Why Trump Impeachment Doesn't Matter

Okay, very good morning, Thursday 19th of December. Hope you're doing well. Uh, usual routine, I'm going to run through a couple of the major headlines and overall opening sentiment here for the UK European session, then I'll hand you over to Sam and he can have a look at the, the charts from a more technical perspective. But first off, looking at the— well, you might have just seen there a glimpse of the headline: Trump impeached by the House. And as you can see on the charts, absolutely zero impact. As we had been saying from the beginning, he is almost certain to be acquitted by the Senate when they then hold their trial, which is Republican, predominantly run there's no way that he's going to get impeached officially in terms of exiting the White House. So as you can see on the charts, absolutely zero reaction, as one would expect to that news from Donald Trump. So looking else, what's going on? The pound actually has had a little bit of a jump higher this morning, perhaps. I mean, some people I've been talking to talking about just closing out a bit of short covering going into the Bank of England rate decision. I mean, bearing in mind we've had a, a pretty disastrous run for the British pound. If we start looking at here that chart we had before, we've been using, referring back to throughout the entire week. Let me just remove this so you can see it a bit more. That's the, the journey of the pound, of course, since the night of the UK election when we did print a 1.35 handle, but we've got down and, and pretty much found technical support yesterday. Uh, the pivot level is working quite nicely with that low seen on the 12th, and we just kind of went sideways thereafter before then just seeing a bit of a pushback. Probably a decent level of resistance actually, just looking at this chart now at the R1. That does bring in a couple of nice areas of of some of the election, post-election price movement, but also some of the support levels that were seen on the 11th and the 12th as well, uh, before that main event. So nothing really too much else behind that move. There's certainly no, uh, other fundamentals other than perhaps just a bit of short covering given the depth and scope of the, the +3% sell-off that we've had since the beginning of the week on this pricing in on the fears of a no-deal Brexit back on the table from Boris Johnson's toughening of that legislation. Elsewhere, equity markets pretty flat overall. US 10-year just coming down to retest the low that was seen during the London afternoon yesterday at 2802. Gold just coming back to pivot as well. So just a fraction higher in the European index futures to get things underway. But as I said, fairly quiet open, not too much going on. Oil is basically flat and going sideways. Very tight price action seen overnight in the Asia-Pacific session. So straight into the headlines. Trump being impeached by the House of Representatives on charges of abuse of power and obstructing Congress. As I said just a short while ago, the Senate will hold a trial early in 2020 to decide whether the president should be convicted on these charges and removed from office. But it's almost— it's certainly, uh, the base case scenario would be that they will acquit him. And so actually, as I've said, I think on Monday's outlook, um, it's almost like that phrase from Star Wars, "Strike me down and you make me stronger." I think that couldn't be more relevant for Trump I think this is— I don't agree with the Democrats' approach with this. I think all they're doing is giving more strength and more support to Donald Trump by taking the action that they're doing. Trump's gonna be loving life at the moment. Now I know that sounds a bit perverse. He's only the third president in US history to have been impeached, but this absolutely plays to his strengths. And where was he last night? Holding a campaign rally, of course. Whilst they were counting the votes on Congress, he was there doing his usual kind of pumping up a stadium crowd, and he was saying that the impeachment shows a deep hatred and disdain for the American voters, and they would pay at the election. At the end of next year, of course. And so again, it's this, it's this whole notion of global politics, like with Brexit, us against them, people versus Parliament, establishment versus the people. In the US now, Trump, it's the Democrats or Congress versus you, the American people, and your rights. And look what I've done, perfect timing, couldn't be better, stock market record highs, and at Christmas. I mean, all this does to me, this impeachment from the House, is just further fuel what will be, uh, just a, a really strong message for Trump. And I think it just galvanizes his base even further. And no better timing than the seasonal period of where we're at at the moment. So although I know I sound like a bit of a Trump fanboy, I do look at this you know, 100% from a strategic point of view. And I think once again he and his team have played a blinder, as Sam would say. And yeah, I think this just plays in his favor. I don't see any risk at all from this, only upside for the president. The other thing, of course, that I did— I did tweet this, just going on this theme. I know it's a bit off-market topic But I did see a really excellent graphic because I was looking at the stats behind the frequency of Trump tweets. And Donald Trump— I'm not sure if you caught the tweet that I did— he's tweeted, well, given another day now, he's done north of 850 tweets. 