Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>There is no bubble in stock prices</li>
<li>P/Es are an inappropriate and misleading guide to assessing aggregate stock markets</li>
<li>Aggregate stock markets depend on liquidity and behavioral factors</li>
<li>
China and Emerging Markets have the most to gain from future equity investment</li>
</ul>


There is no bubble in stock prices
P/Es are an inappropriate and misleading guide to assessing aggregate stock markets
Aggregate stock markets depend on liquidity and behavioral factors

China and Emerging Markets have the most to gain from future equity investment


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

MSCI Emerging Markets Index / Technical Analysis

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

Overweight EM Vs. EAFE; Dollar Weakness Continues

<ul>
<li>
Geopolitical risk analysis is much in fashion, especially in the Trump era</li>
<li>Geopolitical events prove statistically significant per se, but economically minor in their effects on markets</li>
<li>Far more important is prevailing risk positioning of investors</li>
<li>Using this analysis, 2021 will decent for stocks, but the UK looks a compelling investment, whereas Asian EM now look less interesting</li>
</ul>



Geopolitical risk analysis is much in fashion, especially in the Trump era
Geopolitical events prove statistically significant per se, but economically minor in their effects on markets
Far more important is prevailing risk positioning of investors
Using this analysis, 2021 will decent for stocks, but the UK looks a compelling investment, whereas Asian EM now look less interesting


How Important Will Be Trump’s Exit, Geopolitics and Warren Buffett to Investment Markets in 2021?

<div>• High levels of Global Liquidity and V-shaped Economic Rebound</div><div>• Economies, so far, rebounding faster than after 2008 GFC</div><div>• China has unusually not created much liquidity in 2020</div><div>• Latest evidence show acceleration in Chinese Shadow Bank lending</div>

• High levels of Global Liquidity and V-shaped Economic Rebound• Economies, so far, rebounding faster than after 2008 GFC• China has unusually not created much liquidity in 2020• Latest evidence show acceleration in Chinese Shadow Bank lending

A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?

China

The MSCI Em (Emerging Markets) Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

MSCI Emerging Markets Index (MXEF INDEX)

Is This The Greatest Bubble of All Time?

P/Es are a misleading and wrong way to value aggregate stock markets. What works at the individual security level does not work well in aggregate....

Michael J. Howell

Overweight EM Vs. EAFE; Dollar Weakness Continues

Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS...

Vermilion Research

How Important Will Be Trump’s Exit, Geopolitics and Warren Buffett to Investment Markets in 2021?

Geopolitics are a popular background narrative to markets, but they make little difference to returns. What really matters is the portfolio...

Michael J. Howell

A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?

By easing restrictions on shadow bank lending China is boosting liquidity. Shadow bank credit is accelerating rapidly once again. This will boost...

Michael J. Howell

Is This The Greatest Bubble of All Time?

P/Es are a misleading and wrong way to value aggregate stock markets. What works at the individual security level does not work well in aggregate....

Michael J. Howell

Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

Overweight EM Vs. EAFE; Dollar Weakness Continues

Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS...

Vermilion Research

How Important Will Be Trump’s Exit, Geopolitics and Warren Buffett to Investment Markets in 2021?

Geopolitics are a popular background narrative to markets, but they make little difference to returns. What really matters is the portfolio...

Michael J. Howell

A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?

By easing restrictions on shadow bank lending China is boosting liquidity. Shadow bank credit is accelerating rapidly once again. This will boost...

Michael J. Howell