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

<ul>
<li>Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward.</li>
<li>Attractive Sectors include Energy and Financials, (and to a lesser extent Staples and Utilities) and these areas remain our primary focus.</li>
<li>Financials (XLF) and Energy (XLE) are hitting new RS highs amid rising rates and new highs in WTI crude oil -- Remain overweight/add exposure on pullbacks.</li>
</ul>


Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward.
Attractive Sectors include Energy and Financials, (and to a lesser extent Staples and Utilities) and these areas remain our primary focus.
Financials (XLF) and Energy (XLE) are hitting new RS highs amid rising rates and new highs in WTI crude oil -- Remain overweight/add exposure on pullbacks.


Alpha-Centric ESG Research

Kyle Rudden

COP26 – the United Nations' flagship international conference on climate change – takes place in Glasgow from 31 October to 12 November. World leaders will be discussing critical climate issues, and collaborating on aggressive plans to avert catastrophic climate change.Three core agenda items – mitigating global warming, financing climate action, and developing a global carbon market and pricing scheme – are mission-critical in combating climate change. But they also have significant implications for global capital markets and investing.This Insight is the first of several addressing COP26 from an investing perspective. This provides an overview of the COP26 conference, its key nation state players, core objectives and outcomes, and why there is such as palpable now-or-never sense of urgency; more so than ever before.Upcoming Insights, for which this report serves as context, will dive deeper into country-specific climate action plans, as well as discuss various investment themes and trading ideas around the COP26 conference and climate change in general. The first of those Insights are imminent.

COP26 – the United Nations' flagship international conference on climate change – takes place in Glasgow from 31 October to 12 November. World leaders will be discussing critical climate issues, and collaborating on aggressive plans to avert catastrophic climate change.Three core agenda items – mitigating global warming, financing climate action, and developing a global carbon market and pricing scheme – are mission-critical in combating climate change. But they also have significant implications for global capital markets and investing.This Insight is the first of several addressing COP26 from an investing perspective. This provides an overview of the COP26 conference, its key nation state players, core objectives and outcomes, and why there is such as palpable now-or-never sense of urgency; more so than ever before.Upcoming Insights, for which this report serves as context, will dive deeper into country-specific climate action plans, as well as discuss various investment themes and trading ideas around the COP26 conference and climate change in general. The first of those Insights are imminent.

COP26: U.N. Climate Conference to Address Mitigation, Financing, and Carbon Pricing

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Competitor Call Confirms Business Is Dead: A competitor hosted a conference call with the management of HSBC Holdings plc (5.HK/HSBA.LN) [HSBC]. Much of the discussion centered on Hong Kong/Asia, where net interest income remains under pressure due to low spreads, credit remains benign, and now Wealth Management is again in focus; and    *Elephant In Room Not Discussed: CET 1 was 15.9% at 1Q21, and the Group continues to aim for between 14.0% -14.5%. Unfortunately there was no mention nor even a question on its US franchise, HSBC North America (HSBCNA), which if sold or even managed properly could would easily allow HSBC to realize its CET1 goal  - given the losses management still needs to take on that mess.

*Competitor Call Confirms Business Is Dead: A competitor hosted a conference call with the management of HSBC Holdings plc (5.HK/HSBA.LN) [HSBC]. Much of the discussion centered on Hong Kong/Asia, where net interest income remains under pressure due to low spreads, credit remains benign, and now Wealth Management is again in focus; and    *Elephant In Room Not Discussed: CET 1 was 15.9% at 1Q21, and the Group continues to aim for between 14.0% -14.5%. Unfortunately there was no mention nor even a question on its US franchise, HSBC North America (HSBCNA), which if sold or even managed properly could would easily allow HSBC to realize its CET1 goal  - given the losses management still needs to take on that mess.

HSBC Holdings Plc – Head Still Buried In The Sand

*Always The Magician: Founded in 2010, Metro Bank plc (MTRO.LN) [Metro] was the first de novo high street bank in the United Kingdom in over 150 years. After a period of rapid growth, Metro ran into some difficulties. Over the years, we have learned never to count out Founder Vernon Hill (former Chair and Founder of former Commerce Bancorp in New Jersey) who always walks between the raindrops. Metro has moved forward with the sale of its mortgage portfolio to Natwest Group plc on December 18, 2020; and *Large Capital Gain: The sold Metro portfolio should provide the company with and GBP 83mm gain on sale – representing 42% of market-cap. The sale of 20% of Metro’s loan portfolio also removes Metro’s need to issue expensive MREL debt versus its prior debt guidance issuance of between GBP 200-300 mn.

