Vermilion Int'l Compass: Global Equity Strategy
Remain Risk-On With Market Dynamics ImprovingOur outlook remains bullish on global equities (MSCI ACWI). We discussed in our latest Int'l Compass (January 9, 2025) how we viewed the pullback as a buying opportunity and we were watching for $116-$117 support to hold on ACWI-US. $116 support held perfectly and we expect upside to continue following 1+ month bull flag breakouts, followed by successful retests of support, on ACWI-US and the S&P 500. We also upgraded Germany to overweight in last week's (January 22) Int'l Macro Vision, with RS on the DAX breaking out from a 2-year base. This leaves the U.S. (S&P 500) and Germany as our only two country overweights. Germany is leading Europe higher, and the EURO STOXX 50 displays a major 9-month base breakout above 5000-5120 , a very bullish sign for global equities. Japan's TOPIX could very well be next to break out as it consolidates below 2740-2820 resistance. As long as ACWI-US is above $116, the S&P 500 is above 5650-5670, and the EURO STOXX 50 is above 5030, we see every reason to remain bullish.
Remain Overweight the U.S. and Germany. Our two country overweights include the U.S. (S&P 500) and Germany (DAX).
Market Dynamics Improving. A strong U.S. dollar (DXY) and rising long-term Treasury yields had been a potential concern for the global equity market, however both have established local tops, which has effectively turned them into tailwinds for equities. A break below $107-108 on DXY and 4.5% on the 10-year Treasury yield would signal a longer-term top is in. Additional improvements include crude oil prices rolling over, 6+ month base breakouts on MSCI ACWI ex-US and EAFE (in local currency), as well as bullish inflections in France (CAC 40), Hong Kong (Hang Seng), Ireland (ISEQ All Share), Italy (FTSE MIB), UK (FTSE 100), Canada (S&P TSX), Czech Republic (PX), Poland (WIG), and Korea (KOSPI). Of course, this is in addition to the many other market dynamics which remain risk-on (high yield spreads, cyclical/growth Sectors outperforming, low interest rate volatility, etc.)... see charts below and page 2.
Actionable Themes: Financials, Technology, Services, and Consumer Discretionary. Financials remain global leadership -- remain overweight/add exposure on pullbacks. Global growth Sectors (Consumer Discretionary, Services, and Technology) that we have been recommending for months also continue to be attractive -- stay long and add exposure on pullbacks...
Boruta Zachem SA. Boruta Zachem SA, located in Bydgoszcz, Poland, manufactures dyestuffs and pigments. It also produces biosurfactants used in chemical and cosmetics industry as well as provides research and development of innovative chemical solutions.
K W Nelson Interior Design and Contracting Group Ltd. K W Nelson Interior Design and Contracting Group Limited, formerly K W Nelson Interior Architect Group Limited, is a Hong Kong-based investment holding company. The Company, along with its subsidiaries, is principally engaged in the provision of interior designs, project management services and fitting-out works in Hong Kong and the People's Republic of China (PRC). The Company offers its services to the fields of banking, retail, healthcare, legal services, catering, education, energy, insurance, telecommunications, property management and logistics management. Its subsidiaries include Golden Icon Group Limited, K W Nelson Interior Architect Limited, as well as Guangzhou Nelson Decoration Limited, among others.
Mitsubishi UFJ Financial Group is financial groups with total assets of Y297,185,019 million as of Mar. 31, 2017. Co. is the holding company for The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holdings Co., Ltd., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Mitsubishi UFJ NICOS Co., Ltd., and other companies. As a bank holding company, Co. is regulated under the Banking Law of Japan. Its services include commercial banking, trust banking, securities, credit cards, consumer finance, asset management, leasing and many more fields of financial services.
Royal Bank of Canada is a financial services company that provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services. Co. serves personal, business, public sector and institutional clients through offices in Canada, the U.S. and 37 other countries. Co. is organized into five segments: Personal and Commercial Banking, which is comprised of Co.'s personal and business banking operations, and its auto financing businesses; Wealth Management, Insurance; Investor and Treasury Services; and Capital Markets. As of Oct 31 2017, Co. had total assets of C$1.21 trillion and total deposits of C$789.64 billion.
Unicredit is a pan-European commercial banking group based in Italy. Co. is engaged in the provision of in-branch and online corporate and investment banking services, providing customers with access to banks in 14 core markets as well as to an another 18 countries worldwide. Co.'s operations are organized along six business lines: Commercial Banking Italy; CEE Division; CIB; Commercial Banking Germany; Commercial Banking Austria; and Asset Gathering. Co.'s European banking network includes Italy, Germany, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Slovakia, Slovenia, Serbia and Turkey.
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.
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