UK PM May cuts a new deal but is it enough?!

Okay, very good morning. I hope you are well. Tuesday the 12th of March. Got a brand new look Amplify channel, so I hope you like it, and hopefully we can add a few more dimensions to the briefing that Sam and I deliver every morning. Um, but getting straight into things then, um, I didn't want to start immediately with Brexit. That obviously is the big talking point this morning. First of all, I wanted to go in chronological order and just wanted to have a look at, um, the equity rise that we had yesterday. So if I just switch over, transition to my charts here, you can see got the regular setup. So again, just to recap, EURUSD future top left, followed by cable, gold, center left, DAX, NASDAQ, and S&P on the right. Then you've got WTI crude at the bottom and US 10-year at the bottom right, all futures. But we had a really persistent rally on Wall Street yesterday right from the opening bell, continued to push up higher. And, you know, part of that I think is— don't forget one of the charts I was showing you at the beginning of yesterday's briefing was about this idea that the equity downside that we had seen had been one of the worst going back till December, essentially. So given that negative run that we had had, obviously lots of different negative data points that we've had of a, of a large extent, i.e., coming out of the US in particular, but generally globally amidst various trade indicators from China through to Germany, particularly on the industrial production factory order side as well. And so a bit of, uh, I guess profit taking on those shorts on the back of what had been quite a negative run for equities. And despite the Boeing news and the Dow underperformance, the technology sector really was a sweet spot yesterday. So here you can see the large major cap tech names. Apple in particular was up leading the way. They're up about 3.5%. Not sure if you saw that they've announced basically a special event is going to be taking place on the 25th of March, and that's going to be unveiling essentially a live streaming TV network, which is going to be their aim at rivaling, excuse me, the likes of Netflix and Amazon Prime. So that's quite a big deal. Also going to refresh things like the iPad, and their shares outperforming and generally helping lift some of the, the tech sentiment at the time. On the trade side, obviously continues to look out for that. Things I was reading this morning is about the the kind of, uh, the agreements that they had made last week about some changes on intellectual property, which is quite pivotal to these talks going through successfully. As well as, I think the amount now is $1.3 trillion that China has promised it's going to buy predominantly in agricultural goods over the course of, I think it's the next 6 years. So seemingly getting very close to a deal. But interestingly, one of the points I was reading this morning was about this idea that Xi, the Chinese president, is particularly nervous. Basically, Trump's team have been trying to get Xi to come to, to the US to meet with Trump to basically ink the deal, but they're very reticent to do so in case— because Trump's got a reputation, of course, of changing things last minute. And absolutely, China will want to avoid any type of last chance kind of twist in the towel by Trump, which he's quite notorious for. Can they trust him? And that's a lot of people saying that's what's hindering a deal getting done at this point. But that's obviously helping the things, you know, he's moving along and it's not deteriorating. So yeah, that was— just wanted to cover that first before we get into the nuts and bolts of the main story of the day, which of course is this one. This is the chart of cable. If we start putting cable down onto, um, I mean, this is the futures, so obviously there's a bit of gap in price action, uh, the close and then the reopening of trade. And this came, of course, on the back of the headline that Theresa May has struck a new Brexit deal with the EU and asks Parliament to back it. That's going to be happening later today, so that's what we're going to talk about predominantly for for the best part of what I'm going to cover for this briefing. So yeah, we started to see a little bit of a climb throughout the session. There was some— I think it was about 5 PM when it became clear that Theresa was going to basically get back on the plane, make a hastily arranged talk and meeting with Mr. Juncker at the European Parliament in Strasbourg, and that created already a bit of a a positive signal for the pound. You know, the fact that she was going over there right at the last minute, indicative then that there's kind of will on both sides to try and get something done ahead of this parliamentary vote. And then the news came. It was pretty late on, I guess it was post-10 PM at that point, the press conference that followed. But what's happened here is the Prime Minister hopes that new attempts at legal assurances that Britain cannot be trapped in a customs union will be enough to win over her critics in order to, uh, have them back now her meaningful vote, which is going to happen later today. Actually, just seeing a bit of power movement as I'm speaking, just seeing latest tweets. Some suggestion Geoffrey Cox may not come to Commons to take questions on his legal advice after it is published. Labour certainly expect him to make a statement to the House. Uh, okay, so yeah, this is going to be key. We'll get to that in a second, but Personally, I'm not so bullish