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Chart of the Week – EuroZone Banks
Every asset class remains in the black in 2019 helped by
monetary supports;
November 26, 2019 2
2019 Total Return Performances
EuroZone Banks have lagged considerably over the
past decade and need to rebound further to help the
broader index catch up with the S&P.
US investors are already increasing their exposure to
Europe in global equity mandates.
Though banks fundamentals remain weak, the mere
removal of headwinds (regulations, low rates, slowing
economy…) could trigger a rotation into the sector
Please see our upcoming special report for an overview
of the sector.
EuroStoxx Banks – Monthly
Equity Indices Value
North America
Dow Jones 27'876 22.2% 22.2% 27.2%
S&P 500 3'110 26.3% 26.3% 31.5%
Nasdaq 100 8'272 32.0% 32.0% 37.4%
Europe
EuroStoxx 50 3'703 27.8% 22.7% 27.8%
Stoxx 600 407 24.9% 20.0% 24.9%
FTSE 7'391 14.6% 15.7% 20.5%
SMI 10'439 28.0% 25.8% 31.2%
DAX 13'222 25.2% 20.2% 25.2%
CAC 5'917 29.0% 23.9% 29.0%
MIB 23'445 33.4% 28.1% 33.4%
IBEX 9'316 13.1% 8.6% 13.1%
Asia & Emergings
Nikkei 23'293 18.7% 19.5% 24.6%
HSCEI 10'629 8.9% 9.0% 13.6%
S&P China 545 12.4% 12.4% 7.9%
Kospi 282 8.6% 2.9% 6.8%
TAIEX 11'562 23.9% 24.1% 29.3%
IBOV 108'692 23.7% 14.6% 19.2%
Nifty 12'074 12.6% 9.3% 13.8%
Russian RTS 1'455 45.3% 45.3% 39.6%
MSCI EM ($) 42.87 10.6% 10.6% 15.1%
MSCI World ($) 2'274 23.6% 23.6% 28.7%
% Total Return USD % TR EUR % TR
Short term, European Banks are trading in an upward
channel between 87 and 100.
The broader EuroStoxx remains strong and is hovering
around its 3’700 resistance.
Short term, we expect a pullback to at least the previous
resistance level at 3’650 but on a monthly basis, the
EuroStoxx has confirmed its breakout and should catch
up further with the US.
European Equities
November 26, 2019 3
EuroStoxx – MonthlyEuroStoxx – Daily
EuroStoxx Banks - Daily
Asset Classes – Performance per Year
November 26, 2019 4
2018 -2019 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
US Equities S&P 500 20.8% 26.3% -4.4% 21.8% 12.0% 1.4% 13.7% 32.4% 16.0% 2.1% 15.1% 26.4% -37.0% 5.6%
Russell 2000 6.1% 19.3% -11.0% 14.6% 21.3% -4.4% 4.9% 38.8% 16.4% -4.2% 26.8% 27.1% -33.8% -1.6%
NASDAQ 100 32.0% 32.0% 0.0% 33.0% 7.3% 9.8% 19.4% 36.9% 18.3% 3.6% 20.1% 54.6% -41.6% 19.2%
Global Equities MSCI World 13.5% 23.6% -8.2% 23.1% 8.2% -0.3% 5.6% 27.4% 16.6% -5.0% 12.4% 30.9% -40.3% 9.7%
MSCI ACWI 11.2% 22.1% -8.9% 24.7% 8.5% -1.8% 4.8% 23.5% 16.8% -6.8% 13.3% 35.5% -41.8% 12.3%
EuroStoxx 50 13.3% 27.8% -11.3% 9.9% 4.8% 7.3% 4.9% 22.7% 19.6% -13.1% -1.8% 27.0% -41.8% 10.4%
Stoxx 600 12.1% 24.9% -10.3% 11.2% 2.4% 10.1% 7.8% 21.4% 18.9% -8.0% 12.3% 33.4% -43.4% 2.9%
FTSE 100 4.6% 14.6% -8.8% 12.0% 19.2% -1.3% 0.7% 18.7% 10.0% -2.1% 12.7% 27.4% -28.3% 7.4%
Topix -2.0% 16.7% -16.0% 22.2% 0.3% 12.1% 10.3% 54.4% 20.9% -17.0% 1.0% 7.6% -40.6% -11.0%
Emergings HSCEI -1.9% 8.9% -10.0% 29.6% 1.4% -16.9% 15.5% -1.4% 19.7% -19.6% 1.7% 66.0% -49.9% 58.8%
