Report
Dave Nicoski ...
  • Ross LaDuke
EUR 47.40 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Still Bullish, But Extended Near-Term

Global equities continue to trend higher following breakouts that have occurred during the past two weeks. Over this timeframe we have been recommending adding exposure to cyclical Sectors and, despite them getting near-term extended, we believe these upside moves are likely just getting going. Additionally, the US dollar is breaking below support and EM equities are breaking above resistance, only adding to our bullish outlook on global equities.

· US Dollar Breakdown & Its Implications On Global Equities. The US dollar (DXY) broke below its 200-day MA and key support at 98.50. We view this as bullish for global equities as it indicates improving risk appetites. Coinciding with the DXY breakdown, non-US equities have justifiably begun to outperform US equities. While it is far too early to call a long-term reversal in favor of non-US equities, we believe there is potential for continued outperformance as long as the DXY is below 98.50. Arguably the biggest beneficiary of a weak dollar is EM equities (EEM-US), which broke above the $37.50-38 key resistance level this week. Trump's treatment of Hong Kong in light of new China national security laws was not as harsh as feared, which helped both China and Hong Kong equities (and in turn, EM equities). This combination of a weakening dollar and a breakout in EM equities relieves two concerns we had for the global equity market... see charts below.

· STOXX 600 Banks and Autos & Parts Sectors. These two deep cyclical Sectors in the UK and Europe are making bullish price and RS inflections. The fact that these areas are investable again is a great sign for the global equity market... see page 2.

· Actionable Themes: Consumer Discretionary and Additional Opportunities. European & Hong Kong/China apparel is today's focus within the Discretionary Sector (LVMH, Hermes, etc.). This area is emerging as leadership -- add exposure. We also highlight several additional opportunities within Energy, Financials, Manufacturing, Services, and Communications... see page 3.

· Actionable Themes: Real Estate, Utilities. Global Real Estate and Utilities Sectors are making bullish price and RS inflections following months of underperformance -- add selective exposure... see page 4.
Underlyings
2020 Bulkers Ltd

2020 Bulkers Ltd is a Bermuda-based owner and operator of cargo ships. The Company owns as subsidiaries 2020 Bulkers I Inc and 2020 Bulkers II Inc in Liberia. Entities are parts to shipbuilding contract with New Times Shipbuilding Co. Ltd. for construction and delivery of Newcastlemax dry bulk vessel. The Company's main shareholders comprise Magni Partners and Titan Opportunities Fund.

Accor SA

Accor is a hotel operator. Co. offers its guests and partners the expertise of a hotel operator and brand franchisor (HotelServices) and a hotel owner and investor (HotelInvest). Co. divides its activities into three segments: Luxury-upscale, Midscale and Economy. Luxury-upscale makes up 11% of Co.'s portfolio and comprises brands such as Sofitel, Pullman, MGallery, and Grand Mercure; Midscale makes up 43% of its portfolio and comprises the Novotel, Suite Novotel, Mercure and Adagio brands; and Economy makes up 46% the Co.'s portfolio, comprising the brands ibis, ibis Styles, ibis budget and hotelF1. At Dec 31 2013 Co. operated around 3,600 hotels and 460,000 rooms in 92 countries.

Adidas AG

ACM Managed Dollar Income Fund is a non-diversified, closed-end management investment company. This closed-end investment fund is designed for investors who seek high current income and capital appreciation. In order to achieve this objective, Co. invests primarily in high-yielding, U.S. and non-U.S. fixed income securities, denominated in U.S. dollars, that it expects to benefit from improving economic and credit fundamentals. Co. may utilize leverage through the investment techniques of reverse repurchase agreements and dollar rolls. As of Sept 30 2007, Co. had total assets of $192,614,325 and investment portfolio totalled $178,906,534.

Burberry Group plc

Burberry Group designs, makes, sources and sells luxury products under the Burberry brand. Co.'s products are for women, men and children and include apparel, accessories, and beauty. Co.'s products are sold globally through its directly operated store network and online at Burberry.com, as well as through franchisees and third-party retailers, both offline and online. In a few selected areas such as Eyewear and Beauty, Co. uses the product and distribution capability of licensing partners. Co. operates in three regions: Asia Pacific; Europe, Middle East, India and Africa; and Americas. As of Mar 31 2017, Co.'s store portfolio had 469 directly-operated stores and 48 franchise stores.

Candover Investments PLC

Candover Investments is a private equity investment trust. Co.'s principal activity is to focus on returning cash to investors dependent on when portfolio realizations are made by the investment manager. As of Dec 31 2016, Co.'s portfolio comprised investments in three privately owned European businesses, acquired by investing alongside funds managed by Arle Capital LLP (Arle), an independent private equity partnership. Arle is the private equity asset manager of the Candover 2005 Fund and Candover 2008 Fund, as well as special purpose vehicles.

Cullen/Frost Bankers Inc.

