WHO Says Virus In EU May Be Approaching Peak

Okay, very good morning. Hope everyone is doing well. It is Tuesday, 31st of March. Before we begin with the debriefing, just wanted to have a quick word about Amplify Trading because I know there's still quite a few people who watch our briefings on YouTube who are not subscribed to the channel. So please do, be much appreciated. Hoping to grow our community further, particularly stateside. As well as in where we're based in, in London, in the UK. We managed to cross the 10,000 subscriber mark not that long ago, so it'd be great to build out the community. You've had some really fantastic comments actually over the last couple of days, so remember you can always drop a comment on the, on the video and I'll always reply throughout the day, whether it's about us as a trading firm or whether it's about markets in general. On that point then, a quick look at— this is, uh, the company website. And as you can see here, just a couple of shots of our, our main trading floor in London. But obviously, given COVID-19, as you can see, I'm not sat at work, I'm sat at home. And this is likely to remain the case now for the foreseeable future. I would say probably at least the next 3 months or so, most likely. So what we've done is, if you go on our home page and you scroll down depending on whether you're someone who's more interested in our trading kind of division and some of our trader development training, or whether you're a student looking to do the more holistic kind of overview of financial markets. There's two different sections here to click on, but focusing on the trader one, it basically opens up a page with a little bit more detail about what is exactly that we do, what different programs do we have. So do check that out if you have, if you have time. Otherwise, let's crack on with the The Briefing. And what have we got for this morning? Well, actually, volatility-wise, things have died down quite a bit as we go into quarter end. Obviously today, the last day of March and Q1, so definitely keep that in mind, I guess, as we go through into the second half of the week. Interestingly, having a conversation with someone online, actually on the YouTube channel in some of the comment section, we were talking about the quarter end, and perhaps this little bit of a bump that we've had in equities, which has resulted in this type of movement, which is the S&P being on pace to post 4 up days in 5 sessions. Now, is this a little bit of reflection of the fact that equities have been so beaten down over the recent weeks, and particularly the first quarter, that portfolio managers are just looking to kind of rebalance going into the end of Q1, and then from kind of Wednesday onwards do we start to see then a bit of a renewed run on markets if we are to see any downside materialize again. But, you know, looking at this morning, things are a touch more positive. Um, let's start with the S&P 500 here and, and just have a quick look. You can see here I just marked up the chart from some of the recent price activity that we've had. So since the Fed's announcement of measures, and I mean, look where we are now, we're back up to retest those highs that we're seeing right at the the end of last week. And if we take that low really from really this time last week, or Monday last week, to where we are at the moment, we're still up about 20% or so. And you can see in the overnight Asia-Pacific session we've had a test and rejection of that resistance point from where we were trading on Friday, and we're going into Thursday night Friday session up at around the 34.75 level. So definitely now that's the, the kind of range to keep an eye on as we go forward throughout the rest of the day. Would be here, this kind of movement. You've got those highs that were seen on the 27th, so this was Friday's high, and then also the retest that came late in session before the eventual collapse that we saw into the Wall Street close at the end of last week. So markets responding a little bit to that around those levels in the early European entrance this morning to just define that near-term range that could be quite interesting to watch On the upside, obviously any break higher. On the downside, probably some of these lows that we've seen over the course of the last day, so it would have been yesterday evening in the futures market, scaling back down through that 2600 handle if we were to push back lower. If we go back higher, let's have a quick look here, just widening the chart out a little bit. You've got obviously the 2700 handle which would be the next kind of more bigger psychological level on the upside, which isn't that far off. So if we just look at 2700, you can see the market has responded to that before, given some of the big volatility that we've seen in recent sessions, particularly in around mid-March. And you can see how the market's also responded to that as a bit of a floor in price activity before in the earlier part of the month. So some, some bigger levels there coming in if we were to go on the other side and continue to push on to the upside. But as I said, a little bit of mild risk on. I'm going to get into the Chinese data that came out overnight, which was quite strong. But with that then, as you can imagine, gold a little bit lower this morning. There was a trend line we were looking at in the briefing yesterday, and you can see that that's still being respected to a certain degree. And yeah, Asia Pacific session having already broken through it Yesterday afternoon it came back up, tested around that point, and now we're just keeping an eye on that— would have been Friday low. You can see it's had a, an attempt late last, last night. But any— I'd be keeping an eye if equities do remain quite buoyant. Do we get a bit of a push on, a breakdown to here, perhaps targeting then the, the S1 bounce back, and then for the