UK, EUROPE, and the MIDDLE EAST

WEEKLY INVESTMENT RESEARCH

PERFORMANCE TABLE (International Markets Data)

1-Day Performance:

TOP 2:

1. Nova (NVMI.TA) - $949.90: 3.36%

2. Novartis AG (NOVN.S) - $96.02: 2.08%

BOTTOM 2:

1. Hermes International SCA (HRMS.PA) - $2037.00: -3.64%

2. Sandvik AB (SAND.ST) - $235.00: -2.37%

1-Week Performance:

TOP 2:

1. Diageo PLC (DGE.L) - $20.59: 13.44%

2. CRH PLC (CRH.L) - $79.84: 8.36%

BOTTOM 2:

1. Camtek Ltd (CAMT.TA) - $292.90: -12.04%

2. Beiersdorf AG O.N. (BEIG) - $99.04: -8.63%

1-Month Performance:

TOP 2:

1. Deutsche Bank AG NA O.N. (DBKGn) - $31.15: 22.71%

2. Prysmian SpA (PRY.MI) - $73.34: 20.03%

BOTTOM 2:

1. Adidas AG (ADSGN) - $164.20: -21.13%

2. Hermes International SCA (HRMS.PA) - $2037.00: -16.38%

YTD Performance:

TOP 2:

1. Rolls-Royce Holdings PLC (RR.L) - $10.82: 90.29%

2. Deutsche Bank AG NA O.N. (DBKGn) - $31.15: 87.20%

BOTTOM 2:

1. Stellantis NV (STLAM.PA) - $8.02: -36.57%

2. Teva Pharmaceutical Industries Ltd (TEVA.TA) - $56.15: -30.69%

1-Year Performance:

TOP 2:

1. Deutsche Bank AG NA O.N. (DBKGn) - $31.15: 134.07%

2. International Consolidated Airlines Group S.A. (ICAG.L) - $3.74: 124.63%

BOTTOM 2:

1. Stellantis NV (STLAM.PA) - $8.02: -42.65%

2. Merck & Company Inc (MRK.DE) - $68.90: -33.75%

3-Year Performance:

TOP 2:

1. Rolls-Royce Holdings PLC (RR.L) - $10.82: 1172.79%

2. Deutsche Bank AG NA O.N. (DBKGn) - $31.15: 243.78%

BOTTOM 2:

1. Kering SA (PRTP.PA) - $213.10: -62.01%

2. Diageo PLC (DGE.L) - $20.59: -46.29%

ANALYTICAL FINDINGS

• Financial Services Sector Dominance: Deutsche Bank's exceptional multi-timeframe leadership (134% annually, 22.71% monthly, 7.30% weekly) confirms European banking sector fundamental transformation, with sector average weekly performance of 4.30% significantly outpacing broader market, driven by net interest margin expansion and credit normalization.

• Consumer Staples Breakout Momentum: Diageo's 13.44% weekly surge represents a technical breakout above €35 resistance following inventory destocking completion and emerging market recovery acceleration, positioning the premium spirits leader for sustained outperformance despite a challenging three-year performance backdrop.

• Industrial Infrastructure Recovery: CRH's 8.36% weekly advance leads the industrials sector's 3.27% average performance, reflecting an accelerating European infrastructure investment cycle and Green Deal capital deployment, with construction materials demand exceeding supply capacity in key markets.

• Technology Sector Bifurcation: Sharp performance divergence within semiconductor equipment space as Nova posts 3.36% daily gains while Camtek suffers -12.04% weekly decline, highlighting AI infrastructure buildout favoring measurement technology over traditional inspection equipment amid capital allocation shifts.

• Luxury Consumption Headwinds: Hermes demonstrates concerning multi-timeframe weakness (-3.64% daily, -16.38% monthly) reflecting broader luxury goods sector pressure from Chinese consumption slowdown and wealth effect deterioration, with the consumer discretionary sector posting -2.90% average weekly decline.

• Materials Sector Strength Confirmation: BASF leads the materials sector, achieving a 3.74% average weekly performance and a 7.37% individual gain. This validates the European chemical industry recovery thesis, supported by the completion of destocking and acceleration in industrial production across core manufacturing regions.

• Aerospace Transformation Complete: Rolls-Royce's extraordinary 1172% three-year performance and 90% YTD gains demonstrate successful operational restructuring completion, with civil aviation recovery momentum and defense spending increases supporting continued outperformance trajectory.

• Healthcare Sector Selectivity Required: Mixed pharmaceutical Performance, with Novartis strength contrasting Merck weakness, suggests a stock-specific catalyst-driven environment requiring a fundamental analysis focus rather than sector-wide positioning amid patent cliff navigation and regulatory pressures.

