EUR 47.39 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Buying Global Technology; S&P 500 and MSCI ACWI Remain Above Base Supports

Global equities (MSCI ACWI -- ACWI-US) and the U.S. (S&P 500) remain topside their respective bases at $117 and 5650-5670. As discussed last week (October 17, 2024 Int'l Compass), we upgraded our outlook on global equities (MSCI ACWI) to bullish, noting that we would use any pre-election pullback as an opportunity to add exposure. The pullback appears to be underway, and we are buyers as long as ACWI-US and S&P 500 remain above their aforementioned bases... see page 2. At the same time, while Europe and Japan could easily be next to break out, we still want to be selective as they remain below critical resistance levels of 5000-5120 on the EURO STOXX 50 and 2740-2820 on the TOPIX.

Remain Overweight the U.S. Our only country overweight is the U.S. (S&P 500).
China and Hong Kong Holding at Support. The Hang Seng and Shanghai Composite have held above critical supports at 19,700-20,000 and 3175, respectively. As long as these supports hold, we are buyers on the pullback, but a breakdown would be reason to sell. Important 3-year resistance to watch is at 22,600 on the Hang Seng and 3422 on the Shanghai Composite.
Bond Market Volatility, Rates, and the U.S. Dollar (DXY). At this point, our primary remaining concern is rising bond market volatility (MOVE index in the U.S.). Global equities (ACWI) have not been upset by a rising U.S. dollar (DXY) and global sovereign 10-year yields, because it has largely been due to strong economic data in pretty much every region except for Latin America. But MSCI ACWI could certainly pull back if rates volatility continues to rise, which would disproportionately hurt global small-caps.
Actionable Theme: Technology. If this is a resumption of the bull market as we expect, Technology is likely to continue leading the way. Today we are focusing on our favorite ideas to buy/stay long within Technology