Trump U-Turn As NATO Meeting Begins

Okay, good morning. It is Anthony here. Let me transition my screen back. Not Sam North, as the, uh, the bottom of my screen would suggest. So it is Wednesday the 4th of December. Plenty for us to talk about given some of the size of the moves that we had yesterday. Initiated by obviously renewed comments from Donald Trump, who was speaking live, downplaying the urgency of getting a US-China trade deal over the line, prompting a renewed spat of selling across the US indices. The Dow finished down about 280 points. So remember, the day before it finished down about 270 points. So the, the kind of losses are starting to accumulate. And this morning, the index futures, at least in the stateside, are looking a little soft once again, albeit in Europe a little firmer, but sub-pivot levels in both the Euro Stoxx and the DAX future. The DAX you can see here in the center left. So we're kind of maintaining overall in the asset class the correlations, relative risk-off pricing in the wake of what has been developing. Over the last 24 hours. So gold still up and maintaining the bid that was seen yesterday. We're higher by about $5 at the moment, just short of the R1 at $1492. And then the US 10-year, uh, company trading flat. But again, the point being it's held on to a full point move that we had in yesterday's session, as you can see here down in the bottom right. So all my charts pretty bare here at the moment because I've, I've pretty much removed all of the technical levels because I want Sam to come on after me and really pick out everything from fresh, because I think certainly I would like to know where next on a lot of the downside levels if we were to get another run in the equity space today. But as I said, I'll leave that to him. So this is the main crux of the matter. Trump yesterday, um, me and the guys here were talking about this at the time. He was kind of almost ad-libbing, and, and whenever Trump does that becomes a potential disaster in a sense that, you know, he— one word obviously out of place and the markets react almost instantaneously. And when he made the comment yesterday about, look, I don't have to do a deal anytime soon, that was kind of the catalyst then for the trigger to further extend on the sell-off that was seen at the beginning of the week. This, of course, particularly important because we've got about 11 days now until the initiation of the next round of, you know, kind of just shy of $200 billion worth of renewed tariffs on Chinese imports. So obviously quite a severe about-turn on US trade. And as I was discussing in the briefing yesterday, this isn't just a focus on China. This is a focus on global trade. So everyone from Italy, Austria, Argentina, and then of course France all in the spotlight at the moment. And that's what's causing these types of moves. As I said, the kind of traditional flight to quality move holding for the moment. This is a graphic here looking at the change in Treasury 10-year yields. And you can see here we had the biggest one-day drop since the summer in August, seeing around a 10 basis point move. You can see we haven't really seen that since the depth of what we had in the summer. One of the key things then I would say to have a look out for is Trump is of course in Britain, and so if you are waiting for him potentially to say something or to tweet something, then you kind of need to recalibrate your, your Twitter scanner somewhat, because instead of waiting for the US session, so London afternoon, obviously anything could come at any time now, it if you are based here in kind of GMT-0. So the summit is happening today. I did on my Twitter account reshare the full agenda. They kicked off about an hour ago, the arrival at the Grove Hotel just outside London in Watford. And one of the most interesting things, of course, is that China for the first time will be on the formal agenda at the summit, with the US warning against countries becoming dependent on Chinese infrastructure and credit. So he looks like he's trying to strategically tie into this NATO discussion the talk about China, which would fit hand in glove into this whole narrative on the protection of trade, on the ongoing trade war. And what's been quite interesting here is that there's a lot of political news coming out at the moment around Donald Trump, starting with this NATO discussion. So Trump pulls a U-turn on NATO, claiming credit for stronger pact. Now, heading into this meeting, obviously everyone was a little bit worried. Trump was kind of firing shots, if you like, at the other heads of state. However, after spending a long time being highly critical of NATO, of course the US being the biggest kind of financial backer of the group, and has been critical in a sense of other countries not pulling their weight by giving the appropriate contribution to like the fund, if you like. He actually flipped that and started talking about the fact that a lot of countries have stepped up. And you know why? It's because of me. He said the alliance is becoming different than it was. It's much bigger now. It's much stronger than it was. So, you know, this is all for me a little bit of PR management on behalf of Donald Trump. And that's going to lead me on to this next one. And really, there's, there's a couple of things here. One is here: White House seeks to portray Trump at work during impeachment. Now, I do think that that is a particularly interesting one. Because at the moment the House Democrats have accused Donald Trump of abusing his office for political gain, trying to obstruct the Ukraine-gate investigation. And this of course comes after