about what's happened overnight, and I think there's definitely scope for a pretty aggressive pullback, but we'll get to that. Let me just cover what exactly has happened first, and then we'll get into some of the arithmetic of what Theresa May— how many people she's going to have to persuade tonight if she's going to get this deal over the line. So just going through, I'll give you the kind of summary, if you like, of points from some of the headlines from what we had in the FT this morning. Now, Mr. Juncker said this was the last chance for MPs to support the Brexit deal. Quote, "There will be no further interpretations of interpretations or reassurances on reassurances." He said, "It's this deal or Brexit might not happen at all." The big test will be whether it's enough to win over more than 100 Tory Eurosceptics, of course, who voted down her deal back on the 15th of January, along with the Northern Irish DUP, of course. Jacob Rees-Mogg, obviously a real pivotal person to be monitoring as we go through today, he said last night, "It was too early to tell definitively, but it's a clear step in the right direction." What has the main leader of the opposition said? Jeremy Corbyn has said, This evening's agreement— so this was quoted last night— this evening's agreement with the European Commission does not contain anything approaching the changes Theresa May has promised Parliament. So as I said, the focus now squarely turns to the Attorney General Geoffrey Cox. He will give his legal advice on the backstop, and apparently he's going to be doing that late morning. No specific timing to the minute. But the point being is that it's going to be before the hearings and debate begins in the House of Commons, and that is set to be around 11:30. So anytime, I guess, between around 10 to 11:30, looking out for any potential comments. Okay, just seeing another comment here from ITV's political correspondent Paul Brand just saying Jacob Rees-Mogg still reserving judgment. Says lawyers acting on behalf of the ERG will examine the documents at 9 AM. The test remains whether UK can unilaterally withdraw from the backstop. So yeah, the ERG obviously a key one to look for. Now I just wanted to summarize the 3 points of what actually has changed from the joint press conference that was given by Juncker and May yesterday. So these are the 3 points, and this gets very complicated, but this is the most simple explanation that I could find. Just to kind of wrap this part up. The first is a joint interpretive instrument stating that the EU could not deliberately seek to keep Britain in the backstop by failing to negotiate a new trade deal in good faith. If it did, Britain could seek arbitration and an exit from the arrangement. So that's point one. The second is a joint UK-EU statement in a non-binding political declaration committing both sides to developing new technologies at the border to replace the need for a backstop by December 2020. Remember, those new technologies, very critical for the idea of not seeing the return of a hard border. And then third is a UK-only declaration, initially opposed by Juncker, that there would be nothing to stop Britain launching a procedure to ultimately get out of the backstop should the EU not act in good faith and with its best endeavours to agree a free trade deal to supersede the backstop. In Brussels, the Commission briefed EU 27 ambassadors that Brexit could be delayed until May 24th, the day after European elections are due to start. Any extension beyond this date would require the bloc's leaders to clarify the legal consequences of Britain not participating in the elections because the UK would still be effectively a member state. The UK government confirmed last night if May's deal was defeated then as we've already known, and it's been stated before but clarified last night, there would be two further Commons votes on whether to leave without a deal and on whether to delay Brexit. These would be held tomorrow and Thursday respectively. So that's kind of the, the state of play, if you like, of where things reside at the moment. Now on that point, I've said that Geoffrey Cox is going to be particularly key Well, here, if you see at the bottom, so this is Beth Rigby. So if you look here, she is the political— the deputy political editor of Sky News. She's one of the, the influential kind of journalists who's been very good at updating on this situation, and she has quite kindly here given us the full breakdown of timings of the key things that you guys need to look out for. So these, may I stress, are the set events. They're going to be happening throughout the day. So littered in these, you've got to be aware that there's likely to be lots of rumors, lots of additional tweets coming out from the likes of Beth, but also Laura Koonsberg, Faisal Islam, Paul Brand, all the usual kind of major political correspondents. So it's going to be a highly frenetic day, I would suggest, and that should mean any execution of trades needs to be highly proactive. I, I would not sit in a trade for any long period of time, not unless something absolutely definitive comes out. Now here you've got the cabinet which are meeting, and we've just seen now on Twitter from Paul Brand of the ITV that Jacob Rees-Mogg and the ERG lawyers are sitting down to review the deal at 9 o'clock, so they're due to do that shortly. Now, their assessment of that, I would imagine it's going to take them a number of hours to really go through the, the legal details with a fine-tooth comb, but that's going to be