Report
Dave Nicoski ...
  • Ross LaDuke
EUR 46.83 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Bullish Outlook Intact

Overall we remain bullish and we continue to believe the path of least resistance is higher for global equities (MSCI ACWI). The price uptrend is fairly steep for ACWI-US, so while this means it could correct 5-10% on a breakdown, such a pullback would likely be a buying opportunity. Furthermore, there is little that suggests a correction is imminent; we recommend riding the trend higher.

· Index Overviews. The MSCI ACWI index (USD) is breaking out to all-time highs while the MSCI EM index (local) is breaking above its prior highs from January. This is bullish and will continue to be as long as there is an absence of breakdowns. On the other hand, Europe's EURO STOXX 50 and Japan's TOPIX have struggled to break above resistance and their RS remains near the lows -- be selective... see charts below and page 2.

· US Dollar (DXY) Still A Tailwind. The path of least resistance remains lower for the DXY which we continue to see as bullish for global equities. A break below 92 short-term support would signal a continuation of the downtrend while a break above 94 short-term resistance could mean a visit to 95-96. Ultimately, as long as the DXY is below 96 resistance we believe it will be a positive for global equities.

· Sovereign Yields. One concern we have had for global equities is that sovereign yields in the US and Europe have been rangebound since bottoming in March, and have been unable to meaningfully lift off of their lows. Thankfully, Treasury and Bund yields have moved higher in recent weeks which gives this concern some space to breathe.

· Actionable Themes: Technology, Consumer Discretionary, and Materials. These three MSCI ACWI Sectors remain global leadership -- remain overweight/add exposure... see pages 3-4 and pages 5-14.

· Actionable Theme: Additional One-Off Ideas. We highlight additional ideas in the following Sectors: Services, Communications, Industrials, and Transportation.
Underlyings
Appen

Appen is engaged in the provision of speech and search technology services which provide more than 150 languages. Co. is also engaged in the provision of solutions for clients create engaging products with accurate speech interfaces and relevant content ranging from web sites, to maps, images, and merchandise.

Avis Budget Group Inc.

Avis Budget Group is a provider of mobility solutions through its three brands, Avis, Budget and Zipcar, together with several other brands. The company has two segments: Americas, which provides and licenses the company's brands to third parties for vehicle rentals and ancillary products and services in North America, South America, Central America and the Caribbean, and operates its car sharing business in certain of these markets; and International, which provides and licenses the company's brands to third parties for vehicle rentals and ancillary products and services in Europe, the Middle East, Africa, Asia and Australasia, and operates the company's car sharing business in certain of these markets.

Black Cat Syndicate

Canadian Solar Inc.

Focus Media Information Technology Co Ltd Class A

Hedy Holding is engaged in the research, development, manufacture and process of computer and its parts, electronic products, communication equipment and facsimile printers; the provision of computer technologies services; the development of computer software; the export of self-produced products and technologies; the import of necessary machinery equipment, spare parts, auxiliary materials and technologies; and hired of locations. Through its subsidiaries, Co. is also engaged in the manufacture and sale of digital products; the sale of projector equipment, building automated system and office equipment; and the design and installation of computer networking engineering.

Haidilao International Holding Ltd.

Haidilao International Holding Ltd. Haidilao International Holding Ltd is a China-based company principally engaged in the restaurant operation business. The Company is mainly engaged in the operation of hotpot chain restaurants under the brand of Haidilao. The Company is also involved in the takeaway business, as well as the sales of condiments and ingredients. The Company operates its businesses mainly in the domestic market.

Huazhu Group Ltd. Sponsored ADR

INFINEON TECHNOLOGIES AG

Infineon Technologies is a semiconductor manufacturing company. The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive applications. The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the generation, transmission and economy in the use of electrical energy. The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors for power supplies, mobile devices and mobile phone network infrastructures. The Chip Card & Security segment designs, develops, manufactures and markets semiconductor-based security products for card applications and networked systems.

Jubilant Foodworks Limited

Jubilant FoodWorks Limited is a food service company. The Company operates through Food and Beverages segment. The Company and its subsidiary have rights to develop and operate Domino's Pizza brand in India, Sri Lanka, Bangladesh and Nepal. It operates in India and Sri Lanka. It has a right for developing and operating Dunkin' Donuts restaurants for India. Domino's Pizza India operates approximately 1040 restaurants in India located in states and union territories, covering approximately 240 cities across the country. Dunkin' Donuts sells a range of donuts and over a dozen coffee beverages, as well as an array of bagels, breakfast sandwiches and other baked goods. The Company has approximately 70 Dunkin' Donuts restaurants in India. It offers Chocolate Donut, Break-up Party Eclair, Chocofix Donuts, Big Joy Burger, Naughty Lucy Burger, The Tough Guy Burger, Too Much Burgers range, Wicked Wraps, the iconic Dunkin' Original Drip Coffee, Dunkaccinos and Spiked Iced Tea, among others.

KWS SAAT SE & Co KGaA

KWS SAAT is a holding company. Through its subsidiaries, Co. is engaged in developing, producing and distributing seed for agriculture. Co.'s operational business is divided into three segments: corn, which is engaged in the production and distribution activities of corn for grain and silage corn, oil and field seed; sugarbeet, which is engaged in the multiplication, processing and distribution activities for sugarbeet seed, as well as Co.'s seed potato business; and cereals, which is engaged in the production and distribution of hybrid rye, wheat and barley, as well as oil and field seed.

LG Display Co. Ltd

LG Display is engaged in the manufacture of digital display products. Co.'s products include thin film transistor - liquid crystal display ("TFT-LCD") panels in a range of sizes and specifications primarily for use in televisions, notebook computers and desktop monitors. Co. also manufactures TFT-LCDs for handheld application products, such as mobile phones, as well as for industrial and other applications, such as entertainment systems, automobile navigation systems, digital photo displays and medical diagnostic equipment. Co. is also a supplier of organic light emitting diode (OLED) panels and high-definition television panels.