850 tweets. So probably how much I would tweet over, I don't know, 4 months, 5 months. He's done in basically 2 weeks in the month of December so far. But this was quite interesting, and I do think it definitely is true about how he uses Twitter as that vehicle to, to create these different types of things. So here, diversion and deflection are probably 2 of the biggest things. The other 2 are when it comes to financial markets, I think the trial balloon is, is perfect. That's when he will start testing out the waters on the market's reaction and perception of the trade war and also the criticism of the Fed. You know, how far can he push it? And then there's the preemptive framing, of course, which is getting ahead of the curve. And, you know, one of the things that I think he's been very good at is and I've said this in a few conversations with the guys here— is that, I mean, what can you throw now at Trump that could bring him down? They've tried to throw the Russian thing at him. They've tried to throw now obstructing Congress, abuse of power. I mean, from sexual harassment to racism, everything. That would have downed any normal political figure, he has confronted. And the fact that he has confronted it so face-on, he's pretty much bulletproof at the moment. Uh, and, and so yeah, this whole notion of the witch hunt, uh, and the more that you throw at him, the stronger he becomes, like a Sith Lord, as I, as I said. So yeah, I'll move on. Other things that I think warrant a mention and a few other things to be aware of. We had the Bank of Japan interest rate decision last night. I'm not going to spend a great deal of time talking about this. No surprises at all. They left interest rates on hold. This comes after the Japanese government under Shinzo Abe have announced a large-scale stimulus. So hence the kind of calls from the central bank to get the fiscal situation to lend more support, given the lack of real ammunition that the central bank has now in its toolbox. Uh, the BOJ did say they no longer described overseas risks to the economy as increasing, so they have kind of improved very subtly their outlook about the future. But they did say significant, uh, risks do remain, so that they remain on guard, so to speak. Uh, they did say though that central bank that the domestic demand would be supported though by this active government spending. And to give you a bit of context, BOJ officials see a sizable impact from the government spending expected to boost the economy by just short of 0.4 percentage points. So that was Japan overnight, but the, the currency reaction, uh, minimal if anything at all. The other currency that has moved though is the Australian dollar. And this isn't so much based on any update on the trade side and any potential ramifications on China. This is directly the implications from domestic economic data where the Australian jobs numbers— employment jumped 39,900 last month. This is employment figures. That was compared to expectations of just 15,000, so more than double expectations. And if you look at your Aussie chart, that will explain the little spike on on the candlestick that you can see, and then the graduated move we've had. And we're all the way trading up at the R2 in the futures in the Aussie this morning on the back of the number. So at the moment, the RBA, you could say, justified in taking those 3-step cutting action that they have done over the course of this year, but right to hold and stand pat for the moment to let, uh, that feed through into the economy. And so far so good in that approach. The other thing, of course, coming up, the Bank of England interest rate decision. Not expecting any real great movement on the back of this, so very much so expected to hold rates, even though markets are pricing in, as you can see on this graphic, an interest rate cut is the more favorable pricing by markets at the moment. You can see then when we get to really around May, June of next year, an interest rate cut is priced in. Now don't forget, pricing has seen a little bit of a shift obviously since Boris has got a little bit more aggressive. We've been focusing on the pound coming under pressure, but the rates market also reflecting this. And given in mind then, he's pretty much got to strike a deal in just a matter of months. He's given that deadline of he's not now going to extend the implementation phase or transition. And so hence the reason why when we get to kind of end of Q1, beginning of Q2, you're pretty much going to know whether or not that is going to be withheld, or, or indeed he is going to have to change tax. So all of that meaning more political uncertainty, more risk to the economy, and hence the reason why timing-wise that's when a rate cut is priced for, around that point of time for the moment. Otherwise, elsewhere, a couple of other things that people are looking at. Um, if we go back to here, this is the Bank of England Dove-Hawk barometer, if you like. Looking left at the doves, all the way going to the far right, the hawks. So you can see the overall composition, of course, of the, the members of the Monetary Policy Committee. Would be leaning to the left because of the state of the economy and the risks associated with, with Brexit. Most importantly though, we have seen, seeing a pattern of 7-2 splits, that meaning 7 to hold policy as it is at