prevailing move back down targeting these kind of areas, which would have been the low point that was seen back on what, last Wednesday, Thursday type level. Uh, but again, conducive of equities and, and sentiment still remaining relatively bullish. Uh, on the commodity front, uh, pretty similar actually. Uh, oil prices have— oil prices were interesting. I was actually looking at my charts last night. Uh, I did see the rundown in oil, uh, that came shortly after what would be the traditional kind of market hours, so to speak, so around half 7 And what we broke down through the lows, through $20, and saw a bit of an extended run in price. And we actually printed a low down at $19.27. And obviously when we start looking at these longer-term price levels, that starts to bring in another look down to these very depressed points of going back to 2001. But after that close, we'd see a ramp back up, and then overnight the Asia-Pacific session You can see a bit of a short-term descending trending line there, break above, and we just remain quite bullish on the back of the, the Chinese numbers that did come out, which we're going to have a look at shortly. From an oil perspective, uh, obviously a couple of interesting things were developing yesterday. Some source reports suggesting, uh, coming from Trump that he's going to look to get involved, if you like, within this Saudi-Russian confrontation. He's going to look to have consultations with Vladimir Putin I do think somewhat Trump now, if you think about what's going on just generally in the world at the moment, oil prices is still very low by historical standards. And, you know, one of the things about becoming the most biggest producer in the world is that you almost become now part of the same game that Saudi and Russia have, which is the price of oil starts to become quite important, as we know now. For me, the US have said overnight that they are roughly about 2 weeks away from peak virus in the United States. So things are going to get worse before they get better. And I think that's going to lead to more quarantined areas across the United States and therefore the implications that that can have from a demand perspective and an already weaker oil price and this price war that's going on with the OPEC+ at the moment. So I would expect quite an increasing amount of headline risk to come out for the oil market. Coming up in the next few days, week or two. And what I mean by headline risk, I mean something serious coming out that can bump the price back up higher quite aggressively, because I think Trump knows that there's a risk here prices could drop quite substantially further. And a more concrete follow-through through $20 leads us back down to the kind of $16 type area, which would be particularly troubling for producers involved. So I think Trump's trying to get ahead of that, hence why you saw the source comments yesterday. I think there's more of that to come. Saudi are still being quite stubborn. I think some of the things I was hearing this morning on the Squawk, they were talking about still committed to increasing supply by about 600,000 barrels per day going into May. So maybe a little bit less than what they were intonating in that FT report a few weeks ago, but Russia seemingly a little bit more willing to come to the table now. So definitely this is an evolving story, and I think after what was a little bit of a range price activity here in crude oil through the best part of last week, having broken down again, again it rekindles this necessity to try and now cultivate a bit of a change in, in the current status from these parties that be, given the downside risks that are on the table. So Yeah, that's my kind of overall assessment with, with that. And then in the currency markets, sterling a little bit weaker, but both major pairs are down in EURUSD and Cable. As you can see, the dollar index is up about 2 tenths. A little bit of a blip down in Cable overnight, but nothing really too meaningful behind that. And the UK GDP has come out this morning, but this is fourth quarter data, so it really is not important. It's very backward-looking. You know, how the UK was performing then has absolutely no bearing on the pound today when we're very much focused about how we're going to perform in now Q2 going forward. In terms of the euro currency, the euro currency has broken that kind of trend channel that we were looking at here on the 90-minute candlestick yesterday. You can see after the breakthrough that came around midday yesterday, we did come up to retest it in the afternoon and again close to it in late in the US session. Before then, the price broke down a little bit further. We've had a failed move through that kind of S1, perhaps keeping a close eye on that given not only the, the test this morning and the S1 level, but there's also the high print that we had back on the 18th. So I'm interested to see, really a few pips away from there, about 10 pips at the moment, how it's going to react. Okay, so let's get stuck into some of the headline stories. Um, and let's start off with this one. Why is there some, you know, kind of a moderate degree of risk-on attitude to markets this morning? And this is the World Health Organization. They have said overnight that there are signs of some stabilization in Europe's coronavirus outbreak as the hardest-hit countries in the region, Italy, reported the smallest number of new cases in almost 2 weeks. European nations, they continue to move to tighten restrictions to fight the, the virus. Conte, the Italian prime minister, is working on another new stimulus package, this time aiming for around mid-April, to be said to be around €30 billion. This is to accompany the initial measures worth €25 billion. So again, these governments continuing to do this kind of mindset of whatever it takes at the moment, which you would say despite the accumulation