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

Yesterday’s break below 3425 short-term support in the S&amp;P 500 opens the door for potential visits to 3325 and 3200, two important support levels we are watching moving forward. With that said, as long as 3200 holds (the September lows) we are constructive and would be buyers on a pullback. At the same time, small-caps are providing a risk-on signal with the Russell 2000 (IWM) still holding above $159 short-term support. Leadership from small-caps is something we would expect to see in a broad-based bull market, and if IWM is above $159 it is hard to get too bearish overall.

Yesterday’s break below 3425 short-term support in the S&amp;P 500 opens the door for potential visits to 3325 and 3200, two important support levels we are watching moving forward. With that said, as long as 3200 holds (the September lows) we are constructive and would be buyers on a pullback. At the same time, small-caps are providing a risk-on signal with the Russell 2000 (IWM) still holding above $159 short-term support. Leadership from small-caps is something we would expect to see in a broad-based bull market, and if IWM is above $159 it is hard to get too bearish overall.

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

FTSE China A50 Index / Technical Analysis

Base case calls for buying US equities at sub DJI 28k, SPX 3,410 and NDX 11,600-500 while allowing for some noise to base and stage a fresh up cycle. Do not want to trade for any length of time below SPX 3,400 to hold longs. Asia long levels on a dip given odds the US ranges into the election barring a stimulus package announcement.Europe remains weak with a bias to short rally attempts as the short pair/long US.In Asia we have liked being long A shares, Australia, H shares and now see potential to work into a long in the Philippines. Top shorts are HSI, STI, KLSE. Taiwan and Korea are transitioning into the bull camp on a pullback to position for a break above key highs with new high projections noted.

Base case calls for buying US equities at sub DJI 28k, SPX 3,410 and NDX 11,600-500 while allowing for some noise to base and stage a fresh up cycle. Do not want to trade for any length of time below SPX 3,400 to hold longs. Asia long levels on a dip given odds the US ranges into the election barring a stimulus package announcement.Europe remains weak with a bias to short rally attempts as the short pair/long US.In Asia we have liked being long A shares, Australia, H shares and now see potential to work into a long in the Philippines. Top shorts are HSI, STI, KLSE. Taiwan and Korea are transitioning into the bull camp on a pullback to position for a break above key highs with new high projections noted.

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

Macroeconomics

The better-than-expected performance of the US economy since the fiscal cliff raises an issue as to whether the Federal Open Market Committee (FOMC) has been too pessimistic in their assessment of the economic outlook. Different dynamics have unfolded since the arrival of the COVID-19 pandemic to those envisaged by the FOMC.
US households deployed stimulus payments to repair balance sheets during Q2, and could repeat the process if more fiscal easing is introduced. The decline in households' net worth during the COVID-19 recession was short-lived in stark contrast to the protracted period experienced in the aftermath of the Great Recession, thereby sowing the seeds for a faster economic recovery in 2020 H2.
Repeated calls by Chair Powell for further fiscal stimulus have resulted in some commentators to claim the Fed has embraced so-called Modern Monetary Theory (MMT), whereby policy settings are dictated by the fiscal stance embraced by the government. Chair Powell believes easier fiscal and monetary policies will reduce downside risks for the economy, while there are currently limited negative consequences for excessive stimulus.
Hard-core advocates of MMT claim there is little risk of inflation due to the ever-present threat of higher taxes, thereby implying that bond yields should not be too adversely affected by rising inflationary expectations.  Under MMT, the Fed would aim to cap a dangerous rise in long-term interest rates via yield curve control, something which has yet to happen in 2020. 
The arrival of large federal budget surpluses in the late-1990s raised the spectre of a shrinking supply of Treasuries onto the open-market, thereby incurring implications for the equity risk premium and US equity valuations. Current US equity dynamics are similar to the late-1990s, but, despite large federal budget deficits, quantitative easing has succeeded in reducing the supply of Treasuries, thereby forcing investors into riskier assets due to lower-expected returns on risk-free instruments.