a report that they released yesterday paving the way for articles of impeachment and a trial in the Senate. So at the moment, Capitol Hill is completely focused on trying to impeach the US president. But what's the US president been doing? Well, if you remember, Everyone was having a bit of a jibe at him. Do you remember just before Thanksgiving he did that tweet of Rocky Balboa with Trump's head on it? And everyone was going, "This is ridiculous, he's not taking anything seriously." Then where did he turn up? He was with the troops in Afghanistan, handing out the dinner plates. Absolute genius from a marketing point of view on behalf of Trump, I thought. Everyone was thinking, writing him off as a joker. Not taking it seriously, and there he was with the US forces. And that was an unscheduled visit. Then, now, he starts ramping up the rhetoric on China. He flips on NATO, saying that, you know, "We are a united force against China." And China is one of the biggest subject matters that really resonates with the electorate, and particularly the Trump kind of base domestically. So what you can see here is what they're trying to do, and I do agree with this kind of Bloomberg statement, you know, whilst everyone is on Capitol Hill, as long as he keeps saying fake news, then he can kind of twist it and say, look, they don't care about our country, they're just trying to go on a witch hunt. Look at me, I'm out trying to make America great again. And I think it's pretty good as far as trying to get his, his Republican support. So definitely there's a lot going on here at the moment that's all tied to many different political narratives, and there's many individual ones going on, from, from Macron in France to Boris in the UK in the election to, to Trump trying to manage. And all of these guys, let's not, let's not forget the fact it's all in their best self-interest. They're not looking to help each other unless it's to help themselves. But this is how you've got to think, this kind of idea of, I guess, game theory in that respect. So that's definitely how I see this at the moment in terms of this quite surprising, more positive assessment of what Trump thinks of NATO going into these discussions which are happening later today. Do be mindful though, as I said with the tweet earlier that I did, China is for the first time on the formal agenda, so there could well be more commentary coming up, of course, in respect to what moved the market yesterday, which is any updates on the trade side. One thing that was quite interesting, obviously part of his team— this is quite typical because I do think that he slightly was a bit off cue because he was speaking ad hoc when he made the original comment— Wilbur Ross was quite quick to come back, try during North American trading hours when equities were getting hit to come out and say, well, hang about, we can still get a deal done, of course. So, you know, everything's still on the table and certainly a situation in flux at the moment. One of the other things though, let's, let's turn on the Chinese side. Things are, things are inherently deteriorating, and certainly this is why we've had this decent sell-off to start the week, is because the prospects of where we were at the end of last week, where the market was fairly comfortable with the idea that a Phase 1 trade deal was going to get done. We hit all-time record highs. However, you know, not only have we had last week legislation approved by the US president to support the pro-democracy protest in Hong Kong, we've now had the US House of Representatives overwhelmingly approve legislation that would impose sanctions on Chinese officials over human rights abuses against Muslim minorities in that area, of course, of Xinjiang in the western part of China. So there's two pieces of legislation overwhelmingly have passed now in Congress in response to what's been happening in China on those two fronts of kind of human rights. And so again, This kind of further fuels then the risk of retaliation coming back from China about its interference in those types of very sensitive subjects for that country. Now the other thing, of course, that we've had is this: Trump has now revived— and again, all of this in my mind is completely as to be expected. I'm not surprised by this type of rhetoric at all. Trump has revived his nickname, calling Kim Jong-un yesterday the Rocket Man. So we've gone back to this previous status we were in. I mean, it's almost like we've forgotten that historic peace agreement. I mean, that was what, less than a year ago? When the president, holding hands with Kim, walked over the divide between North and South Korea. And then here we are again, he's calling him Rocket Man again. So this of course comes with China looking to, to retaliate, put a bit of pressure back on the US. And as I've said in many briefings before, this goes lockstep with Korea starting to up the ante with the fact that they talk about their new ability to fire more advanced equipment in terms of missiles and so on and so forth. And so tensions in Pyongyang going into year-end of starting to increase once again. But all the more reason why Trump needs to have this, this quite strong wording against China at the moment to manage it politically. On the ground though, although the threat of tariffs of course is a major obstacle, a significant one for the Chinese economy, actually for the moment Chinese data has been pretty decent. You remember the manufacturing bounce that we had over the weekend at the beginning of the week? Well, we've just had the Keqin service PMI number come out overnight, and it showed the service activity expanded