The Return Of The Tariff Man

OK, very good morning to everyone. It's Tuesday, the 3rd of December, and I'm gonna go straight into this graphic I've got here, which is a bit of a reflection of the size of the sell-off that we had yesterday. Pretty much the S&P putting in its biggest sell-off that we've had in about 2 months. The Dow, I think, was down, closed about 268 points on Wall Street. The combination really of the tariff man back in business, of course, before he heads and meets other senior heads of state in the NATO Leaders Summit happening in the UK coming up this week. I've got a full agenda for Trump that we can look at hour by hour so we can track his movements for any potential tweets that he might make on these subjects. And then we've had the economic data that's been coming out. And despite some of the recent kind of positive US economic data points we've had, we've had some disappointments. And particularly yesterday, almost sparking further momentum behind the sell-off on Wall Street, was that latest ISM manufacturing number. Kind of every component of it, the US manufacturing sector was contracting slightly faster rate in November. The PMI survey also showing businesses scaling back production, new orders are faltering, the employment constituent was down against the prior month. And all of this as well coming ahead of more key North American data this week. You got the non-manufacturing PMI, ADP, and of course non-farm payrolls all coming up on Friday. So they were kind of the two main real catalysts to to yesterday's price activity. So the dollar got hit, both major pairs largely supported. And if we're looking at the, the kind of charts this morning, things are seeing a little bit of a recovery of sorts, I guess, given the depth of the move that we saw yesterday. This is usually quite common kind of practice, people just closing out those speculative shorts having hit that move yesterday. And just looking at two major stock indices here, this is the S&P 500. One of the questions I was asking Sam first thing this morning was, if you were gonna— if you, uh, if I had to force you to buy the dip, where would you buy the dip? And I'm sure he can talk about this a little bit more because for me yesterday's movement had enough reasons from the tariffs and the data, but not forgetting as well that we were at record all-time highs And so I do think that a little bit of a pullback here is kind of warranted at these levels. The question is then, well, at what point then do we, we kind of look to get in for the inevitable Santa Claus rally if that does indeed materialize? Obviously, a lot of risks looming mid-month given the tariffs still potentially coming on China. We've got the Federal Reserve meeting, you've got the UK general election, so still plenty going on. But you can see here from, uh, yesterday's response at a key kind of technical level, you had that trend line, ascending trend line from really the 13th, the retest on around the 20th, and that coinciding with some of the upside resistance that we had around the middle of November, just all coinciding around that same point. Before then seeing a bit of a lift in the most recent price activity this morning to get things underway. If we're looking at the DAX, pretty similar as well. You know, the DAX loves it when it breaks a key technical level. You know, the way I kind of look at the DAX and the way of which it moves, it's all often, um, you need the fundamental catalyst, but then the technical breaches of key, uh, longer time frame levels tends to see some real sharp price movement. And yesterday certainly we got beyond that point. You can see we broke that mid-November area. We then pushed down. So you can see here that level, that extension on the wick there. I know it's quite small for you to see. Let me make a bit bigger. So there, the break that you get, you get the break, the pullback to the exact level of where the initial area that people are looking at. Then you get push down on the downside. And as we recover, we're recovering back, uh, playing on the same kind of technical points. So the market responding initially when, uh, the overnight Asia Pacific, late in that session, to where we were on the 20th. Then we break higher. Where do we go? Back to that level again of where we were consolidating previously, here and here. So again, quite, you know, when you're trading that type of instrument, which is very volatile I think you've got to be picking out these levels well in advance of time. And I did— if you didn't catch it yesterday, I did share some commentary I was doing immediately post the ISM on our YouTube channel. So if you go on the breaking news category, you can catch that. But you can see how when I'm trying to observe the markets in flux, when things are moving quite rapidly, for me it's about monitoring of key levels across asset class. That's how I generally can determine then about the, the depth of a move, how, how far it can go. So in addition to just seeing how the candles are forming, uh, the