesterday was just about when we had the gap fill from the closing of price before the spike up on the election result. If we're looking at the Sterling futures contract here, but we continue to drift south yesterday as markets have to price in this renewed risk of a no deal, of course. Otherwise, I'll come back to that in a second. Equity index futures pretty quiet, oil hugging the pivot, albeit down 40 cents. A bit of a pop lower in WTI crude last night. You can see that, that bigger red candle. These are 30-minute candlesticks there, the price moving down by around 40 cents or so yesterday evening. And of course, we had the API all inventories released, and I can get you up to speed as well with those numbers. So let's jump straight into the, the headlines. And this is one of the first things I wanted to mention because it's like to get a lot of airplay. It's kind of the main story that people are running given the fairly quiet macro developments at the moment. So Fiat Chrysler and Peugeot agree to merge in giant auto deal. Um, so apparently they've struck a merger pact that would create the world's fourth largest carmaker by output, with combined revenues of approximately €170 billion. The transaction expected to complete within 12 to 15 months, subject to shareholder approval and then of course regulatory clearances. But this doesn't make them, in terms of actual combined size, one of the largest car makers in the world, they still wouldn't rank near the top in that respect. Combined revenues though would be, would be decent. Opening calls in terms of the cash market, just having a quick look, Peugeot shares were called up about 5% ahead of the open, so some pretty decent gains for the, for the French car maker. Fiat Chrysler up about 2% at the open. as well. One thing I was just looking at and talking about, um, the auto manufacturers was I was just updating a few crib sheets, uh, in regards to the equity indices. And I was just having a look at the DAX, uh, composition. And obviously automakers in Germany, uh, have suffered greatly under a kind of a combination of protectionism coming out of the US, specifically targeting tariffs on the likes of BMW, Volkswagen, Daimler, and so on. But also, you remember we had China just a few days ago coming out saying they could also retaliate if the German government was to ban Huawei's 5G network. And obviously the way to hurt Germany, or at least to threaten them in that type of situation, is to target the car makers, given as well they're such an export-heavy nation. And last time I looked at this sector allocation of the DAX, obviously the automobile sector was top, uh, combining those big 3 automakers. Although individually not the largest companies, collectively was the largest piece of the pie here that you can see on the left-hand side. However, what a difference a couple of months makes, and given the multiple profit warnings we've had from a lot of these German automotive names, including lots of different regulatory issues that they've had, compliance issues with the emissions side as well over the years. And the automobile sector now is just ranking all the way down at 5th spot, below pharma, software, insurance, and chemicals. So yeah, definitely quite interesting to see how quickly the, the tide can turn there, and the underlying composition of course of these indices can alter. The other company that I thought was worth mentioning is is FedEx. Now, for any of those new to markets, it's not that FedEx is a particularly large company, but it is often seen as a bit of a— what they call or classify as a bellwether. That meaning that the frequency of the use of the company services to deliver goods would be reflective then of consumers purchasing of, of say, gifts to then use FedEx to send or consumers buying goods for themselves. So the weaker their business, then the weaker it would reflect on the overall economic environment. And as you can see here from the, the title, they've slid after their second profit warning. So it's the second time in 3 months, in fact, that they've cut their annual earnings guidance. They've cited, as you can see, a weak economy higher costs and also loss of delivery deal with Amazon. Amazon, of course, just looking to take everything in-house, be the giant conglomerate that they are, not utilizing anymore the uses of the likes of FedEx, which is a big blow for them as well. So, uh, aftermarket last night when this news broke, their shares were down about 6%. So yeah, if you're looking for other signs as to think about, are we nearing a bit of a top for this equity run? Another thing, of course, that, that people talk about at this time of year— and let's just, let's just have a quick look at the S&P at the moment, perhaps put it on a 240 so we can look at a bit of a longer time frame. I mean, just looking where we are at