at the fastest pace in 7 months in the month of November. So all in all, both those figures on the PMIs might act as a bit of a, I guess, a break from all the negatives that we've seen develop over the last 2 trading sessions, because these have been surprisingly strong in that regard. One thing, one stat that I did see that I thought was quite interesting this morning: overall put-to-call ratios of S&P 500 options is now near its most defensive it has been in at least 5 years. Now a lot of this is when, you know, when you see that type of put-to-call ratio, essentially these are people looking to protect themselves against potential severe volatility to the downside. And you would think that that's pretty much going to be a prudent strategy, so it shouldn't come as too much of a surprise given the fact that we've got the looming deadline for Chinese tariffs potentially on December 15th, and also given the extreme outperformance of the S&P 500 year-to-date. Still being up, what, mid-20% type of area. And so I think taking a hedge against potential downside is, is pretty much standard fare. But I thought I'd point it out. Um, the other final thing on this political side, where is Boris Johnson at the moment? Is he at the NATO meeting at the Grove Hotel? No way, he's nowhere near Donald Trump. He's actually in Salisbury at the moment. Trying to keep his head down and not get photographed with the US president. And yesterday I did catch that Trump said, "Boris is a great guy, but I'm not going to comment on the UK election." So again, Boris hasn't really— you know, you haven't really read about Boris in the papers in the last 24 hours because you're not going to see him over the next 24 hours. Basically, they're gonna wrap him up in cotton wool put him in a cupboard and just say, look, the campaigning can wait for, for a day. Let's let Trump come and go and then we'll crack on. So I'd expect that to be the case for the time being. You don't want to give Labour any opportunities unnecessarily. Okay, moving on. OPEC, obviously we've got the OPEC meeting kicking off tomorrow and Friday, so the commentary around this will start to pick up a little bit of pace Everything remains pretty equal at the moment. Iraq's oil minister continues to kind of bang the drum about an extra 400k barrel a day reduction to the current OPEC 1.2 million quota at the moment. Apparently, according to the Iraqi oil minister, Saudi agree. Now, there was one thing I did tweet yesterday, and I'm not saying this is going to happen, But I am saying I just think it's very interesting, the timing. If I just scroll back, um, to yesterday, uh, was this one. So OPEX— not OPEC, Saudi Aramco, the state-owned oil firm— uh, their IPO prices on Thursday. So if they're going to start trading in the near future The point I was making yesterday was they can't— I can't see how they would allow prices to fall. It would be highly detrimental to the kind of the PR surrounding one of the biggest IPOs in history, and obviously the kind of jewel in the crown of Saudi Arabia. The last thing that they want then is oil prices to fall. So that, in combination with the Iraqi oil minister, who quite frankly I would take his comments with a massive pinch of salt, but the fact that he's now kind of bolted on this additional comment about he has said the Saudis agree with his notion of cutting production, because remember, that is not the consensus. The consensus is not about cuts. That would be surprise and bullish for price because what is under more discussion is about a rollover of the existing agreement and pressure on OPEC+ members to become more compliant. That's the base case. So that, in addition to a cut, would probably fire up prices a little bit in the short term. And that would certainly help offset some of this negative trade development that we've had. Over the last 48 hours. So definitely worth keeping an eye on here. Um, more near-term to price, you might have seen there was a little uptick in oil prices, but it was— it failed to be sustained. Um, you did have the API oil inventories last night showing the headline crude figure a draw of 3.72 million. That's the biggest draw in fact since September. Cushing, a draw of a quarter million. Gasoline though was a build of just shy of 3 million to still it's a build just shy of 800,000. So after 5 straight weeks of builds, the headline figure though was a draw and in fact the largest draw since September. So be interested to see whether or not we get any kind of pre-positioning ahead of the DOE's later as the US start to filter into the market. Last piece of news on the, on this side, Boris Johnson, his lead over Labour holds at 9 points. So this is the latest YouGov poll that's come out, and as I've said, um, Boris looking to stay out of trouble while Trump is in town. And so if he can do that successfully, then perhaps he can hold on to this kind of high single-digit poll lead at the moment, which is kind of stabilized after quite a significant narrowing that was seen in the polls at the end of last week. Calendar-wise, what have we got? What's the main things to look out for? Well, quickly I'll run through the data, then I'll give my main view about what to look out for. So this morning, these are all final service PMI numbers, so I wouldn't get too excited about them. The one though to keep an eye on is perhaps the service one in the UK, given the significance of that particular sector. But again, it's a final reading. In the US, we've— don't forget— got non-farm payrolls on Friday, so So if you don't already do so and you are watching this on YouTube, make sure you subscribe to the channel