kind of movement on the ladder, also looking at the cross-asset class correlations to see if there are any meaningful coordinated breaks of key levels is what I'm generally basing that along the decision And if you're trying to kind of maximize then potential profit targets, for example, to maximize the trade, to get out when the market is moving quite, quite rapid as it was yesterday. One thing that's going back on the macro front, this was another graphic that I'm sure in summary is very familiar. And this is looking at the blue line as the S&P 500 index. The white line is the MSCI Asia Pacific Index. That's kind of a whole continent, if you like, putting all together those Asian indices. So the US has outperformed. The point here is not that. The point is the red lines here. So every time, you know, if you were to remove the right-hand side of the chart, this is record all-time highs. We hit the record all-time high. Trump says he will raise tariffs on $200 billion of Chinese goods to 25%. That was in kind of May time of this year, and then equities fall. We then get to equities all-time highs. Trump says, "We'll add 10% tariffs to $300 billion of Chinese goods." Equities fall. We get to all-time highs. Trump comes out, as I'm about to discuss, and now he's not talking about potentiality of delaying or disrupting at least the Phase 1 deal with China. But now he's firing bullets across the entire globe at everyone from France to Australia to Brazil, Argentina, uh, with this whole kind of US protectionist policy. And, and therefore we've had a little bit of a correction. So, you know, the one thing that is still very telling here, um, if you're kind of moving yourself out of the intraday market and looking at this more medium-term perspective, is that every time we get near that all-time high we go back into that continuum, that loop of the trade war cycle. Trump has that flexibility then, almost, it feels, to kind of get a little bit more aggressive on the rhetoric, and inevitably then markets pull back, only for then a deal to be made or hints towards it. The Fed might respond if there's continuous pressure in the market, and then we go back up again. One would imagine this can't be sustained forever, but at the moment this is a very distinct pattern and one that I think we can continue to expect to see in time. The other thing that, that I've was thinking this morning when I was coming into work is that there seems to me to be a very distinct pattern, not only about where the stock market is at this point in time and how that can translate to Trump's activity, or at least strategy is the other thing. We do have this coming up. Donald Trump arrived in Britain, fairly, fairly quiet arrival actually yesterday. I have tweeted on my account the full agenda of where he's going to be today and on the 4th of December. This of course is for that NATO Leaders Summit that's happening in Hertfordshire. But the important point I want to make here is that every time— so if we were to look at the 4th, when we're right in the middle of the NATO meeting, some of the people attending this are Justin Trudeau, the Canadian PM. Angela Merkel, the German Chancellor, will be there. Of course, Boris Johnson is hosting, the Prime Minister. Giuseppe Conte, the Italian PM, is going to be there. Mark Rutte, the Dutch PM, is there. Nearly always that I've seen, the head of a G7, G20, NATO, whatever it might be, if there's heads of state present, particularly Trump's, Trump's least favorite character, Emmanuel Macron, he always threatens new tariffs, or he threatens basically this kind of notion that the world is taking advantage of America. And so again, these types of things are very subtle, but something to be aware of, because then you can start to almost anticipate around the timing of which the Trump tone or tactic might change gear or direction. What I'm saying then is that every time before meeting heads of state, he typically starts to talk quite a negative tone. So something to just bear in mind. But that, in combination with the stock market, I think, given that we were at all-time record highs, was almost like the perfect storm for what happened and created a lot of the market movement yesterday, I feel, from a fundamental perspective. The other point here though that makes it a little more interesting, and perhaps a little bit more that we could see some more downside to come, is the fact that China have been quite vocal about potentially retaliation. Now, Chinese state media has said the government would soon publish a list of unreliable entities that could lead to sanctions against US companies. Now, a lot of this is coming in retaliation to the human rights issues that the US have been saying about what's been going on in Hong Kong with the pro-democracy protests, and also in an area in the western part of China in Xinjiang, which is where they've been, these reported voluntary re-educational camps, which I'll let you make your own judgment on what you really think about that in reality. But all of this, of