Vermilion Int'l Compass: Global Equity Strategy
Supports Starting to BreakKey support levels on global equity indexes are beginning to break as the U.S. dollar (DXY) and 10-year Treasury yield break above $105.70 and 4.35%. Since our Sept. 8th, 2023 Int'l Compass we have discussed how we need to see the DXY and 10-year Treasury yield hold below these resistance levels in order to be confident that $92-$93 support holds on MSCI ACWI (ACWI-US). Breakouts above these levels significantly increase the odds of a break below major $92-$93 support on ACWI-US, and we would shift to a more cautious outlook on a break below $92 (note: we have discussed the critical $93 level on ACWI-US since early December 2022, and we are adjusting key support down to $92 to account for the ~$1.50 in dividends since then). We shifted to overweight value within non-U.S. equities last week, and we are now also shifting to overweight small-caps within non-U.S. equities... see chart below.
Supports Starting to Break. 6+ month supports that we have focused on since mid-August 2023 are starting to break. This includes 4200 on the EURO STOXX 50, $47.50 on MSCI ACWI ex-U.S. (ACWX-US), and $69-$70 on MSCI EAFE (EFA-US). Other key supports are currently being tested, including $92-$93 on MSCI ACWI (ACWI-US) and $37.50 on MSCI EM (EEM-US). The upcoming days will be critical; will the indexes that are breaking down be able to reclaim supports (i.e., false breakdowns), or will the ACWI-US and EEM-US be added to the list of indexes that are breaking down? The former would be bullish, and the latter would be bearish... see chart below and pages 3-4.
Upgrading Non-U.S. Small-Caps to Overweight; Remain Overweight Value Within Non-U.S. Equities. We are upgrading non-U.S. small-caps to overweight following the base breakout in the MSCI ACWI ex-U.S. Small vs. Large-Cap ratio. As a reminder, last week we upgraded Value to overweight within non-U.S. equities, with the MSCI ACWI ex-U.S. IMI Value vs. Growth ratio breaking out following a 1.5+ year consolidation.
Remain Overweight Japan and India. Recent weakness in global equities has not changed our views on Japan and India, which remain our top two country overweights.
Actionable Theme: Global Value. Value remains leadership, especially outside of the U.S. -- remain overweight/add exposure. We have focused extensively on buys in Energy since our June 23, 2023 Int'l Compass, and within Financials since late July; these remain two of our favorite value Sectors, but we are looking at other value areas today. We highlight our favorite names to buy within Transportation, Communications, and Health Care... see pages 5-15.
Kawasaki Kisen is the parent company of a group engaged in the provision of marine transportation services. Co.'s principal business segments are containership, unscheduled carrier, and marine resource development and heavy-lift ship. Co.'s principal services include containership, bulk carrier, car carrier, LNG (liquefied natural gas) carrier, tanker and thermal coal carrier services; tramp liner; harbor transportation; terminal operation; shipping agency, warehousing, customer clearance and other related services; short sea/coastal shipping and ferry services; energy-related development business, offshore support vessel business, heavy-lift ship business and others.
Mitsui O.S.K. Lines and its affiliates are mainly engaged in the marine transportation businesses in Japan and overseas. Co. is engaged in the owning and operation of dry bulkers, tankers, liquefied natural gas (LNG) carriers, car carriers and containerships; the offshore business; the operation of container terminals; the air and sea forwarding and land transport businesses; the provision of warehousing services; the transportation of passengers and cargos by operating ferries; and the real estate, cruise ship, tugboat, trading, construction, human resources and staffing, ship management, financing, shipbuilding, information service, accounting service, and marine consulting businesses.
Nippon Yusen Kabushiki Kaisha is a shipping and transportation company. Through its affiliates, Co. provides global logistics based on international marine transportation business, cruises, terminal and harbor transport, shipping-related services, real estate, and other business. Co. operates various types of carriers including container ships, bulker and specialized carriers, tankers and gas carriers to carry iron ore, coal, cement, crude oil, gas, wood chips, grain, fertilizer, dry bulk and reefer cargoes, chemical products and other products.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.