 *Always The Magician: Founded in 2010, Metro Bank plc (MTRO.LN) [Metro] was the first de novo high street bank in the United Kingdom in over 150 years. After a period of rapid growth, Metro ran into some difficulties. Over the years, we have learned never to count out Founder Vernon Hill (former Chair and Founder of former Commerce Bancorp in New Jersey) who always walks between the raindrops. Metro has moved forward with the sale of its mortgage portfolio to Natwest Group plc on December 18, 2020; and *Large Capital Gain: The sold Metro portfolio should provide the company with and GBP 83mm gain on sale – representing 42% of market-cap. The sale of 20% of Metro’s loan portfolio also removes Metro’s need to issue expensive MREL debt versus its prior debt guidance issuance of between GBP 200-300 mn. 

*Don’t Be Fooled: Citigroup (C.US) [Citi] reported 3Q20 earnings of USD 3.2 bn (EPS of USD 1.40) – increasing USD 1.9 bn (145.4%) on a linked quarter basis and coming in well head of consensus of USD 0.89 per share. Core operating results were even more impressive at Citi, improving USD 2.3 bn or 3.6x linked quarter. Citi cut its loss provisioning effort by USD 5.6 bn (71.4%) during the period despite net new NPLs remaining on an aggressive upswing;*Getting Squeezed From Every Angle: Citi’s operating revenues declined driven by both the decline in principal transactions revenue of USD 1.6 bn (39.7%) and NIM pressures. Expenses were problematic for Citi as well, increasing USD 589 mn (5.7%) over the same period and pushed its C&amp;I ratio higher by 10.1% to 64.4%; and  *Consent Order: On October 7, 2020, Citi announced a Consent Order with the Federal Reserve Bank of New York  and the Office of the Comptroller to take action to improve its risk management, data governance, and internal controls. There was also a USD 400 mn penalty.

*Don’t Be Fooled: Citigroup (C.US) [Citi] reported 3Q20 earnings of USD 3.2 bn (EPS of USD 1.40) – increasing USD 1.9 bn (145.4%) on a linked quarter basis and coming in well head of consensus of USD 0.89 per share. Core operating results were even more impressive at Citi, improving USD 2.3 bn or 3.6x linked quarter. Citi cut its loss provisioning effort by USD 5.6 bn (71.4%) during the period despite net new NPLs remaining on an aggressive upswing;*Getting Squeezed From Every Angle: Citi’s operating revenues declined driven by both the decline in principal transactions revenue of USD 1.6 bn (39.7%) and NIM pressures. Expenses were problematic for Citi as well, increasing USD 589 mn (5.7%) over the same period and pushed its C&amp;I ratio higher by 10.1% to 64.4%; and  *Consent Order: On October 7, 2020, Citi announced a Consent Order with the Federal Reserve Bank of New York  and the Office of the Comptroller to take action to improve its risk management, data governance, and internal controls. There was also a USD 400 mn penalty.

United Kingdom

Standard Chartered PLC is an international banking group operating principally in Asia, Africa, and the Middle East. The Company offers its products and services in the personal, consumer, corporate, institutional and treasury areas.

Barclays PLC is a global financial services provider engaged in retail banking, credit cards, wholesale banking, investment banking, wealth management and investment management services.

Lloyds Banking Group plc, through subsidiaries and associated companies, offers a range of banking and financial services. The Company provides retail banking, mortgages, pensions, asset management, insurance services, corporate banking, and treasury services.

NatWest Group plc operates as a banking and financial services company. The Bank provides personal and business banking, consumer loans, asset and invoice finances, commercial and residential mortgages, credit cards, and financial planning services, as well as life, personal, and income protection insurance. NatWest Group serves clients worldwide.

Barclays PLC is a global financial services provider engaged in retail banking, credit cards, wholesale banking, investment banking, wealth management, and investment management services.

Bank of Georgia Group PLC operates as a bank. The Bank services includes retail banking and payment services, corporate and investment banking, and wealth management operations solutions. Bank of Georgia Group serves customers in the United Kingdom, Belarus, and Georgia.

Metro Bank PLC provides a full range of commercial banking services for retail and institutional customers. The Bank offers services such as current accounts, mortgages, safe deposit boxes, cash management, private banking, and debit and credit cards. Metro Bank conducts its business in the United Kingdom.

