Record Drop In US Retail Sales Expected

Okay, very good morning guys, Anthony here and it's Wednesday the 15th of April. Just before I begin, I just wanted to say thank you to everyone who was leaving some comments, some amazing engagement on yesterday's video. So really appreciate that, you know, I'd love to grow this community that we've got online. So if you are watching this Remember to like and subscribe to the Amplified Trading YouTube channel. This was yesterday's video, and a couple things here just to reiterate. For one, as soon as I upload the video, I do actually kind of bookmark. So here, if you just click on the video description, you can see I've got here— you can literally click on those chaptered kind of numbers and it will jump you straight to specific topics that I talk about, because obviously I'm, I'm giving you your kind of fundamental run-through of the morning and And depending on what asset class that you trade, for example, you might want to just skip to certain parts. Like yesterday, a lot of the emphasis on earnings, of course, and so you could just jump to that specific section. So just pointing that out if that's of use to you as you go through these videos in future. And as I said, some of the comments yesterday, you know, so Kusala, Pratek, Hassan, you know, I tried to reply to everyone And so it's great to kind of answer people's questions just generally. You know, part of the reason for this channel is to, you know, not for me to just go over the news and give my opinion, but also to try and help in the best way that I can. So absolutely happy to do so. That being said, then let's get back into the markets and talk about what's been going on. And let me just give you an overview first of the overall general sentiment for the morning. And equity index futures just off a little bit, but it does follow a generally higher close that we had on Wall Street last night. The major 3 indices finishing in positive territory. So this is what it looked like, uh, the S&P, the Dow, and the Nasdaq Composite. You can see here on the far right with the, with the rectangle, all finishing in pretty decent, uh, positive territory. The Dow about 560 points or so. Stocks rallying as per the title with earnings in focus, but moving higher at the start of uncertain earnings season, of course. And, and how does earnings season really kick off? Well, the big banks come out, and we can see that here on, on the kind of heat map. If you look down in the bottom left-hand corner, JP finished the day down about 2.75%, Wells Fargo down about 4%, and then later on today we're going to get the likes of Citi, Bank of America, and Goldman's all coming out before the opening bell. So I'll be covering a little bit more detail on those via my Twitter account. There's my handle. If you want to stay on top of those, um, in real time. But, you know, with earnings season, you know, overall, despite those negative closes for some of the big banks, we did finish higher. And obviously a lot of the focus on the discussions yesterday about the general plateauing, if not regression, of some of the areas of new development of coronavirus cases. So despite deaths still rising, the market's kind of forward-looking and looking at trajectory now of some of those other European or main global hotspots, they've started to hit that plateau, uh, and the next natural area from there, following the Chinese example, would be a decline going forward. And so a little bit of positive, kind of cautious optimism taken out of that. Uh, and as I said before, with earnings season, uh, I do think it's going to be pretty horrific, but how much of that is a surprise? Uh, I don't think a great deal. Uh, I guess still to be kind of factored in though when we see these kind of empirical evidence come in about how truly bad it is. But obviously a lot of this is going to be in the next quarter when it's going to be really dented going forward, given the nature of the, the kind of slow move of loosening the quarantine measures that have been adopted kind of globally. It's going to result in a very severe immediate impact and a very slow gradual recovery of the economy. One thing The common question I got quite a lot, a lot of yesterday, uh, was talking about this idea about the equity market and have I become now more bullish. And yeah, I mean, it's, it's been a, it's been a tricky one to call because, you know, a week ago or so we were talking about the potential third phase of what we'd call, uh, it's kind of a bear market rally. So if you remember looking at the case studies of 2008 to 20 20, and this idea and notion that you go through these various phases, but seeing quite strong rally is just a natural part of the general trend lower. And will we see that? But we haven't so far. And there's a bit of debate. I was doing a bit of reading last night, what various hedge fund managers are saying, what various kind of sell-side institutions are saying, and it is a bit of a mixed bag at the moment. Some people calling, like we were talking about yesterday, you know, GS have dropped that kind of call about markets pushing back down, breaking that pre- late March low. Before then, a meaningful rebound. They've now scrapped that, but a couple of hedge fund managers still kind of talking about the worst still to come and so on. And, you know, a few things to take out of that. First of all, just looking at this S&P chart from a technical perspective, let me just move it so you can see everything a bit more clearly. And what we have here are, you know, the level we got to yesterday as we were creeping back up higher. I think it's particularly interesting Um, you can see here you've got the 50-day moving average coming quite close into play. You've got that previous low point that we had in the late February sell-off. Before then, it, it