because Sam and I will cover that live in the buildup, the release, and the review. So we'll kick off at around 1 o'clock, 30 minutes before the data comes out on, on farms on Friday. But today you've got then the ADP National Employment Number 115. You then get the ISM Non-Manufacturing PMI. That, of course, will be particularly interesting given that was a bit of a catalyst for a sell-off on Monday. Don't forget, with the manufacturing figure, you've got the Bank of Canada rate decision. Rates expected on hold at 1.75%. That'll be at 3 PM. Then the oil inventories coming at 3:30. So quite a lively afternoon actually in terms of data coming out of the States, and particularly given how sensitive markets have been of late. Overlaying then, actually, the most pivotal thing being, I think, the fact that Trump has been quite active in his commentary, and it comes in the backdrop of him attending a NATO meeting where he's— he wants to keep up appearances. I think that is going to serve for quite an interesting day overall. So one final word of advice, the guys here on our training program um, who've just started trading live this week. I did see that some of you had really excellent days, uh, in the last 2 days. Really excellent start to your, to your kind of, uh, your first steps into trading live. Now the one thing is, I want things to be aware of, is that the markets do not always, uh, they're not— it's not a perfect pattern. Just because one day or two days you sell off 280-odd points, that doesn't mean then that the same rules apply. You need to look at every step, every session objectively, both fundamentally and technically. Prices have repositioned themselves, news has now been priced in to different extents, different key technical levels will now be relevant, and so therefore you need to come at it afresh reanalyze the market, look at it objectively for what it is today in context, not what it did yesterday. And with that, I'm going to step off and hand you over to Sam. So have a good day, guys.

Hi guys, good morning. I hope we're doing well. Start off with the pound as we have pushed higher It's calling it a stop run. Whether that's the case or not, I think it's been proven that it is. No headline coming through, but pushing through those highs. Highest we've been now since May, where we had to start pricing in the, the no-deal threat. Since then, 120. We're now up a considerable amount and still going, to be fair to it. It's, uh, gonna try to spread its legs if it can get through this area. It's gonna remove the, the pivots. Now looking on that daily chart, you can see The, uh, the high of today is, is pretty much bang on that 15th of May high. So keep a watch on that 3100 to the upside, another potential point. And, and therefore the also comes in around that high of the 14th, so day before there. The pound trying, it has to be said it hasn't broken through yet, but trying to break out of that range that we've been in for, well, quite some time really, going back to the 21st of October. You can see that the bottom got tested 3 times, the top another couple on, on that. And so it's not by all means out the, uh, the woodwork and we're going to go push on and suddenly need to be start looking at, at 1.33. But worth keeping a watch certainly where we finish the day today, um, for, for the pound, as it could of course attract some more medium-term buyers if we were to close above those levels. Looking more Intraday, obviously keeping a watch on any of those previous highs that we have just gone through. They could offer a level of support as well for this, this market to continue pushing high. You can see yesterday, good starts in the morning, then we got relatively choppy around those highs before drifting down in early trade this morning. We then pushed higher, and it's dragging the euro as well. The dollar weak a bit this morning. The euro trying to make a new high for, for the day. Just putting this on 15-minute as well. You can see above its pivot, above the high, uh, and trying to confirm that now really, uh, up towards the R1 would be an area I'd keep an eye on because you got the 1.11 handle. Before that you've got the highs of yesterday and also the high that we had on Monday. So really key resistance zone, uh, that I'll be keeping a watch on. And then to the downside, other than, uh, this morning's low, you've got yesterday's low in the mix there, and, and some from Monday and Tuesday as well before S1 and the actual low from yesterday comes in. So euro in a bit of a range as well. And even if we were to break out yesterday's high, just be aware that just a bit above there you have some really key resistance points going back to November 22nd, 21st, and the 18th. So, uh, no, by all means, uh, it's not out the, the woodwork yet. Uh, but, uh, that certainly, that area, as you can see the importance of those levels, you can— you're going back here to September, October, and November around 111, uh, 90— well, yeah, 111.13, that sort of point on the futures. And, and even going up to the highest 6th, it's such a key resistance point that, uh, any real break above that could, uh, could lead to a decent push on. And whether the dollar being attacked by Trump, you know, maybe as well with some positive pound sentiment, Brexit sentiment perhaps. This euro could well get a breakthrough there. Having a look at stocks, decent move yesterday, and definitely some time to have got in the original push from the downside on those Trump comments on that interview. And just having a look here, and I tweeted this yesterday about the importance of this This trend line still significant for me, uh, looking