Trump vs Biden: Presidential Debate Guide

Hi there, I'm Anthony Cheung and I'm the head of market analysis here at Amplify Trading. Every weekday morning I'll deliver a fundamental rundown ahead of the European Open, but if you subscribe to the channel you'll also get content from the rest of the team. So let's begin. Okay, very good morning to everyone, hope you're doing well. Got, uh, got these guys with me this morning because I'm gonna give you a bit of a run-through of the first of the 3 face-to-face US presidential debates that will happen before the US election in November. And I'll run you through what people are going to be looking for and generally my take about how the markets might react, but we'll get into that in a moment. First of all, let's just have a look at the, the overall charts and what's going on. And Asia markets traded mostly higher, although the region overall struggled to make the most of the firm tailwinds that we saw with the firmer close on Wall Street. Just wanted to have a quick look at the US indices here. You can see the NASDAQ future and the S&P in the center and right are minor positives this morning, but a decent session yesterday. I mean, the climb that we've seen certainly from where we finished last week through yesterday's session, a really solid upward move. Obviously yesterday a lot of talk about now Nancy Pelosi, the Democrats looking to come forward with the stimulus and actually releasing a scaled-back $2.2 trillion proposal to extend support to the US economy, seeking to break that impasse with Republicans on COVID-19 relief. So House Speaker Pelosi and Treasury Secretary Steven Mnuchin, they are having talked last night, going to be speaking again today. So that's been one of the things that's kind of fallen away last week and did contribute, I think, to a large portion of the downside as the focus was so so much on the Supreme Court. But now we've had Amy Coney Barrett announced, we can kind of move back to then the pressing subject for markets, which, which is how quickly can the next round of stimulus come. And certainly we are moving back into the direction of at least dialogue between the two sides. So here then, looking at the S&P, I did tweet— my handle's here if you ever— on the other screen, it'll come up in a moment if you ever did want to follow me. But I tweeted some charts last night because I just happened to be on my desk before, for the end of the day. And I was just looking at really this 50 DMA area, which has been really solid level for the S&P 500. You can see from a point of support going back to June to some of that price action that we had in early September, and then where we were in yesterday's session, it really was a cap before the futures closed. We've opened at around that level, so quite interested to see how we perform here Above here we have got the 21 DMA, which has also been the top side of the area that's confined the price activity before the breakdown that we saw on the developments of the renewed kind of strict restrictions from the UK and Europe given the outbreaks we're seeing with COVID-19 at the moment. So if we do continue on the upside, I'd just be mindful of that 21 DMA today. Any further break above there, then 3397 $3,400 level. That is that previous all-time high, of course, that we had back in February. It starts to bring in some of those previous highs in mid-August as well. Any further pullback, if there were to be one, then be looking for just retracement back to some of the gains that we saw in the prior day session towards that, those previous highs. So just notch that up a touch to around here, probably $3,321.75 type level, which was that spike low that we had on the 17th and the highs that we had following that gap down at the recommencement of trade on the 21st. But the 50 DMA has been really key. Where it closes today, why they're above or below, I think will be quite important from a technical perspective. And then if we were looking at the NASDAQ, that was something as well I was watching just last night given how positive the gains were on Wall Street yesterday. And here's a look at the 21 DMA, and again, that was providing a bit of near-term resistance last night, but we have opened above that point. So if that's a bullish signal, and seeing how the day plays out, then upside— the next level of real clear resistance doesn't really come until that double top that we printed going back to the 10th of September, 16th of September. That would have to come in at 11,567 on the upside. So a little bit of headroom for further gains in the NASDAQ from a technical point of view if we remain above those, those key levels. Uh, but I did tweet them if you want to see those charts and those levels in more detail with the, with the chart annotations. Otherwise, elsewhere then, uh, the DAX did open up, uh, followed suit, but it's just drifted a little bit, uh, lower back down towards the, the kind of late afternoon session kind of range. Um, elsewhere in the currency markets, the Dixie is pretty flat, and overall that's reflected in EURUSD, but cable still an outperformer and a decent move yesterday in cable. We're going to talk about that because there's been some more Times newspaper updates on the Brexit situation. And just something to be aware of, the Times have been particularly