Trump's US Equity Rally Continues

Good morning and welcome to the market briefing here on January 9th. My name is Will DeLucy. Sorry to take the normal Anthony Cheung format away from you just for today, but I thought I'd take the opportunity to give you a quick update myself on what's going on in markets and what to look out for for the trading day ahead. I'm starting off with this chart of the S&P, and I know, well, you can rewind the clocks and you'll have heard this many, many times before, but yes, new all-time highs in US equities once again. Um, absolutely phenomenal performance over the decade. And I was just looking at the stats again, obviously it's 400% since 2009, and I was counting the months, 92 up months since that 2009 low. Um, it's really very, very difficult to get in the way of this rally. And trying to fight this momentum, no matter what happens in global geopolitics, certainly seems a struggle. What I'd like to talk about in the next few minutes is really looking at the trading opportunities over the last couple of days and the type of, um, activity that's worked well and the type of activity that, that, that would have definitely hurt a number of traders. And I mean, just, just looking at the type of whipsaw activity that we've had over the, the last few days, it really does set the scene for how flexible you need to keep your trading strategy, how open you need to keep your mindset, and how at Amplify, obviously, we're trying to help people respond to events as they happen and take opportunity when they arise. But You can imagine here, I mean, look, this is just looking at a Bloomberg source of, you know, the Japanese yen movement on the, uh, Iran attack on the US Iraqi air bases, where obviously the US JPY sunk aggressively. And you definitely would have had traders all over the world and a lot of algos responding to this, then being whipsawed on the next announcement that Iran is not seeking an all-out war. And it's not just on assets like that. I mean, obviously we talk a lot here about gold, for example, and looking at the movement in gold where over the last few days we had a strong break of the August high for last year. And anyone in sort of short-term trading positions could have got very excited buying more gold here, only to be whipsawed out the other side. A lot of you guys have been with us for some time, hopefully will know the, you know, the importance of not committing to a view and being able to, being able to move and change your decision accordingly. And I think this is never more important than here. I was almost tempted— I was talking to Sam yesterday— I've stayed out of US stocks for a very long time, you know, not to get caught up in this rally, but I was almost tempted at the beginning of the week to start to place some decent shorts on the S&P 500, really, if we were able to stay below the sort of 3210 handle in the S&P. But once again, going against that momentum really would have shown, uh, shown itself to be folly. As you know, I've talked with you guys before. I do have, uh, personally a view on, on long gold and gold miners, and those trades are going well. Um, obviously not as well today as they were going 2 days ago. I'm happy to sort of share with you how, how I've followed that trend here with that first entry on this Miner and then getting out on the trendline break. As you know, we sort of try and teach everybody discipline on the technical analysis, then long again, scaling out of some of that trade and then entering again on the trendline break. But it's, it's an incredibly rocky ride, as it is across really all of these assets at the moment as we're moving to such aggressive geopolitical news. So on that front, what's going on in the world today and what's moving markets? Well, one of the reasons again for US equities continuing to push higher is the positive news flow that's now coming out after the initial escalation of Iran. First of all, here we've got China sending their deputy, is on his way really to go and see Trump in and try and sign the trade deal. And that was one of the things that really kept US equities back in 2019. Well, hardly kept them back, but one of the reasons that was— there was some weight in US equities. So that looks like that's continuing to support in 2020. If you just look at the headlines from Bloomberg, first piece of news is China, you know, China deal being signed. You've got Trump's strike paying off now after Iran backs away from further escalation. Higher German industrial output. We had really good US data out yesterday in ADP employment, 200,000 versus the 124 expected. There's equity-specific news stories coming out about Tesla. So Tesla's up now $500 a share compared to the $200 it was just back in, just back in June. So all around, looking across the news sources, it's, it's an incredibly positive atmosphere out there. Very, very different to literally just 3 or 4 days ago. And I'm finding this type of market environment absolutely fascinating. In— really, it's perfect for traders who are able to respond to fundamental news and remain agile and remain flexible. But my goodness, for those traders who are sort of holding on to trades that are whipsawing themselves out on the shorter term, then then it's just so difficult. I mean, here, this is an example looking at oil that I've put together just over the last few minutes. Soleimani killed, we had oil was trading at $61 a barrel when that news first broke and hit the newswires. We pushed up to $64. Check out this level in oil here, $62.34. We're oscillating. This is really important, this technical level. But anyway, with the Soleimani death pushed us above that. We did come back and test it for a classic long, as you can see. We then rebounded and we tested this key level in oil as the world was trying to work out what this means. Will Iran respond or not? We then do get an Iranian response, and then everybody piles back into oil. Obviously, that's when gold then went again and touched $1,600 as well. Big move in assets. Within an hour or so, that starts to de-escalate as it looks like there was no US deaths, no real damage done. We break through the 62.34 level, retest it from the belly, and then you get Trump's speech coming out where he suggests there's no further escalation. And net-net, after all of that, oil now trades a full $1 below where it was before this whole debacle kicked