Tactical Europe Portfolio :
performance (alpha) : +12% versus Stoxx600NR
Megatrend Europe Portfolio :
performance (alpha) : +23.1% versus Stoxx600NR
Core US Portfolio :
performance (alpha) : +19.1% versus S&P500
Trading signal split (stocks only)
- Enter Long : 42.2% of stocks with an « enter long » signal in process
- Enter short : 3.6% of stocks with an « enter short » signal in process
- No signal: 54.3% of stocks of which last signal is an « Exit Long » or « Exit Short »
US: Exposure to US Equity markets 100% / Cash 0% (unchanged)
Europe: Exposure to European Equity markets 85% / Cash 15% (unchanged)
There was no follow up on the Monday’s drop in equity markets that looks now on a « wait & see » mood. A concern looks to be the narrowing lead of Biden against Trump in polls, that ratchet up uncertainties back on the US presidential outcome with higher probability of a contested election. Meantime hopes for a relief package before the end of the week maintain a positive momentum for stocks, especially cylical ones.
In Europe, the Food & Beverage sector is weakening again led by Danone (in Major Bearish Trend) while Banks and Airlines continue to stabilize at low level and improve short term in relative terms.
However the main change in our indicators is on the Market Pressure index which is now above 50 at 52/100 and points for a Neutral phase rather than a "risk on" mood. That means that markets are now much less directional and more caution is required even if there is no correction in sight for the moment (correction signal at 58/100, major correction signal at 70/100). The surge in the MPI looks volatility driven with a VIX close to the 30 level.
In terms of participation, the situation remains unchanged for stocks in both the US and Europe, while profit taking continue on quality/growth stocks offset by value theme and small caps. The US 10Y rates is now back at a 4 months high (0.83%) and still rising, that is rather bullish for the economy and may eventually trigger a positive signal for US Banks (short term score currently improving) later on, if confimed. All in all a mixed bag driven by a volatile situation.
Buy Signal on Extra Space Storage (EXR-US)
EXR is a $15.3Bn market cap, and specializes in owning and managing self-service storage spaces. Revenue is mainly achieved by rental of storage spaces (87% of sales); while other revenues (13%) includes tenant insurance, development and ownership of storage spaces. The real estate portfolio, with a total rental area of 11,676,544.6 m2, is made up of 1,647 assets located in the United States and Puerto Rico.
Extra Space Storage is one of the largest self-storage REITs in the US, with a demonstrated track record of growing its revenues and dividend delivery (current dividend yield of 3%). The company enjoys strong operating profitability (over 55%) and is so far not impacted by the Covid crisis. This sector is generally recession-resistant, with high operating margins and low-Capex requirements. Revenue growth is driven by the fact that the self-storage industry is largely fragmented, allowing EXR to consolidate the industry.
Short term catalyst: Acquisitions, new capacities.
This signal looks mainly company specific .