Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.93 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Correction Lows Established -- Add Broad Exposure

Key $70 support on the MSCI ACWI (ACWI-US) held strong last week, and ACWI-US is now inflecting topside its bullish falling wedge pattern. This bullish price action combined with market dynamics which remain mostly healthy lead us to believe the lows of this recent correction are in.

· Key Levels On MSCI ACWI & EM Indexes. Key support levels to watch moving forward include $70 on ACWI-US and $42.30 on EEM-US; if these support levels hold we believe a bullish outlook is appropriate. On the other hand, breakdowns would suggest the corrective phase is not yet done... see chart below and page 2.

· US Dollar (DXY). In last week's Int'l Compass we expressed some concern for global equities due to the DXY breaking above 94, while also noting it would take a move above 96 in order to raise major concerns (something we continue to believe). Thus far the DXY's break above 94 has failed to rattle the equity market -- a positive sign -- and the DXY is still below bigger resistance at 95 and 96... see page 2.

· Actionable Themes: Consumer Discretionary & Manufacturing/Industrials. We have pointed to outperformance from cyclical Sectors and underperformance from defensive Sectors as something that is supportive of a positive market environment. As a result, we posited that the most likely scenario was for this pullback to be “normal” and healthy -- as opposed to this being a major top. Consumer Discretionary and Manufacturing Sectors continue to be two attractive Sectors that are outperforming globally -- add exposure. In particular, we continue to focus on stocks within the automotive industry (CARZ-US)
Underlyings
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.

Balkrishna Industries Limited

Balkrishna Industries Limited is engaged in offering pneumatic tires. The Company offers tires, tubes and tire flaps. It focuses on manufacture of a range of off-highway tires (OHT). These tires are mainly meant for agricultural, industrial and construction, earthmover and port, mining, forestry, lawn and garden and all-terrain vehicles (ATV). It offers tires for compact loader, compact utility tractor, cotton picker, forwarder, go-kart, golf kart, harvester, hay harvester/baler, mower, orchard harvester, pivot irrigator, rotor rake, rototiller, sprayer, spreader, tanker, tractor, trailer, trencher, universal vehicle and vineyard harvester. The Company offers tires for backhoe loader, compact dumper, compactor, container handler, excavator, mobile home and skid steer. It also offers tires for dozer, haul train, load haul dump (LHD) and underground mining vehicles. Its products include AGRIMAX RT 855, PL 801, EARTHMAX SR 41, EM 934, AGRIMAX TERIS and EARTHMAX SR 30, among others.

BYD Company Limited Class H

Canada Goose Holdings Inc.

Canada Goose is a holding company. Through its subsidiaries, Co. designs, manufactures, and sells outdoor apparel for men, women, youth, children, and babies in Canada, the United States, and internationally. Co.'s apparel collections include various styles of parkas, jackets, shells, vests, and accessories for fall, winter, and spring seasons. Co. sells its products through online retailers and distributors; and its e-commerce sites and retail stores.

Compeq Manufacturing Co. Ltd.

Compeq Manufacturing is engaged in the manufacture and sale of multi-layer printed circuit boards for computer use and product related services. Co.'s application of main products include: (i) computers: desk-top PC, laptop, work station, server and other computer peripherals; (ii) networking: hub, switch, router and other network equipments; (iii) telecommunication: mobile phone, base station and other telecom equipments; (iv) consumers related: LCD monitor, DSC, PDA, GPS and other consumer products; and (v) IC substrate: CPU, ASIC, MCU, system chipset, GPU and other IC packaging substrates.

Daimler AG

Daimler provides a range of transportation products, including passenger cars and commercial vehicles, and also financial services. Co. operates in five segments. Mercedes-Benz Cars sells passenger cars and off-road vehicles under the Mercedes-Benz brand and small cars under the smart brand. The Daimler Trucks distributes its trucks (Mercedes-Benz, Freightliner, FUSO, Western Star, Thomas Built Buses and BharatBenz). The vans of the Mercedes-Benz Vans segment are sold under the brand name Mercedes-Benz and Freightliner. Daimler Buses sells completely built-up buses (Mercedes-Benz and Setra). The Daimler Financial Services division supports sales of Co.'s automotive brands.

DENSO CORPORATION

Denso and its affiliates are mainly engaged in the manufacture and sale of automobile electronic, electrical parts, and other components. Co.'s principal business segments are powertrain control systems, electronic systems, thermal systems, information and safety systems, small motors, industrial systems and consumer products. Co.'s principal products include starters, alternators, engine management systems, components for gasoline, diesel and electric hybrid vehicles, engine ECUs, hybrid ICs, air conditioners, radiators, remote keyless entry controllers, car navigation systems, car-mounted ETC devices, motors, bar code handy scanners and industrial robots.