of debt, which is going to put the kind of creditworthiness of these countries under a bit of pressure, as we saw with the downgrade, because Fitch on the UK on Friday, really, I think the markets can digest that without too much, too many issues, given that, you know, that is what is necessary at this point in time. The other country, Spain, that was one obviously we were looking at yesterday, which has been particularly in focus. And this is an updated look at the FT's tracker, looking at the cumulative number of, of deaths. And what we're looking at here from a visual graphic kind of point of view is the trajectory of these cases and deaths in these different countries. And Spain has announced plans last night that they're tightening restrictions on public life further. They're ordering those who work in non-essential services to stay at home during the Easter period. But you can see here that, I guess, the positive thing is that although these numbers are still moving up, they are getting slightly more shallow at this point, mimicking kind of the, the shape of what we have seen in China. Actually, from one of the most steepest ones that have been inclining of late, which is kind of still off the radar somewhat at the moment, is India. They have jumped up quite aggressively here more recently when they actually look at their data as a specific country. Other areas which I think are quite key Of course, in the United States, New York City, they did report a 16% increase in deaths in 6 hours overnight. So that's particularly troubling. That is an area which so far Trump and the US administration have kind of held off doing any kind of extreme lockdown measures to what we've seen more mimic toward that in mainland Europe. But you would say that probably only a matter of time, as we were looking at some of those, those graphics from yesterday where you can see the kind of national expansion of the outbreak. And overnight it was suggested it's going to be 2 weeks until the peak. So definitely I do think that this is still something which could, you know, the kind of the big risk at the moment to this seemingly bottoming out of this market rout that we've had. The wild card still remains the development of this virus, and that's not Not to say as well, we still have to tackle the issue about when we have containment. So if you think about the next kind of 3 to 6 months, we are right in the middle of the initial storm at the moment. But then naturally, as the virus peaks and then starts to become more shallow, the next big critical test that the market will have globally is this whole return to work. I mean, how's that going to play out, given the fact that there's going to be huge fear about a second wave of of new transmission of the virus. And, and so, yeah, this definitely is a, a much more protracted, longer economic theme that perhaps some were thinking at the beginning. But for the moment, in terms of the overnight, things are looking a little bit more positive. Now, one of the reasons as well is this: you've had the German manufacturing PMI data come out overnight. And to give you the numbers, the Chinese manufacturing activity in March came in 52 versus the expected 45. So it was much stronger than expected, and it went to 52. The previous was 35.7. So that's a monster jump up, uh, going from the largest contraction since around 15 years ago and springboarding back up into an expansionary territory as far as the PMI is concerned. And this is what that looks like, this kind of V-shape Important to note though, a couple of things. Although this was much stronger than expected, and certainly it's helped a little bit with the oil price and generally with equity sentiment, yeah, definitely. The new orders PMI is still in contractionary territory, it's still sub-50. The employment one's just a whisker above. One of the things that, just reading around the data point from overnight, that they're saying is that firms in China are still reporting funding shortages and falling demand in February. Now think about it, you know, if we reverse back a couple of weeks ago, China, their economy was significantly weakening because of the virus. Now if you think about it, that was because of the domestic nature of it being in their country and the ability then for workers to be active in factories in terms of the manufacturing of goods. Now now is a, is a different but similarly economically damaging issue, which is that of the global economy elsewhere out of mainland China is now being hurt. And what China needs is the buyer, i.e., these countries from external who are importing these Chinese goods, to be actively purchasing. And that's just not happening and won't be happening anytime soon in any type of size. And so although this is a kind of positive short-term signal, I would say probably a little bit early, uh, to really jump on this and think, well, that's the end of it and this is the now meaningful kind of recovery of the Chinese economy. I think you've got two things to monitor here. One is the global ability to import Chinese goods going forward, given the repercussions of the growing still expansion of the coronavirus, particularly the US being one of these most important trade partners, and the fact that they've— they're still 2 weeks away from, uh, from the peak. And then the second thing, uh, is that of which Chinese workers are still set to really fully return to work. It's been gradually happening, uh, but how does that play out in terms of any risk of a second wave of viruses breaking out? One of China said— well, this is that Global Times editor Hu Xijin. And he did tweet a couple of hours ago, having a little bit of a pop at some of the Chinese, the Congress, and the US politicians. Said, want China to compensate for US losses in the pandemic? One, it has no legal basis at all. Two, China today is no longer a country that the US can willfully