Trump Drops Easter Target As Worse Still To Come

K, a very good morning to you. It is Monday, 30th of March. Hope everyone managed to make the most of what they could from the weekend. As per usual on a Monday morning, it's not just a rundown for the session ahead but for the entire week. So a little bit of housekeeping first before we begin, and starting off with something which I know some of you might have read already, but there is a report, basically a blog that I write every Sunday, which is my kind of fundamental look ahead for the, the entire week, and it includes kind of a calendar of economic highlights as well. So I'll put this link into the video description, so do check that out. But it runs through just generally what my thoughts are for the major themes, some interesting graphics that I'm looking at, ways of which I'm monitoring the coronavirus, for example, was a big theme of what I was writing about yesterday. So Yeah, do check that out. If you don't already follow me on Twitter, this is my Twitter account. I do tweet that report out as well. So as you can see here, issued about 14 hours ago. So it's quite a good thing. Part of my kind of routine, if you like, is every Sunday I tend to try and switch off generally over a Saturday and then kind of late on a Sunday evening I start to get my head back into gear looking at markets. And this is quite a nice way, I guess, for you guys to just kind of shortcut that process a little bit and just get my kind of fundamental view to complement largely what it is I know a lot of you do is technical analysis as well. So yeah, check that out if you get a second. And again, feel free to follow me on Twitter. I generally put out insights day to day. The other thing as well I wanted to mention was this. This is Amplify Now. So this is one of Amplify Trading's new products we released really at the beginning of the year officially. And this was our new kind of on-demand program. So essentially it's a monthly subscription program, but generally it takes people on average about 1 to 2 months to complete. And what it is, is we basically encapsulated all of our knowledge and expertise here at Amplify. And predominantly it's really me as head of market analysis and then Piers Curran, the head of trading. And we've basically put down all of our education that we would have taught over the years into bite-sized on-demand videos. So as you can see here, there's lots of different chapters, kind of Economics 101, where we go into macro fundamentals, monetary policy, and things like that. We go through each individual asset classes through a series of different videos. We go into things like technical analysis, of course, trading the news, trading psychology. So yeah, check that out as well. I'll drop the link in the description. A lot of people have given us great feedback, thankfully, on this so far. Took quite a few months to put together, so quite proud of it, and we would love for you guys to check it out. All right, let's get back to markets then, and let's talk about first of all what the chart setup is looking like this morning. And we had a bit of a risk-off start. One of those— I guess one of the things at the moment not working in an office is I find myself somewhat glued unhealthily to my screens at the moment. It's quite unusual. I generally quite like the routine and process of kind of getting on a train super early, going into the city. I just like that, gets me in the right frame of mind. So it's been a bit of an adjustment doing this from home. But one thing I do find is, yeah, as I said, I do tend to look at the charts and, and the news quite a lot more perhaps than I normally would. And Good thing, I guess, for, for you guys. Uh, but we had quite a negative open last night. You can see here, uh, on my charts, you had quite an aggressive gap down in equity index futures. I think we were down a couple of percentage points, but we've come rallying all the way back, uh, since then. Similar case reflected then European index futures. DAX is up about 80. Crude oil was a super interesting one. I'm not going to make these charts bigger yet because I'm going to walk you through them uh, after I've gone through the news. But WTI crude back to kind of 17-year lows again, though mimicking the equity move a little bit. We've recovered, um, a touch. T-notes still up quite sharply, about 16 ticks, but off the highs. Gold, uh, off— we kind of had a rejection of that Thursday high. You can see here we've come back down to a trend line, which, as I said, I'm going to talk about a bit more shortly. So overall, a little bit of a risk-off initial reaction to what tends to be that gap in markets at the weekend. Obviously, an increase at the moment in coronavirus— coronavirus cases and deaths— that creates a bit of negativity, kind of uncertainty, kind of fuels that feeling. But then we've managed to just restore a little bit of calm going into this European morning. But I'm just going to say that I don't think that that's the be-all and end-all of it. That's just where we're at at the point of filming this morning, which is just after 7 AM. So let's, let's run through and cycle through a couple stories, starting off with the overall coronavirus update. So total confirmed cases now globally over 700,000. But as you'll see here on the left-hand side, the United States of America now far outnumbering the Italians, China, and Spain. 