EUR 43.22 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Stay Defensive

We downgraded our global (MSCI ACWI) near-term outlook to neutral in our 3/17/26 Int'l Macro Vision, following ACWI-US breaking below $141.50 support. The bottom line is that we do not see the S&P 500 (SPX) or MSCI ACWI breaking out to new highs – at least not until we see more downside first. The growing list of concerns that we have discussed since early-February remains a problem for global equities -- notably global Energy (IXC-US) leading, with defensive Sectors Consumer Staples (KXI-US) and Utilities (JXI-US) near 6+ month RS highs, U.S. high yield spreads at 9-month wides above the key 320bps level, the U.S. dollar (DXY) in a 2-month uptrend, interest rate volatility (MOVE index) at 10-month highs, WTI crude oil still bullish and above $88, and gasoline prices (UGA-US) topside a 3.5+ year base. We will maintain our bullish intermediate-term view (in place since our 5/14/25 Compass) as long as market dynamics remain constructive and the SPX and ACWI-US are above 6480-6520 and $134-$135.70 (testing now); just know we would turn bearish on breakdowns, with acceptance, below these levels. Resistance to watch on ACWI-US is at $140 and $142-$143.

Remain Overweight Emerging Markets, Taiwan, Korea, Spain, Japan, and Canada. Our current overweights include Emerging Markets (MSCI EM), Taiwan (TAIEX), Korea (KOSPI), Spain (IBEX 35), Japan (TOPIX), and Canada (S&P TSX). We also remain constructive on Europe's EURO STOXX 50 as "must hold" support at 5500 has held, however, we would get bearish on a break below this level.
Emerging Markets Overview. We remain overweight emerging markets (MSCI EM) since 1/21/26. We are near-term neutral following the break below $58.20 on EEM-US, but we are still intermediate-term bullish as long as EEM-US is above $55. We would shift to bearish on a breakdown, with acceptance, below $55. Top countries continue to be Taiwan and Korea, and we are also overweight Latin America (ILF-US). In terms of Sectors, we remain overweight MSCI EM Energy, Technology, Materials, and Industrials. We are also monitoring for a major RS bottom in MSCI EM Utilities.
Actionable Themes: Energy, Materials, Transportation, Communications, Utilities, and Consumer Staples. Attractive ideas continue to be primarily within commodity Sectors (Energy and Materials, with both Sectors highlighted today) and defensives (Communications, Utilities, and Consumer Staples highlighted today); stick with these trends. We also highlight opportunities within Transportation..