the moment, I would say it's going to be pretty tough going for us to break the all-time high now. Having established that above the 3200 level only within the last week, or in fact yesterday, fresh catalysts to really push us higher again given the proximity of Christmas and year-end, I think, is, is limited. So obviously these things are not impossible, but I would say we need something surprisingly positive to come out. The one thing as well that will probably help the consolidation, if anything, of perhaps the equity move, this, you know, solid gain that we've had more recently through December in the recovery throughout the month, is that obviously Trump will want to deliver a little Christmas present, not just in terms of for markets but for the consumer, to validate that his policies are in fact working by just connecting that to the height of the stock market. That's his kind of political way of just going about his business. The other things with Trump, as we discussed yesterday, the House is looking like they are going to impeach the president. But as I said, I don't really see that as a risk to price at this point. And I think that's reflected in the fact that everyone knows he's gonna get impeached by the House. It's not gonna pass the Senate. And so therefore, you know, if this was going to be a market-moving piece of information, it already would have done so, and it hasn't. So, and again, the likelihood of actual removal from the White House is minimal, if not non-existent. So I wouldn't get too worried about that. So all in all, whether or not we consolidate in this 3192 to 3203 until the end of the year, perhaps we see a pullback, and if we did then, you know, you've got good areas now technically where the S&P is likely to, to find some decent support. But all in all, even if we did pull back a percent, um, also, I don't think that that's anything to get too worried about. And I think now we just see out the year. And if I was looking a little bit more conservative for a range, 5950 up into towards where we are at the moment would probably be the kind price area I'd be looking at. Um, talking of Brexit, uh, as I said, the pound was continuing to come down yesterday. So I mean, let's just have a look from a percentage point of view, um, how far we've gone from the actual peak of the actual election night to the low of yesterday. We've now come off about 3.25%. For cable as this becomes a little bit more of a distinct reality now of where are we heading given the shift in the toughness on the Brexit legislation that Boris is going to look to push through in the WAB at the end of the week. I'm not going to go through this in, in all detail. What I'll do is I'll just pop it in the chat room. I did share it on my, my Twitter account as well if you wanted to have a look at this graphic, but But I guess just summarizing, uh, a couple of the options and the decisions that need to be made going forward and the respective time frames as well in order for that to happen. Um, otherwise elsewhere, let's just have a look at WTI crude. I did say and show you that the price dropped overnight. This comes as you can see here, the headline crude figure showed a build of 4.7 million. Expectations were for a drawdown of 1.5%. So after 4 days of gains, the report shows US stockpiles are swelling once again. Cushing was a drawdown of about 300,000. Gasoline, a build of 5.6 million. Distillates, a build of 3.7 million. So pretty sizable crude and gasoline combo there in and around the 5 million mark, just bumping crude oil prices down from where where we were trading just shy of a 61 handle yesterday, back a bit of a pullback of 50 cents or so. So that's setting us up for the data we'll get later on today. Um, final thing, actually, just quickly jumping back to the UK political side of things, just wanted to mention this because literally only a, a day or so ago when I was looking at this, Rebecca Long-Bailey was seen as the outright favorite for the next, um, Labour leader. And Keir Starmer, who on the night of the election was seen as the outright favorite, he had dropped to third and only priced in the booking or in the betting market about 12%. Overnight though, there's been a significant shift in the betting market backing Keir Starmer. Keir Starmer, of course, was or can potentially cause a bit of friction with the North East because he was very much a backer of a second referendum, more definitively than, say, Corbyn was. However, you could say that he's a little bit more towards the centrist side of the left, which would be very different from Rebecca Long-Bailey, who's very much part of the Corbynista crew. So she's come off And the more, I'd say, center-left candidates— Lisa Nandy's taking a bit of a, bit of a pop to the upside, but Keir Starmer taking the most biggest, uh, move at the moment. And it does