Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.65 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Small-Caps & Reopening Stocks Remain In Focus

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to hold above critical support levels and market dynamics remain largely positive. Until this changes, we believe global equities are headed higher in the coming weeks and months. Additionally, we are reiterating our overweight recommendations on small-caps and value as we believe outperformance from these areas is likely to continue.

· Risks To Our Positive Outlook. As we have outlined for months, global market dynamics remain largely positive which continues to support our constructive outlook. The main risks we see include a rising US dollar (DXY) and an accelerated trend higher in global sovereign bond yields. As for the DXY, as long as it stays below 92 we see it as a risk-on signal for global equities. Additionally, global equity markets appear to be getting more comfortable with rising yields; for example, 10-year sovereign yields in the US and Canada have recently hit new highs alongside new price highs in their respective equity markets (S&P 500 and S&P/TSX Composite).

· Europe & Japan. Europe's EURO STOXX 50 is knocking on the door of a major 6-year breakout while Japan's TOPIX is hitting 19-year highs. Additionally, both of these indexes appear to be establishing RS bottoms. Favor small-caps in both Europe and Japan... see charts below.

· Support Levels Holding. Important support levels we are watching include $90 on the MSCI ACWI (ACWI-US), $53 on MSCI ACWI ex-US (ACWX-US), and $52 on MSCI EM (EEM-US). If these indexes are above the respective levels we are constructive from a price perspective, however breakdowns would mean additional downside ahead.

· Actionable Theme: Value & Reopening Areas. We believe outperformance from value and reopening areas has only just begun, and we continue to recommend an overweight to value over growth. Use rallies in growth stocks as an opportunity to reduce exposure and shift to value. Sectors covered today include Consumer Discretionary, Energy, and Financials... see pages 3-19.
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.

Bellway p.l.c.

Bellway builds homes designed to complement the style of existing local housing in developments that meet local demand and improve the community. With a range from one-bedroom apartments to six-bedroom family homes, Co. provides a choice from which customers can choose a property that fits their particular requirements. Co. also provides homes to housing associations for social housing. Co.'s focus is to provide family housing across its divisions outside London and apartments within the London boroughs.

Bison Finance Group

Entrec

Entrec is a provider of heavy lift and heavy haul services with offerings encompassing crane services, heavy haul transportation, engineering, logistics and support. Co. provides these services to the oil and natural gas, construction, petrochemical, mining and power generation industries.

Flight Centre Travel Group Limited

Flight Centre Travel Group is engaged in the travel retailing in both the leisure and corporate travel sectors, plus wholesaling.

Galaxy Entertainment Group Limited

Galaxy Entertainment is an investment holding company, engaged in operation in casino games of chance or games of other forms, as well as the provision of hospitality and related services in Macau. In addition, Co. manufactures, sells and distributes construction materials through its Construction Materials Division across Mainland China, Hong Kong and Macau. Co.'s segments include gaming and entertainment, and construction materials.

Honda Motor Co. Ltd.

Honda Motor is the parent company of a group mainly develop, manufacture and distribute motorcycles, automobiles, power products, and also provide financing for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Turkey, China, India, Indonesia, Malaysia, Thailand, Vietnam, Argentina, and Brazil. Co.'s principal business segments are motorcycles, automobiles, financial services, and power products & other business. Co.'s principal automobile products include passenger cars such as "Legend," "Accord," "Inspire," "Civic," "Insight," "City," "Acura RL," "Acura TL," "Acura TSX," and "Acura CSX".

Iida Group Holdings Co. Ltd.

Iida Group Holdings is a holding company mainly engaged in the housing construction and real estate businesses. Co., through its subsidiaries, is engaged in the construction and sale of single-family houses and condominiums; the construction and housing renovation contract work; the leasing and brokerage of real estate; the building demolition and land development work; and the operation of golf courses and hot spring facilities, as well as the home mortgage and insurance agency businesses. Co. is also engaged in the the manufacture and processing of lumber, laminated woods and precut wood building materials.

MGM China Holdings Limited

MGM China Holdings is an investment holding company. Through its subsidiaries, Co. is engaged in the development and operation of casino games of chance and other casino games and the related hotel and resort facilities in Macau. Co. operates in one business segment, being the management of casino, hotel and food and beverage operations.

Piaggio & C. S.p.a.

Piaggio is a manufacturer of two-wheeler motor vehicles and commercial vehicles. Co.'s product range includes scooters, mopeds and motorcycles from 50cc to 1,400cc marketed under the Piaggio, Vespa, Gilera, Aprilia, Moto Guzzi, Derbi and Scarabeo brands. Co. also operates in the three- and four-wheeler light transport sector with its Ape, Porter and Quargo ranges of commercial vehicles.

Sands China Ltd.

Sands China and its subsidiaries are principally engaged in the operation of casino games of chance or games of other forms, the development and operation of integrated resorts which contain not only gaming areas but also meeting space, convention and exhibition halls, retail and dining areas and entertainment venues and other ancillary services including ferry operations and other related operations in the Macao Special Administrative Region of the People's Republic of China.

Sundram Fasteners

Sundram Fasteners Limited. Sundram Fasteners Limited is a holding company. The Company is engaged in manufacturing high tensile fasteners, and motor vehicle parts and accessories. Its product range includes cold extruded parts, powder metal parts, radiator caps, gear shifters, hot forged parts, precision forged differential gears, water pumps, oil pumps, fuel pumps, belt tensioners, rocker arm assemblies, cam followers, bearing housings, hubs and shafts, tappets and other engine components, and valve train parts. The Company's high tensile fasteners product range includes standard fasteners and special fasteners. The Company's powder metal parts product range includes bushes, structural parts and iron powder. The Company's radiator caps product range includes metal and nylon cap assemblies for original equipment manufacturers. The Company's hot forged products include connecting rods, lug gears for motorcycles, constant-velocity joint parts, fan hubs, bevel gears and fuel injection pump parts.

Tradeweb Markets Inc. Class A

Tradeweb Markets is a leader in building and operating electronic marketplaces for its global network of clients across the financial ecosystem. The company's network is comprised of clients across the institutional, wholesale and retail client sectors, including many of the large global asset managers, hedge funds, insurance companies, central banks, banks and dealers, proprietary trading firms and retail brokerage and financial advisory firms, as well as regional dealers. The company's marketplaces facilitate trading across a range of asset classes, including rates, credit, money markets and equities. The company is a global company serving clients in 62 countries with offices in North America, Europe and Asia.

Trip.com Group Ltd. Sponsored ADR

Webjet Limited

Webjet is engaged in the provision of online travel bookings. Co.'s business consists of a Business to Consumer division (comprising theWebjet, ZUJI and Online Republic brands) and a Business to Business division (comprising the Lots of Hotels and Sunhotels brands).

Wynn Macau Ltd.

Wynn Macau is a holding company. Co. is a developer, owner and operator of destination casino gaming and entertainment resort facilities in Macau. Through its subsidiary, Wynn Resorts (Macau) S.A., Co. owns and operates the destination hotel and casino resort Wynn Macau in Macau. In addition, Co. is engaged in the development, design and preconstruction activities.

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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