The better-than-expected performance of the US economy since the fiscal cliff raises an issue as to whether the Federal Open Market Committee (FOMC) has been too pessimistic in their assessment of the economic outlook. Different dynamics have unfolded since the arrival of the COVID-19 pandemic to those envisaged by the FOMC.
US households deployed stimulus payments to repair balance sheets during Q2, and could repeat the process if more fiscal easing is introduced. The decline in households' net worth during the COVID-19 recession was short-lived in stark contrast to the protracted period experienced in the aftermath of the Great Recession, thereby sowing the seeds for a faster economic recovery in 2020 H2.
Repeated calls by Chair Powell for further fiscal stimulus have resulted in some commentators to claim the Fed has embraced so-called Modern Monetary Theory (MMT), whereby policy settings are dictated by the fiscal stance embraced by the government. Chair Powell believes easier fiscal and monetary policies will reduce downside risks for the economy, while there are currently limited negative consequences for excessive stimulus.
Hard-core advocates of MMT claim there is little risk of inflation due to the ever-present threat of higher taxes, thereby implying that bond yields should not be too adversely affected by rising inflationary expectations.  Under MMT, the Fed would aim to cap a dangerous rise in long-term interest rates via yield curve control, something which has yet to happen in 2020. 
The arrival of large federal budget surpluses in the late-1990s raised the spectre of a shrinking supply of Treasuries onto the open-market, thereby incurring implications for the equity risk premium and US equity valuations. Current US equity dynamics are similar to the late-1990s, but, despite large federal budget deficits, quantitative easing has succeeded in reducing the supply of Treasuries, thereby forcing investors into riskier assets due to lower-expected returns on risk-free instruments.    

Has the Fed Embraced Modern Monetary Theory? Calls for Fiscal Backup Despite Economic Resilience

The S&amp;P 500, Nasdaq 100, and Russell 2000 are all holding above their respective short-term support levels and market dynamics remain positive. As a result, our outlook remains bullish and we continue to believe a “buy the dip” mentality is warranted. In today’s report we highlight attractive Groups and stocks within Services, Transportation, &amp; Utilities: Construction &amp; Engineering, Large-Cap, Auctions, Vehicle Rentals/Leasing, Electric, Southwest

The S&amp;P 500, Nasdaq 100, and Russell 2000 are all holding above their respective short-term support levels and market dynamics remain positive. As a result, our outlook remains bullish and we continue to believe a “buy the dip” mentality is warranted. In today’s report we highlight attractive Groups and stocks within Services, Transportation, &amp; Utilities: Construction &amp; Engineering, Large-Cap, Auctions, Vehicle Rentals/Leasing, Electric, Southwest

U. S. Equity Strategy: Upgrading Utilities; Downgrading Communications

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

A Deep (big) Blue Wave will be bad for markets, empowering the Democratic left which will pursue an inflationary strategy that hurts equities. Despite Biden's seemingly widening lead in the polls, the likeliest outcome is a narrow presidential win and a Light Blue Wave, which obliges the Democratic Congress to hew to the centre (Biden's preference). After an initial sell-off amid uncertainty in November, a Light Blue Wave will be good for equities, bad for bonds as the yield curve steepens and growth prospects improve into 2021.  President Trump's Covid-positive diagnosis, and his subsequent behaviour in and upon leaving the Walter Reed military hospital, did not help his poll numbers. Instead, the undecided or swing voters have begun tilting toward Biden, raising the increased possibility of a "blue wave", with the Democrats winning the Presidency, Senate and the House, hence ending divided government. Biden's current national lead is 9.4 percentage points (3.6pp ahead of where Hillary Clinton was at this stage in 2016), and Biden leads in all the swing states (albeit narrowly in Ohio and Florida). Last week's rival townhalls also saw slightly higher viewership for the sedate and wonkish Biden than the always-colourful Trump. The bigger the Blue Wave, however, the worse for markets. A big Blue Wave will hand the initiative to the left of the Democratic Party, enabling more of the Green New Deal to be enacted, and for legislators to push for aspects of the Medicare for All proposals. And the Democrats would also seek to "pack the Supreme Court" (i.e., expand it beyond 9 members). Despite Biden's promised tax increases, such an agenda will be severely negative for markets and the economy -- likely resulting in a big Republican backlash in the 2022 mid-term Congressional election. The greater the Blue Wave, the more negative we would be about the outcome for markets (especially equities). However, the likelier outcome is a soft Blue Wave, i.e., with the Democrats winning no more than 51 seats in the Senate, and a narrow victory for Biden in the Electoral College. If that is the outcome, November will be a month of uncertainty and chaos, with a substantial sell-off in markets. But thereafter, once the electoral outcomes are clear, the narrow Senate majority (with the Class of 2020 dominated by moderate/centrist Democrats) will curtail any thoughts of a radical leftward shift. It would instead provide the ideal ground for a President Biden to govern from the centre -- in keeping with his natural instinct. Taxes on corporates and the top 1% of personal-income earners will rise sharply, but the moderate agenda will see enhanced spending on infrastructure, subsidies for green-technology, and a mild expansion/reform of Obamacare. While the program will be moderately inflationary (resulting in Fed Funds rates rising by mid-2021), it will be good for the economy and equities after the November sell-off. On a 3-6 month view, we would recommend switching from bonds to equities by the end of November.