come— you've probably seen on Twitter, let me just see if I, if I go on my Twitter account here, you can see on the, on the right-hand side things that are trending on Twitter this morning. Uh, and this, this really sums it up actually. I didn't plan on, on seeing this. but you can see Tony Blair is the number one tweeting thing on Twitter at the moment. Now he's come out yesterday, and of course Tony Blair being of New Labour, very much more centrist, saying that if this isn't the definitive sign that Labour needs to move to the centre again, then what is? But then you've got that, and then the second most trending thing on Twitter is #CorbynWasRight. I mean, I've not looked at these tweets yet, but I'm not sure. I assume that they're saying that Boris is a liar because he's now threatening no deal when he said he was gonna pass his deal. So sure, I get that. But the point I was just wanting to share here is that, I mean, look how divided Labour supporters are here. You've got Tony Blair trending, and then you've got Corbyn was right trending. Just goes to show the state of the opposition party at the moment. Until they get that act together and really unite behind one single direction, then they're going to be— well, it's going to be a Tory rule for a while, I guess, with the way I'd interpret that. Quick look at the calendar. UK data— well, before the UK data, you've got German IFO coming up at 9 o'clock, and perhaps that can be interesting. It's not normally massively market-moving because I think people are generally aware of the current economic state of Germany being fairly dire, but the forward outlook is important. And if we were to get an upside surprise number, I do think that the bigger reaction is, is from an upside surprise rather than a downside miss, if that makes sense, just given how negative people currently are in terms of the behavioral view of, of Germany at the moment, and people wanting to see if not— is it going to get worse or are we hitting a bit of a bottom at the moment? And so IFO being then the, the main kind of survey to a large sample of actual companies on the ground, that could be an interesting figure. So that's coming out at 9, the headline reading expected at 95.5. So we're still slight improvement on the prior month. UK CPI data coming out, not looking for anything really from those numbers. I guess here it's more a case of, at the moment, the dominant theme is the pricing in of no deal from Boris. If we were near a particularly important, let's say, technical level of support, for instance, sense, uh, it could act as a catalyst just to break a level. In itself, I don't think it's really that meaningful as a piece of economic data. So even though CPI nearly always very important, given it really, really is key to monetary policy decision-making, the fact that the data is expected to be largely no different from the prior month— we're basically tracking just sub-2% in CPI year on year in the UK, and I wouldn't be really looking for too many shocks either side. Um, otherwise we get the final eurozone CPI, but again, final reading. So I'd say IFO more of a risk for any euro position than, than the CPI reading. Into the US afternoon, we get Canadian data at 1:30, so that does— inflation data move the loonie if you are looking at the that currency. You've got the oil inventories from the DOE coming out at 3:30. So recap of the APIs, we'll go through again and the setup on crude oil ahead of the figures. And then that's pretty much it. Speakers— Christine Lagarde does speak in a short while actually, so keep an eye out for any comments. But I don't think she's going to say anything. She's speaking at a welcoming address in honor of ECB's co— organized by the ECB. So not looking for too much given the importance of her speech just given last week. Fed's Brainard, a voter neutral, has been slightly on the dovish side in recent year or so, speaking at 10:15. ECB's Coe does speak himself at 11:15, and Fed's Evans, a leaning dove, speaking later on late afternoon London time. And then finally, the Amplify Quiz happening, delivered by the one and only Sam North. That'll be at 3 o'clock. All right guys, that's it. I'll pop that Brexit decision tree in the chat and I wish you a good day. Thanks very much.