143,000 cases. A couple of things that have come out over the weekend— this was yesterday— so President Donald Trump now has dropped this kind of Easter pledge, if you like, to try and get America back open. Now you remember on the briefings that we were delivering a week or so ago, we were very much of the idea that there's no way that Trump would deliver on this promise. And as per— wrong— kind of right on cue that shifting over the weekend. So social distancing would remain in place until at least the end of April, essentially the 30th of April, and he warned that 100,000 or more people may die. Now to put that in a bit of context, less than 3,000 people have died in America at the moment, and he's commented that it could be more than 100,000. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, and Deborah Birx, the statement department immunologist— wow, I'm testing my vocabulary here— advising Vice President Mike Pence, who's kind of the czar for the coronavirus. Basically, Fauci said that earlier on CNN that as many as 200,000 Americans might die, and obviously Trump's gone for a figure half of that at the moment. Yeah, it definitely— that's the key one I still feel to look for, which is, I guess, this map here. I mean, this is what the confirmed cases in North America currently looks like. There was a lot of discussion. Trump was tweeting on Saturday about intensifying the lockdowns in key areas like New York, New Jersey, Connecticut. As you can see here, most of the cases as a kind of an area is definitely in the Northeast on the coast within New York State, as we know, where cases are roughly about 15 times more than anywhere else in America. But you can see down here when it comes to Florida, also in Louisiana, California, and Washington State, these are the other key areas I'd definitely be keeping an eye on. And as, as we've kind of said before, I think it's fairly well known now that this number in America is going to multiply quite quickly, and I don't think it would be surprising to see that, that number double, potentially triple by the end of the week. In, in that instance, this was the, the kind of overall snapshot where she encompasses now a few different countries. The one probably that dominated a lot of the press over the The weekend was that of Spain, which has been hit particularly hard. A lot of criticism about the government's response and how quickly they were to go into this, this kind of lockdown phase. Quite a few people talking about Italy, and there's quite a few kind of bar charts that I've seen talking about the potential peak in Italy. The one thing I'd say is, because I've had a few questions about that, you know, is that Italian peak then the kind of the catalyst you're looking for for that market bottom when it comes to the virus? And My answer to that is probably not, because I don't think you can extrapolate one country like Italy and then just apply it and roll it out to other European or UK or global to other countries. And the reason for that being that, you know, the strictness and the implementation of their kind of quarantine measures are slightly different. The timings of when they were applied was probably slightly different. The makeup of the demographic, again, Italy slightly different from other countries as well. So there's a lot of different variables I think you need to contemplate. I don't think it's as simple as just taking one line of trajectory and looking, well, Italy peaked after X amount of days, therefore we can apply that to the UK and elsewhere. So definitely something to keep an eye on. Certainly in the UK, I think deaths are now above 1,000, and there were, Michael Gove spoke at the weekend, I'm sure you probably would have seen, not willing to put a date yet about when we're going to return to some type of normality, but it's looking, you know, much like multiple months, potentially 6 months of social distancing in the UK to continue for the time being. So again, Boris, very much in a similar vein to Trump, kind of preparing the citizens of their country that there's probably going to be many more casualties to come. Going forward. One of the things I talk about in the, the Macro Menu, the blog that I write on Sunday, was this, which I thought was quite interesting. This is something I touched upon last week, but it's the Coronavirus Panic Index, measuring the level of news chatter that marks reference to panic or hysteria and coronavirus, looking at global media. And I think this is quite telling of generally how the media cycle works. You can see here, going from the beginning of March to the end of March, the kind of panic index has risen very sharply. And actually, I was just looking over the dates, and you can see we get this big push-up to the peaks pretty much like clockwork over the weekend. So what that means then is that over the