Our previous Int’l Compass (11/5/20) outlined our constructive outlook, with the caveat that $77 support needed to hold on the MSCI ACWI (ACWI-US), and that we would shift to a bullish stance on a breakout above $84. Positive Covid vaccine news has since led to bullish inflections in a staggering number of countries, ACWI-US included. Staying true to our word and considering market dynamics remain positive, our current outlook is bullish.
- Staggering Number Of Countries With Bullish Inflections. With broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) breaking above major resistance, it is no wonder that several countries are doing the same. Among others, countries with breakouts or bullish reversals include: Japan (Nikkei, TOPIX), Hong Kong (Hang Seng), the UK (FTSE 100), France (CAC 40), Italy (FTSE MIB), Austria (ATX), Norway (Oslo OBX), Spain (IBEX 35), Brazil (Bovespa), Greece (ATHEX), and Mexico (S&P/BMV IPC). New highs around the world is supportive of our bullish outlook.
- Rotations Are The Lifeblood Of Bull Markets. Sector rotations are the lifeblood of any healthy bull market, and right now we are seeing flows coming into left-for-dead value Sectors (namely Financials and Energy), and some consolidation in growth Sectors (esp. Technology). Shift to neutral between global ex-US value vs. growth.
- Actionable Theme: Value Sectors, Financials & Energy. Value has closed the gap on growth in the global ex-US equities arena, and we are now neutral on value vs. growth (we were previously overweight growth). Two important Sectors behind the resurgence for value are Financials and Energy, and we see price and RS as going through a bottoming process for these Sectors — add exposure.
- Actionable Theme: Autos & Auto Parts. Global autos (CARZ-US) have been a major focus for us in recent months and we continue to recommend an overweight to the space. Two new attractive and actionable ideas include: Renault SA (RNO-FR) and Huizhou Desay SV Automotive (002920-CN) — add exposure.
Disclosure: Vermilion Research
Disclaimer: The information contained herein is privileged, confidential and protected from disclosure. Any unauthorized disclosure distribution, dissemination or copying of this material or any attachment is strictly prohibited; such information, whether derived from Vermilion Vermilion Capital Management, LLC or from any oral or written communication by way of opinion, advice, or otherwise with a principal of the company is not warranted in any manner whatsoever, is for the use of our customers only and may be obtained from internal and external research sources considered to be reliable. It is not necessarily complete and its accuracy is not guaranteed by Vermilion Capital Management, LLC, its operating entity or the principals therein. Neither the information nor any opinion expressed constitutes a solicitation for the purchase of any future or security referred to in Vermilion research publications. Principals of Vermilion Capital Management, LLC may or may not hold, or be short of, securities discussed herein, or of any other securities, at any time. The foregoing also expressly applies to any trial subscription.
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Vermilion Research and is being posted with permission from Vermilion Research . The views expressed in this material are solely those of the author and/or Vermilion Research and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.