the moment, but 2, Saunders and Haskell, being more minded of taking more preemptive action to mitigate any ongoing downturn. Now Would they be right in doing that? Well, inflation, as we saw yesterday, has been relatively steady, but as you can see, it has been drifting away from target at the Bank of England, 2%, as, as general demand in the economy has dissipated with the, uh, the significance of the impact of the uncertainty surrounding our economy. So things like manufacturing activity has been declining, construction the worst in the decade, so on and so forth. The other thing though, GDP— this is looking at it on a product rolling 3-month total— has surprisingly held up. However, you could say stagnating. I mean, growth is pretty much flatlining at this moment, but albeit we've managed to avert the initial dip that we saw in, in the summer. But growth fairly precarious. So in that reasoning, hence these two likely to vote for a rate cut again, and some speculation that this chap here, uh, Flieger, is potentially going to join, and you could have a 6-3 split. Now, would 6-3 lead to a big continuous sell-off in sterling? I would say no, but if we were trading at a sensitive lower bound level. Now we've moved away from that, I'd say it's maybe a little less the case. A 6-3 vote, I think you would have a little bit of a downside reaction in cable. But in terms of retesting the lower bound of this now quite important level of the 131 handle, um, you've got close proximity the S1 on the daily pivot and the low on the 12th. I, I don't think we'd get down that low But certainly coming back to pivot, which does start to encapsulate some of the Asian Pacific low. I mean, in the, in the area prior to this area here, this is quite a good strong area of support or potential target in that type of setup. So at the moment, you can see we're forming a bit of a range. I think that any short covering that was happening this morning is done. And now it's kind of this price movement up until we get the actual announcement. Whether or not we can breach that and push lower down to here. Um, you know, if we got a surprise, maybe if it's 5-4, uh, then there's a little bit more emphasis to get back through pivot and retest down at those levels. But other than the vote, I don't think there's going to be too much there that's going to be shocking information, to be quite frank. Okay, a quick look at the calendar, what else is coming out.

Today.

Let's just have a quick look. So you do have the Bank of England retail sales report. So yeah, let's go back to that sterling chart with that in mind then. What you would want to see from a fundamental perspective if you're looking at the short is, given where we are at the moment, we get retail sales— and let's say retail sales month-to-month expected at 0.3%, that's +0.3% month on month. The range on the low is -1.5%. It's a bit of an outlier because the top end of the range is 0.7, so it's definitely someone on the street is quite bearish on that figure, potentially as a bit of an outlier against the, the median estimate. With that being said, if we got a very negative retail sales, I'd say that could bring us back a little lower towards that pivot and overnight top end of the Asia range. And then if we got a 6, um, 6-3 or 6-5-4 split, excuse me, something as drastically dovish as that, well then yeah, then we could get a test back down and a potential breach of that level. But you're looking at, I would say, fairly lower probability scenarios. But again, this is what you do, right? As a good macro trader, you should be thinking about the plausible scenarios. Uh, you know, let's flip it on its head. Let's say we get a strong retail sales report Likewise, I'd be using the price action then that really defined the sell-off that we've had over the last couple of days, and then looking for where would the subsequent targets be if we were riding the move back higher. And I think there's a couple of good spots that I'd probably keep an eye on. So if I just get my ellipse back, so if we break where we are at the moment, probably target these levels here. So if I was going to put circles and then perhaps up to the next level. Then you've got the R1, and then some areas here from the previous highs that were seen before the gap up on the election. So like I say, I don't really have too much of a bias right now. I think that the no-deal stuff is kind of priced in, uh, to the point where it's reflecting Boris's legislation. So I think now the data and the the BOE could have some implications. But, you know, they've both got to go in the same direction. And what I mean by that is particularly strong or particularly weak or dovish. That's what you're looking for, for a more cleaner clarity, and then looking to manage the trade through those technical levels either on the up or downside accordingly. Okay, back to the calendar. Other than retail sales, Bank of England, US afternoon, you've got your weekly jobless claims as per usual, you've got your Philly Fed number, existing home sales also coming out. Um, speakers, no one, no one really to be aware of. But do be aware, in WTI crude, at around the historical close later on this evening, you've got the Jan futures contract expiration. So hence the reason why on our charts when Sam's talking, we're looking at the Feb contract, which has now got the main volume. All right, that's it from me. Have a good day. Hi guys, good morning.