really got quite heavy in towards when the, the pandemic at the time was starting to pick up pace more globally at the beginning of March. Um, that's coming into close proximity to where we are at the moment. It comes in in the futures I'm looking at here in the S&P at 2855. And you'll see that that was also quite a key area as well, on around the 200-day moving average, but also the low that we had in October, uh, of 2019. So very interesting test as we come up towards these levels, as we've continued to just bump higher. Obviously not just about cautious optimism on the trajectory of the coronavirus developments globally, but also, uh, just the, the firepower that the Fed have thrown at this particularly a lot of people looking at that move yet last week that we had after $2.3 trillion commitment, if you like, to, to really supporting smaller businesses, which is quite pivotal for them, the kind of the overall driving force behind, you know, employment in a country like America for sure, and whether or not that's going to be the tipping point that kind of eliminates a lot of that downside risks. You know, the whole point here is it's a bit of a mixed— there's mixed opinions. And what does that mean then? Well, I thought what was quite interesting yesterday, um, if I switch over my screens, was this. And this is the Bank of America kind of hedge fund managers survey. Now this is something that they do on a rolling basis, kind of month to month. And why do investors look at it? Well, market participants like to have a bit of a feel for what's the general sentiment, how are portfolio managers positioning themselves in the current economic climate. And of particular interest at the moment where this real money is going. When there is a lot of indecision, it can be quite telling then of what, you know, the bigger powers that be, you know, with the real insight and experience in markets, how are they, how are they setting up for the, for the future and or even investing their clients' money. And what was quite interesting here was the fact that cash is actually king at the moment. Now, it's not a new concept. We have seen money market funds as well. I've seen similar type of movement. But what you can see here is Bank of America's survey showed extreme investor pessimism as cash levels jumped to 5.9%, which equals the highest level since the 9/11 terrorist attacks, of course, back in, uh, 2001. So fund managers generally shunning risk with equity allocations their lowest now since 2009. 52% of those polled expect there to be a U-shaped, or one where economic indicators gradually rise back over time, compared to just 15% looking for more rapid kind of V-shaped recovery. So I don't find that latter part, um, particularly surprising. I think as this situation has become more evident and more real, investors, you know, from that initial interpretation at the beginning of this pandemic Obviously the big shakeout in markets was a lot of this repositioning of the idea about this more graduated recovery over time. It's going to be a much more deeper, severe initial impact, and so therefore the path back to normality is going to be that much more protracted. But yeah, interesting just to see then that cash positions now, they're higher since basically if you go here all the way back to 2001 when obviously it dropped on the back of the 9/11 attacks. Um, so yeah, the opportunities I feel, um, over that kind of more medium-long-term horizon are definitely coming in the market. Um, I'd say probably the one thing that I'm particularly interested in at the moment personally is still oil prices rather than probably equities second to that. But for me, with equities at the moment, I'm a little bit standoffish in a similar vein to kind of the accumulation of a cash position. I'd rather just build my ammo and keep it and let the market decide what it wants to do first. But with oil, I am more interested because this is what the bigger picture looks like for crude oil at the moment. And it's got a couple of annotations here, but let's just focus on the actual price on the charts. And, you know, yesterday we go all the way back down to that really super key area, which was down at late March, early April lows. We briefly, momentarily printed an 18-year low, of course, when we saw a move below the $20 handle with a bit more force. We got to $19.27. But remember, this is the OPEC deal. We were trading up at— when there was circulating talk midweek, this kind of time last week, we were trading at one point up at around $28.36. We're now trading down this morning at basically $20, so we're about nearly 30% off that move in just a period of days. And of course, this is all coming as I've kind of been, you know, saying on Twitter and in these briefings. I just think that the OPEC, you know, they were almost doomed to fail in a way because expectations were so exceedingly high. And I think that whatever they were going to going to achieve in a coordinated kind of struggle, it was never going to be enough to offset the significant demand shock that we're going to see on the back of this, this global pandemic. So for me, I'm still quite bearish oil at the moment. And what I'm, I'm generally looking for, and this is, I guess, from a more, a more long-term sense, is I want to see a break of that level. I think, I think it's going to come at some point, whether that's today or not. But obviously Today is going to be quite key. We're not that far off, about 40 cents from the low from yesterday. I think a retest here, you're probably going to see the pullbacks get more shallow, and I think we will have a, a break on the cards, all things remaining equal as they are, the variables fundamentally in play at the moment. And if we get that, well, then you know what the chart looks like from an oil perspective when you start looking