good both at the weekend and overnight in breaking the latest Brexit scoops. So a couple words, or a couple of words of advice or tips, whatever you want to call it. One thing I would do in this type of situation is I would look at two things really. What is the newspaper breaking, these latest comments? Because then I'd want to just be more mindful of being vigilant to monitor that particular news source. But then separately as well, um, the idea then that who is the actual journalist writing these reports, and are they in fact on platforms like Twitter, and could I be exposed to getting information quicker via that rather than officially via The Times? Or do they just tweet more often? So rather than just a one set-piece article coming out of The Times, I can get drip-fed some more insights as these stories are developing. So a couple of things there perhaps that can give you an edge if we— if you were to obtain information more fast in that form. But we'll talk about Brexit in a second. Elsewhere, WTI crude a little bit lower. There's a few people that were looking at the latest estimate for the, the upcoming inventory numbers, which are potentially going to show a build, and that could be the first time in 3 weeks. And so as such, then a little bit of pressure in the overnight session for crude, but nothing too pronounced, to be quite frank. And we're just hugging pivot in the futures here, down 26 cents, 40.34. And T-notes just sideways for the time being. All right, well, look, let's get stuck into it and let's talk about this debate. A lot of, a lot of people obviously awaiting this. It is not just symbolic being the first, but it does tend to carry quite a lot of enhanced influence over then voters. And one thing I was reading last night is that a lot of the way that a US election works is very different from how it does in here at the UK, for example. And that being that some states have already opened their, their balloting, their, their voting to be mailed in. So what that can mean then is that some people might even vote directly after debate 1, for example. That is a possibility in some specific areas in America. So it really is crucial from now forward that these guys are doing everything that they can to secure these votes from now onward, really. But the first one does tend to set the kind of tone, and it tends to be the most impactful. And I guess it kind of diminishes once they go through second and third because that first time out really sets the precedence. So there's a couple things here. For one, this isn't going to happen until the middle of the night if you're based in London. So if you're based in London, one of the things to be aware of then is that this isn't happening until— I think it translates into BST time— till 2 AM in the morning. It's going to go on for 90 minutes. So really, it's not until we come in the following morning around this sort of time I'm doing the briefing that we're going to know the actual result and the general feedback. Generally what happens is, as much as if you watch it live, you get a general sense of how it went for each of the candidates. There'll also be kind of almost like an exit poll. There'll be people, market commentators talking about it, and they'll give you a pretty good flavor as well. By the time we come in tomorrow, markets will be closed then. I mean, electronic trade will be open, of course. So would there be a need to stay up overnight, I guess, could be a question I might get from one of the guys later on this morning. I don't think so. I think if this goes as per, I guess, the base case scenario, which is Trump probably comes across perhaps a little bit better, but Biden's not a disaster. I think that's actually the status quo. And I don't think it was going to bump the polls too much in either way if that is the case. That would be my baseline expectation. I guess the biggest things are— the biggest risk here is a complete mental inability for Biden to handle the truth in terms of— not handle the truth, but handle the moment is a better phrase, I guess. And if he has a mental pause of too long, that's going to be absolutely jumped on by Trump, not just there and then, but also in the follow-up to that debate, those videos will go viral, and that's going to only enhance then this whole rhetoric about his mental agility and capability. So I see that as one of the biggest risks, and that would then severely close, I think, the gap in the polling, uh, if he's going to be found out in that way. Um, and the other thing as well, I'll run you through a couple of points that we're looking at, is just how much practice they've had, I think, is a really telling point. You know, anyone who's ever given a speech or who's ever spoken in a public forum, you know, practice is everything. And Trump has been out and about talking to press, he's been doing campaign rallies, he's been on TV interviews, whereas Biden really has been quite bunkered down. And so this is his first real big outing for quite some time. Now that's not to say that he hasn't been, you know, the benefit that Biden would have had is he hasn't had presidential commitments to run a country day to day, so he's had more time to prepare almost. So there's pros and cons, but certainly, you know, just being in the moment is something which Trump