Amplify Weekly Strategy: 25th February- 1st March 2019

CALENDAR HIGHLIGHTS

Monday: SP PPI, UK CBI Distributive Trades Survey, US Chicago Fed National Activity Index, Wholesales Sales, Fed's Clarida, Kaplan to speak

Tuesday: JN BoJ Core CPI, GE Consumer Climate, FR Consumer Confidence, UK Gross Mortgage Approvals, TSC Inflation Hearing, GE 2-yr Govt Bond Auction, US Building Permits, Housing Starts, House Price Index, Consumer Confidence, Richmond Fed Manufacturing, Weekly API Inventories, NZ Trade Balance, US Fed Chair Powell Semi-Annual Testimony to Senate Banking Committee

Wednesday: IT Business/Consumer Confidence, 5/10-yr Govt Bond Auctions, Trade Balance Non-EU, EU Business Climate, Consumer/Industrial Confidence, GE 10-Govt Bond Auction, SP Business Confidence, UK BRC Shop Price Index, US ADP Employment Change, Durable Goods Orders, Goods Trade Balance, Factory Orders, Pending Home Sales, Weekly DoE Inventories, CA CPI, UK PM May Back to Parliament on Amendments (DELAYED), US Fed Chair Powell Semi-Annual Testimony to House Committee, BoJ's Kataoka speaks, US President Trump Summit with North Korea Leader Jong-Un Day 1

Thursday: CN Manufacturing, Non-Manufacturing PMI, FR GDP, PPI, Consumer Spending, SP CPI, Current Account, IT CPI, GE CPI, UK GfK Consumer Confidence, US Challenger Job Cuts, Weekly Jobless Claims, GDP, Core PCE Prices, Chicago PMI, AU Manufacturing PMI, Fed's Powell, Clarida to speak, US President Trump Summit with North Korea Leader Jong-Un Day 2

Friday: JN Manufacturing PMI, Tokyo CPI, Caixin CN Manufacturing PMI, IR/SP/FR/GE/EU Manufacturing PMI, GE Import Price Index, Unemployment Rate/Change FR Govt Budget Balance, UK Manufacturing PMI, Mortgage Approvals/Lending, M4 Money Supply, EU CPI, Unemployment Rate, US Core PCE Price Index, Personal Income/Spending, Markit Manufacturing PMI, ISM Manufacturing PMI, Uni of Michigan Sentiment, Baker Hughes Rig Count, Total Vehicle Sales, CA GDP, Fed's Bostic speaks, 90-Day US/China Trade Truce Deadline (DELAYED)

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Macro Overview - Sam North (@snorth19)

Despite the slow start to the calendar, I wouldn’t be too surprised to see markets spring into life right from the get-go. The Brexit Delay and the push-back of the March 1st Deadline for the US/China Trade talks will filter into the market and we could well see some re-positioning as participants digest this information.

Worst Trade War Ever……

All is good that ends well. The CSI 300 is into bull market territory and the S&P 500 is currently testing 2800 and just over 5% away from its All-Time-High. The decision to delay the March 1st deadline might on paper seem negative and thus send the message of uncertainty about whether a deal can be done, but with the extension being declared because of positive talks between the two biggest economies – the market is loving it. We currently do not know as to when the new deadline will be but with Xi and Trump expected to meet at Donald’s Mar-a-Lago golf club in Florida soon, developments on talks will be key to keep an ear out for as well as an eye on Twitter.

Two Delays Don’t Make a Deal….

Again, not really a surprise in that there has been a delay on her latest Brexit Deal and the GBP has hardly blinked in reaction this morning. Reports suggest that her Brexit Deal vote in parliament could be pushed back as late as March 12th which incredibly is just 17 days before the UK is to leave the EU.

However, with bookies expecting this already (No Deal Brexit by 30/03/2019 at 80%) and a (22% chance the UK will leave as planned on March 29th) the price action this morning has been limited.

