Report
Dave Nicoski ...
  • Ross LaDuke
EUR 48.76 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Value Remains Leadership But Defensives Improving

Our outlook remains unchanged as the weight of the evidence continues to suggest a mixed, but overall constructive market. Cyclical value Sectors continue to be our favorite areas to overweight (i.e., Energy, Materials, Manufacturing, and Transportation), while defensive Sectors also continue to be worth a look (i.e., Staples, Health Care, and Real Estate).

Support Levels Holding, Market Dynamics Largely Positive. Broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) continue to hold above their respective intermediate-term support levels ($96 on ACWI-US, $54 on ACWX-US, $77 on EFA-US, and $52 on EEM-US). Unsurprisingly, major indexes around the world are also holding above key support levels (4000 on the S&P 500, 3865 on the EURO STOXX 50, 3325 on the Shanghai Composite, and 27,400 on the Hang Seng). Additionally, market dynamics (e.g., cyclical value Sectors, the US dollar, high yield spreads, commodities) remain largely positive. If these support levels continue to hold and market dynamics remain positive, our constructive outlook remains appropriate... see chart below.
Actionable Theme: Autos & Auto Parts. Autos & auto parts stocks continue to be an attractive theme, particularly in Europe, Japan, and India. Add exposure... see page 2 and pages 4-6.
Actionable Theme: Consumer Staples & Health Care. One of the primary reasons for the current mixed environment is the fact that defensive Sectors are no longer underperforming. Today we recommend several leadership stocks within Consumer Staples and Health Care, with a primary focus on European names -- add exposure... see page 3 and pages 6-12.
Underlyings
Aisin Seiki Co Ltd

Aisin Seiki is engaged in the manufacture and sale of automobile parts and housing-related equipment. Co.'s principal products are engine parts, including water pumps, pistons and intake manifolds; automatic transmissions, and manual transmissions; brake and chassis parts, such as brake master cylinders, disk brakes and antilock brake systems; door locks and power backdoor systems, car navigation systems, parking support systems and intelligent parking support systems; housing-related equipment, such as shower toilets, beds, automatic wheel chairs and gas heater pump air-conditionings; and fiber laser. Co. is also engaged in the civil construction and petroleum sales businesses.

BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT

Bayerische Motoren Werke is a holding company, engaged in the development, manufacture and sale of cars and motorcycles. Co. owns three brands: BMW, MINI and Rolls-Royce. Co.'s BMW automobile range encompasses the 1 Series, including coupe and convertible models; the 3 Series, including sedan, touring, coupe and convertible models; the 5 Series, including sedan and touring models; the 6 Series, including coupe or convertible; the 7 Series large sedan; the Z4 roadster and coupe; the sports utility vehicles, X3, X5 and X6 and M models. Co. also provides cars under the MINI brand and motorcycles under the BMW brand. The Rolls-Royce brand provides three cars, Phantom, Coupe and Ghost.

ChinaAMC Direxion CSI 300 Index Daily (2X) Leveraged Product

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.

Dom Development SA

Dom Development is engaged in the construction and sale of residential real estate in Poland.

Isuzu Motors Limited

Isuzu Motors is engaged in the manufacture and sale of automobiles. Co. manufactures heavy/medium/light-duty trucks, buses, passenger vehicle engines and industrial-use diesel engines. Co.'s principal products include commercial vehicles including light, medium and heavy-duty trucks and buses; passenger cars including sport utility vehicles and pickup trucks under the name of "Isuzu D-MAX," "Isuzu mu-X" and "Panther;" diesel engines for construction machinery, freezer units and generators; diesel engines for passenger vehicles; and marine engines for commercial boats. In addition, Co.'s subsidiary provides commercial vehicle leasing and maintenance services.

Motherson Sumi Systems Limited

Motherson Sumi Systems is engaged in the manufacturing of rearview vision systems, interior and exterior modules and wiring harness. Co.'s business portfolio comprises electrical distribution systems (wiring harnesses), automotive rearview mirrors, polymer processing and tooling, elastomer processing, metal machining, and information technolgy, engineering & design. Co. also provides manufacturing support, including compressors, paint coating equipment, auxiliary equipment for injection moulding machines and automotive manufacturing engineering services.

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.

Toyota Boshoku Corp.

Toyota Boshoku is engaged in the development and sale of automotive parts and textile products. Co. is engaged in the development of automotive interior systems, and the manufacture and sale of automotive interior products, automotive filters and powertrain components, other automotive components, as well as the production and sale of fabric goods. Co.'s principal products include seats, door trims, instrument panels, headliners, illuminations, air induction parts, lubricating parts, air conditioning parts, seat fabrics, curtain-shield airbags, bumpers, fender liners, and engine covers.

Yokohama Rubber Co. Ltd.

Yokohama Rubber is mainly engaged in the manufacture and sale of vehicle tires and other rubber products. Co.'s primary products include tires for passenger cars, trucks and buses, light trucks, mining and construction equipment and industrial vehicles, aluminum alloy wheels and automobile-related components; industrial products, such as conveyor belts, rubber plates, various hoses, marine fenders, oil spill containment booms, marine hoses, rubber molded products, air springs, highway joints, rubber support, adhesives and sealants; aerospace products and sports products. Co., through its subsidiaries, is also engaged in the provision of data processing and real estate services.

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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