Cullen/Frost Bankers is a financial holding company and a bank holding company. Through its subsidiaries, the company provides a range of products and services throughout various Texas markets. The company provides commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. The company serves a variety of industries including, among others, energy, manufacturing, services, construction, retail, telecommunications, healthcare, military and transportation. The company's reportable operating segments are: Banking and Frost Wealth Advisors.

db x-trackers MSCI THAILAND TRN INDEX ETF

DL Holdings Co. Ltd.

Daelim Industrial is engaged in international engineering and construction contracting including gas, petroleum refining, chemical and petrochemical, power and energy, public building and housing, civil works as well as industrial facilities. Co. is also engaged in the field of industrial plant design and construction. Co.'s performance reaches the the field of nuclear and thermal power plants, desalination plants, petrochemical plants, refineries, fertilizer plants, oil and gas treatment facilities as well as cement plants, cross-country pipelines and other industrial plants.

Elitegroup Computer Systems Co. Ltd.

Elitegroup Computer Systems is engaged in the design, sale and manufacture of innovative notebook, DeskNote, portable desktop computer systems and multimedia product. Through its subsidiaries, Co. is engaged in the manufacture and sale of motherboard, printed circuit board, computer peripheral product and related module, mobile phone, disc projection system, scanner and communication electronic product; the wholesale and retail of electronic parts and materials, information software, precision instrument and telecommunication equipment; international trading; product design; and instrument, measuring appliance installation construction; and the provision of information consultation services.

Feng Tay Enterprise Co. Ltd.

Feng Tay Enterprise is engaged in the manufacture of footwear, sports shoes and related accessories; the sale, and import and export of shoes materials, and footwear machines and equipment; and the provision of technical information in shoes manufacturing. Through its subsidiaries, Co. is also engaged in investments; machinery and tools trading; the manufacture and maintenance of mold, stripper bar and metal parts; and the retail of household electrical, apparel, sports series products, food and beverage, hardware and general merchandise.

Hermes International SCA

Hermes International is engaged in the manufacture, sale, and distribution of luxury goods primarily in France, rest of Europe, Japan, Asia-Pacific, and Americas. Co.'s activities can be divided into two segments: the distribution via Co.'s exclusive network and the distribution via specialist outlets. The distribution via Co.'s exclusive network comprises silks and textiles, leather goods and saddlery, ready-to-wear and fashion accessories (men and women's clothing, belts, jewellery accessories, gloves, hats and shoes), and other goods (jewellery and products of the art of living department). The distribution via specialist outlets comprise perfumes, tableware and watches.

Hong Kong Exchanges & Clearing Ltd.

Hong Kong Exchanges and Clearing is an exchange controller under the Securities and Futures Ordinance. Co. operates recognised stock and futures markets in Hong Kong. Co. also operates Hong Kong Securities Clearing Company Limited (HKSCC), HKFE Clearing Corporation Limited (HKCC), The SEHK Options Clearing House Limited (SEOCH) and OTC Clearing Hong Kong Limited (OTC Clear). HKSCC, HKCC and SEOCH provide clearing and settlement services, while OTC Clear provides OTC interest rate derivatives and non-deliverable forwards clearing and settlement services. Co.'s operating segment include: cash, equity & financial derivatives, commodities, clearing, and platform & infrastructure.

Hypoport SE

Hypoport AG is a Germany-based company that provides technology-based financial services. The Company operates through subsidiaries assigned to its four business units. Credit Platform operates EUROPACE, an online business-to-business (B2B) financial marketplace offering mortgages and personal loans. It also includes sub-marketplaces FINMAS and GENOPACE, B2B mortgage distribution companies and providers of real estate valuation services. Private Clients is aimed at directly advising consumers on mortgages, insurance or pension products, and includes Dr. Klein Privatkunden and the consumer comparison portal Vergleich.de. Real Estate Platform, operating under the DR. KLEIN Firmenkunden brand, among others, is a financial service partner to housing companies and commercial property investors. Insurance Platform operates Smart InsurTech, a platform for advice, comparison of tariffs and the administration of insurance policies, as well as develops other insurance software.

LVMH Moet Hennessy Louis Vuitton SE

LVMH Moet Hennessy Louis Vuitton is a manufacturer and retailer of luxury goods. Co. offers champagne and wines, cognac and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelery; and is engaged in selective retailing. Its operations are organized along five business segments: Wine and Spirits, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewelery, and Selective Retailing. Co. is also engaged in other activities (Media with Les Echos group, La Samaritaine and Luxury yacht with Royal Van Lent). Some of Co.'s brands are Moet & Chandon, Dom Perignon, Louis Vuitton, Fendi, Donna Karan, Parfums Christian Dior, Guerlain, Parfums Givenchy, and TAG Heuer.

Nihon M&A Center Inc.

Nihon M&A Center is mainly engaged in the mediation business for merger and acquisition ("M&A"). Along with its subsidiary and associated companies, Co. operates in two business segments: M&A mediation and others. The M&A Mediation segment is involved in the marketing, introducing and contract of M&A for Japan-based mid-sized and small-to-medium sized companies. It is also engaged in the corporate revival, corporate restructuring and management buyout ("MBO") businesses. The Others segment is engaged in the operation of the membership organization of regional M&A centers.