course, has come at a very interesting time, and one of which is adding a lot of pressure about the delivery of something's got to give before the middle of the month. Because the clock is ticking. December 15th, Trump has threatened to impose 15% tariffs on $160 billion further more of Chinese imports. Now, at the moment, I think things get a little bit more worse on this front before then the inevitable happens. And I do think that a Phase 1 deal will not be completely eliminated. I do think though we're gonna have to be looking until the new year until it gets done. But between now and then, I Obviously, there's a lot of risk on the table, renewed, that is. The other thing as well that the Global Times editor, which you'll know, quite vocal on Twitter in the Western world, tends to be the mouthpiece of the government, has been talking about US officials may also face visa curbs as well. So it's all suddenly kind of escalated quite quickly, particularly on the back of that, again, legislation that was passed by the president last week. Supporting the situation that's happening with the protesters in Hong Kong. This, just to make matters worse, the— as I said, Trump going into meeting all of these officials. I mean, just imagine going into a meeting room where you've basically just said you're gonna massively tariff individual countries, and then you go into a room to meet all of the prime ministers and heads of states of these countries. I mean, You've got to hand it to him, he's got, he's got some pair of, uh, well, some pair of stuffing balls, let's say, keeping it seasonal. But yeah, this is the main thing that's happened overnight, and the headline that Bloomberg are running with is that the US was proposing duties on $2.4 billion of French goods over tech tax. Now hitting France where it hurts. Cheese and wine and handbags. I'm sure Bloomberg are having a little, little bit of a dig and a laugh at that this morning. But, you know, these are the main exporting goods out of that country. And so the US proposing this in retaliation to digital revenues that France has been proposing to hit and specifically target large American corporations. So as you can imagine, those like Google, Apple, Facebook, Amazon, which they feel are massively underpaying and getting around the loopholes of the amount of tax that they should be paying. And of course, America taking this as, why are you unfairly picking on us in this situation? Uh, the USTR, uh, are not only looking at France though, they've got their eyes on Austria, Italy, and Turkey. So now it's spread almost, and although that was always the case, Again, the more the market starts to believe that this is beyond the shores of just China, the more of a global risk that it becomes. So yeah, in very interesting development. So overnight, okay, let's move off Trump and let's go somewhere else. One is, just wanted to quickly talk about OPEC. So, um, for those on the distribution list, I did email this out to you this morning, so do have a read. Basically, it's an analysis piece, a preview ahead of the OPEC meeting that's happening later on, second half of this week. I did also reshare on my Twitter account if you need to see the article that way. Now, a couple of points I've taken out of this article, and I just wanted to get you up to speed of the thing— things to think about, because as I said yesterday's briefing, the OPEC meeting, rarely does it get to the point of the, the confirmation from the press conference officially We're gonna get a lot of headline noise coming up over the next day or two. So I wanted to get you guys kind of set up for what to expect. Now, many analysts say the group should announce deeper cuts for longer in order to avoid a price slump. So far, however, OPEC delegates have largely indicated no appetite for bolder action. So on the balance, expectations are that they're not gonna deepen the existing OPEC 1.2 million barrels per day cut, they're just gonna roll this over given its expiration at the end of Q1 of 2020. Now, a lot of this has been reignited by the fact that the Iraqi oil minister said on Sunday that the proposal should be to increase the cut depth by an extra 400,000 to 1.6 million. Now, for the most part, OPEC+ appears headed towards a less ambitious but more straightforward extension of a deal on the same quotas The exact length though is unknown. Some, according to those familiar with the discussions, have said that we're looking at basically 3, 6, or 9-month extensions which could be under discussion. Obviously, the longer the extension, probably the more bullish it could be for prices. So scaling out from 3, 6 to 9 months. Now, I thought this was a really interesting point and something which I do think could throw a little bit of a spanner in the works for a positive price surprise, and this is that shares in the state-owned Saudi Aramco are set to begin trading next week. And obviously this has been one of the most eagerly anticipated and biggest initial public offerings we've ever seen. Now, what do you