typically tends to kind of thrive in, despite his slightly peculiar vocabulary he tends to pull out every now and again. So a couple of top-level things there, but let's get a little bit more definitive on key points. So I've kind of broken this down into really 5 or 6 different areas to keep an eye on in the debate. One is flashpoints. Now, what could be areas of potential that could flare up this debate and really become quite heated, and therefore does someone make a misstep and so on, and how do they manage that kind of confrontation? Trump taxes. Of course, we had the New York Times come out talking about basically how little tax he's paid and he's lost lots of money, and again, this is definitely goes— this is a concerted attack from the Democrats, you could say, coming from that type of political-leaning newspaper to try and then target one of the main things that Trump relies upon, which is this idea and perception that he tries to give the public of being a successful businessman. That would be quite the opposite. So, the Trump taxes, the peaceful transfer of power, that comment that Trump made about a week ago saying that he wouldn't kind of go away quietly. It's probably going to be pressed on that. And then Amy Coney Barrett, the replacement for, um, in the Supreme Court that we've had, uh, for Ginsburg. And, you know, that being quite a shift then towards the, the right from a political stance, but also then what that could mean as a tangible outcome for this upcoming election. This is likely to be quite a big talking point. The other thing then is about Biden. We've already really talked about that. Biden himself avoiding any verbal mishaps He has got a bit of a track record of doing that, and as I said, he's only done limited amounts of events recently, so he might be a bit rusty on that front. I was reading a couple of other things as well, and they were talking about he can sometimes become a little bit snappy. He calls it his Irish side when he comes out, and he gets a bit bitey on responses when he becomes a bit frustrated. And a bit agitated, uh, and if that comes out, I think that's going to be a big negative because I think that persona definitely lands well, uh, with the electorate for Trump. I think the better strategy for Biden is to be almost the opposite— complete control, assured, presidential— and I think he would come out more favorably. But can he keep that when he's going to be under heavy attack from Trump? Of course. Owning it is another area, and this is basically referring to voters. Typically, the data would suggest they like to see a president who takes responsibility, the good, the bad, the ugly. And obviously things like COVID-19 is going to be very important, uh, just given the implications that's had on, on just human day-to-day life, of course, in America, and how he handled that. And that's going to be obviously a real pressing point that Biden's going to be trying to make, given the large scale of of number of deaths, cases, and also unemployment levels as well in America. Twisting the truth— we know Trump loves a little, um, little bending of the truth. And so can Biden turn into a real-time fact-checker? Now this really would be, uh, at the most agile mentally that Biden could possibly be. So this is the question point: can he achieve that status, if he can, he could really undo Trump quite spectacularly because Trump does tend to come out with a number of statements which just are not factually true. And if Biden can just be absolutely pinpoint sharp to, you know, come back with, with pure facts in his rebuttals, then he could absolutely quite dominate this discussion in that sense. So Whether or not he can do it though is the, is the question. So the subject matter again, just so we're all on point, they're going to be talking about the candidates' previous records, the Supreme Court, the coronavirus pandemic, the economy. Big one for Trump is race and violence, law and order in US cities, and then the integrity of the election. These are all subjects that have been confirmed by the the debate commission. So these are definitely going to be covered. So it's going to be all the key things that we'd want to hear. Um, at the moment, in terms of how the land lies, then this is what we're looking at. Um, we have seen really since the conventions that didn't really have too much of an impact for Biden, but did see a slight narrowing of the spread, which was around 10 points if we were to go back around 2 months. Uh, the, the widest point of this spread really was when, uh, the Sunbelt regions in America were seeing that outbreak. But since COVID-19 has generally improved in America over the course of the last several weeks, and we've started to see this gap close. So the current percentage point difference on the average RCP polls is 6.8 at the moment. When are the next ones? Just so we have a little bit of foresight. So basically you've got the first presidential debate today and then the vice presidential debate. There's only one of those that's going to happen the following week. Then you get the second one on the 15th of Biden-Trump, and then you get the third one on the 22nd of October, and then the election on the 3rd. So that's how the, the land lies at the moment. So yeah, hopefully that gives you a bit of a pointer of