Report
Dave Nicoski ...
  • Ross LaDuke
EUR 42.78 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Upgrading Mexico to Overweight

Recent developments have continued to reinforce our bullish outlook on global equities (MSCI ACWI). There is no reason to fight this bullish trend, and we continue to expect more upside into the early part of 2024.

Upgrading Mexico to Overweight. We are upgrading Mexico to overweight; Mexico's S&P/BMV IPC index is breaking out to all-time highs, and RS is bottoming -- add exposure. Our other country overweights include Europe, Japan, India, Poland, Greece, and Brazil. Japan's TOPIX index has pulled back to test its 1.5+ year RS uptrend; we need to see this RS uptrend hold in order to maintain our overweight recommendation on Japan... see chart below and page 2.
Reasons to Expect More Upside. We continue to see many reasons to be bullish on global equities into year-end and the early part of 2024, including (1) bullish price patterns and minimal pullbacks on broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) and major countries (U.S., Europe, Japan), (2) the U.S. dollar's (DXY) trend lower is likely to continue toward $101-$101.50, or lower (3) global sovereign 10-year yields have put in intermediate-term tops, (4) U.S. and European high yield spreads are at 20-month and 9-month narrows, respectively, (5) defensive MSCI ACWI Sectors including Consumer Staples (KXI-US), Utilities (JXI-US), and Health Care (IXJ-US) remain in YTD RS downtrends, (6) breadth continues to bottom-out, and (7) U.S. and non-U.S. small-caps appear to be putting-in RS bottoms. As discussed since our November 16, 2023 Int'l Compass, the significance of all of these risk-on signals cannot be understated, and we expect upside to continue.
Actionable Themes: Technology, Services, Consumer Discretionary, and Financials. Our best ideas continue to be within these same Sectors that we have been focusing on for several months... see pages 3 and 5-11.
Actionable Theme: Materials. The MSCI ACWI Materials Sector has been a significant laggard, but we are finally starting to see a growing number of attractive buy opportunities -- add exposure... see pages 4 and 11-15.
Underlyings
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.

China Clean Energy Technology Group Ltd.

Shift

SHIFT Inc. is a Japan-based company mainly engaged in the provision of software test services. The Company operates through two business segments. The Enterprise Market segment is engaged in the provision of general service related to quality assurance of software in business systems and information systems for companies of financial industry, distribution industry, manufacturing industry, communication industry and Web services industry. The Entertainment Market segment is engaged in the provision of general services related to quality assurance of software for enterprises providing mobile games, social games, consumer games and other entertainment products.

SHOPIFY INC.

Shopify provides a cloud-based commerce platform designed for small and medium-sized businesses. Merchants use its software to run their business across all of their sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops. Co. provides a platform for merchants to create an omni-channel experience that helps showcase the merchant's brand and grow its business. Co.'s platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting.

Tokyo Electron Ltd.

Tokyo Electron is a supplier of semiconductor production equipment ("SPE") and flat panel display ("FPD") selling through global network that spans Japan, the U.S., Europe and Asia. Co.'s principal products are coater/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems (auto wet station, single wafer cleaning system, pre-clean system and scrubber system), wafer prober, FPD coater/developers and FPD plasma etch/ash systems. In addition, Co., through its subsidiaries, is engaged in the provision of transportation services, insurance services, as well as the support services for Co.'s photovoltaic cell ("PV") production equipment.

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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