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Bullish Inflections Around The World

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.
ishares MSCI ACWI ETF
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