I hope, uh, all good. Let's have a quick look over the DAX, which is just pushing down to its lowest level of the week so far, but a key level has to be said, going back here now to last Thursday to the tick, pretty much bang on the, the S1 and that low. So keep a watch on that. Was also the high if we had back on the 5th of the month as well. So a bit of a line in the sand that I would have marked up today just for, for the DAX in general. But of course, just the, the first 30 minutes doesn't always guarantee that the direction is going to be that way, and it is a key level of support in in what has been, uh, relatively choppy, it has to be said, has to be said, DAX over the last month or so. We had a couple of instances where it looked like it was going to break the bottom part of that range before then eventually getting above there and then reaching a new high for the year, only to now start drifting down again. But yeah, certainly keep a watch on that. And then if we put this onto the 15-minute chart, you know, this area is to hold and we get back above the the triple bottom from today's, uh, two lows and yesterday's one as well, then you are looking for price to get back to 13,220, uh, that kind of area here where we broke through. So some interesting resistance points just above where we're trading. Key level tested on the low here now as well. Has it had much impact on US equities? Not really, but you are just starting to see, certainly in the S&P perhaps, a bit of a trend develop from those lows of yesterday. So, uh, given the time, if you were to get like a 15-minute close below that, maybe you would feel a bit more comfortable about being bearish on this market down towards what has been the lower point of that range. And just below there, um, the S1 is where that comes in, 31.92. So still the same levels of support below there that I'd be keeping an eye on. 31.88, previous all-time high. We are As you can see, in a bit of a range this week still. So those lows just after we did the briefing yesterday, uh, held, and then the high that we were talking about at 3202 has held as well. Uh, 3200 level in, uh, in stocks, or in the S&P, we may well look back at this and just sort of see similar price action that we saw at 3100. And it's not until we really get a close of the day above that that, uh, we can get a bit more excited. So 3202.5 to the upside, still an area of resistance. You can see here some really big tests, and this will be on the daily and of course any other time frame as well. So keep a watch on that. Little intraday trend lines as well to keep focus on, uh, and then I'd say 3196 as well. The impeachment, as Anne said, has not really done too much. The US data in the afternoon unlikely to move things as well. I think the, the range-bound trade from the lows is a nice one, even the top part. But personally, I'd be looking for, you know, a confirmed break to retest that area for a further push to the upside. But we'll see, we will see. Let's have a look over the pound, which did have a little jump this morning. Um, I know Ant mentioned some nice resistance points. You can see that the high of the day is the high that we had from $6.30 yesterday, $31.65, uh, and then even if it is to get through there, you've got some really key levels as well that I would have as points of interest, uh, to see if, uh, they can hold up. Obviously we've had a big move lower, so it's incredible. That's all you could see. You wouldn't think the, uh, the Conservatives won the election, but of course No Deal supposedly is back on the table, whether Do you think that's actually going to happen or not? I don't know. That's why I actually do think it's going to be a good buy soon again, which is kind of what we were saying in the, you know, the, the election, that we come lower to then perhaps push on. I guess the timing of that could be key. However, yesterday's low is that low that we had back on the, the 19th, and you can see just the significance of that. And quite a few pound pairs have come to an area of support, um, euro or euro pound resistance where price has turned round. And perhaps that is just going to be such a good opportunity to buy. Saying that, if it does get below that, and it could do of course from midday today, then the floodgates could open perhaps to a further move lower. So that is just a massive level for the day and the week, that low from yesterday, which is the low from the, the more— well, the afternoon, I should say. Into the evening of the 12th, which of course was the general election this time, um, well, a week ago. It's almost literally a week ago that we were exactly where we were. Uh, what a difference a week makes. But yeah, that resistance holding up for now. If we— if you are short, I would be looking to target, you know, just around that pivot point, I would say, is your key level. You can see the resistance held so firm here from the 2:30 to 2:15 this morning before breaking through a quarter to 7. 