what to look out for. Okay, just having a look at Brexit then. Obviously I mentioned the pound had a really strong day yesterday. The latest in overnight, uh, session has been that European Union negotiators have signaled they are willing to begin work on a joint legal text of a trade agreement with the UK ahead of trade talks that resume today, according to The Times. Barnier expects Britain's chief negotiator David Frost to provide more details of fishing quotas and the government's future subsidy policy, adding that the EU has also backed away from a threat to suspend trade and security talks. So some pretty meaningful progression there if these things are to be true. The one thing I'm, you know, I tend to think about the whole Brexit saga as a whole, as much as there's been some disruptions, and of course the House of Commons meets today about that internal market bill that's all going on in the background, uh, and somewhat of a backstop to these ongoing talks anyway, not to actually be used. So I do think with the coronavirus situation— I was just watching the news last night and I was looking what was going on in France, in Paris and Marseille, and these types of areas where they've had to actually basically shut down everything again for a period given the outbreaks that they've seen. I just think that not doing a deal is just not really economically feasible for either side at this point. So although I do not foresee perhaps a deal being done as soon as the 15th of October, which is what the initial timelines were presented by PM Johnson, I do think though by the end of October, going into November, perhaps even if it needs to go into December, that something will inevitably get done. So at the moment, we are— I guess the market's reacted quite positively. So if I was thinking short-term intraday, they— these guys are meeting again today, they're meeting again Wednesday, they're meeting all week pretty much. So at the moment, given the market positioning of the move yesterday with the general positivity and the tone coming out of the press, anything other now than positive comments and developments from here forward could impart a little bit of a pullback in cable. Is the way I'd kind of look at things. So I'd definitely be mindful of monitoring those usual UK British political journalists on Twitter, for example. Just keep an eye out on the likes of The Times, Telegraph, FT for any breaking developments on the Brexit headlines. Sticking with the UK, I thought this was quite an interesting comment that came out yesterday. Just wanted to quickly briefly mention because you remember we had, uh, Tenreyro, the NPC member, talking in The Telegraph at the weekend something I talked about in the briefing yesterday. And she was talking about the kind of the benefits of how other central banks have deployed negative interest rates and how generally effective it had been. And that would be somewhat tipping the hat towards then the idea that the Bank of England are very serious about contemplating using negative interest rates. But then this guy came out, this is Dave Ramsden, and he's no small fry. He is actually the Deputy Governor of the Bank of England, and he voiced strong opposition to setting negative rates, saying he thought the benchmark could not be lowered any further without counterproductive results. I mean, that's a pretty resounding, um, rebuttal to what Tenreyro said at the weekend. Reading between the lines here, I think the Bank of England just basically want us to be crystal clear that if things get materially worse, they will use negative rates. But they want to be clear that that's not a predefined course at this point in time. And so I think they're just struggling a little bit to try and find a bit of a balancing act to, to hit that right tone. Um, so you've had kind of Bailey saying something, walking it back. He's kind of fairly center ground now. Torreira might have gone a step too far committing to it, so Ramstein's had to realign it back by talking, basically just ruling it out completely. Now, the reason why I think this is quite important is because Bailey is speaking later today at 3 PM London time. So I'd just be mindful of that if you're in a sterling position at that time in the afternoon, and just in case he comes out and he looks to try and clarify it once again and we start to move the needle about the timings or likelihood of, of the Bank of England adopting that strategy. Okay, quick look elsewhere. I mentioned oil briefly. I mean, the move is relatively small, really down 30 cents, uh, $40.28 at the moment, but just backed off a little bit from the highs at $40.78 that was seen yesterday. Um, US crude inventories probably rose 1 million barrels last week, expanding for the first time in 3 weeks according to the latest Bloomberg survey that came out last night. As this is going ahead in toward the inventory data we'll get, um, obviously tonight and then the DOE tomorrow. Um, there's a few people looking on the demand side. Again, symbolically, global confirmed deaths from the coronavirus now has hit 1 million. I don't think that's particularly new, so I don't think that's a reason for crude to go lower. However, definitely the resurgence of COVID-19 cases and the tightening of restrictions in some regions definitely needs to be monitored