EUR 44.11 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Overweight Value Within Global ex-U.S. Equities

Our overall outlook remains largely unchanged; we remain bullish on global equities as long as the MSCI ACWI (ACWI-US) is above major $93 support. We also discussed that if the 10-year Treasury yield remains below 4.35% and the DXY is below $105.70, we would continue to expect $93 support on ACWI-US to hold. The 10-year Treasury is attempting to break above 4.35% and this could create a problem for MSCI ACWI; we will continue to monitor closely. We also see a notable shift to value within non-U.S. equities (and, to a lesser extent, within the U.S.), and we are shifting to overweight value.

Overweight Value Within Non-U.S. Equities. The MSCI ACWI ex-U.S. IMI Value vs. Growth ratio displays a major breakout following a 1.5+ year consolidation, and we are upgrading value to overweight within non-U.S. equity markets... see chart below.
Remain Overweight Japan and India. Japan and India remain our top two country overweights, with price and RS uptrends intact on Japan's TOPIX/TOPIX Small and India's SENSEX/BSE 500. All Sectors are attractive within Japan and India.
Key Supports Holding. In addition to the important $93 support level on ACWI-US, 6+ month supports on other major indexes continue to hold, including 4200 on the EURO STOXX 50, $47.50-$48 on MSCI ACWI ex-U.S. (ACWX-US), $70 on MSCI EAFE (EFA-US), and $37.50-$38 on MSCI EM (EEM-US). As long as these supports continue to hold, we simply cannot be bearish... see page 2.
Actionable Theme: Global Value. Value areas are beginning to outperform, especially outside of the U.S. -- add exposure. We highlight our favorite names to buy within Financials, Real Estate, Consumer Discretionary, Energy, and Communications... see pages 3-14.