Trump Threatens To Deploy Military To End Unrest

Okay, very good morning to you. It is Tuesday the 2nd of June. Hope you're doing well. My name is Anthony Cheung. I'm the head of market analysis here at Amplify Trading. Uh, just a quick mention of our websites: AmplifyTrading.com. There will be— you will be presented with a few different options depending on whether you are a trader wanting to learn to trade or a student. If you go on the trader page though, this is what you'll see. And if I just scroll down, you can see information about the team and different programs that we run. But of all the programs that we run, there's something we have called Amplify Now, which is our on-demand learning portal, which we launched at the beginning of the year. If you now click that Start Now button, essentially the way that we've designed this is that we have put— this is the e-learning portal. You just enroll and then you can access 3 videos from the team for absolutely free. So no harm in doing so, uh, just even if you wanted to check out that content without doing anything else other than that. But if you did like what you see, then basically you can pay for an upgrade and get access to the full program, which it really is the, the full kind of foundation for everything you'd need to know to analyze and trade financial markets, at least to start your journey on the right footing. So check that out, just go on the Amplified Trading .com/traders-page, and you'll be able to access that. But let's look at the charts in more detail for this morning. And we've got a relatively quiet open, kind of similar to yesterday in some respects in terms of the equity movement. And we've had a little dip overnight, and then we've recovered as we've gone into the late Asia session and as Europe has come into the market, kind of similar to the gap down we had with some of the Initial protests from the weekend only to be reversed when Europe came in. Kind of similar type news themes as well occurring with widespread protests across nationwide America last night. Once again, I'll go into that in a moment in a little bit more detail, but for now let's just have a quick look across the charts. So equity index futures kind of flat in the US, DAX up about 30, albeit off its best levels. Gold below its pivot level. You can see here just in terms of some of the near-term price activity, it has been the pivot, an interesting point of technical interest, added some support in the overnight Asia-Pacific session a couple of times, had a failed break there momentarily. When it did then eventually break through at around 5:30 AM London time, it broke down, came back up to retest that level before then extension on the push down. So nice classic on the, on the pivot there in terms of the movement. In fixed income, we're basically flat. WTI crude futures holding up, and there's a couple of things to be aware of there. Nothing major really, but all in all, stabilization at a $35 handle. Saudi Arabia favoring keeping the current curbs in place, which are set to start easing from July. They want to keep it in place for an extra 1 to 3 months, according to a delegate. And of course, yesterday we're hearing some talk about them bringing forward next week's OPEC meeting to this week on Thursday. Haven't really had any confirmation or not whether that's going to take place. And obviously the whole deal is contingent on Russia agreeing with Saudi Arabia, which has obviously been a fairly contentious relationship in the past. But it's looking like perhaps that that might take place, and the markets taking heat from that and giving some underlying support to crude prices despite some of the natural demand uncertainty emanating from the escalation in the US-China trade war at the moment. In the FX markets, the dollar is pretty flat. There's been a little bit of movement since the European participants came in, initially a little bit of a dip in the dollar, then a recovery, but net-net the Dixie is unchanged. That price movement kind of reflected in the euro this morning, and cables currently really unchanged but holding on to a lot of the gains that were seen after a decent day in the markets yesterday for the British pound. Let's get in then to some of the stories, and starting off then with what has been happening in America, because, um, from a financial markets point of view You must understand that, you know, my, my job here is to talk about markets. It's not to talk so much about politics. As you've probably come to ascertain, the two are somewhat, um, incorporate one another to a certain respect, just given Donald Trump in the White House. But otherwise as well, the government's integral part of trying to counteract the economic consequence of the pandemic. But things like the reasoning behind this kind of the underlying racial connotations of this latest unrest. Again, I will leave to the sidelines, but markets at this point are not really that fazed by what's going on. That's not to downplay the importance of the issue, but markets don't really have sympathy for these types of issues, at least mechanically from how they function. That's not unless And one thing I'll talk about, that it increases the rate of potential transmission of the virus, which then given that kind of compounding rate of growth that it can have, if then, you know, one person catches it and that R rate goes above 1, and then 1 goes to 2, 2 goes to 4, and so on and so forth, then certainly this would have big ramifications for the economic recovery potential for the United States of America, which would be absolutely key for the global economy. So we're going to talk about that a little bit, but let me just give you an overview of what's happening. So last night it kind of came to a bit of a head given the fact that Donald Trump was doing a few things that I guess the opposing political view have some serious questions about, given that he authorized the use of tear gas on peaceful