ongoing for the time being because any further onerous restrictions are certainly going to start to impede just general activity, whether that being just general consumer, but obviously manufacturing, travel, all these types of things. And so therefore, as a net consequence, will start to impact, impact the perception of demand. So definitely warrants more monitoring. Another headline I saw, which again I just want to brief comment on, is talking about the US-China trade deal. Obviously pretty quiet on that at the moment overall. Uh, but Bloomberg were punching the numbers. Their calculations based on customs administration data showed that the value of US goods bought by China declined from the previous month, led by a slowdown in energy products. By the end of August, China had purchased about 32.8% of the full-year target of more than $170 billion. You remember, as part of that Phase 1 trade agreement. Now, this is what it looks like And these were the purchases that China have done. And so you can see it was incredibly small amount, um, as they were going into the main part of the experiencing of a pandemic, as you would imagine. But then it has gradually increased every single month thereafter. The problem is, is that to hit that target by the end of the year, they are a long way off at the moment. So for me I mean, Bloomberg are running this as quite a, um, I guess a negative development, as a spin they're trying to put on it, that China are not adhering to their deal. But for me, I, I don't think they were ever gonna hit the target. Um, you know, they were just putting a, a figure out there. It led to a Phase 1 agreement materializing, which is a positive development. They then experienced an unscheduled, unplanned epidemic at the time, which impacted obviously their economic activity. And we're experiencing a global pandemic right now, which is impeding then just generally demand for goods. So the idea that they've got to hit 200% for this deal to be deemed a success, I think, is not, not how I would perceive it to be. I think even if they get to 50% by the end of the year, or, or up to $100 billion, I think that they've done a job that I think will satisfy markets that this, this, this deal at least between the US and China can continue ongoing into 2021. Quick look at the calendar then for today. We've already had one of the German state CPIs, Nordrhein-Westfalia came in at -0.2%, year-on-year -0.3% against previous -0.2%. 2. So nothing really too much to comment on. We do get the German pan-CPI then figure coming out later, but keep an eye out for those other German states just in case. But generally they tend to follow in step with one another, so perhaps not going to be particularly market moving. UK net consumer credit, mortgage approvals, again not really a market mover. Neither are the, the eurozone confidence figures at 10 o'clock. So then moving on, really it's a, it's an afternoon that will be in focus. And as you can see, then, a lot of speakers here. Uh, let me just zoom into that. Here's the speaker schedule for today. Uh, Fed's Williams, Twice, Harker, Clarida, you know, these— there's a number of Fed speakers. And in actual fact, they are all voting members of the FOMC. So definitely worth bearing that in mind. There's none of them are speaking this morning. It's all in the afternoon. And then you've also got Bank of England Governor Bailey, as I mentioned, at 3 PM speaking in an online event as well. As I said, the US presidential debate is not going to happen until the overnight session, so reality is it's not going to be until you come in tomorrow morning that we'll really see, uh, where the land lies with that. But just finishing off then, looking at the charts, I guess my overall perception on today is the actual economic calendar is relatively quiet. We had quite a big day yesterday in equities, a decent push higher. Um, and so what I'd be looking for, perhaps, yeah, a little bit of a pullback for none other than just perhaps a little bit of profit taking here in the S&P. As I said, we've got to that 50 DMA, so on the daily that's going to be quite important around these levels here. And if we faded back down a little lower, I don't think that would be of too much surprise. You can see that initial high we had yesterday afternoon, a support kind of platform for the beginning of the Asia session before the push higher, just providing a little bit of support here, this recent decline. So even if we did decline, um, back down towards pivot perhaps, or even, you know, these previous lows here that was on the way on the, the push high yesterday, I don't think that would be room for any type of concern. I think all in all, even if we drift a little lower and we finished a minor negative today, that doesn't detract from the point that we'd still be quite sharply higher, taking into account the gains that we've seen at the end of last week and into Monday session. So, um, all in all, I'd say I don't have too much bias from the, the news developments that have occurred overnight. I don't think there's anything particularly too important. So looking at the charts from a quite technical perspective, and then just awaiting that debate to see how things pan out. Alright guys, that's it. Have a good day, and I'll catch you same time tomorrow. Thanks very much.