like that's going to come in around 66, 67 on the futures, 30, 66, 67. So keep a watch on that. You've also got around that area the low the 6th of November, uh, that could be the last real key area of support that you'd want to keep an eye on after 1, 2, 3 down days in a row. We haven't had that since we've gone back here to end of July, beginning of August. As we do push lower, if we continue to, of course, worth getting on your moving average— averages. And the 50-day moving average isn't too far away if we were to break that trend line. And actually, if it was to happen anytime soon, would come in at a very key point. Previous all-time high from July, the levels from September that turned to support in October around 3025 and 3035 area. Pretty key and certainly one to keep a watch on. If you were a bull, when would you be slightly more encouraged? Well, you can see early trade this morning we tried to get back above the lows of the 20th a couple of times, just failing to, to do that. So that along with 3100, I think if we can get a close above that area, then you would feel like maybe the worst is over for a bit, but I would, would roll with the negative sentiment to continue. And gold and silver enjoyed that yesterday, uh, gold getting to the highest it has been since that big breakdown that we had on the 7th. I mean, obviously on the, the futures with that rollover, that what was $1,480 is now changed to more $1,490. But this level you can see is just massive, absolutely massive for gold here. So keep a watch on what happens here. Understandably, yesterday on that first real test of it, we had a bit of profit taking, but this will certainly, from a technical point of view, attract some sellers into the market. So key level, key line in the sand, uh, for, for gold. And it's the, the same for silver as well, in that it had a good day, but we're just coming back up to really the top end of that range that it's been in. Still some key points that would have to go through before you would be happy that this is going to continue higher. Looking more 60-minute, we have almost come back to test the, the high of yesterday, so that's certainly level to keep an eye on. Putting it to 15-minute, as you can see, we've trended higher this morning. So with that, I'll be looking to see if we can have any trend lines to confirm this move to stay up. And if it was to break through there, then maybe it is not ready just yet. And of course, you know, the lows of the day and previous highs of yesterday would be other levels to consider. But as it stands, unless Donald Trump is going to come and backtrack on the comments he said yesterday, I think you've got to roll with gold sentiment to the upside, stocks lower, and a weaker dollar. OPEC this week will be interesting. The oil— and I was going to put this on a longer-term chart— oil is is certainly waiting, you would say, for a big move to, to take place. It's, uh, in a bit of a trend channel. If we look at those lows, you can see it's relatively well respected from both sides, and we're keeping a watch on that. And, and really a case of waiting to see what happens. Absolutely have your, your fundamental view, but you know, you're not going to be buying if it breaks to the downside, uh, and you're not going to be selling if it breaks to the upside. So, you know, the market here can let it tell you what's going on. And still, the, the low that we had on the 21st, 1, 2, 3 times we cannot get above that key line in the sand. Buyers can take over, at least for a bit, if we were to break through that level. You can see now on the 240 the significance of that point, not just from the 21st but other days as well. So very important level. Above that, we'll be keeping a watch on any of those previous lows, and then who knows, we may well get a retest of this overall trend line that led to the break on Friday at some point. Putting the pivots on just for a bit of direction for today, you can see putting this now onto 60-minute, uh, just, uh, on yesterday's low, you've got the trend line, you've got the S1, uh, as well. So a couple of, couple of key points around that area. $55.51 as well marked up. $56 looks like a key level, uh, if we were to get through that, the the range of yesterday, uh, I wouldn't be too surprised to see a quicker move to the upside, perhaps targeting around sort of 57.11 to 20 on oil as well. Quick look over at the DAX just to see how we're moving. Uh, it's actually, you know, kind of— well, it is up for the day but relatively flat over the last couple of hours or so. And we are making this new range as well, the the low from yesterday is the low from Monday, and keeping a watch on that high from yesterday as a potential point for that to be retested this morning. As we know, certainly once we— over the last few weeks, when we get these ranges in the DAX, it struggles, really does struggle to really come out again and really get out and spread its legs. So keeping a watch as well, any moment if we were to get— and I don't imagine this is going to happen anytime soon. But if we were to get a retest of the, the bottom part of that range, that could be where the, the further move comes down for— come down from. Obviously Friday, a big day for the DAX there to the downside. As usual, any questions, uh, keep, uh, let us know. Keep an eye, I would say, on the pound at these levels. Gold as well is at such a key technical point. And stocks, I think while the sentiment's downside. Like Ant mentioned, you're not always going to be guaranteed to have a multi-point move in a row. So any questions, please do let us know. Hope you all have a good trading day.