Good morning and welcome to episode 323 of ‘Talking Bull’. In this video/podcast we cover the main headlines and what to expect from the day ahead.
We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a ‘Gun to the head’ challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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2 winners yesterday totalling 3.65R. Steve hit target on Oil for 3R, and Joe was 0.65R onside on his NASDAQ short idea.
We have included an illustration based on a £1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 101.96% collectively since we began recording Talking Bull on the 30th October 2019.
We’ll learn the contents of Rishi Sunak’s red briefcase later when the U.K. Chancellor of the Exchequer presents the country’s budget. Sunak and colleagues have been setting the scene for possible tax increases and spending cuts to recoup some of the huge payouts on pandemic support measures like furlough, which is set to be extended. Still, most investors expect Sunak to hold fire on a corporate tax hike until some sort of normality has resumed, rather than risk hurting the recovery, though he may guide for a higher rate to come. For equity markets, housebuilders, mortgage lenders and pub and restaurant operators are some of the key sectors in focus today.
German Chancellor Angela Merkel proposed a four-step lockdown easing strategy accompanied by widespread Covid-19 testing, amid political pressure to open up the euro area’s largest economy. Restrictions on private meetings between households will be adjusted, while measures like shuttering non-essential stores, gyms and restaurants will be prolonged.
Oil crept up after a three-day fall with the OPEC+ alliance said to be poised to agree on an output increase at its meeting this week. West Texas Intermediate gained 0.3% following the worst losing run since December as Brent also rose. The widespread view among the group is the market can absorb extra barrels, according to people familiar with the matter. That could put the group on track to implement the majority of the 1.5 million barrel-a-day output increase that’s up for debate on Thursday.
U.S. ADP employment numbers set us up for Friday’s nonfarm payrolls, while China data showed the services sector remains in expansion.
Finally, the quarterly review of the FTSE 100 index is due to be announced after the close of trading, with supermarket Morrison among the stocks facing potential relegation.
A strong session overnight saw the Hang Seng and CSI 300 lead the way with 2% gains despite widespread losses seen throughout US markets yesterday.
Market continue to straddle the optimism around a vaccination-led economic bounce, with fear of rising Treasury yields. With US yields having turned lower for the third consecutive session, this week has seen some of that pressure taken off for the time being.
Economic growth numbers from Australia outperformed overnight, with the 3.1% Q4 reading well above market estimates.
Meanwhile, the Chinese Caixin services PMI survey for February eased back to a ten-month low of 51.5, following a January figure of 52.0. Looking ahead, a host of final PMI readings throughout Europe and the US lay the foundations for a day that will ultimately be dominated by the UK budget, US ADP payrolls, and US crude inventories releases.
1.15pm – US ADP employment report (February): forecast to rise by 105K from 174K last month. Markets to watch: US indices, USD crosses
3pm – US ISM non-mfg PMI (February): index to fall to 58.2 from 58.7. Markets to watch: US indices, USD crosses
3.30pm – US EIA crude oil inventories (w/e 26 February): stockpiles rose by 2.8 million barrels in the previous week. Markets to watch: Brent, WTI
Gun to head trade ideas – Update
Today’s trade idea
Have a great week everyone.