Luxshare Precision Industry Co. Ltd. Class A

Luxshare Precision Industry Co., LTD. is a China-based provider of Internet solutions. The Company's products include computer interconnection products and precision components, automotive interconnection products and precision components, communication products and precision components, consumer electronics, as well as other connectors. The Company distributes its products within domestic market and to overseas markets.

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.

Nintendo Co. Ltd.

Nintendo is mainly engaged in the development, manufacture, and sale of home-use game hardware/software and peripheral equipment as well as software under the name of "Nintendo DS," "Nintendo 3DS," "Game Boy," "Nintendo 64,"" Game Boy Advance," "Wii," "Nintendo GameCube," "Game Boy Color" and "e-Reader (trading card games)." Co.'s principal software trademarks include "Pokemon," "Super Mario Bros.," "The Legend of Zelda," "STARFOX64" and others. Co. also provides online games and repair services. In addition, Co. is involved in the manufacture and sale of Japanese playing cards called "Karuta," playing cards and board games, as well as the management of intellectual property rights.

Nokia Oyj

Nokia is an Internet and communications technology company based in Finland. Co.'s operations are focused on three businesses: network infrastructure software, hardware and services, which Co. offers through Networks; location intelligence, which Co. provides through HERE; and advanced technology development and licensing, which Co. pursues through Technologies. Co. maintains a global presence with operations and Researh & Development facilities located in Europe, North America and Asia, and sales in approximately 130 countries. Co. has an installed base of around 600 customers worldwide and these operators serve over 4 billion subscribers.

Shenzhen Sunway Communication Co. Ltd. Class A

Shenzhen Sunway Communication Co., Ltd. is a China-based company principally engaged in the research, development, manufacture and sale of mobile terminal antenna systems. The Company's main products include mobile terminal antennas, radio frequency (RF) isolation devices, RF connectors, audio and RF modules, precision hardware devices, magnetic materials and RF front-end devices, among others. The Company's products are mainly used in mobile phones, laptops, netbooks, wearable communication equipment and electric vehicles. The Company distributes its products in domestic market and to overseas markets.

Shin Nippon Biomedical Laboratories

Shin Nippon Biomedical Laboratories is mainly engaged in the provision of drug development services to pharmaceutical companies. Co.'s principal business segments are preclinical research operation, clinical pharmacology operation, translational research, medipolis and others. Co. is engaged in the research and extrapolates the safety of new drugs from many standpoints; the conduct of Phase I clinical trials in collaboration with CPC Clinic, an affiliated medical institution; the development of "Muco System," a novel nasal delivery system; the operation of accommodations; the geothermal power generation business; the consignment business; and others.

Sony Corporation

Sony is engaged in the development, design, production, manufacture, offer and sale of various kinds of electronic equipment, instruments and devices for consumer, professional and industrial markets such as network services, game hardware and software, televisions, audio and video recorders and players, still and video cameras, mobile phones, and semiconductors. Co. is engaged in the development, production, manufacture, and distribution of recorded music and the management and licensing of the words and music of songs as well as the production and distribution of animation titles. Co. is also engaged in the production, acquisition and distribution of motion pictures and television.

Square Enix Holdings Co. Ltd.

Square Enix Holdings is a holding company that is mainly engaged in the entertainment industry. Co., through its subsidiaries, operates in four business segments. The Digital Entertainment business is engaged in the design, development, sale, licensed sale and operation of digital entertainment contents focusing on computer games. The Amusement segment is engaged in the operation of amusement facilities, the design, development, manufacture, sale and rental of amusement equipment. The Publishing segment is involved in the publication of comic magazines, books and game related books. The Rights Property segment is involved design, production, sale and grant of secondary works.

Telefonaktiebolaget LM Ericsson Class B

Ericsson provides communications technology and services. Co.'s services, software and infrastructure – especially in mobility, broadband and the cloud – enable the telecom industry and other sectors to do business, increase efficiency, improve the user experience and capture new opportunities. Co. has more than 110,000 professionals and customers in more than 180 countries. Co. provides support for networks with more than 2.5 billion subscribers. Co.'s core business areas are called Radio, Core and Transmission and Telecom Services. Co. divides its operations into three business segments: Networks, Global Services and Support Solutions.

Trend Micro Incorporated

Trend Micro is engaged in the development and sale of computer security products. Co. offers security and protection products for data centers, cloud computing, networks, endpoints and gateways, email, webs and SaaS applications for enterprises, small business and governments. Co. also provides enterprise ransomware protection products, regulatory compliance products, healthcare security products and point-of-sale protection products. In addition, Co offers security software and cleanup and other related services for home networks, PCs, tablet computers and smartphones for individual users.

Western Silver Corp.

Xero Limited

Xero is engaged in the provision of a platform for online accounting and business services to small businesses.

Yum China Holdings Inc.

Yum China Holdings is a holding company. Through its subsidiaries, the company is a restaurant company in the People's Republic of China (China). The company's restaurant base consists of restaurant concepts, including KFC, Pizza Hut brands, as well as brands such as East Dawning, Little Sheep, Taco Bell and COFFii & JOY. The company has the right to operate and sublicense the KFC, Pizza Hut and Taco Bell brands in China (excluding Hong Kong, Taiwan and Macau), and own the intellectual property of the East Dawning, Little Sheep and COFFii & JOY concepts outright. Most restaurants in the KFC, Pizza Hut, East Dawning, Taco Bell and COFFii & JOY concepts provide delivery service.

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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