weekend, what tends to happen in global, global media is that it's entirely focused on talking about this virus. And obviously It's a lot of doom and gloom, uh, and therefore we start to see peaks in these index before then it comes off generally then as the week gets underway. And it's quite similar, uh, to start things off this week, we're down 13%, but it was up 17%, uh, yesterday. But the reason why I'm mentioning all of this and this index specifically is because what I feel with trying to make that judgment call about whether markets have bottomed, there are a number of different things which I'm, I'm going to run through. But one is that this subject matter is very hard to pin down because it's not like a binary numerical thing. We're trying to ascertain investors' and consumers' fears about this invisible enemy, and that's quite a tough thing to really quantify. And so actually what I thought was quite interesting, and that I'm keeping an eye on, is any fluctuations where you get kind of peak panic, and then how does that then reflect in markets as kind of a narrative at that point. So Yeah, I'll keep you posted on what I find with that. But, you know, one of the things here and what I just wanted to quickly run through was, again, a lot of people asking me, you know, is now the— but have we already hit the bottom? You know, what should I be doing? How should I be investing my capital at this point in time? And this was an interesting thing that I saw, which was money market funds have seen their biggest weekly inflows on record. And I think if I'm right in stating as a statistic that every last 3 weeks it's basically hit a record upon record upon record. So what this is suggesting is that, you know, the kind of headline is cash is king. I mean, this isn't quite cash, but it's pretty much about as safe as the investment in terms of getting a return, albeit a lower one, that you could get. And money market funds then may be suggesting that what I think is probably an astute or prudent move is that if you are unsure and I must admit, when I read the weekend press and I read what different market talking heads or banks are saying, they're so wide and split in their opinion. Perhaps then the better move is to, you know, sit on your cash, so to speak, or in this case, um, you put your cash into money market funds, wait for a little bit more clarity to emerge, and then look to redeploy your capital once you do have a little bit of foresight and the fog starts to clear a little bit. From an investment point of view. But yeah, a few, a few things to have a look at here. One that I thought was quite interesting was looking, um, kind of backtesting to the financial crisis and, you know, people talking about this kind of bear, bear market rally where we had quite an exceptional week last week. I mean, and of recent we've had some of the biggest sell-offs in history, then accompanied by some of the biggest multi-day rallies that we've had in the last 100 years, as you'll remember. Last week. But here, this was looking from a Goldman Sachs research report, and it was looking at 6 times where basically the S&P has bounced by 9 to 19% between September-December 2008. Albeit, as you can see here, each time this has happened, yes, this was a big meaningful rally in markets accompanied by then the downward directional trend of a bearish market. Rallied, sold off, rallied, sold off, so on and so forth. Obviously the question mark being, is this just another episode of that that's materializing at the moment? Well, if you actually look at this, Goldman Sachs, David Kostin, who's their kind of chief US equity strategist, he reiterated on a note on Friday that he expects the market to turn lower again in the coming weeks. However, as I said, you listen to these banks, which I do think you need to take with a bit of a pinch of salt because generally speaking I think that traditional market indicators for determining a market bottom are a little bit watered down by the fact that we're trying to, I guess, gauge fear, which is a very, as I said earlier, difficult thing to, to kind of manage in a sense of, you know, quantifying it. But JP Morgan, they're the opposite. They've said the market rout is probably past its worst now, so they're going for the opposite view of of Goldman's. They said recession-like pricing, a reversal in indicate— in, excuse me, a reversal in investor positioning, an extraordinarily fiscal large stimulus, uh, are all being positives in order to kind of mitigate any further sell-off. They do say though that the coronavirus infections continue to remain the wild card at the moment, and that in particular I feel I still kind of err on the side of feeling still, despite, uh, the kind of authorities' large-scale measures that they've taken, despite last week's move. Personally, I still feel like there's perhaps a little bit more to come based on, for me, still the heaviest weighting on how I feel that this virus is going to perform or accelerate over the coming weeks and months. As we've seen, I've always been— if you think about the way I've delivered these briefings— quite bearish in