EUR 42.53 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Defensives Leading; Concerns Persist

We maintain our near-term bullish outlook on MSCI ACWI (ACWI-US) and the S&P 500 (SPX), which has remained in place since 4/22/25, aside from one week (11/19/25-11/25/25) when we went neutral. We will stay near-term bullish as long as crucial support levels of 6780-6824 on SPX and $141.50 on ACWI-US continue to hold. We are not fighting the bullish trend with all the MSCI global indexes (MSCI ACWI, EAFE, ACWI ex-US, and EM) hitting multi-year highs, but we are monitoring potential concerns -- notably global defensive Sectors Consumer Staples (KXI-US), Utilities (JXI-US), and Real Estates (RWO-US) at 5+ month RS highs, the U.S. dollar (DXY) holding above $96.40 support, crude oil prices bottoming, and gasoline prices (UGA) breaking out from a 3.5+ year downtrend. Our intermediate-term bullish outlook has been in place since our 5/14/25 Compass. We will maintain our bullish intermediate-term view as long as market dynamics remain constructive and the SPX and ACWI-US are above 6480-6520 and $134-$135.70. Short-term supports to watch on ACWI-US include $142-$143 and $141.50. Longer-term supports include $138.50-$139 and $134-$135.70.

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 bullish on Europe's EURO STOXX 50 and believe RS is bottoming in Europe.
Emerging Markets Overview. We remain overweight emerging markets (MSCI EM) since 1/21/26, and we remain both near-term and intermediate-term bullish as long as EEM-US is above $58.20 and $55, respectively. Top countries continue to be Taiwan and Korea, and we are also overweight Latin America (ILF-US). In terms of Sectors, our top three overweights continue to be MSCI EM Technology, Materials, and Industrials. MSCI EM Financials are also attractive, and EM Energy, Real Estate, and potentially Consumer Staples appear to be forming RS bottoms -- add exposure.
Actionable Themes: Staples, Utilities, Energy, and Transportation. We remain overweight Technology within emerging markets and Japan, though prices are extended and we have been overweight since May of 2025. We see an abundance of opportunity within defensives (Staples and Utilities highlighted today) and cyclical value (Energy and Transports highlighted today); stick with these new trends... see pages 2-22.