coerce and extort. A few US politicians, they better stop daydreaming. So Yeah, absolutely. The, you know, the kind of forgotten macro topic, I guess, is that these were two countries which really defined much of 2018-19 from a global perspective. I mean, obviously being based here in the UK, Brexit and UK election was a dominant theme, but ultimately that, that coronavirus, which sits top of the pyramid at the moment of the macro drivers, that undoubtedly had been the trade war for the past two years before this pandemic came along, and this isn't resolved at this point. So anything like this that starts to grow again in this hostility between the two nations, particularly not forgetting Trump has an election to manage in only a couple of months' time, I think it's going to be something to also keep an eye on. The more this breaks down, the more it can almost exacerbate the negative conditions that we're seeing at the moment on a more global scale. Interestingly, though, jumping over to Washington, the White House and Congress are said to be weighing another stimulus. You know, it's quite incredible, really. And this was the one that we saw. I know it's a bit small, but hopefully I can talk you through it. I did post this graphic via my, my Twitter handle, so you can see it here. If you do want to have a closer look, you can get the graphic. But this is looking at the coronavirus Aid Relief and Economic Security Act, otherwise known as the CARES Act. This is the one that passed last week that saw equity markets surge higher on the back of this $2 trillion stimulus in America. But what was quite neat about this infographic is you can see where just generally the money is going. So if you break this $2 trillion down, you know, individuals, large corporations, small businesses, but then what exactly within each one of these kind of categories is the funding going to. So for example, of the $2 trillion, $300 billion is going to cash payments to American citizens essentially. Uh, and that does comprise of then for individuals, 30% of the entire $2 trillion stimulus. Uh, and as you follow it through, you can see lots of different breakdowns. Now, one of the important things here and what they've been talking about overnight with this new top-up, if you like, of further stimulus is this idea about specifically considering aid for mortgage markets and travel industry. As you can imagine, these are two of the most hardest hit. If there is going to be— as we've seen last week, jobless claims in America up 3.2%, I've seen estimates of this week it's going to be up at 3.5%. Non-farm payrolls is going to be the worst contraction since 2009, and it's only going to get way worse next month as well as the unemployment rate starts to surge. And so defaults or risk of that on mortgage markets, the pressure on the mortgage market is going to increase. And the travel industry, as we know, has been under pressure ever since this pandemic began. So officials have compiled lists of requests from government agencies, and they total what's, according to people familiar with the matter, around $600 billion. $1.9 trillion to top up further to what we've already seen. So yeah, again, that could well help offset any further negatives. Again, if they just keep throwing hundreds of billions of dollars, for the moment, again, the market is not thinking about that several steps down the line debt burden that the American or any national government is going to have with the stimulus package. What they're thinking about is addressing the near-term existential threat, if you like, to the economy. And at the moment, these are seen as more positive than negative in that, in that sense. Okay, quick look at the calendar and then I'll let you guys get on with things. So we've already had the Chinese data, again decent surprise on the upside, but I don't think you should read too much into it beyond just this short-term reaction that we're seeing. But obviously further economic stimulus could be forthcoming. That is a positive. The WHO are saying that there's signs of potential peaking in some of the European key nations with the virus, i.e., Italy and Spain, getting closer. And so these are, these are good signals, at least for the intraday. Going further forward, we have the German unemployment rate change coming up just before 9 AM this morning. In London. And then you've got the eurozone flash CPI number coming out at 10 o'clock, expectations at 0.8% year-on-year, slight decrease on 1.2% seen last month. And into the US session, we get the Chicago PMI, again likely to be a fairly depressed number, 40 dropping from 49, with a range of 35 to 46. 35, that would be incredibly low number by any stretch of the imagination. Then US consumer confidence also expected to take quite a decent hit as well when that comes out later on this afternoon. I guess with a lot of this economic data coming out from the US, markets have largely priced in a lot of this. One thing I'd, I guess I'd be watching is just making sure you're aware of that analyst range of the data, and not so much focusing on the median estimate but more the lower bound of the range and how much by how much of a deviation do we break away from that low-end pessimistic estimate on the street. I do think there's, there's some risk of some quite big misses coming up, but perhaps it's going to be more evident as we go into next month's data, just given the fact that the virus has only really started to pick up in North America over the course of the last 2, 2.5 weeks or so. Then got the oil inventories in the afternoon. as per normal, with supply coming out, Italian, um, auctions happening throughout the morning. All right, that is it. Uh, that's your briefing for this morning. So I hope that's useful. Uh, again, don't forget to subscribe to the channel if you don't already, and I wish you a good day ahead. Thanks very much, guys.