protesters nearby I believe he was in Washington and he wanted them removed, so he tear-gassed them, walked across basically the hill, and then went to a church for a photo opportunity is what some of the press is suggesting. But irrespective of that, what has been happening? Well, Trump, the main point was that he threatened to deploy the US military to end riots and lawlessness across the country. This, of course, is all coming after George Floyd, that unarmed Black man, was killed by the hands of the Minneapolis police, what, 7 days ago now. Trump, he said that state officials, he labeled them as basically weak and asked them to toughen their response to demonstrations. So again, it's kind of quite a traditional tactic from Trump, similar to how he's dealt with the virus. He's kind of using the, the state-level authorities as kind of the scapegoats to blame in this instance, whereas he comes down with quite a heavy kind of hand. And 2 people have been killed in unrest in a Chicago suburb last night. 4 police officers have been shot in St. Louis. Um, so there's lots of different things that are going on. New York City, they've imposed a late-night curfew as of yesterday. That curfew then being doors closed and from 11 PM until 5 AM. That didn't stop though bands of protests that were happening. There was a rally in Times Square in Brooklyn yesterday that marched for several hours. Protesters were also marching through Manhattan and Brooklyn irrespective of that curfew last night. So One of the main things here that I'm looking at, and I was talking to some of the traders about late yesterday, was just having a bit of a recap really of what's going on with COVID-19. If you remember when we were kind of in early March, I guess this was probably the only screen that I used to be sharing in these briefings. However, it's very rarely that I actually bring it up, and a big point of that is that for one, a lot of this has been priced in, and two, we've got over the peak in areas like America, and we're now on the downward trajectory. And so this is leading to the reopening. But what I'm more interested now is, as economies do start to reopen, then, well, then at what point do we potentially start to see the emergence of a secondary wave? Now, people have always thought that that will be the case because inherently then Given the nature of the virus, that it's very hard sometimes to identify because not all people show symptoms, it might mean that people do effectively go back to crowded places, into the workplace, and inadvertently start to reshare the virus. And then of course it can spread very quickly, like what we saw in South Korea. I think that one individual went to 3 nightclubs and it was thousands of people that potentially could have been impacted. So here then is a bit of an update of what's going on in the US at the moment. Um, and one of the things I was looking at is here, and this obviously makes it a little bit more clear. It certainly, as has always been the case from the beginning, New York, Rhode Island, Connecticut, New Jersey, these types of areas have seen the heaviest number of deaths in regard to the coronavirus situation in the US. But one thing I was having a look at last night was, well, I was just quite surprised by just the, the number of protests that have been happening in America nationwide at the moment. And George Floyd's death in police custody has sparked more than 250 protests across the country. And as you can see here, each red dot, obviously, um, you know, this is not a scientific kind of map with, with respective numbers, and those, those gatherings will vary in size dramatically. But the point I'm saying is that the last thing that probably you would want from a World Health Organization point of view, so from a, a health authority, is for people to be gathering in mass congregations protesting, which is obviously not not conducive for social distancing. So for me, although this virus obviously takes time to appear in its symptoms, you know, it could be too late by that point. One evening of mass gathering, then when these people disband and go their own way, could easily grow very quickly. So I'm very interested to track those numbers now going forward. The protests, obviously, if they continue today, would be going into what the 7th 7th day. So the period of the next week, I think, could be quite interesting to see the trajectory of those US numbers. Um, if you break these down, of course, um, poor African American households with high incidence of pre-existing conditions, so things like heart disease, diabetes, asthma, these are all exacerbated by poverty, uh, poor nutrition, lack of access to medical care. These are all things that typically are more probably reflective of the ethnic minorities in America, and therefore those have been more susceptible and have had higher rates of deaths comparative to their white counterparts, for example. So given the nature of the, the racial underlying of these, these protests, I think it's going to be potentially a risk for markets, not now, but these numbers, if they do expand quite quickly on the virus. So again, just what I'm saying, I guess vigilance for tracking these numbers going forward. I think markets have become relatively sanguine about the whole information or the whole situation at the moment, and we continue to kind of rally in the equity market. Now, I'm not saying that this is going to be the one silver bullet that's going to call the end of it, but I do think that, um, this— the secondary wave risk was already there, and now that's been somewhat exacerbated by this, this situation. Okay, moving on, other headlines. Um, this isn't new— Merkel talking about more stimulus. The only reason I'm bringing it up again, because this did come out last week is that today is the day they're going to be talking. So German Chancellor Angela Merkel is going to seek to broker a compromise today on a second stimulus package after they