EUR 85.50 For Business Accounts Only

Int'l Macro Vision: Sector Synopsis

Int'l Equity Strategy

We are in the midst of a pullback/consolidation phase (likely normal/mild 3-5% pullback) on the S&P 500 (SPX) and MSCI ACWI (ACWI-US). Particularly concerning is that SPX is violating its 2-month uptrend, the 10-year Treasury yield is breaking above the important 4.20% short-term resistance level, and the global Discretionary vs. Staples ratio displays a negative divergence (the ratio has not made new highs, while ACWI-US has). As a result, barring a quick reclaim above 6824 today/tomorrow, we are downgrading our near-term outlook to neutral on SPX following its 2-month uptrend violation and break below the important 6824 level yesterday. MSCI ACWI (ACWI-US) is similarly violating its 2-month uptrend, but it has held up relatively well, and we remain near-term bullish on ACWI-US as long as crucial short-term support of $141.50 holds. For now, most of the weakness is contained to U.S. large-cap growth, with all the MSCI global indexes (MSCI ACWI, EAFE, ACWI ex-US, and EM) still constructive. We are on the lookout for weakness that may seep into these non-U.S. areas as well, but it has yet to happen to a meaningful extent. Additionally, our intermediate-term bullish outlook remains intact, and has been in place since our 5/14/25 Compass. We will maintain our bullish intermediate-term view as long as market dynamics remain constructive and the SPX and ACWI-US are above 6480-6520 and $134-$135.70. Short-term supports to watch on ACWI-US include $142-$143 (testing now) and $141.50. Longer-term supports include $138.50-$139, $134-$135.70, and $130-$132.

We are upgrading Emerging Markets (MSCI EM) and Canada (S&P TSX) to overweight with RS breaking above multi-year and multi-month bases, respectively. We are also downgrading the U.S. (S&P 500) to market weight, as RS (vs. MSCI ACWI) is violating its 8+ year uptrend. We remain overweight Japan (TOPIX), Taiwan (TAIEX), Korea (KOSPI), and Spain (IBEX 35). We remain bullish on Europe's EURO STOXX 50 and would look for support at 5770-5815; we are monitoring for a RS bottom in Europe. The sheer volume of bullish indexes around the globe continues to reinforce our bullish intermediate-term outlook, including the aforementioned indexes that we are overweight, as well as Germany (DAX), the Netherlands (AEX), Austria (ATX), Czech Republic (PX), Poland (WIG), Indonesia (JSX), Turkey (ISE National 100), Chile (S&P/CLX IPSA), Philippines (PSE PSEi), Pakistan (KSE 100), Romania (BET), and Vietnam (Ho Chi Minh).

In addition to bullish technicals on all the aforementioned indexes, additional risk-on market dynamics that support our bullish intermediate-term outlook include: (1) U.S. and European high yield spreads are at multi-year narrows and remain below crucial levels. (2) Though the U.S. 10-year Treasury yield is breaking out above 4.20% (which is causing some indigestion for SPX and ACWI), it remains below other key levels including 4.35%, 4.50%, and the major 4.70%-4.80% resistance level. (3) The U.S. dollar (DXY) remains below $100.25-$100.80 resistance. (4) U.S. interest rate volatility (MOVE index) remains at 4+ year lows. (5) Gold and silver remain intermediate- and long-term bullish. These are all risk-on signals that support our bullish intermediate-term outlook on global equities, leading us to believe that any short-term pullback should be viewed as a buying opportunity.