Dometic Group AB

Dometic Group AB serves the market with a range of air conditioners, refrigerators, awnings, cookers, sanitation, lightning, mobile power equipment, windows, doors and other comfort and safety products. The products are sold in approximately 100 countries and are mainly produced in wholly owned production facilities around the world.

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.

First Trust China AlphaDEX Fund

Glacier Media Inc

Glacier Media is an information communications company engaged in the provision of information and related services through print, electronic and online media. Co. has two core business segments: the newspaper and trade information markets and the business and professional information markets.

Goldwin

Goldwin is mainly engaged in the manufacture and sale of sportswear and sporting goods. Co.'s outdoor products include clothing for mountain climbing and marine activities, outdoor equipment and other related products. Co.'s athletic products include apparel for tennis, fitness, swimming, golf and other athletic activities. Co.'s active style products include apparel for ski, snowboard and motorcycle. Co.'s brands include "GOLDWIN," "GOLDWIN Motorcycle," "C3fit," "ESTIVO," "and per se," "MXP," "PROFECIO," "SCHOLETE," "ELLESSE" and "THE NORTH FACE." Co. sells its products through company-owned stores and wholesale to department stores, specialty stores and sporting goods stores.

Hero Motocorp Limited

Hero MotoCorp is engaged in the production and sale of motorized two wheelers up to 350cc engine capacity for both domestic and international markets.

Katitas Co LTD

Katitas is primarily involved in the secondhand housing regeneration business. Co. is engaged in the remodeling, renovation and sale of secondhand housing purchased at low cost through court auctions and short sales. Co. sells secondhand housing for investment purposes; leases real estate properties such as apartment houses; manages and collects debts, mainly housing loans; as well as provides housing loans for individual clients.

Kingfisher Plc

Kingfisher supplies home improvement products and services through a network of retail stores and other channels, located mainly in the U.K. and continental Europe. As of Jan 31 2017, Co. had nearly 1,200 stores in 10 countries across Europe.

Koito Manufacturing Co. Ltd.

Koito Manufacturing and its affiliates are mainly engaged in the manufacture and sale of automotive lighting equipment, aircraft components, electric equipment and other products. Co.'s automotive lighting and accessories include light-emitting diode (LED) headlights, discharge headlights, halogen headlights, fog lights, turn signal lights and other lighting products. Co.'s aircraft lighting and other equipment include interior and exterior lights, electrical equipment and hydraulic equipment. Co.'s other principal products include electrical components for railroad cars, LED marine lamps, traffic control systems, road and tunnel lighting equipment and seats for aircraft and railroad cars.

KTM Industries AG

KTM Industries provides infrastructure solutions for IT management and optimization of telecommunication networks; IT support for business processes; industry specific applications for financial services providers and production companies, and outsourcing, which comprises systems, such as user helpdesk and application management. Co. operates in three segments: Process Optimization, who provides services and solutions supporting business processes; Infrastructure Optimization offers services and solutions related to IT infrastructures management; and the professional services segment recruits and supplies IT specialists for customer requirements.

Midea Group Co. Ltd. Class A

Midea Group Co., Ltd. is a China-based company principally engaged in the manufacture and distribution of household electronics. The Company's products are categorized into three types, including consumer appliances, heating ventilating and air conditioning (HAVC) and robot and automation systems. The Company's products mainly consist of central air conditioning systems, heating and ventilation systems, kitchen appliances, refrigerators, washing machines and other small home appliances, such as water dispensers, water purifying devices, air purifiers, electric kettles, dust collectors and humidifiers. The Company is also involved in the production of motors, as well as logistics business. The Company distributes its products within domestic market and to overseas markets.

Minth Group Limited

Minth Group is an investment holding company. Through its subsidiaries, Co. is engaged in design, developing, manufacturing, processing and sales of automobile body parts and moulds of passenger cars.

Nagawa

Nagawa is mainly engaged in the manufacture, sale and rental of prefabricated houses as well as the rental and sale of construction equipment. Along with its affiliates, Co. operates in the three business segments. Prefabricated House segment is engaged in the manufacture, sale, and rental of prefabricated houses, as well as the sale and rental of office equipment and electric appliances. Module & System Construction segment is engaged in the provision of module building and system building services. Construction Equipment Rental segment is engaged in the sale and rental of construction equipment and facilities, as well as automobile maintenance services.

