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

Shanghai Stock Exchange Composite Index / Technical Analysis

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

Wisdomtree Japan Hedged Eq / Technical Analysis

Market dynamics continue to send mixed signals, but the bottom line is that not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Additionally, the MSCI ACWI, ACWI ex-US, and EAFE indexes all remain above critical support levels. Until supports start to break we cannot be bearish. It is also worth noting that various indicators could be making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a potential false breakdown in crude oil, and high yield spreads leveling-out.

Market dynamics continue to send mixed signals, but the bottom line is that not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Additionally, the MSCI ACWI, ACWI ex-US, and EAFE indexes all remain above critical support levels. Until supports start to break we cannot be bearish. It is also worth noting that various indicators could be making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a potential false breakdown in crude oil, and high yield spreads leveling-out.

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Mizuho Financial Group / Equity Bottom-Up

On Monday 23 August, Mizuho Bank suffered its 6th systems failure so far this year.  This time, some 130 of its around 5,300 ATMs stopped working for about an hour just after noon.  This comes in the wake of last Friday’s débâcle, when the bank opened its doors for business at 09:00am but none of the computer terminals at its counters nationwide would function properly.  Are these repeated systems failures simply a hardware problem, a software problem, or is the fundamental problem a more human one?
While management searches for solutions, and the inevitable finger-pointing continues, the bank’s reputation erodes.  The damage to the share price of parent company Mizuho Financial Group (8411 JP) has so far been comparatively light, but for how much longer?  MHFG has markedly underperformed its two megabank rivals <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> and <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-group-inc" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial Group (8316 JP)</a> so far this year in a rising market, with its stock price up just +6.5% YoY against MUFG’s +34.6% and SMFG’s +21.3%, respectively.  Foreign investors still own in aggregate over 22% of MHFG’s stock, but their patience is being sorely tested.  Further revelations of systems mishaps, or punitive actions by the FSA against MHFG, may well lead to a swift exit by some shareholders; a sell-off cannot be ruled out.
Caveat Emptor! (May the Buyer Beware!) remains our advice to would-be investors in this enormous but highly volatile banking group.

On Monday 23 August, Mizuho Bank suffered its 6th systems failure so far this year.  This time, some 130 of its around 5,300 ATMs stopped working for about an hour just after noon.  This comes in the wake of last Friday’s débâcle, when the bank opened its doors for business at 09:00am but none of the computer terminals at its counters nationwide would function properly.  Are these repeated systems failures simply a hardware problem, a software problem, or is the fundamental problem a more human one?
While management searches for solutions, and the inevitable finger-pointing continues, the bank’s reputation erodes.  The damage to the share price of parent company Mizuho Financial Group (8411 JP) has so far been comparatively light, but for how much longer?  MHFG has markedly underperformed its two megabank rivals Mitsubishi UFJ Financial (MUFG) (8306 JP) and Sumitomo Mitsui Financial Group (8316 JP) so far this year in a rising market, with its stock price up just +6.5% YoY against MUFG’s +34.6% and SMFG’s +21.3%, respectively.  Foreign investors still own in aggregate over 22% of MHFG’s stock, but their patience is being sorely tested.  Further revelations of systems mishaps, or punitive actions by the FSA against MHFG, may well lead to a swift exit by some shareholders; a sell-off cannot be ruled out.
Caveat Emptor! (May the Buyer Beware!) remains our advice to would-be investors in this enormous but highly volatile banking group.

Mizuho Financial Group (8411 JP):  Systemic Failures - A Human Factor?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Nomura Research Institute / Equity Bottom-Up

On 21 June 2021, <a href="https://www.smartkarma.com/entities/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute Ltd (4307 JP)</a> announced (<a href="https://ir.nri.com/jp/ir/news/auto_20210621452515/pdfFile.pdf" target="_blank" rel="noopener">link</a>) a buyback program of up to 20,000,000 shares (3.30% of shares out) spending up to ¥60 billion, with the program running from 22 June 2021 to 30 December 2021, with possible buying on market and on ToSTNeT-3, but excluding dates in the 10 days around the day after the quarterly results announcements. The company ALSO announced a ToSTNeT-3 buyback tomorrow morning for up to 16,925,200 shares at today's closing price of ¥3,545/share. That 16.925mm shares at that price = ¥59,999,834,000 so one can assume that if the ToSTNeT-3 buyback is completed to the full extent, that will mean the buyback program will be done tomorrow before the market opens.The announcement suggested that <a href="https://www.smartkarma.com/entities/nomura-holdings-inc" target="_blank" data-smartkarma-citation="entities:742:1" rel="noopener">Nomura Holdings (8604 JP)</a> intended to sell as many as 14.105 million shares in the buyback leaving 2.815mm shares for other holders if they want to sell Monday's close. But I remind readers that a) short selling is allowed, and b) it is entirely pro rata (with some niggling little procedural exceptions) so if people stepped in to sell, they would probably get a decent portion of their offer sold at that price. More below the fold.