absolutely key, what their outlook is. And then also the Attorney General, which you can see here, early PM May opens the meaningful vote 2 debate, and we could be Geoffrey Cox then coming out before that, because if you're going to have a debate on the situation, you've got to know what the Attorney General's view is first. That just makes logical sense. So I'll be anticipating that, I guess, anytime between 10 and half 11, which could be layered in with the ERG updates. The actual vote itself is just a repeat of what we've had before, so it's going to be 7 PM, uh, when that begins. Now what is quite good here that Beth Rigby has done is how do you turn 230-vote defeat— so So that was the previous, and this is the record largest defeat that a standing government has ever had in Parliament. So how do you turn that into a victory? Well, this is what needs to happen. 116, um, change the mind of 116 MPs is required. Um, 10 DUP, up to 65 ERG— there's about 110 in that group— 4 independents and she's listed those that could be the potentials, and up to 40 Labour Leave MPs. And I think that emoji there is basically a little emoji person whose mind's going, "Pfft!" I.e., it looks incredibly difficult that this change alone is going to change the magnitude of the size of defeat that was seen last time round. Um, on that point, that's why I'm gonna put my neck out there. I think the deal fails. I think she secures some votes but not enough to get near a victory, and I still foresee a defeat in the magnitude of anything from 50 to 100. So that then puts us, as we know from the timeline, uh, going back through into this idea of The vote procedural then for the no-deal side on Wednesday, an extension on Thursday. How, if I'm right, let's say, how does that impact the pound? Well, it's quite a tricky one because the market has priced in now that the fact that her deal could be accepted and you have this orderly resolution and a move into transition, an aversion then of any of this other routes of uncertainty, then, you know, what does the pound do? I mean, the fact of the matter is if she loses again, do you get a dip, maybe a gap fill, move back to pivot? But then ultimately, if we— I mean, I think if we get to the vote on Wednesday about do MPs back a no deal, I think that will fail. And so if that fails, we get an extension. This is that whole more sterling positive long, medium to long-term narrative that that Brexit overall being delivered might become a lesser probability, and therefore we get a really big push up. So yeah, maybe that might be the type of movement where you get a kind of short-term reaction negative but a longer then trend on the upside. So you get a knee-jerk reaction followed by the more rational trend move, if you like. If Jeffrey Cox I mean, you might get the signal early, and if Jeffrey Cox comes out and throws his weight behind what has happened, and he gives it his kind of backing, his legal assurance, and the ERG follow-up in succession, well then I think you've got to be looking for pound to start punching higher and punching higher pretty quickly. I mean, that overnight high, sure, the R2, absolutely, 133, and I think then we keep pushing higher. We'd want to be looking at longer time frames then of, well, how do you execute the trade? The overall broader target, I guess, upside being the end of Feb high up at 1.3364. Say we push even higher, so you've got to start— again, one word of advice I'd probably do now is I'd start plotting out on your cable chart some quite outlying levels so that if that type of news does come out, then You're not there trying to find levels to strategize a trade of execution. You're just literally binary. You already know the predefined levels that you're aiming for. A good tweet as well that Will in the chat spotted that I think is absolutely relevant to this discussion. Jon Snow— sure, you all know Jon Snow from Channel 4 News— he said earlier this morning A lawyer contact tells me the legal world is aware that Attorney General said no last night to the validity of Mrs. May's new EU deal. He has been told though to go away and find a way to say yes. A cohort of lawyers has been summoned. So, you know, can that be the case? Is that going to be enough? Um, does the Attorney General play to May's kind of tune and help her out and find a way, or does he stick? You know, it's his reputation on the line here, and he— before, what was the words that he used? He previously warned that it could endure indefinitely was his legal advice on the backstop that he previously said. Does he alter that phrase? Pivotal for today's price action. Then I've just also seen this. So Geoffrey Cox, um, what we've just said, the ERG and the DUP, this is where the real— if you were going to define potential big sparks of price action, this is where the three could come. The third, uh, this is Sammy Wilson, basically acts as the number two for Arlene Foster, um, in Northern Ireland. But he has told LBC this morning it appears to fall short of her promises, i.e., disappointed from the PM's new deal. Now don't forget, he did also follow this up saying he's not yet seen the deal. He's making this comment on the back of what he's heard so far. But this definitely is not exactly what May would want to be seeing, and probably goes some way to explain why the market has seen some fluctuation here, as these types of comments from Mr. Wilson have been coming out. Okay, well, that's, I think, enough with, with the Brexit side. I'm just gonna wrap up and look at the calendar then, and then I'll