think Saudi Arabia will want for the price of oil in the first few days of which Saudi Aramco starts trading? For me, I think that definitely spells a little bit fishy that, you know, would they— do they really— even though they've been the ones who've been very reluctant to deepen the cuts because they know they typically end up shouldering most of the burden, but they definitely are going to want oil prices stabilizing or moving higher when that— those shares in Aramco start trading next week. So I just think, yeah, a little bit suspect, the timing. Will Saudi Arabia feel this kind of political pressure to perform with Aramco? And so therefore, well, look, let's just, let's just commit to something pretty decent like a 9-month rollover, or let's go for a $200K extension for a little bit more plus an extension on the time frame, something like that, just to propel the oil price in time Knowing as well, Saudi, that the global picture is at some degree of risk coming this and next week under now the renewed protectionism coming out of the US, which could dent oil prices right at the worst time for Saudi with that Aramco listing. So yeah, in the absence though of deeper collective cuts, analysts have said that the Saudis could well start to just put some additional pressure on the likes of Iraq, Nigeria, who have been historically very bad with their compliance, to just basically start upping their game and falling into line. And obviously the Russians will be key. So a couple of interesting points there I thought I'd share. Rounding off the, the headlines, the other things here are in Germany. We were talking about this yesterday, pretty, um, huge move in, in Bunds actually yesterday, in German yields. So I wanted to just give you an update because everyone yesterday was talking about perhaps now, you know, a revolutionary move from a fiscal budget point of view. So we're moving out of the surplus to really ramp up government spending under this new leftist junior partner coalition in the SPD. However, now the dust has settled, one of the things here that I read which I think was quite interesting was that They said the SPD and these, these new duo leaders that are more left rather than centrist, um, believe that ending the coalition, generally speaking, in Germany then leads to the risk of a snap election. Now, that's a particular risk for the SPD, whose popularity has been decreasing, where support has slumped around 15% in some recent polls. Now, the risk that that runs then is the SPD could lose out because in the polls at the moment, the far right, AfD, are polling at a pretty much matched level. So the idea here being then that maybe they won't want to disrupt and pull the plug on the existing coalition because the risks are too great that if they did and we went down the election route, they could be completely out of power, uh, and you'd have a far right AfD potential representation. And so better off then just using your negotiation internally with Merkel's CDU to try and make, make further headway. So I just thought I would cover that. Um, new poll has come out overnight, the ICM poll. Importantly, and this is going to be something quite interesting to watch over the coming days, this is the first poll conducted which encapsulates the fieldwork post the event of the, the tragic event that unfolded in London on Friday. So this was polling people who would have already have experienced and known about that terror attack that happened on London Bridge. Now, what we've seen before is this often can lead to further support for the Conservatives, given the more aggressive policies on things like policing, immigration, internal kind of rulings about the severity of punishments in regards to the the, the criminal system, uh, and so on, comparative to Labour. Uh, but one thing that happened was it wasn't like a big change. If anything, it was stabilization. The Conservatives in the latest ICM poll have maintained a 7-point lead over Labour. And so you remember the weekend, there were what, 4 new polls, 3 of which Labour were gaining. And so if anything, this is a, a slight positive for the Conservatives. On this side. And then finally, uh, the Aussie is a little bit firmer overnight in the currency market. So despite some of the, the negatives we've been discussing on China and trade wars, Australia had their RBA, the Reserve Bank of Australia, interest rate decision as expected. They didn't change rates, they kept it on hold at 0.75%, but they did say they are prepared to be patient as policy has long and variable lags. So again, not looking to make any near-term moves if you're reading between the lines of the types of commentary that came alongside their actual holding in rates. Looking at the actual calendar for today, what have we got? So on the data side of things, UK Construction PMI, that's not going to really move much the sterling currency. It'll be the service number we'll get tomorrow which will be more important. Eurozone producer prices perhaps could be warrant watching. The month-to-month