Nomura Research Institute Ltd.

Nomura Research Institute is mainly engaged in the provision of consulting, financial and industrial IT services, and IT platform services. Consulting Services segment offers management consulting and system consulting services. Financial IT Solutions segment provides IT services including system development, operation outsourcing, and shared-online services for securities, insurance, banking, and other financial industries. Industrial IT Solutions segment provides IT services for distribution, manufacturing, service, and healthcare industries. IT Platform Services segment offers IT infrastructure services, managed services, and advanced information technology services.

Paragon AG

Paragon develops, produces and sells electrical, electronic, and electromechanical components, devices, and systems for the automotive industry. Co.'s segments include Sensors, which develops and markets solutions for air quality within the vehicle cabin; Acoustics, which develops and markets products designed to ensure the transmission of speech from its point of origination to its destination; Cockpit, which develops and markets products for the cockpit; Electromobility, which develops and markets battery packs for utility vehicles and buses; and Body Works Kinematics, which develops and markets technical solutions for the moving parts of the automobile body, both exterior and interior.

Prada S.p.A.

PRADA is engaged the luxury goods sector where it operates with the Prada, Miu Miu, Church's and Car Shoe brands in the design, production and distribution of luxury handbags, leather goods, footwear, apparel and accessories. Co. also operates, under licensing agreements, in the eyewear, fragrances and mobile telephone sectors. Co.'s products are sold in 70 countries worldwide through a network that included 540 Directly Operated Stores (DOS), and a select network of luxury department stores, independent retailers and franchise stores.

PUMA SE

Puma and its subsidiaries are engaged in the development and sale of a broad range of sports and sports lifestyle products, including footwear, apparel and accessories. Product management, design, development and category-specific marketing have been combined under six separate Business Units. The Business Units Teamsport, Running, Training & Fitness, and Golf represent Co.'s performance business, while Lifestyle and Motorsports, Fundamentals as well as Accessories & Licensing constitute the lifestyle business.

Schneider Electric SE

Schneider Electric is engaged in energy management. Co. is organized into four areas: Buildings and Partner, Infrastructure, Industry and IT; and operates in four principal markets: non-residential & residential buildings, utilities & infrastructure, industry & machine manufacturers and data centers & networks. The non-residential and residential buildings market includes end-users, property developers, design firms, and systems integrators. The utilities and infrastructure market includes energy operators. The industries market serves end users and companies, and engineering firms. The data centers and networks contain servers that process and store digital data in secure rooms.

SHO BOND Holdings Co. Ltd.

SHO-BOND Holdings is a holding company. Co., through its subsidiaries, is engaged in the domestic construction business which offers contraction and design of civil engineering and architectural works; the manufacture, sale and installment of civil engineering and architectural machines, equipment, display signs and equipment; and others. In addition, Co. is also involved in the manufacture and sale of construction materials, such as adhesive agent, injected agent, concrete protection materials, bond materials, resin mortar and cement, fillers, and mechanical couplings as well as the provision of overseas construction business.

TBK
TBK

TBK is mainly engaged in the manufacture and sale of brakes and engine components for automobiles. Along with its subsidiaries, Co. operates automobile parts manufacturing business in Japan, Asia and North America. Co.'s principal automobile parts are brakes for small cars, trucks, buses, trailers, and industrial equipment, including drum brakes and disc brakes; engine components, including water pumps for engine cooling, oil pumps for engine lubrication, pumps for construction machine engines and other engine components; as well as retarders and other devices.

Tongcheng-Elong Holdings Limited

Tongcheng-Elong Holdings Limited is a China-based holding company principally engaged in the provision of online travel products and services. The Company mainly conducts its businesses through three segments. The Transportation Ticketing segment mainly provides online air ticketing, train ticketing, bus ticketing and ferry ticketing services. The Accommodation Reservation segment mainly provides accommodation reservation services. The Others segment provides various ancillary value-added travel products and services to meet customers' evolving travel needs throughout their trips.

United Internet AG

United Internet AG is a Germany-based Internet service provider (ISP) and holding company of the United Internet Group. The Company's products and technical services are divided into two key segments. The Access segment comprises narrowband, broadband and mobile access subscriptions, including the corresponding applications. The Applications segment includes such applications as home pages, e-shops, Personal Information Management applications, group work, online storage and office software. The Application segment also includes the operations of the Company's brands Sedo and affilinet, which serve customers performance-based advertising and sales possibilities. The Company's brand portfolio also includes GMX, WEB.DE, 1&1, united-domains, Fasthosts and InterNetX. In addition, the Company develops Internet based applications, such as cloud applications. The Company acts primarily via its wholly owned subsidiary 1&1 Internet AG, and Sedo Holding AG, in which it holds a majority stake.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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