Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our outlook remains cautious as we continue to expect heightened volatility and a potential retest of the February 2018 lows over the next several weeks. Near-term we are monitoring for S&amp;P 500 support near 2,600 (i.e., the October low) and resistance near 2,817 or the 100- and 50-day moving averages. In today’s report we outline our current concerns along with developments that would cause us to become more constructive on the market. We also highlight attractive set ups within the Financials, Consumer Discretionary, and Health Care Sectors.

Our outlook remains cautious as we continue to expect heightened volatility and a potential retest of the February 2018 lows over the next several weeks. Near-term we are monitoring for S&amp;P 500 support near 2,600 (i.e., the October low) and resistance near 2,817 or the 100- and 50-day moving averages. In today’s report we outline our current concerns along with developments that would cause us to become more constructive on the market. We also highlight attractive set ups within the Financials, Consumer Discretionary, and Health Care Sectors.

U.S. Equity Strategy: Retest of October Lows Underway; Upgrading Financials

Investors continue to prefer the stability of the U.S. relative to emerging markets. The recent declines recorded in emerging markets and their currencies suggest global risk aversion. U.S. equity markets are, by contrast, not showing any significant signs of coming unhinged as a result of this rout in emerging markets.  In this report we examine the factors likely to impact the U.S. equity markets, and explore actionable opportunities within the Technology, Consumer Discretionary, and Health Care Sectors.

Investors continue to prefer the stability of the U.S. relative to emerging markets. The recent declines recorded in emerging markets and their currencies suggest global risk aversion. U.S. equity markets are, by contrast, not showing any significant signs of coming unhinged as a result of this rout in emerging markets.  In this report we examine the factors likely to impact the U.S. equity markets, and explore actionable opportunities within the Technology, Consumer Discretionary, and Health Care Sectors.

U.S. Equity Strategy: Cyclicals Remain Leadership - Staples & Utilities Are Strengthening

Transport Sector, China and Asia-focused Research

Charles De Trenck

Equity Bottom-Up

Starbucks generally is a good corporate citizen. When it makes a mistake in the eyes of it fanbase, it moves quickly to fix things. <a href="https://www.smartkarma.com/entities/7641" target="_blank" data-smartkarma-citation="entities:7641:1">Starbucks Corp (SBUX US)</a> is also seen as generous to its employees. The coffee it serves is ethically sourced (note: not the same as fair trade), and its coffee appeals to most palates (it’s designed that way).But there is a darkside to SBUX as well. Starbucks’ business model is mainly built on selling stimulants – coffee and sugar. And lots of calories. For most of us, coffee, or caffeinated tea, is a welcome stimulus in the morning. But sugar, especially when consumed in large amounts and delivered in multiple combinations,  effectively can be lethal. Sugar blended into coffee in larger amounts is not good any way we look at it.Starbucks has abused the sugar kick, even if we can point to companies with worse health agendas. And it is aware of the problem, as are many. But it fails to officially recognize how dependent its business was and still is on sugar. One of the best-selling flagship products, the Frappuccino, remains a packed sugar grenade for the body, providing an entire dose or more of daily sugar in one serving.SBUX should never have grown its business so rapidly on the back of contributing so much to diabetes.   Now it is trying to change by taking small steps to more wholesome products.But we look at further steps it could take to increase quality and sales.

Starbucks generally is a good corporate citizen. When it makes a mistake in the eyes of it fanbase, it moves quickly to fix things. Starbucks Corp (SBUX US) is also seen as generous to its employees. The coffee it serves is ethically sourced (note: not the same as fair trade), and its coffee appeals to most palates (it’s designed that way).But there is a darkside to SBUX as well. Starbucks’ business model is mainly built on selling stimulants – coffee and sugar. And lots of calories. For most of us, coffee, or caffeinated tea, is a welcome stimulus in the morning. But sugar, especially when consumed in large amounts and delivered in multiple combinations,  effectively can be lethal. Sugar blended into coffee in larger amounts is not good any way we look at it.Starbucks has abused the sugar kick, even if we can point to companies with worse health agendas. And it is aware of the problem, as are many. But it fails to officially recognize how dependent its business was and still is on sugar. One of the best-selling flagship products, the Frappuccino, remains a packed sugar grenade for the body, providing an entire dose or more of daily sugar in one serving.SBUX should never have grown its business so rapidly on the back of contributing so much to diabetes.   Now it is trying to change by taking small steps to more wholesome products.But we look at further steps it could take to increase quality and sales.  

Starbucks (SBUX): Castles Made of Stimulants (Capitalism's Less Explored Darkside)

Complete top-down and bottom-up technical analysis of the U.S. Consumer Discretionary Sector.  Charts highlighted:  AMZN, NFLX, COLM, PVH, UAA, FOSL, GOOS, GIII, TJX, BURL, AEO, ANF, BBY, M, URBN, RL, LUXTY, LE, NKE, WWW, DECK, SHOO, CROX, RCKY, WEYS, MAR, HLT, LQ, ILG, CHH, H, IHG, WYNN, LVS, MLCO, BYD, PNK, YUM, DPZ, TXRH, CAKE, NDLS, and DNKN.

Complete top-down and bottom-up technical analysis of the U.S. Consumer Discretionary Sector.  Charts highlighted:  AMZN, NFLX, COLM, PVH, UAA, FOSL, GOOS, GIII, TJX, BURL, AEO, ANF, BBY, M, URBN, RL, LUXTY, LE, NKE, WWW, DECK, SHOO, CROX, RCKY, WEYS, MAR, HLT, LQ, ILG, CHH, H, IHG, WYNN, LVS, MLCO, BYD, PNK, YUM, DPZ, TXRH, CAKE, NDLS, and DNKN.

U.S. Consumer Discretionary Sector: Complete Technical Analysis

United States

Dunkin' Brands Group Inc. franchises quick service restaurants ("QSRs") serving hot and cold coffee and baked goods, as well as ice cream.  The Company operates primarily in the breakfast part of the day within the QSR segment of the restaurant industry. Dunkin' Brands Group Inc. operates worldwide.

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Dunkin' Brands Group (DNKN US)

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

U.S. Equity Strategy: Retest of October Lows Underway; Upgrading Financials

Our outlook remains cautious as we continue to expect heightened volatility and a potential retest of the February 2018 lows over the next several...

Vermilion Research

U.S. Equity Strategy: Cyclicals Remain Leadership - Staples & Utilities Are Strengthening

Investors continue to prefer the stability of the U.S. relative to emerging markets. The recent declines recorded in emerging markets and their...

Vermilion Research

Starbucks (SBUX): Castles Made of Stimulants (Capitalism's Less Explored Darkside)

Starbucks generally is a good corporate citizen. When it makes a mistake in the eyes of it fanbase, it moves quickly to fix things. Starbucks Corp...

Charles De Trenck

U.S. Consumer Discretionary Sector: Complete Technical Analysis

Complete top-down and bottom-up technical analysis of the U.S. Consumer Discretionary Sector. Charts highlighted: AMZN, NFLX, COLM, PVH,...

Vermilion Research

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