on a much longer time frame. Well, look, we get back to that 9.11. Not just in the cash positions for portfolio managers, but in the oil market. A significant break from where we are at the moment, decidedly short-lived from OPEC. Although I must stress, OPEC can change its mind very quickly and alter a deal, um, and they will should the price start to dramatically drop again. At the moment, you know, they can't afford to make too many signals too quickly, otherwise the market will start to become very a lack of response to what they're saying. So they need to be quite timed with their measures. So I think that gives a little bit of room for a potential break here, particularly if equities start to fade a little bit. If, you know, yesterday was kind of X-ing out earnings, but let's say earnings start coming in, there is a progressive theme where they're, they're particularly bad in a sense, then, and we get coupled with retail sales today being really bad record levels on the low, jobless claims comes in and they're spectacularly high again, you know, these kind of catalysts might help to just break through those levels. And I, and I do think we get a rundown then to kind of the 16 handle, uh, and then it starts to get quite interesting down here for what I think is potential for a, for a more longer-term entry for, for a long. Um, now how would I play that out? Well, just given the job that I do and other commitments that I have, you know, it's very rare that I'd be— I'll let the traders do a lot of intraday trading, but for me, certainly I'd have a portfolio of some long-only positions. And I think, you know, someone like Exxon raising a substantial amount of funding to offset then any potential risks that are forthcoming, the fact that they're pretty healthy given the size Perhaps that could be a good exposure in a cash position to just get into a company like that if price levels become particularly depressed on a historical basis down at this $16 handle. And imagine if we got down to the, the kind of late '90s post-OPEC crisis lows down at $10. You've got to think that that's a good point to get in then to just ride the move back up over the next 12, 18, 24 months. When I absolutely would foresee oil coming back up to, you know, the $40, $50, $60 levels. So yeah, just something to be aware of there in oil. I mean, from an intraday trading perspective, absolutely, I'd be keeping a very close eye on it anyway in the short term from a trades potential, you know, the retest, just seeing how the market behaves and around this $8.1985 in futures. Any break of that, perhaps a break, an ability to get back in on the pullback to then follow the move back down targeting that previous 30th low, uh, and then kind of managing, scaling into position, uh, to just see it, you know, play out further to the, to the downside. Um, you know, once the market, if it does break this area of consolidation that we had at these, you know, kind of two-decade lows, you know, the market, as you've seen with crude, can move very quickly. And as I said, I don't anticipate that the, the OPEC will have the ability to counteract that run immediately. The, the kind of natural progression of these things is the market might break. If it does, then you'll get quite an aggressive move of multiple dollars. Then OPEC will start verbally saying things. Before then, the action comes later. But from an intraday opportunity you know, there can obviously be some, some decent $3, $4, $5 moves in the market in the blink of an eye, uh, would not be uncommon. So yeah, it's definitely on my, my radar at the moment, and I'm watching that today. Um, just cycling through a few of the other headlines then to, to wrap things up. Um, Trump halts US payments to the World Health Organization. I'm sure you've probably read this last night, citing reliance on China. You know, this is just the art of, uh, a kind of distraction, passing of accountability. You know, this is kind of what Trump is the master of. Whether or not this actually comes to fruition, perhaps not. I mean, I think the point is here is Trump says these things as he's trying to manage responsibility of the economic impending fallout that's going to happen. And if he can pass that over to one, blaming China for allowing this virus to spread and lying about their numbers, and then for the WHO for being too lenient on relying on China's own statistical data and not doing their due diligence, then all the better that he can say, well, it wasn't my fault, the economy was booming before the WHO and China made their mistakes. So this is all political in my mind. I don't really think that this is a market-moving thing. Obviously, the United States being the size of the economy that they are. They are a big proportionate member of funding for the World Health Organization. But this isn't a new thing. Trump, from the very beginning of his presidency, has always been very much of the idea of pulling out funding for this type of thing, because obviously from a kind of more populist policies, if you like, he's more about bang for your buck And if you think about the kind of insurance policy of trying to identify a pandemic very early, pandemic generally is something that happens or comes around every couple of decades. And so he'd rather put his funding into, you know, kind of more immediate fiscal payoffs so that he can get more political kind of wins on the back of that and secure himself a second term. So this type of conversation isn't new for Trump, but obviously timing is quite key in the context of what's happening at the moment. Talking of Trump, he has said that they're close to a plan to reopen the economy possibly in part before the 1st of May. Again, I think this is a little bit of kind of political management of public perception. You know, May 1st does seem quite early. As