hand you over to Sam. So here's the calendar for today. Brexit absolutely will be a dominant theme. The pound, in theory, I would say a multiple percentage move in either direction is is certainly possible. And as I said, I would focus on those three main things. I would basically overlay this calendar of timing with then focus on hearing from those three officials— Cox, the IG lawyers, and Jacob Rees-Mogg— and then also finally what the DUP say. Other than that, you do have UK data coming out at 9:30. You've got GDP, you've got the industrial manufacturing output numbers, construction and trade balance. So a little cluster of data coming out, but you know, don't get distracted too much. That's likely to just be a blip of action and then we'll revert back to the, the situation that's Brexit. Yeah, and as, as one of the guys are saying in the trading live room, one of the other guys in the DUP Group. Nigel Dodds is another big name for the DUP in Westminster to have a look for. So yeah, thanks for that as well. Otherwise, in the US afternoon, do not forget and do not get caught by the fact that US clocks have changed, um, and that means that all US data will be coming out an hour earlier than normal. And today is important because aside from the action on the pound and Brexit, you absolutely need to be aware that you've got major US data coming this afternoon. 12:30 is US CPI, um, that could influence the dollar for sure, which adds another layer of awareness that you need to be absolutely keeping an eye on when it comes to trading cable today. Definitely don't get too swamped and saturated into this kind of Brexit euphoria and forget that the dollar could see some fluctuations here which could knock you out in your trade if you're not executing your timing correctly. Otherwise, oil inventories later on. Speakers, couple to be aware of. Um, the Bank of England publishing its record of FPC. That's typically a non-event, so I wouldn't worry too much about that. You've got the German Chancellor speaking later. They were— well, there was a fairly positive reaction to some Merkel comments on the Brexit situation about how she was quite happy with this deal and how Britain should look to accept it. So I wouldn't be expecting too much from Merkel, but maybe keeping an eye on. And you got Feds Brainard, a voter, she'll be speaking later at 12:45. Okay, so with that, let me hand you over to Sam. Give me one second. There we go.

Hi guys, hope everyone is, is doing well. Um, you know, just going on from that calendar like I mentioned, you have got the, uh, the CPI numbers 12:30, so that's obviously something to keep an eye on because if we just go back to, to euro, and I was just looking before I came on here, um, just now at, uh, the reaction to the retail sales, and was a tricky one. Of course it came in, uh, a bit better than expected, but that revision was a lot, uh, worse. And on that you had the spike down and then up, and really tricky one. So I think you, for this, these numbers, you're going to want to a better reaction, cleaner reaction before wanting to get in. I think quite a few people might have got chopped up in that before the eventual move lower. Uh, this morning, obviously with the, the positive spin so far on, on Brexit, we're seeing a bit of an unwind in, uh, this, this euro move. And we talked yesterday about the possibility, possibility, uh, of a complete, uh, retracement in, in the euro, much like the Canadian dollar does. And here the euro not too far away from really getting back to where we were on ECB Thursday. Other key levels to, to sort of have marked up that we potentially might find a bit of support or resistance— I should say resistance— that, that low that we had on the, the 2 PM on the Wednesday is something I, I'd be marking up. Just pull the 113 handle on the futures But with the, the positive spin so far, I think favoring the upside, and even potentially a bit of a break of that later on today might be the favored way to look at it. However, great area to take profit on that. You can see the lows are getting higher as well, and these highs are also getting higher on this market. So looking for maybe a more medium-term short, probably not the best area unless you were to get an opposing side downside to these Brexit comments. Of course it's going to affect the, the euro as well. The pound, what a recovery from gapping lower over the weekend. Other key points, obviously I've seen a couple of people in the chat have already got marked up the, uh, the gap. So that's something that you've got to be looking out for. That might come quite quickly, so a headline might trigger that. And then with this sort of trend going from those lows, it would be a very sort of fast reaction trade below of the 132 down to the, the sort of the highest level we had from yesterday. But with, uh, you know, the briefing already, we're only about 25 minutes into it, we've already had different comments that have come out. So it's going to be a day where if you're in a pound or euro trade, I would say making it risk-free as soon as possible is the way to go. And you might need a bit of, bit of luck to, to take advantage of these comments as they come out while being at the screen or already in the trade. But just be careful, uh, would be my advice going forward. Other key points to, to be aware of the pound, and when we put it on the 240, you can see just how impressive that recovery is. And, and this level was talked about on, on Friday, the low the 22nd, and again yesterday we did talk about it, that