Int'l Macro Vision: Sector Synopsis
Int'l Equity StrategyIn our October 26, 2023 Int'l Compass we discussed our expectations for a bounce in global equities (MSCI ACWI). So far, that has been the low. Then, in our November 2, 2023 Int'l Compass, we discussed the bullish implications of the false breakdown in the MSCI ACWI (local currency). Finally, we outlined in our November 16, 2023 Int'l Compass our belief that a year-end rally has begun in global equities (MSCI ACWI). Recent developments have only reinforced our bullish outlook on global equities (MSCI ACWI), and we continue to expect a rally into year-end and, at minimum, the early part of 2024.
We continue to see many reasons to be bullish on global equities heading into 2024, including: (1) Bullish price patterns on broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) and major countries (U.S., Europe, Japan), including 2+ year breakouts for the S&P 500, EURO STOXX 50, and Brazil's Bovespa, and a 5-month breakout for India's SENSEX. (2) The U.S. dollar's (DXY) trend lower is likely to continue toward $101-$101.50. (3) Global sovereign 10-year yields have, at the very least, put in short-term tops (and more likely, intermediate-term tops). (4) U.S. and European high yield spreads are at 19-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 near multi-year RS lows (vs. MSCI ACWI). (6) Breadth continues to bottom-out. (7) U.S. and non-U.S. small-caps appear to be putting-in relative strength bottoms. The significance of all of these risk-on signals cannot be understated, and we expect for the bull market in ACWI-US to resume.
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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