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

Heightened trade tensions have caused global equities to move from resistance to support in a matter of days. Additional consolidation - i.e., no breakdowns - on the broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) remains the most likely scenario. At the same time, new cracks are beginning to show and as a result we believe global equities are vulnerable to a breakdown.  Along with a recap of important technical levels across major markets, we flip through several attractive Groups and stocks within Advertising, retail, restaurants, and travel, which offer attractive pullback opportunities.

Heightened trade tensions have caused global equities to move from resistance to support in a matter of days. Additional consolidation - i.e., no breakdowns - on the broad global indexes (MSCI ACWI, ACWI ex-US, EAFE, and EM) remains the most likely scenario. At the same time, new cracks are beginning to show and as a result we believe global equities are vulnerable to a breakdown.  Along with a recap of important technical levels across major markets, we flip through several attractive Groups and stocks within Advertising, retail, restaurants, and travel, which offer attractive pullback opportunities.

Global Equity Strategy: Another Test of Support

Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>UK GDP disappointed expectations in June as output was flat on the month. Together with downward revisions, output contracted by 0.2% q-o-q in 2Q19.</li>
<li>A similar underlying spread above the surveys was maintained, and I still forecast growth of 0.3% q-o-q in 3Q19. The outlook beyond that bifurcates around Brexit.</li>
</ul>


UK GDP disappointed expectations in June as output was flat on the month. Together with downward revisions, output contracted by 0.2% q-o-q in 2Q19.
A similar underlying spread above the surveys was maintained, and I still forecast growth of 0.3% q-o-q in 3Q19. The outlook beyond that bifurcates around Brexit.


UK: GDP Contraction Before Brexit Bifurcation

<ul>
<li>The UK’s outlook remains bimodal around Brexit, with shifting probabilities driving market pricing. As the BoE assumes a deal, it has now attempted to adjust for the inconsistent assumptions, with a need to raise rates still shown.</li>
<li>I assume the UK leaves the EU without a deal, which would cause a different set of shocks to those the BoE showed in its Aug-19 Inflation Report. This publication also includes my forecasts for both scenarios until end-2021.</li>
</ul>


The UK’s outlook remains bimodal around Brexit, with shifting probabilities driving market pricing. As the BoE assumes a deal, it has now attempted to adjust for the inconsistent assumptions, with a need to raise rates still shown.
I assume the UK leaves the EU without a deal, which would cause a different set of shocks to those the BoE showed in its Aug-19 Inflation Report. This publication also includes my forecasts for both scenarios until end-2021.


<ul>
<li>The services PMI exceeded expectations in Jul-19 as it increased by 1.2 to 51.4. That is towards the top of the range achieved since Brexit uncertainty intensified almost a year ago, biasing the survey down in the process.</li>
<li>Other sectoral PMIs are weaker, but the official GDP data now look likely to avoid the small fall implied here. I expect 0.0% q-o-q in 2Q19 before activity improves in Q3, although a no-deal Brexit could blow the UK off-course beyond that.</li>
</ul>


The services PMI exceeded expectations in Jul-19 as it increased by 1.2 to 51.4. That is towards the top of the range achieved since Brexit uncertainty intensified almost a year ago, biasing the survey down in the process.
Other sectoral PMIs are weaker, but the official GDP data now look likely to avoid the small fall implied here. I expect 0.0% q-o-q in 2Q19 before activity improves in Q3, although a no-deal Brexit could blow the UK off-course beyond that.


UK: Jul-19 Surveys Still in Gloomy Ranges

<ul>
<li>The MPC was unanimous in leaving policy unchanged again in Aug-19, as expected.</li>
<li>Further monetary stimulus from markets pricing risk of no-deal provided a significant increase in forecast excesses. Adjusting for the effect of a smooth deal on market prices leads the MPC to still signal rate hikes as appropriate. </li>
<li>Policy changes in a no-deal scenario will depend on the specific balance of shocks, so the Bank still describes its response as not automatic. I maintain my baseline forecast for a 50bp rate cut in Jan-20 following a no-deal Brexit.</li>
</ul>


The MPC was unanimous in leaving policy unchanged again in Aug-19, as expected.
Further monetary stimulus from markets pricing risk of no-deal provided a significant increase in forecast excesses. Adjusting for the effect of a smooth deal on market prices leads the MPC to still signal rate hikes as appropriate. 
Policy changes in a no-deal scenario will depend on the specific balance of shocks, so the Bank still describes its response as not automatic. I maintain my baseline forecast for a 50bp rate cut in Jan-20 following a no-deal Brexit.


BoE: Still Hawkish in Smooth Brexit Scenario

United Kingdom

SPDR FTSE UK All Share ETF is an open ended, UCITS IV compliant exchange traded fund, domiciled in Ireland. The fund's objective is to track the performance of FTSE All Share Index. The Fund invests in physical securities in the index.

SPDR FTSE UK All Share (FTAL LN)

Global Equity Strategy: Another Test of Support

Heightened trade tensions have caused global equities to move from resistance to support in a matter of days. Additional consolidation - i.e., no...

Vermilion Research

UK: GDP Contraction Before Brexit Bifurcation

UK GDP disappointed expectations in June as output was flat on the month. Together with downward revisions, output contracted by 0.2% q-o-q in...

Phil Rush

Brexit: Bimodal Forecasts and the BoE

The UK’s outlook remains bimodal around Brexit, with shifting probabilities driving market pricing. As the BoE assumes a deal, it has now...

Phil Rush

UK: Jul-19 Surveys Still in Gloomy Ranges

The services PMI exceeded expectations in Jul-19 as it increased by 1.2 to 51.4. That is towards the top of the range achieved since Brexit...

Phil Rush

BoE: Still Hawkish in Smooth Brexit Scenario

The MPC was unanimous in leaving policy unchanged again in Aug-19, as expected. Further monetary stimulus from markets pricing risk of no-deal...

Phil Rush