terms of the numbers associated with the virus. I feel like the authorities have massively undershot it nearly every single time, and I still think that is the case at the moment. And you know, what the markets will react to is whether or not there's a surprise, i.e., we're kind of geared up now. Trump trying to manage this by talking about hundreds of thousands of deaths. You know, it's this kind of figure at the moment that is going to unfortunately become a reality. And, and so that's why mainly I remember I still side on being quite bearish at the moment. This was the other thing, of course. So obviously this is all having a massive impact on the demand side of the equation for crude oil. Oil gapping down last night, we broke the previous low. You can see here. So this looks at the last 20 years' worth of price action in WTI crude futures, and you can see we're back down to that $20 level. We did print a low overnight in the futures at $19.92, in fact. And of course, that puts us back down to that low we saw in the immediate aftermath of the 9/11 terrorist attacks in New York at that time. One interesting thing that I did see— actually, I'm just going to jump over to this This one is, uh, it's not just about the coronavirus. Of course, there is also this ongoing price war happening, uh, OPEC+ between the Saudis and Russians. And over the weekend, basically it remains on track. The two are still having an outright confrontation, neither of which are giving way at this point. So I've got a few notes here. Um, the kingdom— so Saudi said on Friday that that it had not had any contact with Moscow about output cuts or enlarging the OPEC+ alliance of producers. Russia's Deputy Energy Minister Sorokin said that oil at $25 is unpleasant, but not a catastrophe for the nation's producers. Now, this is what leads me to this graphic here, what I thought was quite interesting. This is looking at some of the biggest Russian oil groups, So we've got Rosneft, Lukoil, Gazpromneft, and this is looking on the axis on the bottom, the Brent crude price per barrel. So here you've got $10, $15, $20, up to $50, and then you've got net income in billions of dollars. So the flat line zero is here. So this being a net income positive and negative going south from here. Now, as you can see then on this bar chart, if we get to $20, Brent crude price per barrel, you can see all 3 big companies are still making a net income in terms of being positive. Even at $15, Lukoil is, the other 2 in slight negative territory. It's not until we get to kind of the $10 price point where Rosneft starts to really get hit in that, that respect. But what's super interesting here is that, you know, Russia's strategy of not agreeing to the demands of OPEC has some validity when you start breaking this down. There's a great article in the FT this morning. They talk about Russia and its vast majority of their costs and liabilities are in rubles rather than US dollars. Now, a lot of this is a byproduct of them maneuvering their system given the large amount of Western sanctioning that they received during the Obama administration and that has been ongoing. So they've looked to readdress this As oil prices generally fall, the ruble tends to fall with it, increasing domestic earnings per exported barrel. Also, they have a tax system that reduces levies on producers in line with oil prices, and its producers have big foreign exchange reserves which they've been saving up for episodes of kind of Western confrontation like what they've seen and been part of before. Over the last several years. So they're kind of well prepared for this type of scenario. And now it's a kind of that game of bluff with this, with the Saudis, where Saudis are really feeling a bit of the pain now because they've got the added weight of having Saudi Aramco IPO not so long ago, and they need to manage that accordingly in combination with this diversifying of their economy away from being so highly geared to oil, which is so problematic for them at this present point in time. So yeah, crude oil, it's just quite interesting breaking this down. You know, Russia, if they can play the long game here and really try to make the Saudis blink, then this does mean that you've got to be quite bearish from a fundamental point of view, as we have been for some time. So with that, let's, let's have a look at oil on the chart then. And let's talk about a few different things from a technical perspective. So here we're just looking at WTI crude. This was the chart we had marked up from last week, and you know, this chart completely unaltered. So these markups here, you'll remember from Thursday morning, we— the price was within this range that we can see here, really defined by about $25 on the upside, $23 on the low. And we had said, well, either way the market's probably going to break. And we, we still felt quite, quite bearish with all the news flow that was going on at that time. And we were looking for the break, the pullback, and then the move back down. And absolutely hit to the tee, pretty much as per what we talked through, uh, down to around that, that second target, which