On 21 June 2021, Nomura Research Institute Ltd (4307 JP) announced (link) a buyback program of up to 20,000,000 shares (3.30% of shares out) spending up to ¥60 billion, with the program running from 22 June 2021 to 30 December 2021, with possible buying on market and on ToSTNeT-3, but excluding dates in the 10 days around the day after the quarterly results announcements. The company ALSO announced a ToSTNeT-3 buyback tomorrow morning for up to 16,925,200 shares at today's closing price of ¥3,545/share. That 16.925mm shares at that price = ¥59,999,834,000 so one can assume that if the ToSTNeT-3 buyback is completed to the full extent, that will mean the buyback program will be done tomorrow before the market opens.The announcement suggested that Nomura Holdings (8604 JP) intended to sell as many as 14.105 million shares in the buyback leaving 2.815mm shares for other holders if they want to sell Monday's close. But I remind readers that a) short selling is allowed, and b) it is entirely pro rata (with some niggling little procedural exceptions) so if people stepped in to sell, they would probably get a decent portion of their offer sold at that price. More below the fold. 

Nomura Research Institute ToSTNeT-3 Buyback

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

It is mid-late April. That means it is time for my annual NTT Earnings Could Surprise To The Upside Because the Street Is Too Slack insight.Just over 6 months ago, <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> announced a deal to take <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a> private, spending nearly US$40bn to buy out minorities. I thought they paid too much for it, but given the purchase was entirely funded by debt, and they bought the remainder of NTT DoCoMo at a 5% earnings yield and a 6+% cashflow yield, and borrowed money at less than 1%, this is a pretty "easy" thing to accept as a shareholder but for whatever reason, NTT shares dipped after the purchase. Perhaps some thought there would be an equity offering but investors had to know that was nigh impossible as the NTT Law requires the government to hold one third of the shares and there is no way that the government was going to pony up to buy more NTT shares.But investors and Street analysts seemed to have ignored the major effect of the purchase. And we discussed that at the time. That meant an additional ¥200bn in annual net income to NTT shareholders. Six months later, the Street has almost caught up. Now what?

It is mid-late April. That means it is time for my annual NTT Earnings Could Surprise To The Upside Because the Street Is Too Slack insight.Just over 6 months ago, NTT (Nippon Telegraph &amp; Telephone) (9432 JP) announced a deal to take NTT Docomo Inc (9437 JP) private, spending nearly US$40bn to buy out minorities. I thought they paid too much for it, but given the purchase was entirely funded by debt, and they bought the remainder of NTT DoCoMo at a 5% earnings yield and a 6+% cashflow yield, and borrowed money at less than 1%, this is a pretty "easy" thing to accept as a shareholder but for whatever reason, NTT shares dipped after the purchase. Perhaps some thought there would be an equity offering but investors had to know that was nigh impossible as the NTT Law requires the government to hold one third of the shares and there is no way that the government was going to pony up to buy more NTT shares.But investors and Street analysts seemed to have ignored the major effect of the purchase. And we discussed that at the time. That meant an additional ¥200bn in annual net income to NTT shareholders. Six months later, the Street has almost caught up. Now what?

NTT 2022 Consensus Has *almost* Caught Up To Pro-Forma - But It's Still Probably Low

Japan

NTT Data Corporation mainly provides large scale system integration and networking system services. System integration involves data transmission system design, sales, leasing, and services.  Network System Services include internet related and linked computer networks, and data provision and management of data. The Company is a subsidiary of Nippon Telegraph & Telephone Corporation.

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NTT Data Corp (9613 JP)

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs...

Vermilion Research

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Various indicators are making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a false breakdown in...

Vermilion Research

Mizuho Financial Group (8411 JP): Systemic Failures - A Human Factor?

Mizuho Bank has now had 6 systems failures so far this year. Are these repeated systems failures simply a hardware problem, a software problem, or...

J. Brian Waterhouse

Nomura Research Institute ToSTNeT-3 Buyback

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a PRE-OPEN ToSTNeT-3 buyback...

Travis Lundy

NTT 2022 Consensus Has almost Caught Up To Pro-Forma - But It's Still Probably Low

NTT Street Consensus for FY21-23 should have had a jump shift at the end of September last year. It did not. It slowly drifted higher. I expect a...

Travis Lundy

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Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs...

Vermilion Research

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Various indicators are making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a false breakdown in...

Vermilion Research

Mizuho Financial Group (8411 JP): Systemic Failures - A Human Factor?

Mizuho Bank has now had 6 systems failures so far this year. Are these repeated systems failures simply a hardware problem, a software problem, or...

J. Brian Waterhouse

Nomura Research Institute ToSTNeT-3 Buyback

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a *PRE-OPEN* ToSTNeT-3 buyback...

Travis Lundy

NTT 2022 Consensus Has *almost* Caught Up To Pro-Forma - But It's Still Probably Low

NTT Street Consensus for FY21-23 should have had a jump shift at the end of September last year. It did not. It slowly drifted higher. I expect a...

Travis Lundy

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a PRE-OPEN ToSTNeT-3 buyback...

NTT 2022 Consensus Has almost Caught Up To Pro-Forma - But It's Still Probably Low