we've seen communicated from the Deputy Medical Advisor in the UK over the weekend, generally the performance of how this virus has performed so far is we hit the kind of peak, but then we see a period of 2 to 3 weeks of plateauing before then we start to see the numbers dip as what we're seeing in the likes of Spain and Italy now at the moment. The UK very much at that kind of peak area, the US the kind of same. So timings-wise might work out, but I still think he's being a little bit optimistic here with the timings. Remember France, which are kind of way ahead of America at this point, point. They've tabled the 11th of May. It's looking likely, yet to be confirmed, that Britain will be the 7th of May, Italy the 3rd of May. So for the, for the US to be— and that this is the number one kind of hotspot at the moment— the first, I think again, it's all kind of political management from a public's point of view, from the president. A few other things to be aware of. Overnight in Asia, the yuan did dip a little bit. China's central bank injected what would be in dollar value equivalent about $14 billion via a 1-day medium-term lending facility. They cut the rate to 2.95% from 3.15%. The cuts in interest rate though, pretty much widely expected. It follows a reduction of the People's Bank of China lowering their 7-day reverse repurchase rate back in March. So these are just all measures kind of similar to what we've seen as other central banks with their objective to just maintain liquidity into the economy at this point in time. So not, not a real market mover, but just something to just bring and draw to your attention. One other thing I thought was quite interesting was the pound. And let me just have a quick look at this. Now what I'm about to talk about, and this Bloomberg article is referencing Standard Bank, but I'm going to, you know, just make it clear. At the moment on the intraday, the pound is pulling back. So, so what I'm going to talk about is more kind of medium, longer-term perspective. But obviously the pound has seen, you know, really nice move consecutively over a number of sessions. A little bit of a pullback here, perhaps warranted. The dollar is just strengthening a touch this morning, so EURUSD is also a little bit lower. DXY is up about a quarter of 1%, just coming down here to a relatively interesting level in the, in the sterling future. But on a weekly chart Obviously, you know, if we start looking at the performance of the pound, if you remember when me and Sam— actually, one of the last times I think Sam and I were in the office was when the pound was getting absolutely battered at the time. We got down to the lowest level since kind of the mid-'80s, but the bounce since then has been pretty spectacular. And actually, we've got it above some quite key levels. You can see that 50% retracement from the October to that Jan, uh, multi-decade low. The market was finding a bit of a tough time getting above around 1.2480, what I'm looking at here in the, the cable future. You can see that 50% fib being rejected a couple times. That was also the Theresa May surviving the no confidence vote low that we had during 2018. But now we've got above that, we've continued to push up higher. Next key levels here, you've got the 618 fib, which would also be the low from the— from late February. And that also starts to bring in some of the price points here. You can see through 2017. Well, if I just actually put a line on that fib level, you can see here, if I just put an ellipse on sterling, that next level kind of see around— well, let's just mark them up here. You can see how the market reacted here and here. And here failed breaks. You can see extensions on the wick, but failing to close below that same level. And so yeah, the next big test kind of comes not that far above, maybe about another 150 pips or so above the current price, because I'm looking at weekly candlesticks here. But the interesting thing here is that a couple of people kind of sharing the view that although intraday obviously it's coming off a little bit, from in a more longer-term perspective The pound may turn into unlikely winner from Europe's virus troubles. Now what they're talking about here is the pandemic means that the, the deadline for a trade deal this year— remember, there's this— when I say trade deal, there is this thing that everyone's obviously completely compartmentalized in the back of their head. It's so far away from the front page. There's still this thing called Brexit that everyone has obviously dealing with the crisis at hand at the moment and park that, but it's still there. And one of the things that we've been talking about on The Briefing for a while is about, you know, Brexit is going to be delayed. You know, this idea about delivering Brexit, or at least in its first form in the framework agreement, by the end of the year, you know, that's, that's been and gone, left town a long time ago. And what that means then is that one of the big risks about would they or not get this over the line, and obviously come June we'll get a better idea about the requesting of an extension of these timelines because that's when they have to submit. The UK and Europe have these discussions about going beyond into '21, but that does remove a kind of tail risk, if you like. There was a still chance of a no-deal Brexit on the table, of course. So a little bit more favorable terms perhaps for the UK, and I know that sounds pretty bizarre given the economic situation and impending downturn we're about to experience. But the removal of that is quite a positive, uh, in a sense of the prospects for the pound, particularly against the European situation at the moment where they've obviously been struggling. You know, I guess one of the difficulties with the eurozone is that it's a collection of many different