were those previous lows in the, the March low. Uh, but here's the gap down from overnight. We have stabilized slightly, but we're still sitting at fairly precarious levels. And if we start looking at the monthly chart— so I'll move this up just above my camera feed so you can see everything. Should be okay now. So yeah, here we are. The next biggest level, just to refresh your memory, would be at 1670. That brings in that actual definitive November 2001 low. Anything below there, really, it starts to not see too much until we get down to perhaps these lows seen here around $13, $14 in the mid-'90s, and then the late '90s you've got that $10.35, uh, that '98 low that we had at the end of that year amid some of the OPEC crisis at that particular point in time as well. So yeah, continue to, to keep a close eye on oil, uh, kind of a double-weighted impact both from a supply side and a demand side, which ultimately I think Again, maintains that bias of being quite bearish on price. Just cycling through some of the other charts then, let's just stick with the US products first. So just having a look at the S&P 500 here, just make this a bit bigger. Again, some markups just to continue the theme from what we were discussing through last week. So you got the Fed surprise announcements and those news measures we had this time last week. You've got this phenomenal rally that we had, one of the biggest seen since, what, the early '30s. The, the kind of counterintuitive move on the jobless claims not being as bad as perhaps some had feared. And then the gap down we've had overnight, you can see a little bit more clearly here. Before then, we've rallied back quite in quite a powerful fashion. So yeah, looking on a, on a daily chart, that Fib 382 still works. You know, particularly well in this occasion when the price has come back down from that level. So I guess on the upside, any retests up and around those levels— and, and here you've got that double top, as you can see in the more near-term price action, which is around that 2600 level in the spoos— is to be kept a close eye on. If we continue to move lower here, at the moment you've got the gap or the close on Friday night, which is at 2516. And then you've got these previous highs with these ellipses here on the 20th and the 25th, and that would come in down at around the 2500 level. I'd probably also be keeping an eye on in terms of the session today because ranges obviously are still relatively large at this point in time, albeit slightly more narrow than what we had seen in recent weeks. Gold, we're just having a look at this. Here, uh, from a more of a kind of intraday point of view. So this is looking over the course about the last 2.5 weeks or so, and in terms of the recent price action, similar kind of setup in a way to the S&P. Uh, let me just see if I get my lips tall here. So I guess upside levels of near-term significance be looking on the intraday at R1. You've got the extremities just above there of the double top from from the overnight session and where we were last Thursday. And then you've got this trend line from, well, last week essentially, going from the 25th. We've just had a test and it's held for the moment, and that does coincide quite nicely with that S1. So be interested to see how gold performs for the rest of the session here. Obviously, if equities do start to continue that move and that, that upward trend that we saw last week, then be looking for a trendline break here and perhaps then another push down to that S2, which should put us back in sight of the low that we were printing back on Thursday of last week. But on the flip side, should equity start to weaken as the US come in, looking for reversal there and a move back up to that upside to retest at that, that double top we just discussed. Um, in the currency markets, just to wrap up, Looking at cable this morning, not, not particularly exciting to be honest. I guess looking at this from a, a technical point of view, rough trend line here going for some of the price activity that we've seen from the back end of last week, Friday, Thursday, Friday, and then the overnight Asia-Pacific session. On the downside, you've got a low pretty much formed at the pivot level on the daily pivots. Any break of that then around the 123.09, 123 handle in the futures, and then there's an interesting area of some of the resistance that we were seeing in the middle of last week. From a news perspective, just so you're aware, because I did have a question about it from someone on Twitter this morning, um, Fitch did downgrade UK's rating to AA- from AA late on Friday. They cited the impact of the pandemic on government finances and economic activity. That puts the UK on par with Estonia, Qatar, Taiwan, and they've also kept them on a negative watch, which means that they're subject to potential future downgrade. Now, definitely this isn't really, I don't think, important for the pound. Much of this has already been priced in. I mean, if a country is going to go to the nth degree in order to support their economy by doing these radical and massive fiscal stimuluses, then I think a