is expected at flat. The bottom end of the range there would be -0.1. And this afternoon, fairly quiet in the US. We do get the API oil inventories after market, but the thing I'd probably say you need to monitor really more is anything coming out of Trump. As I said, that full agenda is available on my Twitter account. To see all of the movements of today. Really, today is the build-up. The actual NATO meeting starts happening tomorrow. Demonstrations are apparently happening across London, as they do when Trump arrives in town. They're going to be happening from 3 PM because then at Buckingham Palace they're hosting a reception this evening. Before then, the meeting kicks off first thing, 7:30 AM, for the the start of proceedings on Wednesday. All right, that's it from me. Gonna hand you over to Sam. I hope that was useful. Remember to like and subscribe to the channel if you've not already done so for more updates, and I'll catch you later on. Thanks very much.

Hi guys, good morning. Hope we're all doing well. Decent move lower in stocks yesterday, and we did come down to 10 test the— well, initially we, we filled the gap from a couple of weeks ago, uh, decent reaction from that. Let's put this down to a 15-minute. You can see a couple of times we did come down to hit, uh, 3111, and we got a good push back and we couldn't break below it. As simple as that, really. And looking on the 240, that trend line that starts back on the 13th of the month before November— or on November, I should say It's held up well, so worth keeping an eye on that, how it holds up, because if that was to go, 3100 could be a level to keep an eye on. And as Ant mentioned, in terms of sort of buying the dip, where would appeal to me? I do quite like the, the look of— and it was around this sort of point here, 30— what was it, 3054, 3055? I think that's a good level as any. To really come back in and haven't really necessarily retested that area since we, we did break through. And you'll remember as well, maybe just a bit above there now is the, uh, the longer term trend channel, uh, the top part of that that we did break through on the 1st November. So again, that would be probably worth just having a quick look at to see where we're trading now for any retracement to that point. I'm just going to put this on for us here. Let's just keep it as a trend line. Roughly draw that there. So you can see, well, if that was to come in now around 67, uh, you see the breakthrough on the, the beginning of November that I was on about. So that would be worth keeping a watch on as well, just in case we are to, to have any follow-through. But must stress, you know, until we really get below that, uh, trend line, uh, from the middle part of November, I wouldn't be too worried about this market. coming down too much. So for now, holding up, obviously above where we're trading. Got to keep an eye on any of these potential resistance points that we had previously been support that we broke through. But yeah, that trend line would be one to keep an eye on, and then the retest of the overall big trend from the all-time highs as well. The pound starting the, the morning quite nicely, finally breaking above that trend in the early hours, but we did come back and it would have probably caused a bit of dramas for anyone wanting to get long in there. But we have pushed up, uh, to test up towards today's R2. So decent push there for the pound. And if we put this on a 240, you can see the significance of this area just above where we're trading, 130. I'm going to draw a bit of a rectangle on that going back to the highs that we had back on the 17th of October. We had a couple of goes at really trying to push above that couldn't quite make it. We came back on, uh, Halloween, Brexit Day apparently, uh, and the 18th of November. Couldn't quite get above where we're trading now. So quite a lot of resistance above where we, we are trading. How long we got now? 9 days until the election. And if we have a look just at the, the recent price action of this market over the last few weeks, we have been overall just chopping in a bit of a range. Every time we've potentially look like we're going to have a go at breaking out of it. We haven't, so we're just coming up to the top end of that now. So worth having this marked up, and you can see the significance of this level if we go back to, uh, what was that, April this year, uh, and then obviously retesting that now. So a key level on the longer term chart to have a watch at around this 130 on the futures. A break above that, could expect a point move, I would say, relatively quickly if that was to take place. But saying that, each time we've come to either the top or bottom end of this range, we've been met with some, some decent price action for a reversal. Euro yesterday, a lovely day for any person who was bullish, and we're coming back up to its key point and top end of that range as well, just above 111, the handle on the futures. You can see here, once we've broken through this on the the 6th and