Secure Trust Bank PLC accepts deposits and offers retail banking services.  The Company offers automobile and retail point of sale financing, and personal unsecured lending.

Arbuthnot Banking Group PLC, together with its subsidiaries, provides various banking and financial products and services in the United Kingdom. It operates through three segments: Retail Banking, UK Private banking, and Group Centre. The company provides private banking services, such as current accounts, deposit accounts, loans, overdrafts, and foreign exchange services; wealth planning services comprising estate and tax planning, pensions, and wealth preservation and generation; and discretionary investment management services, including asset management and developing tailored investment strategies. It also offers retail banking products and services, such as savings and current accounts; consumer finance products in motor finance, retail finance, and unsecured personal lending areas; and SME?s funding for asset finance, invoice finance, and real estate finance. In addition, the company offers commercial banking services comprising financing and cash transaction requirements of SMEs, as well as household cash management and insurance services. Further, the company offers leasing, debt collection, and property rental and management services. Arbuthnot Banking Group PLC was founded in 1833 and is headquartered in London, the United Kingdom.

Hang Seng Bank Limited and its subsidiaries provide banking and related financial services.

United Overseas Bank Limited provides a wide range of financial services including personal financial services, wealth management, private banking, commercial and corporate banking, transaction banking, investment banking, corporate finance, capital market activities, treasury services, futures broking, asset management, venture capital management and insurance.

Oversea-Chinese Banking Corporation Limited offers a comprehensive range of financial services.  The Company's services include deposit-taking, corporate, enterprise and personal lending, international trade financing, investment banking, private banking, treasury, stockbroking, insurance, credit cards, cash management, asset management and other financial and related services.

Kotak Mahindra Bank Limited is a full service commercial bank. The Bank offers a wide range of products and services such as personal, commercial, and corporate banking services, including deposit accounts, loans, and investments. Kotak Mahindra Bank serves customers in India.

Fifth Third Bancorp is a diversified financial services company that operates banking centers in the Midwestern and Southeastern regions of the United States. The Company's principal businesses include retail banking, commercial banking, investment advisory, and data processing.

BOC Hong Kong (Holdings) Limited provides a comprehensive range of financial products and services to retail and corporate customers.  Its products include retail banking, corporate banking, and treasury services.  The Company operates its branches in Hong Kong and China.

PT Bank Mandiri (Persero) Tbk is formed by the merger of four state-owned banks, namely Pt Bank Bumi Daya, PT Bank Dagang Negara, PT Bank Ekspor Import Indonesia (Bank Exim), PT Bank Pembangunan Indonesia (Bank Bapindo). The Bank operates in the commercial banking services.

PT Bank Rakyat Indonesia (Persero) Tbk provides commercial banking activities and its related services. The Bank also provides banking activities based on shariah principles.

Malayan Banking Berhad operates as a bank. The Company provides financial services such as insurance, asset management, stock broking, nominee services, venture capital, leasing, and Internet banking. Malayan Banking Berhad serves customers in South East Asia.

Ping An Bank Co Ltd provides a full range of commercial banking services including RMB and foreign currency deposit, loan, international and domestic settlement, discount, currency trading, letter of credit, bank guarantee, and other related services.

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NatWest Group (NWG LN)

Stick With Energy and Financials

Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward. Attractive Sectors include Energy and...

Vermilion Research

COP26: U.N. Climate Conference to Address Mitigation, Financing, and Carbon Pricing

Over the next two weeks, world leaders and Greta Thunberg will decide our fate. Dramatic perhaps, but not overly. The COP26 climate conference will...

Kyle Rudden

HSBC Holdings Plc – Head Still Buried In The Sand

HSBC HOLDINGS: A competitor call with management centered on benign Hong Kong/Asia. The Group aim is a CET1 of 14-14.5%. No mention HSBC North...

Thomas J. Monaco

Metro Bank Plc – Emrys

METRO BANK PLC: Metro was the first de novo high street bank in the United Kingdom in over 150 years. Metro ran into some difficulties, and moved...

Thomas J. Monaco

Citigroup – Watch The Negative Jaws

CITIGROUP: Investors Shouldn't Be Fooled By The EPS Beat Led By A Massive Pre-emptive Provision Cut. Bank Has Negative Operating Jaws, Worsening...

Thomas J. Monaco

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