Bovespa 42.3% 23.7% 15.0% 26.9% 38.9% -13.3% -2.9% -15.5% 7.4% -18.1% 1.0% 82.7% -41.2% 43.6%
MSCI Emerging Markets -4.5% 11.4% -14.3% 37.8% 11.7% -14.6% -2.0% -2.3% 18.6% -18.2% 19.2% 78.9% -53.2% 39.7%
Bonds Euro Aggregate Bond Index 7.2% 6.8% 0.4% 0.7% 3.3% 1.0% 11.1% 2.2% 11.2% 3.2% 2.2% 6.9% 6.2% 1.4%
Euro 1-3Y Bond Index 0.3% 0.5% -0.2% -0.1% 0.6% 0.6% 1.8% 2.0% 5.0% 2.3% 1.7% 5.8% 5.8% 3.6%
US Aggregate Bond Index 8.6% 8.6% 0.0% 3.5% 2.6% 0.5% 6.0% -2.0% 4.2% 7.8% 6.5% 5.9% 5.2% 7.0%
US 1-3Y Bond Index 5.4% 3.7% 1.6% 0.9% 1.3% 0.7% 0.8% 0.6% 1.3% 1.7% 2.6% 5.0% 4.6% 6.7%
US High Yield 9.3% 11.6% -2.1% 7.5% 17.1% -4.5% 2.5% 7.4% 15.8% 5.0% 15.1% 58.2% -26.2% 1.9%
Commodities CRB Index -7.0% 6.2% -12.4% 0.7% 9.3% -23.4% -17.9% -5.0% -3.4% -8.3% 17.4% 23.5% -36.0% 16.7%
Gold 9.8% 32.6% -17.1% 8.1% 74.1% -34.1% -18.3% -49.2% -8.3% -20.3% 34.7% 35.8% -28.5% 21.8%
WTI Crude Oil -4.5% 27.1% -24.8% 12.5% 45.0% -30.5% -45.9% 7.2% -7.1% 8.2% 15.1% 77.9% -53.5% 57.2%
Dollar Index 6.7% 2.2% 4.4% -9.9% 3.6% 9.3% 12.8% 0.3% -0.5% 1.5% 1.5% -4.2% 6.0% -8.3%
Hedge Funds HFRX Hedge Fund Index -0.5% 6.6% -6.7% 6.0% 2.5% -3.6% -0.6% 6.7% 3.5% -8.9% 5.2% 13.4% -23.3% 4.2%
Equity Markets
US Markets
European Markets
Emerging Markets
November 26, 2019 5
US Equities
The S&P has broken out from the 2’830-3’020 trading
range, giving a full projection target at 3’240-3’250 (see
daily graph).
Shorter term, the index is getting closer to an
intermediate resistance level at around 3’140 that may
well be reached before the Thanksgiving week-end.
We then expect a retest of the 3’000-3’030 support
(previous resistance) before further upside.
Volatility remains in the low teens as investors have cut
back on protection.
November 26, 2019 6
VIX - Daily
S&P – Daily
S&P 500 – Weekly
US Equities
The Nasdaq remains very strong but is already reaching
an overbought level. The index could pull back to 7’950
– 8’050
FAANGs continue to driven the uptrend led by a
rebound of Amazon and a rotation in to software stocks
while Semiconductors are consolidating.
November 26, 2019 7
Nasdaq - Daily
SOX Index – Daily FAANG Index – Daily
US Equities
The Russell 2’000 is finally trading out of its range, the
index needs to close the week above 1’620 to confirm
the breakout;
Stay long small caps vs large caps as the ratio trades at
a historically low level.
US Banks rebound on their previous resistance level
and could now test the 2018 highs.
November 26, 2019 8
Russell – Daily
Russel vs S&P – DailyS&P Banks –
Daily
EuroStoxx Hedged vs S&P in total return
November 26, 2019 9
When expressed in net return and in Dollars, European equities have actually outperformed by nearly 10%since the lows of 2018 as they benefit from a higher dividend yield and from a positive carry when hedgedin Dollars
Asian Markets
The Nikkei remains in a broad trading range with a
strong 24’000 resistance.