the 7th of November. We came back to retest it a couple of times in the mid part, and, and it's held up very well since then. So keep a watch on that for the euro. The downside, you can see why on Friday we, we found support there. So again, longer term, looking at this more as a, a key level of support below, resistance above. And again, if we were to break out of those points, then why can't we reach the other parts the, the range, 112.02 up to the top, and then obviously that low that we had on the 1st of October, uh, down at 109. Gold yesterday had an attempt to try push higher but wasn't really met with much buy-in, especially with stocks going lower and the dollar was weak. You know, you had to be slightly worried about that, you know, if you're a gold bull anyway. 1450 still a key level to the downside. The the top end of this range that we broke through. We came back to retest that on the 20th of November. It was 1480. Now the contract rollover's taken it to 87. So just be aware of that if trading futures. But we are getting squeezed in from both directions, you'd have to say, now for gold. So keep a, a watch on that and any potential break that could come. We'll drop this down to 240 and you can just see maybe over the last few hours we are just getting squeezed in from that top end. Uh, so keep a watch on that. Once I put the pivots on, let's have a little look more closer intraday on the 60-minute at where we're trading. You can see from the last two, uh, trading sessions, those highs have been coming down. And, uh, as well, just below where we're trading here, 1465 is a pretty key level. Yes, a bit choppy yesterday, but you can see we found support today and have been a really good price action point over, uh, last week as well. So gold getting squeezed from the top, the bottom, uh, as well, you could argue, with the trend starting on the 26th, really nicely respected yesterday morning for the third test after we made one on Friday as well. So I'd probably, for gold, wait for— in terms of a bigger move outside of those trend lines— or wait to see what happens at 1465 as well. Have a quick look at oil. Yesterday we pushed higher really an early morning trade and just couldn't get above the, uh, low of that 21st around 56.60. Incredibly well-respected technical level there. That matches up along with yesterday's high today on the R1, so keep a close watch on that. Any push above that, R2 marks up pretty well, bang on with the low of the 25th. So oil quite well respected yesterday from a technical point of view, quite low in volume today. It's going to get a quick trend line on that just to potentially see if we can get a further test of that, uh, later on. The higher today, we had a go at trying to break above what was again quite a good level, 46.32 yesterday. You can see resistance late yesterday was initially support, and then the first real test of that today offering a level where the sellers have got in. So we'll be keeping an eye on that trend line. Obviously the high from yesterday, the R1, break above that, you could see a further move towards 27, which was a key point, as we can see back on the 25th, which didn't really stand in the way of Friday's sell-off following that, uh, technical break as well, which would have picked things up to the downside. Quick look over at the DAX. I mean, well, this time yesterday we were saying, well, hang on, DAX is trying to push up to the top end of that range. Quickly reversed along with stocks across the board and a big push down. We are coming back now to test some of those resistance points. So keep a watch on that. We see the pivot again, worth keeping a, an eye on. And with any of these equity markets, you know, yesterday was a day where the afternoon led to that selling. So keep a, a close watch on any support. And if we do come down with a bit of force, whether you would want to be a buyer around these levels or not, again, I'm not too sure. There could still be some to come, especially if one of these trends were to break. So euro not necessarily massively strong today, which is allowing maybe the DAX to recover a bit. But a strong day in the euro yesterday obviously brought the DAX down and the Bund as well. You can see here still getting a bit choppy around those lows. I'll just clear up the market levels. You can see that low from yesterday was a decent area from the 13th as well. So that 13th of November being attracted by quite a few markets a break below there in the Bund, and you can see the next horizontal level that it'd be targeting would be down to the low of the 12th, the 8th, and the 7th as well, where there was quite a, a lot of buying that came in. Again, with these markets, if you do get those retracements, just keep an eye on any previous lows. And today, the pivot, uh, 1730, and the low of the 22nd all match. Chat as well. As usual, any questions, obviously please, uh, do let us know. We'll be on the mic throughout the day, and I hope you all have a good one, and I look forward to catching up with you all later on.