unveiled the initial one in March. Merkel will host officials from ruling coalition of her Christian Democratic-led bloc and the Social Democrats in Berlin at 2 PM local time, so around 1 PM in London. Possible measures range range from debt relief for struggling municipalities to cash bonuses to stimulate car sales. I think it's Cash for Clunkers, uh, is how it's referred to in the US, and aid for families with, with children. The finance minister also wants to extend a state wage support program. So as what we've seen before in markets, generally every time the government kind of steps up their fiscal, um, kind of offering to the market generally is more well received than not. But as I said, I think that this is already priced in because the initial headlines for this were coming out last week. The only thing looking out here then is potentially disappointment if Merkel, excuse me, can't come to a compromise between the CDU and the Social Democrats. Well, then, you know, if they, like we had with the European assets sensitivity to the inability initially for the EU bloc to come to some sort of coordinated action. Perhaps that could have some sensitivity in a similar fashion if Merkel can't piece together some kind of deal and compromise. Markets expect now the range is around €50 to €100 billion that we're looking at for, for fiscal stimulus in the secondary package. The other thing we've had overnight is the RBA. I'm not going to spend much time talking about this, hasn't really moved the currency. Basically maintained both their cash rate and 3-year yield target at 0.25%. This is all very much as expected. And one of the interesting things, if anything, was a comment that possible depth of downturn will be less than earlier expected. So if anything, perhaps a little bit upbeat with that commentary. So the RBA holding fire on signs of early recovery. So the Aussie just holding on to some of the gains that were seen from yesterday. State session. On Brexit, a few things to be aware of. UK is expected to indicate its willingness to compromise on fisheries and trade rules if the European Union agrees to back off from its maximalist demands related to regulatory alignment and fishing access, according to the Times newspaper. Now, that is a little bit of a sign of perhaps a concession of sorts because Definitely on the fisheries and trade rules, there were the two things, if you remember, in yesterday's briefing from the weekend press, that are providing a bit of a stumbling block for further progression in these talks, which recommence today between Britain and— or UK and Europe. My thoughts on that have not changed. I do not think that the negotiations between the kind of the Brexit negotiators is going to change this week. But one thing is, is that Prime Minister is going to be meeting Boris Johnson with the President of the European Commission, said to be this month, so after this week, but obviously ahead of the deadline at the end of the month. Still looking to, looking to get a deal of some sort over the line, or at least heading in the right direction, in order for the UK government from Boris Johnson's point of view not to request any further extension beyond the, the current transition at the end of the year. And then looking at the calendar for today, it is actually pretty quiet. I mean, RBA aside, there's not really a great deal coming out on the, on the docket today from an economic data point of view. A couple of mortgage-related numbers, perhaps just for those interested if you, if you own a property or looking to buy or sell at the moment. Uh, the latest nationwide house price data for May, uh, came in month to month at -1.7%, a little bit weaker than expected. Um, but I don't think that's surprising. And nationwide house price data doesn't really move the pound. Uh, but that— just pointing that out because you've got mortgage approvals, lending coming out this hour, uh, later this morning. Again, not a market mover. And then going into the afternoon, no major 1:30s from the States. You've got the ISM, your index but again, that's not really going to be a market mover either. And then the API inventories for any crude traders not coming out until much later in the evening. Speaker-wise, not too much from the docket, certainly nothing from a central bank perspective. And then from a fixed income side of things, some supply coming out of the UK to be aware of if you're looking at the UK gilt market. But that's, that's pretty much it from me, so Yeah, pretty quiet open this morning, but given the lack of calendar events, perhaps then today could be a much more technical-led day on the charts, cross-asset. Perhaps still keeping an eye on, on Trump, this situation with the flare-up with the, um, the demonstrations in America and Trump's threat now to deploy the US military, um, certainly need keeping an eye on at this point. Markets seemingly still brushing that aside somewhat, but I think if we start tipping over into that view that I've been talking about, about the repercussion that could have on the pandemic rates of recovery with the, and the virus numbers, that could be something to, to keep an eye on. And then also just keeping an eye out as well for anything on the the US-China trade front. However, I was saying this to some of the guys yesterday, I would imagine that Trump will be wholeheartedly looking to try to address the George Floyd situation rather than talking about China and trade wars. Um, you know, in terms of his political hierarchy of needs, if you want to call it that, it's certainly much more about the demonstrations at this point. So perhaps that could lessen the need or lessen the probability of a kind of a China-related comment that could spook the market at this point, which might mean that trends generally are going to be continuing today and a more technical-oriented session. But we shall see. All right guys, that's it from me. Have a good session ahead and I'll catch you later.