high the 13th, just how strongly technically that works. But of course, more down to the fundamentals that we're out up to where we are. I'd still be keeping an eye on the 133.56. Further positive development today or tomorrow, and that high that we also have back in September will most likely be tested. But yeah, that, that sort of gap would be the area of support that I'd be identifying should we break this potential trend line that we've got in the mix here as well. Probably worth having one on from the top. Can we get a third test, see that it's respected, and then potentially look for the break higher? In between this high and low of the Asian session, probably best to sort of stay out of that. Just elsewhere, just keeping an eye, the Bund is just pushing lower here. Um, so we, we said just a few minutes— I said just a few minutes ago about the ECB reversal. Well, you're starting to get that in the Bund here as well. The stronger euro obviously weighing on, on things there. Equities, um, the DAX had come under pressure this morning, and that pivot yesterday acted so well, and it's working really good today. Was also a previous high that we had Yesterday afternoon, but with the Bund and the Euro, uh, well, correlation, I'll just be a bit careful about wanting to hold this long too much. If anyone is in, potentially looking here at the, the low that we had on, on the open around, uh, this point here, if I just draw a circle, would be obviously a good profit target, but also not the worst place to look for a short. Say, having said that though, equities are looking quite strong again. And it's amazing what a weekend can do and how people can just forget about news, really. But yeah, strong recovery into Friday. We continue to push higher. Boeing— what Boeing literally pushing equities as an opportunity to buy again. And we've pushed higher. Key resistance levels obviously to be aware of, looking here back on the, the 5th and the 6th, we're not too far away from that. 2,800 has acted of resistance on the futures as well this morning. If looking for the pullback, obviously I'll be looking, uh, potentially to get in this later on in the day when the volume is a bit higher. But any of these previous highs, not a bad place, I would, would say, to, to get in. Uh, Euro Pound, I know a few people are still in this trade, and helped, yes, by the reaction last night we saw Um, you know, it's held quite well on the overall retest of, uh, this level. Let me just put it on a weekly chart, uh, and it's one of those ones where by the end of the day we could be back around here, or we could literally be back down to the low that we had in April. So it's a tricky one. I would say just be, um, be sensible by making the trade risk-free. And then if you have multiple contracts, they're sure, let them run. But it's going to be a comment-driven day where price can obviously whipsaw around. And, uh, Ant was mentioning earlier how an Australian, uh, bank, I think it was, was saying there could be 8% swing lower, uh, in the pound. Obviously very unlikely, but those are the type of numbers getting drifted about, just to show how careful you should be. Just to wrap up on oil, and then we'll do gold for, for the commodities, uh, the trend line that we had on— where you can see it's still on there, uh, you've got a decent push higher of that. We almost made the, uh, the 57 handle and the high from, uh, the 7th before getting quite choppy. But since then, we have pushed higher, uh, with the APIs out obviously earlier time, uh, this morning. So that's something to, to bear in mind for any oil traders. But that high from, uh, the, the 5th, we've just broken through that now. Was a good area previously as well, as we did find support on initially on the first day of the month around there. So I'll be keeping an eye on that. If we were to get a significant breakthrough, well, there's almost a bit of free run to go to 57.5 and higher levels. But the key resistance point, as it has been— I was going to put onto a daily chart for quite some time— is that 50 8 handle on the futures. Just to reiterate the importance of that, I'm going to draw that line on. So from, from 5th of February, uh, 2018, retested it in November, we retested it again this year. It's acting just very well, multiple tests. And it reminds me actually of gold last year where I think it's around 1235, similar here where we, we again had support broke through. We tested once, twice, couldn't get through. Then you get that opportunity where it breaks, retests, and then looking to go long. More intraday gold, just to wrap up here. Um, we broke out that little range that we had on Friday with the weakness. It's going to be probably one today just to wait for those inflation numbers to get a real, uh, sort of view on the market. But similar to the pivot, which was acting as quite a good support yesterday morning. You got the same here, similar sort of trendline on that. So potential for a breakthrough either way would be something I'd be focusing on. Ideally come 12:30, that would be looking like a possible trade. Vignesh is saying oil now higher the day, so worth keeping an eye on that. But yeah, any questions as usual, please do get them in the chat. I'm expecting it to be a pretty good day of the opportunity-wise. So that doesn't mean you need to start chasing straight away. But for now, a couple of European equities just finding support on the, um, on the pivot, and the euro just taking a bit of a breather. Hope you'll have a great day, and I'll catch you in the chat.