Vermilion Int'l Compass: Global Equity Strategy
Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity IndexThe number of major country indexes showing major bullish inflections continues to grow, while the number of countries making bearish inflections remains at zero. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.
· Index Overviews. There continues to be an absence of breakdowns globally, and the list of indexes hitting new all-time highs and/or bullishly inflecting is growing -- exactly what we would expect to see in a broad-based global bull market. Indexes breaking out to new all-time highs include MSCI EM (USD) and Germany's DAX, while Hong Kong's Hang Seng is breaking above its 3-year downtrend and China's Shanghai Composite is breaking above 6-month resistance... see chart below and page 2.
· Commodities Continue To Improve. The US dollar remains in a downtrend which continues to be a tailwind for commodities and global equities. The Bloomberg Commodity index (broad commodities) is bullishly inflecting topside a 12.5-year downtrend and we believe we are in the early stages of a secular bull market in commodities. Commodities participating in the bullish trend include crude oil, copper, aluminum, lumber, platinum, iron ore, and steel (among others)... see chart below.
· Actionable Themes: Energy and Materials. Considering our belief that commodities are in the early stages of a secular bull market, the commodity Sectors Energy and Materials are poised to benefit. Global Materials remains one of our top Sector overweight recommendations and with Energy improving, we are monitoring the Sector closely for a potential upgrade from market weight... see pages 3-19.
Aker BP ASA engages in the exploration, development, and production of petroleum resources on the Norwegian Shelf. In addition, Co. has a separate Johan Sverdrup business unit to manage its interest.
Cenovus Energy is in the business of development, production and marketing of crude oil, natural gas and natural gas liquids ("NGLs") in Canada with refining operations in the U.S. Co. operates in two business segments: Upstream, which includes Co.'s development and production of crude oil, NGLs in Canada, is organized into two operations: Oil sands and conventional; and Refining and Marketing, which is focused on the refining of crude oil products into petroleum and chemical products at two refineries located in the U.S. This segment also markets Co.'s crude oil and natural gas, as well as third-party purchases and sales of product.
Husky Energy is engaged in the exploration, development and production of oil and natural gas. Co.'s operations are located in Canada and United States. As of Dec. 31, 2011, Co. had total proved oil and natural gas reserves of 1,172.4 million barrels of oil equivalent (Mmboe) gross (1,010.7 Mmboe net).
Novatek is an independent gas producer and natural gas producer in Russia. Co. is engaged in the exploration, production, and processing of natural gas and liquid hydrocarbons. Co.'s upstream activities are concentrated in the Yamal-Nenets region, which is a natural gas producing area and accounts for a significant part of Russia's natural gas production. Co.'s three core fields are located in the regions of Yurkharovskoye, East Tarkosalinskoye and Khancheyskoye. Co. maintains natural gas reserves of approximately 1,144 bcm. Co.'s total net proved reserves totals around 8,088 million barrels of oil equivalent (boe).
Oil India is a fully integrated upstream petroleum company based in India. Co. is engaged in the exploration, development and production of crude oil and natural gas, transportation of crude oil and production of Liquid Petroleum Gas (LPG). Co. also provides various Exploration & Production (E&P) related services and holds an interest in the Numaligarh Refinery. Co. conducts the majority of its activities in North East India as well as Rajasthan. Additionally, Co.'s is active in Ganga Valley and Mahanadi and has participating interests in Mahanadi Offshore, Mumbai Deepwater, Krishna Godavari Deepwater, etc. as well as various overseas projects in Libya, Gabon, U.S.A., Nigeria and Sudan.
OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).
Petro Rio is an independent Brazilian oil and natural gas exploration and production (E&P) holding company. Co. maintains selected and secured strategically located exploration blocks in onshore basins in Brazil and offshore basins in Namibia, focusing its exploration and development efforts on areas that are underexplored but with high untapped hydrocarbon potential. Co. has a portfolio of 28 exploratory blocks onshore and offshore, of which 16 onshore blocks are in the Solimoes Basin, for which it is the operator with a 55% stake.
Santos is a natural gas company engaged in the exploration for, and development, production, transportation and marketing of, hydrocarbons. Co.'s operating segments consist of five key assets/operating areas of: Cooper Basin; Gladstone LNG; Papua New Guinea; Northern Australia; and Western Australia gas; based on the nature and geographical location of the assets, plus Other non-core assets. Co.'s proved petroleum reserves were 485.0 million barrels of oil equivalent at Dec 31 2016.
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.
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