So, as Theresa May tries to buy herself some more time in Brussels for negotiations, MP's will have a chance on Wednesday to try and seek to block ‘no-deal' as they put forward an array of amendments. The one in particular to keep an eye on is the Cooper and Letwin amendment which if passed would give MP's the power to demand a delay to Brexit if a deal cannot be agreed by March 13th. Whilst May is adamant about getting her deal over the line before any delay, the market thinks that is a slim possibility and the main question is about how long the extension to Article 50 may be.

Always Believe In Your Soul...

Gold. One of the key question’s traders will be asking, is whether Gold can continue its recent run. With a number of factors driving the precious metal higher, such as a Dovish FED, hedge against a global slowdown and risks including Brexit and Trade tensions you might argue that has now been priced in. At the same time, we are seeing Global equities recover which historically is seen as a negative for Gold with the Risk On/Risk Off correlation.

Opportunity to sell? Perhaps not right now - Investec believes we will still see an increase in demand, also backed by the fact that emerging markets such as Russia and Kazakhstan continue to buy Gold to diversify their reserves. With some important data out of the US over the coming couple of weeks, Jerome Powell’s testimony on Wednesday and the usual plethora of FED speak, I think we need to see a continuation of Dovish rhetoric for this market to continue higher and move in correlation with US Stocks.

If you would like further insight and analysis of the charts across asset you can access our morning briefing HERE.

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Technical Overview – Sam North (@snorth19)

S&P 500 Futures

Buy the rumour, buy the news. Having cleared the 200 DMA, the key trend-line from 17th October and now trying to push above 2800 – it seems the only way is up. The 17th October high will be a target for many, as well as the lows we broke down on the 10th October. My opinion remains that we get another ATH soon and unless we can break the trend-line from the 4th January lows then sentiment remains to the upside.

GBPUSD Futures

The bulls really took over around the 1.2860 (futures) area but certainly for shorter-term – 1.3000 looks really important. Once resistance and now more recently a support level, this will be seen a line in the sand for whether this pair can push higher or lower. We are also starting to see price getting squeezed from the 2019 lows and highs which could lead to a decent reaction if we were to significantly break either way. Whilst Brexit and FED policy will drive things, technically the two trend-lines and the 1.3000 handle would be my sentiment gauges as where price could go.

GOLD Futures

What a move Gold has been on…! However, the trend-line we have formed is massive in my opinion. A break and close below that and we could see a decent move lower. I think many will still like the look of a test of the 2017/18 highs and should we remain above 1300 and the trend-line then that will be favourite to happen in the coming weeks. If I wasn’t in a Gold trade right now and looking to get long, I would prioritise a break above the 2019 high rather than a long from lower down. Time will tell whether we get the test of the 1360 area but to get to get a first break above that area in many years we will surely need an Ultra Dovish FED!

WTI Crude Oil Futures

My Oil chart below has been kept quite simple. $58 is massive, can we get back to test it? I think it is likely to get another go this week and what happens from there could well shape several markets. CAD, US Equities and commodities in general may all get a further boost should be technically break and close above the handle. For a significant move lower, I would suggest waiting for $55 or the trend-line to break.

Trade Ideas For The Week – Amplify Team

Saif Ali – Senior Market Analyst (@saifali1100) Looking to continue WTI’s recent push higher and using the $56 handle as an area of support for entry to target back towards $58.

Charlie Hyett - Junior Market Analyst (@CO_Hyett) – With the positive trade talks between the US and China, I am looking for AUD to push higher if we break above the high of last week to target the highs of January 31st

Tommaso Iaquone – Junior Market Analyst (@tommasoiaquone)– Using the trend-line from the low of 2018 up to now, I would look to enter short if we were to break it.

Sam North – Associate (@snorth19) – Looking to continue the trend and using the trend-line as support for a push higher to target the lows before the October 10th breakdown.

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