NIO Inc. Sponsored ADR Class A

SHIMAMURA Co. Ltd.

Shimamura is engaged in the operation of clothing chain stores. Co. operates casual ware stores for women between 20s and 50s under the name of "Fashion Center Shimamura," "Avail" offering casual ware and shoes for women between 15 and 35 years old, children's and infants' wear specialty stores "Birthday," "Chambre" offering casual ware, home decorating products, kitchen goods and stationery targeted for women between 15 and 35 years old, and women's shoe stores "Divalo." In addition, Co., through its subsidiaries, operates family clothing stores in Taiwan and China. As of Feb 20 2017, Co. operates 2,013 stores throughout Japan, as well as 53 stores in overseas.

Sime Darby Bhd.

Sime Darby is an investment holding company. Through its subsidiaries, Co. operates in seven segments: Plantation, which produces and markets fruit bunch, crude palm oil, palm kernel, rubber and refining; Property, which develops and markets residential, commercial and industrial properties and develops land and provides other recreational services; Industrial, which is engaged in sales, rental and servicing of heavy equipment; Motors, which assembles and distributes vehicles; Energy & Utilities, which is engaged in engineering, power generation, treatment and distribution of treated water; Healthcare, which provides healthcare services; and Others, which is engaged in insurance broking.

Sohgo Security Services Co. Ltd.

Sohgo Security Services is mainly engaged in the provision of security-related services including electronic security services, stationed security services, transportation security services and other services. For individual customers, Co. offers home security systems, personal security services, as well as life support services. For corporate customers, Co. offers electronic security systems including online security systems, electronic security system with image monitoring capabilities, condominium complex security systems, automated management systems for ATMs; and stationed security services including stationed security guards, and transportation security systems.

Stanley Electric Co. Ltd.

Stanley Electric is mainly engaged in the manufacture and sale of automotive equipment and electronics equipment. Along with its affiliates, Co. operates in four business segments: automotive equipment, electronic components, applied electronic products, and others. Co.'s principal products include light emitting diode ("LED") headlamps, high-intensity discharge ("HID") headlamps, rear combination lamps, high mount stop lamps, fog lamps, automotive bulbs, LED bulbs, infrared LED lamps, optical sensors, liquid crystal displays ("LCDs"), sub miniature lamps, LED lighting products, backlight units for LCDs, flash units for cameras, operation panels, and others.

Thomson Reuters Corporation

Thomson Reuters provides source of news and information. Co. operates three business: Financial & Risk, a provider of news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals, as well as a provider of regulatory and operational risk management solutions; Legal, a provider of online and print information, decision tools, software and services that support legal, investigation, business and government professionals; and Tax & Accounting, a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government.

Toyo Tire Corporation

Toyo Tire & Rubber and its affiliates are engaged in the manufacture and sale of tires, chemical and industrial products, and automotive parts. Co. operates in three business segments. Tire segment is involved in the manufacture and sale of various tires, tubes for tires, flaps, camel backs, aluminum wheels, and other related products. DiverTech segment is engaged in the manufacture and sale of industrial and construction materials, transportation equipment, heating insulating and waterproof materials, as well as other materials, including furniture, flexible urethane for interior use and office equipment components. Others segment is engaged in the finance and real estate businesses.

United-Guardian Inc.

United-Guardian, through its Guardian Laboratories Division, manufactures and markets cosmetic ingredients, personal and health care products, medical lubricants, pharmaceuticals, and industrial products. The company also conducts research and product development, primarily related to the development of cosmetic and personal care products. The company has a range of products, some of which are marketed and some of which are still in the research and development stage. Of the products being marketed, the two key product lines are the LUBRAJEL? line of cosmetic ingredients and medical lubricants and RENACIDIN? IRRIGATION SOLUTION, a pharmaceutical product.

ZOZO Inc.

Start Today is mainly engaged in the electronic commerce ("EC") business. Along with its subsidiaries, Co. operates in three principal businesses: ZOZOTOWN, B to B, and FURIMA. The ZOZOTOWN business operates brand's online shop on ZOZOTOWN by handling their inventory on a consignment based contract. Co. also purchases fashion items from brands and resell them on each brand's online shop on ZOZOTOWN. Additionally, Co. purchases/resales used fashion products from/to its users. The B to B business supports the brands to operate their individual online stores. The FURIMA business offers users a smartphone application called "ZOZO FURIMA" to sell and purchase personal fashion items.

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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