The Taiwanese Market is poised for a correction (see
our technical alert). Stay hedged.
The HSCEI remains in its 10’000-11’000 amid trade war
uncertainties and increasingly violent protests in Hong-
Kong.
November 26, 2019 10
Nikkei - Weekly
HSCEI -
DailyTAIEX - Weekly
Emergings
The MSCI Emerging failed to recover further amid trade
war uncertainties and weaker emerging currencies.
The Brazilian Real remains close to the crucial 4.20 level
as investors expect more rate cuts in 2020 and wait
more reforms.
November 26, 2019 11
MSCI Emergings -
Daily
Real - DailyBovespa - Daily
Fixed Income
Interest Rates
Corporate Bonds
Credit Spreads
November 26, 2019 12
Interest Rates
Global Bond yields stabilized amid trade war uncertainty.
Bond Futures are heading for further downside. Our
intermediate target on the Bund has been reached, next
target lies at 168.70.
Stay short the T-Note with a 126-125 target (2.15% to
2.30% equivalent Yield).
November 26, 2019 13
T-Note – Daily
German 10Y Rates –
Daily
German Bund – Daily
US Yield Curve – Fed Funds
November 26, 2019 14
Lower Fed funds have triggered a bottoming out of the yield curve.
Corporate Bonds
Global Corporates Bonds have already started to retreat
as bond yields are going up -> Hedge positions.
Credit Spreads remain too low given risks of a cyclical
downturn.
Given the current lack of yield and visibility in credit
markets, we highly recommend switching exposure to
low-volatility, liquid alternatives.
November 26, 2019 15
US Corporate Aggregate - Daily Europe Corporate Aggregate - Daily
IBOX US High Yield - Daily
Credit Spreads
November 26, 2019 16
Europe ITraxx Main - Daily Europe Crossover - Daily
CDX High Yield - DailyUS Corporate Aggregate - Daily
FX & Commodities
Forex
Precious Metals
Energy
November 26, 2019 17
US Dollar
The Dollar Index is in the middle point of its trading
range. Keep long positions with a 99 target.
->Actively trade the range with a long Dollar bias.
The 99 target represents an equivalent 1.097 target on
the Euro/Dollar.
Longer term, the Dollar should break out and the Euro
could ultimately slide to 1.06-1.04 if the trend line
support breaks.
November 26, 2019 18
Dollar Index – Daily
Euro/Dollar –
WeeklyEuro/Dollar - Daily
Long USD vs EUR with carry
November 26, 2019 19
The Dollar has been in an uptrend against the Euro for the past two years (purpleline). With positive rates in the US, the benefits of holding Dollars is even moresignificant (black line), especially against the negative return of carrying cash inEuros (blue line).
Currencies
The Dollar/Yen in a long-term downtrend and is
potentially in a bearish rising wedge. Stay neutral. The
pair would need to trade above 110 to break this
downtrend.
The Euro / Swiss Franc is in an upward consolidation
pattern, supported by a possible SNB intervention.
The Pound remains driven by the news flows on the
December elections. Stay aside.
November 26, 2019 20
Pound - DailyEuro/Swiss Franc - Daily
Dollar/Yen - Weekly
Commodities
Gold has reached our first consolidation target.
Progressively rebuild positions between $1’450 and
$1’390; Longer term, Gold chart shows a significant
breakout.
Silver has almost completed its correction pattern as well
and reached our first target at $17.10, rebuilt positions
between here & $16.05.
Platinum remains rangy. Keep speculative long position
with a $1’000 target.
November 26, 2019 21
Gold – Weekly
Silver - DailyPlatinum -
Daily
Commodities
Crude Oil continues to grind higher amid hopes of
progress in the US-China trade war.
Risk rewards remains favorable -> Stay long.
The US Energy sector is lagging crude oil prices and
failed to confirm the breakout. Stay long with a focus on
large integrated oil producers with a diversified business
model and high dividends.
November 26, 2019 22
US Energy Sector – Daily
WTI Crude Oil – Generic – Daily
WTI Crude Oil – Generic – Monthly
Contacts
Union Securities Switzerland Research
Tel: +41 22 59 18 64
Union Securities Switzerland SA is a FINMA-registered Securities Dealer.
Union Securities Switzerland SA
11 Cours de Rive
1204 Geneva Switzerland
www.unionsecurities.ch
November 26, 2019 23
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