off. It really is fascinating, and I'm sure there's a lot of people out there that were, you know, have biases that would then be plowing into positions and getting whipsawed out. So you must respect, you must maintain your newsfeed, stay absolutely on top of everything that's going. And of course, as Anthony Cheung's been telling you guys, Twitter really more important than ever before. So I mentioned ADP already. Just to go back to the finish on the Iran news, the latest news, we're getting lots of positive news flow. Of course, it looks like Donald Trump has played his hand well so far. The UK are now falling in and saying that, you know, this was perhaps the right decision to do, and they see it as legal. But such a gray area, to be honest. I I do have a different view, but I'm, you know, myself really struggling to— or trying to make sure that I've got the kind of open mind that, you know, we're helping our guys here develop. I don't think this is the end of the response from Iran. I do believe that this is the end of the official sort of face-saving retaliation. It seems to have worked out that both sides have been able to save face as a as a result of what's happened. But there's, there's nothing now to stop Iran continuing its less, if you like, obvious retaliation to this event. And definitely there's very little incentive to stop the longer-term plan for the enrichment of uranium, which will still then keep markets on their toes. But this is all long-term stuff. Really. And as you've seen in US equity markets, you know, you just— it's, it's that short-term, short-term optimism with expected loose monetary policy, with companies' performance like really, you know, doing incredibly well, that there's nothing— it's very hard to stop this train. And with the sort of bearish views out there, and I for one have had a bearish view that, you know, when you continue to see this geopolitical confrontation, the likelihood of a misstep happening is increased, and the likelihood of something unexpected happening which leads to something else unexpected, that chaos theory is prevalent. Well, it hasn't happened yet, and you know, you just can't stand in the way of it. I do believe though there's still a potential for that chaos theory to play out, but it's just not now. So you have to— I have to step away from it and not get in the way. There's obviously the bigger power plays as well happening in the region with the US stepping back and more Russian influence in the Middle East, certainly, and then potential alliance between Iran, Russia, and China. All of these bigger plays are certainly in, in my mind, but that's not what's moving markets at the moment, and you've just got to follow, follow the momentum as it moves. Um, just quickly then on the UK, not too much happening in the UK at the moment that's moving markets, just that Boris Johnson and Ursula, they've obviously met again, um, talking about each other's red lines for the EU negotiations. We do have some UK retail data out today— Next, Sainsbury's, Morrisons— so expect those to come out and to be slightly disappointing, relatively gloomy outlook. Although I think the outlook for UK stocks as a whole is they've still got some way to go after the vote at the end of last year. And actually, on the front of all the papers here in the UK— if you're not logging in from the UK, you might not know— but it's Of course, the poor royal family getting it in the ear again as Harry and Meghan decide to up, up sticks and leave. Um, so that's dominating the front pages of the papers again, which sort of tells you, um, perhaps the serious seriousness that the other geopolitical events are being given at the moment. Um, so looking forward to today then, guys, it's a relatively quiet day data-wise. We've got US initial jobless claims coming out at 1:30, given that non-farm payrolls is out tomorrow. That's going to be the main event. Given that ADP was a strong beat, you'd expect US initial jobless claims to beat its 220 expected again this week. And then non-farm payrolls tomorrow, we're expecting 160,000. But to be honest, it doesn't, it doesn't hugely matter at the moment, uh, employment data. I mean, the employment levels are so low, it's not really going to change the Fed trajectory. The only thing to look out for is the wage inflation, just in case there's any type of inflationary play. And that was one of the longer-term plays that was going to be as well dominating the, um, newswires over the coming weeks. If oil did stay elevated back towards $70, $80 with the continued liquidity in the market, would that create inflationary pressure? Well, I think when it comes to inflation, you just have to try and forget that idea and, and believe it when you see it. Japan has shown we can go a long, long way with ultra-loose monetary policy without, without inflation coming about. But yeah, oil firmly back in its year, 2-year-long trend here, right in the middle, you could say, between the $50 and the sort of $67 range. So that really— Trump being able to play his hand incredibly well at the moment. Let's see how long that can last for. But that's it for me today. I, guys, just to warn you, you know, quiet markets really expected, um, the continuation of now the risk-on trend is expected. But please heed my advice and stay absolutely glued to the newswires, stay absolutely glued to your Twitter, and of course to Anthony Cheung, he'll be in very shortly. And when it comes to trading these opportunities, you know, one of the things that we're trying to develop traders is that, that scaling out when you're— when things are going your way. Don't expect a continuation of these moves indefinitely. We all do it, we all get overexcited, we all get overambitious and try and push our trades far too far. But definitely the tactic to try and follow here is having an open mind, taking an opportunity when it comes, responding to the news, but then also being quick to to take money off the table when that trade's going your way and not expecting a continuation in the move. And if you, if you don't believe me, just check out the whipsaws that you've seen in, in gold or oil over the— or even here in stocks over the last few days. Okay guys, that's it for me, closing the market briefing for January 9th. Look forward to seeing you guys in the room talking about some of your trading. Um, have a good day ahead. Thank you.