Hi guys, yeah, looking forward to the quiz, so make sure you're getting your revision in early doors ahead of that. We'll get that running around 3 o'clock. Starting off here, S&P, you can see I just found a bit of support. Let's bring the pivots onto this chart here. A bit of support found on, on yesterday's lows, which were the pivots. And what a range-bound trade that would have been in, uh, sort of late morning. A couple of tests of that and we went up to the high. And that 3,200 still not really confirming a big push above that, um, as of yet anyway. Uh, the level we're trading now I would say is pretty pretty significant as well. Just above here on the pivot, you've got quite a strong level of resistance, which was good support yesterday. You can see all around 31.97, so we're keeping a watch on that. Below these levels of support here, uh, 31.92, I think we could— I mean, it's not a massive move, but down to the S1, you've also got the high that we had back on the, uh, the Friday. That's double top there, uh, around that point. You can see here just marked up. So keeping a watch on that below where we're trading above 3197, 3200, and the, uh, the double top from yesterday's high, uh, and then the high that we had back on Monday as well. So horizontal levels, those would be the ones to keep an eye on. Obviously that trend line from the, uh, December low, still worth having on. Obviously it's getting a bit steeper here. Let's get— bring that in from the third like so, down to low the 10th, and we didn't quite make it on the 12th, but I'd still have it on as a bit of a guide. You know, it'd almost be like you're happy to stay overall long in S&P as long as that goes through. In terms of drivers throughout the day— sorry, um, the data in the afternoon US-wise isn't going to be massively market moving unless the oil numbers were incredibly out of line. So again, trade developments will be something to focus on here, or any other kind of risk as well. But for now, it seems to be still a case of overall looking for, for places to get long in this market, really, unless it breaks that trend line. And obviously that goes for the NASDAQ and the Dow Jones as well, both actually You can see very similar, just above that pivot, but have some resistance here on the, the NASDAQ to keep an eye on before you would get to the double top on their all-time highs. The Dow as well perhaps leading the way but not quite breaking through, uh, and again very similar in that double top, all-time highs from yesterday, uh, and, uh, Monday as well. Having a look over at the pound, obviously come down yesterday, uh, it was around this sort of time where we filled the gap 3, and that was when we were 300 pips below Friday's high. We almost touched 131 in early hours this morning. If we go to the high on the futures at 135.5, a big, big move to the downside. Almost— let's test my maths out here— almost 450 pips, which is incredible. Uh, have we found the bottom? That is the question. Uh, what an area you would have to say to the people to look to get back in again. You know, if you, uh, could offer people 131, which was the, the low that we had on the election day, an area to get in following an election win for the Conservatives, maybe this is the, the point, uh, of, of interest to get in. I don't know, maybe, uh, in terms of being confident on this in terms of a resistance point maybe where you could look to, to get in. Uh, you obviously, the pivot is a long way away, and literally from the low is 100 pips. But you can see we're starting to maybe with these previous highs just get squeezed in. So I would have this on just as a bit of a guide starting from 4:30 yesterday afternoon. You've got those 3 tests here, 1, 2, 3. So I don't think it's the worst idea in the world to perhaps look for a long above that trend line targeting towards the, uh, the pivot here in the futures, which, you know, if that was to happen now from 31.66 to, you know, the 132 handle and a bit above, not a bad little place to, to get in. Above there, obviously you're gonna have a lot of the previous support levels to keep an eye on, so there would be a lot of resistance, uh, in terms of a bigger move to the downside if the, the low that we had, 131, uh, and the, the low of the 12th goes, then, you know, again, a bigger move perhaps down towards some of the highs that we had on the, the top of the 3rd, or even the, the high of the 18th of November. It could be points of, of interest for this market to go to. Uh, yesterday as well, obviously the euro did drift down a touch into the back end of the, the session, and that continued this morning after a decent start, uh, to the day. We came up to test some interesting resistance and actually broke through, and you could be forgiven for thinking maybe the euro is going to extend here, but not quite. Um, and we were saying yesterday, as we put this on the, the 240, about having those trend lines on from the lows, just because it's been the same pattern the whole year, uh, for the euro in terms of you start developing these trend lines, they break and suddenly you're at the low of the year again. Uh, in terms of what could maybe drive a break of that trend line today, you've got, um, got a bit of European data out at 10 worth keeping an eye on before, uh, you know, the US, uh, well, oil is not going to move it. So really potential, uh, data points, only 10 AM really going to see a possible