downgrade is not unreasonable. The credit quality is going to have deteriorated in that sense, particularly as well with the economic situation we are now confronted with. As long as they're remaining in the, the, the AA category, I think for the moment market doesn't really react to this. And as you're probably seeing this morning on the chart, it hasn't done so. And the way that news generally works is if it was going to move something, it would have already have done so at this point. So it's a news headline. I don't think it's important, to be quite frank. And then finally, the euro. I was just having a look here at the euro. Obviously, the dollar did weaken last week after the Fed unveiled the kind of the latest round of measures to support the economy. And you've got a bit of a trend channel here going from last week week that I'll just be keeping an eye on. We're pretty much bang in the middle of that at the moment, which is sitting around that high point that we printed back on the 27th. So really not too interested unless we get to the upper and lower bound of these, these ranges. On the upside, as you can see here, the, the over— I was going to say the overnight session was a retest on the end of last week's high. Could be quite an interesting area. And then where we are at the moment perhaps has some interest. You can see here where the market's responded as a bit of support, and you can go back here to earlier in the month on the 12th and the 6th, 13th, 16th, and that brings in that level here. So yeah, that's the euro, that's the, the kind of chart setup, some of the things looking at this morning. Any questions at all, then obviously feel free to leave a comment on the video. I'll be replying to people throughout the day. Obviously you can reach me on Twitter as well, just search for my name. In terms of the actual calendar for this week, just to finish and conclude, uh, this is what that looks like. So as per normal, on a Monday, generally quite quiet. It's usually more of a reactionary effect to the over the weekend news, particularly on the coronavirus. We do have US pending home sales a bit later on Tuesday. We then start to see a couple of different things— UK GDP, got some eurozone CPI figures, but I think these are final numbers. You do get the Chinese manufacturing, non-manufacturing PMI data coming out overnight, so by this time tomorrow we'll have some eyes on those figures and whether or not we have hit that that trough and we're kind of coming back slightly in that domestic data. We also get lights of US Chicago PMI, consumer confidence, that's all coming out the US tomorrow. Wednesday we start to see the various different job indicators coming out. US ADP employment change comes out on Wednesday and that leads us up then for Friday, uh, the service and manufacturing PMIs from Europe. Don't forget our final readings, but on Friday, non-farm payrolls. I'll close with this. Um, non-farm payrolls is expected to show, uh, a payroll number of negative just shy of 300,000 in March. That would be the largest monthly drop since July of 2009, as you can see here. So we printed positive payrolls, although we've been close to flatlining a couple times, normally due to a weather impact or a government shutdown. Um, here you can see we haven't had a negative print since we went to 2010, but not one that size since the depths of the financial crisis. Now, unemployment rate is expected to also shoot up to a 14-month high, all things as you would expect. And most importantly, um, the survey period, the reference period they call it for non-farm payrolls, does not really encapsulate then the bulk of the layoffs that materialized in the job, jobless claims we had last week. So that 3.2 million jobless claims print probably is more to date than this payroll reference period. So what I'm saying here in summary is that payrolls is going to probably underestimate. It's basically too old when the data was compiled to reflect the current condition. So even though it's going to be a negative number, and some of you, particularly if you're a student, you might not have ever have seen a negative number. But, you know, in the depths of financial crisis, we were printing, you know, multiple hundreds of thousands, and on various different occasions as well. So I don't think this is going to be particularly a big deal, to be quite frank. I think actually the jobless claims this week could be quite interesting. Expectations are— I think the Wall Street consensus is for another 3.5 million to follow up on the 3.2 we had last week. Now this for me is important because I think from a macroeconomic perspective, it's about how, how high and how consistently high are these jobless claims. And it's going to be next month's payrolls, which is really going to show a true reflection of the situation of how businesses have had to prepare for this latest kind of economic situation that we're facing with the pandemic. All right, that is it. As I said, I wish you a good week, and any questions, just give me a shout on YouTube on the comments section. I'll be happy to help. Alright, take care. See you later.