countries and all have different, you know, wants and aspirations and fiscal situations for what they want to achieve. And we've seen that with this idea about, uh, kind of joint bond issuance, these euro bonds. Italy, France maybe somewhat coordinated, but Germany and Netherlands, for example, very anti that idea. And it's this inability to compromise, like what we saw last week when they really struggled to put together a coordinated action or a deal to counteract the virus. This is even with us facing a global health pandemic and an economic collapse in, you know, big countries like Germany. They still can't make— they still find it particularly difficult. So, you know, does Europe now have the ability to really talk a strong game against the UK when it comes to Brexit? Probably not. So all of these things kind of play quite favorably, and I do, I do kind of agree here with what Standard Bank are saying, and they're saying sterling will strengthen to basically 80— well, let me— I think they've got a chart here. So Standard Bank have got a forecast here, and we're looking at euro-pound here, so euro sterling rather than cable, and they say sterling will strengthen to 80 pence per euro, a level not reached since the 2016 vote to leave the EU and possibly beyond. And yeah, for the moment, I don't— I wouldn't say I disagree with that kind of overall directional bias. The target I'll leave to you. But yeah, I just thought I'd point that out from a currency point of view. Calendar— what have we got for today? Well, it is going to be quite an interesting day actually. There's quite a few things to keep your eye on. Quite quiet in terms of scheduled major economic data coming out for this morning. You do have the IEA oil market report report, probably worth keeping on, just given, uh, the proximity of oil to some key levels. But it's this afternoon that I'm particularly interested in, and that's because you've got US retail sales. Now, one thing I just want to draw your attention to— let me just make this a bit bigger. So retail sales month-to-month in America last time came in at -0.5%. The expectation today is for -8%. But check this out, the range on the street If you're looking at that distribution, which is always quite critical when you're trying to anticipate the type of impact that data can have on market prices in the intraday environment, your, your normal distribution, if you like, you've got a median estimate of -8, you've got a high of -0.9, you've got a low estimate of -24%. So there's one bank on the street that's going for -24% month-on-month US retail sales number. I mean, definitely it's gonna suffer a record drop in March. Mandatory kind of closes for businesses nationwide across America in attempt to control the virus. There's been mass layoffs that we know of. That's gonna dent people's confidence, you know, that's gonna be a real lack of people spending generally. So to— this is a bit of context. This is looking at the month-to-month retail sales performance performance in America going back to the last 30 years. And as you can see here, even in the depths of the financial crisis, the number, you know, seeing numbers of -4%, -5% was about as bad as it got. Today we could see something in double digits, if not even, you know, up to the 24% number. Just to give you a bit of a flavor The French retail sales number for the, the March from February period was -24% as well. So this is going to be a pretty scary reading at the moment. And of course, this comes after— I saw some charts yesterday— the general median consensus for the jobless claims, not today but tomorrow, is to see another 5.5 million. That's going to take basically the cumulative level to what would be the same of, um, literally, um, uh, what was the stat that I saw? The push would take the 4-week total to 22 or above 22 million over a 1-month period. That's roughly 1 in 8 of the entire workforce of United States of America. Um, so, you know, so key, of course. I mean, consumer spending accounts for more than two-thirds of US economic activity. So again, how severe this number that comes out, retail sales, is going to be later, is going to be, you know, particularly important for kind of just the general sentiment to how the day probably plays out. You've also got industrial production, cap utilization from the US, and NAHB housing market index. Got the Bank of Canada rate decision, not expecting any rates here, they're at the lower bound, but obviously obviously any accompanying commentary to keep an eye on. And then you've got the crude oil inventory numbers coming later on, um, this, uh, this afternoon. Earnings-wise, as I said, more banks to come. Citi, GS, probably the main ones to look out for. On that point, here are the kind of timings. So in kind of chronological order, talking about UK time, you've got Bank of America Well, you've got UnitedHealth coming up just ahead of 11 AM, Bank of America 11:45, US Bancorp same time, GS at 12:25, Citigroup last at 1. I will share these kind of analyst estimates with you guys a bit later on, but that is it. Any questions at all, just let me know. Hopefully that was useful. As I said, please like and subscribe to the channel if you don't already do do so. I do know there's a portion of people that watch that aren't subscribed, so I really appreciate it if you help support the channel. I had some great comments last week as well about people in Zurich, in Australia, in Malaysia, all over the world that watch this. It's quite amazing to think that I'm actually sat here, obviously in my spare room at the moment, but it's definitely nice to know that there's people all over the world watching and if As I said, if there's any questions, any help that I can give you on the fundamental side of things, then just let me know. All right guys, have a good day and take care.