move here. So watching that trend line uh, going from the low of December to the 6th, and then of course below that, then we could get a bit interesting again. In terms of a very strong resistance— uh, support point, I'd go with the, uh, 1.1183, the high of the 21st of November, uh, and the 4th, 5th, and 6th of December before the lows we got on the 12th and 13th. So keep a watch on that. Other levels to be aware of just above where we're trading If we were to drift up, wherever the sellers want to protect, we can see some nice support from yesterday afternoon, 1.1237, give or take. Uh, be keeping a watch on that, and maybe you would be, uh, happy to, to get long, more of a medium term or a longer intraday trade if it can break above this trend line as well, starting from yesterday afternoon. So euro is in interesting points coming up. Most notably, you can understand why we're found support on this S1 low of yesterday, low of Monday, uh, morning as well. So key, key level, uh, definitely want that marked up. Gold, let's have a quick look. Relatively range-bound. I mean, just having a look at that, it's, it's been a tricky market, I would say, for overall direction in recent weeks with, uh, are the Fed can be hawkish or dovish, what's the trade situation, good comments, bad comments, and it's struggling really for an overall move. And look, over the last 3 trading days it's done nothing, quite range-bound. So keep a watch on that. 1484 to the upside, and the downside, S1 and those lows coming in around 1478. In terms of a bigger move, 1490 would interest me for a long if we can close the day above that. And you can see why, uh, just all these lows, those highs. And as you know, to the downside, if we break those, those trend lines, uh, could be a decent opportunity to get short. Uh, historically, uh, the first 2 months of the year, January, February, actually not too bad for gold. So maybe the opportunity— and this is something I would be looking for— is to get long above $1,490, uh, if we can confirm a break above that. But intraday looking at this. Again, driver is not going to be too much. There's no real new headlines out, so it'd have to be something maybe more unscheduled that would really drive price action here. So for now, the range-bound trade is, is not a bad one to look at, and just prioritizing the highs from yesterday and the low from the week as well. Quick look over oil before we finish up on European equities to see what they're doing. A decent afternoon for, for oil, uh, before coming down on the API. And actually, the, the low that we made today is significant. 60.37 was the high that we had back on the 13th, uh, as well. So just have that marked up. Trend lines are, are choppy, so probably not really worth having any of those on. Um, so let's narrow that down to 15-minute. Small range. If we can get above the 60.58, obviously looking for a bigger move up to towards the previous support before that API did come out, um, as well. But not too much going on, and probably best waiting for the afternoon considering just how small that range is. And of course, as we know, oil more likely to move in the afternoon anyway, let alone because of the, the DOE numbers. Quick look over at the DAX just to wrap things up. Relatively quiet, uh, first 30 minutes has to be said. You can see yesterday we had a decent push lower that continued all the way until around 10, 11 o'clock. We obviously filled the gap of the week pretty quick. We did gap overnight to the downside, but we're not far away. Let's put this on the 15-minute from filling that on the futures. So certainly have this marked up as a point of resistance. Above that, well, you know, US equities could well look to be attacking those resistance points from yesterday and, and get pushed through. But overall, relatively quiet out there. Data calendar is going to be, you know, kicking off from— in terms of the, the pound anyway, at, uh, at 9:30. Then you've got some at 10 o'clock from Europe, but final inflation numbers. So I would say relatively quiet morning. The afternoon looking quite quite similar. So maybe more unscheduled comments would be one to be aware of. And with the rate that Donald Trump is tweeting, it wouldn't be too surprising to have something going on. Any questions, as usual, please do let us know. To see an oil here just tick down to its lower point of the day. But yeah, any questions, do please let us know. We'll be live 3 o'clock UK time for the quiz. Everyone can take part. It'll be done by Kahoot, so you'll all have 60 seconds to answer each question. There'll be no advantage from anyone doing it in the office, so it's an equal playing field. I look forward to having you all join me for that. But yeah, any questions ahead of that, please do let us know. I hope you all have a good trading day, and I'll catch you all later on.