31.28 on the, uh, the futures. I don't see why that can't really come into play there as well. Euro yesterday, uh, just continued to slow a drift down, but, you know, did finish down to a level which again, like the, the pound, found some good support. You can see here the low of the— yep, you guessed it— the 12th, finding an area where the buyers came back in for the this market. So again, really important. And as we put this onto the 240, we were talking this week about the, the idea that once price develops these trends, what happens when it breaks? Well, break, retest, you know, you've got to have that, that on. As usually when this happens, the euro then does drift lower and makes a new low for the year. However, quite a lot of, uh, end of year reports, you know, coming out and saying it's going to be the euro's year. Next year, uh, which again will be interesting to say. So if we do, uh, you know, to put this on to the daily chart quickly before we move over, have a look at gold and oil. You know, you've still got this massive, absolutely massive trend channel that we're in. And yes, if that breaks the upside, and you know, it's not far from basically a break of 113 when that's on, you know, what an opportunity that could be to get long euro. However, if we put this on a longer time frame and look weekly if that trend line from 2017 low breaks with the double sort of bottom, if you like, from September time, well, it could be bye-bye. Well, we'll have to wait and see for that next year when, uh, maybe more volume comes back into the market. Gold yesterday, you can see here, just looking on 60-minute, bit choppy. You had the— well, what could probably just go down as a fat finger, a big order, and in typical gold fashion it retraced. And where did it retrace to? Let's put this onto a 5-minute. You guessed it, exactly, exactly where it was. The amount of times it does this. But you know, it did take a while, you know, it's 11:35 to, uh, half 3. But that has proven to be a strong resistance point. So still have that marked up. Back to the 60-minute now, and you can have that range back on. Yes, we spiked lower, so I'd still you know, have 1477.4 as a level on that, um, as well. Of course, still going through the days, have the trend line on from those lows of November, December. If it breaks through 1490, for me, it's just such a, a key level, which I will like the idea of, uh, of a winter rally above that, um, will definitely take my attention if we can get a close of a day above there. To, you know, target up towards even 1524.25, which was the, the 1st of, uh, of November there. Quick look at oil yesterday, which surprised the market with a draw. You know, that API DOE correlation completely broke down. So it looked like, uh, in hindsight anyway, what a lovely trade that would have been to, to have got in. And obviously we found some resistance on the high of that week, uh, and that's held quite well, uh, despite a little breakthrough 61.8 $61. So to the downside, obviously pivot is important, and probably more importantly, $60.63 would be a level of interest that I'd have marked up. And then sort of start to draw these trend lines on, which you can see were well respected yesterday afternoon, starting here on the 17th as well. So keep an eye on those levels. The DAX, let's have a quick look, uh, how that is trading on that point. Still holding up on that S1, it looks like. Uh, we almost came down for another test of that. Yeah, we did. Uh, so looks to be quite strong on yesterday's low. So key point, and that could determine what happens really for the morning session. A break below this point here, uh, which is the 12th around 5:15, uh, could see a quicker move down. Hope you all have a good trading day. Bank of England obviously, uh, on at 12, their last ever um, interest rate decision of the decade. Witnessing history. Hope you'll have a good trading day, and I'll catch you all in the chat.