A Deep (big) Blue Wave will be bad for markets, empowering the Democratic left which will pursue an inflationary strategy that hurts equities. Despite Biden's seemingly widening lead in the polls, the likeliest outcome is a narrow presidential win and a Light Blue Wave, which obliges the Democratic Congress to hew to the centre (Biden's preference). After an initial sell-off amid uncertainty in November, a Light Blue Wave will be good for equities, bad for bonds as the yield curve steepens and growth prospects improve into 2021.  President Trump's Covid-positive diagnosis, and his subsequent behaviour in and upon leaving the Walter Reed military hospital, did not help his poll numbers. Instead, the undecided or swing voters have begun tilting toward Biden, raising the increased possibility of a "blue wave", with the Democrats winning the Presidency, Senate and the House, hence ending divided government. Biden's current national lead is 9.4 percentage points (3.6pp ahead of where Hillary Clinton was at this stage in 2016), and Biden leads in all the swing states (albeit narrowly in Ohio and Florida). Last week's rival townhalls also saw slightly higher viewership for the sedate and wonkish Biden than the always-colourful Trump. The bigger the Blue Wave, however, the worse for markets. A big Blue Wave will hand the initiative to the left of the Democratic Party, enabling more of the Green New Deal to be enacted, and for legislators to push for aspects of the Medicare for All proposals. And the Democrats would also seek to "pack the Supreme Court" (i.e., expand it beyond 9 members). Despite Biden's promised tax increases, such an agenda will be severely negative for markets and the economy -- likely resulting in a big Republican backlash in the 2022 mid-term Congressional election. The greater the Blue Wave, the more negative we would be about the outcome for markets (especially equities). However, the likelier outcome is a soft Blue Wave, i.e., with the Democrats winning no more than 51 seats in the Senate, and a narrow victory for Biden in the Electoral College. If that is the outcome, November will be a month of uncertainty and chaos, with a substantial sell-off in markets. But thereafter, once the electoral outcomes are clear, the narrow Senate majority (with the Class of 2020 dominated by moderate/centrist Democrats) will curtail any thoughts of a radical leftward shift. It would instead provide the ideal ground for a President Biden to govern from the centre -- in keeping with his natural instinct. Taxes on corporates and the top 1% of personal-income earners will rise sharply, but the moderate agenda will see enhanced spending on infrastructure, subsidies for green-technology, and a mild expansion/reform of Obamacare. While the program will be moderately inflationary (resulting in Fed Funds rates rising by mid-2021), it will be good for the economy and equities after the November sell-off. On a 3-6 month view, we would recommend switching from bonds to equities by the end of November. 

A "Blue Wave" Is Better than the Worst Outcome, but Won't Be Great for Markets

United States

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

S&P 500 INDEX (SPX INDEX)

U.S. Market Sending Mixed Signals

In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Materials, Health Care, & Services

Vermilion Research

US, China and Asian Bullish Bets

Base case calls for buying US equities at sub DJI 28k, SPX 3,410 and NDX 11,600-500 while allowing for some noise to base and working into larger...

Thomas Schroeder

Has the Fed Embraced Modern Monetary Theory? Calls for Fiscal Backup Despite Economic Resilience

The Fed's repeated calls for more fiscal stimulus to mitigate downside economic risks has the hallmarks Modern Monetary Theory (MMT). If true,...

DeSaque Macro Research

U. S. Equity Strategy: Upgrading Utilities; Downgrading Communications

We are upgrading Utilities and downgrading Communications. We recap important technical levels across major indexes and share actionable ideas...

Vermilion Research

A "Blue Wave" Is Better than the Worst Outcome, but Won't Be Great for Markets

A big Blue Wave will be bad for markets, empowering the left's radical agenda. But the likelier outcome is a light Blue Wave, with 50-51 Dem...

Prasenjit K. Basu