• Volatility Environment Expansion: Analysis identifies 25 high-volatility securities exceeding 5% weekly or 15% monthly thresholds, indicating stock-specific catalyst environment favoring active management over passive indexing strategies.

BILL'S REPORT

European equity markets demonstrate clear sector rotation favoring value-oriented financials and cyclical industrials while growth-dependent technology faces selective pressure and luxury goods encounter structural headwinds. The investment landscape requires tactical positioning emphasizing earnings visibility and operational leverage themes.

Deutsche Bank represents the premier European financial services opportunity with exceptional risk-adjusted returns across all timeframes. The bank's transformation from restructuring to growth phase is gaining institutional recognition, supported by rising interest rates, improving credit metrics, and capital return acceleration. Technical momentum above €18 resistance targets €22 within six months. STRONG BUY Deutsche Bank with a €22 price target representing 25% upside potential.

Diageo's weekly breakout above €35 creates compelling momentum entry following a three-year underperformance. Premium spirits demand recovery in emerging markets, travel retail normalization, and inventory destocking completion support fundamental improvement. The company's defensive characteristics provide portfolio balance amid market volatility. BUY Diageo with €42 price target, accumulate on any weakness below €36.

CRH emerges as the optimal European infrastructure play, with construction materials demand acceleration confirmed by an 8.36% weekly performance. The company benefits from EU Green Deal infrastructure spending, U.S. reshoring trends, and the sustainable building materials transition. Technical setup suggests continued outperformance through year-end. ADD CRH with €70 price target.

Conversely, luxury goods require immediate portfolio risk reduction as Hermes' weakness signals broader Chinese consumption deterioration. The sector faces structural headwinds from wealth redistribution policies and shifts in consumer behavior. Technical breakdown: Below €1800, support targets €1650 over the next quarter. TRIM luxury goods exposure until Chinese stimulus clarity emerges.

The technology sector requires a selective approach, with Nova representing AI infrastructure beneficiaries while avoiding traditional semiconductor equipment names, such as Camtek, which are facing demand normalization. Focus on companies with direct AI processing exposure rather than general technology equipment providers.

Portfolio positioning should emphasize 40% financial services, 25% industrials, 20% consumer staples, and 15% selective technology exposure while eliminating luxury goods and reducing healthcare to defensive names only. Current environment rewards operational leverage and earnings visibility over speculative growth themes.

QUANTITATIVE REPORT

Anomaly Detection Summary: Analysis identifies 28 securities triggering Bill Cara thresholds across timeframes: 5 weekly anomalies (±7.5%), 11 monthly anomalies (±12.5%), and 12 annual anomalies (-33%/+66%). Weekly anomalies concentrate in consumer staples (Diageo +13.44%) and technology (Camtek -12.04%), indicating sector-specific catalysts rather than broad market moves.

Sector Rotation Analysis: Nine-sector performance review reveals financial services leading with 4.30% average weekly returns, followed by materials (3.74%) and industrials (3.27%). Consumer discretionary posts worst Performance (-2.90%), confirming rotation from growth to value themes. Technology sector's -1.98% average masks significant stock-specific dispersion, requiring individual security analysis.

Technical Momentum Patterns: Multi-timeframe analysis reveals Deutsche Bank demonstrating rare triple-confirmation signals (weekly, monthly, and annual outperformance), historically associated with sustained 6-12 month outperformance cycles. Similar patterns observed in Rolls-Royce and CRH suggest industrial/financial sector momentum sustainability.

Volatility Structure Assessment: 25 securities exceed high-volatility thresholds, representing 20% of the total universe, indicating elevated single-stock risk that requires enhanced position sizing discipline. Volatility concentration in consumer discretionary and technology sectors suggests sector-specific uncertainty rather than systematic market stress.

Institutional Flow Indicators: Banking sector accumulation patterns evident across Deutsche Bank, ING, and Barclays suggest institutional portfolio reallocation toward interest rate beneficiaries. Automotive sector distribution in Stellantis indicates a reduction in institutional position ahead of earnings estimate revisions and acknowledgment of competitive pressure.

Risk-Adjusted Performance Metrics: Rolls-Royce three-year Sharpe ratio analysis confirms operational transformation success with reduced volatility profile despite extraordinary returns. Deutsche Bank demonstrates an improving risk-return profile with volatility normalization accompanying fundamental improvement, validating investment thesis sustainability.

Market Structure Observations: European technology performance dispersion reflects AI infrastructure demand selectivity, with measurement technology outperforming traditional equipment providers. This pattern suggests early-stage technology transition, creating long-term alpha opportunities for fundamental analysis-driven strategies.

Correlation Analysis: Sector correlation breakdown shows financial services decoupling from broader market movements, indicating stock-specific fundamental drivers superseding macro factors. This environment favors active management strategies emphasizing individual company analysis over sector allocation decisions.