15.1 C
Houston
Sunday, January 17, 2021

JPMorgan Finds That Shorts Across The Globe Have Capitulated

Three months ago, shortly after the March crash bottom, JPMorgan’s strategist Nikolas Panigirtzoglou predicted that stocks would rise, among other things, because there was a massive short overhang, one which would squeeze prices higher as the Fed injected liquidity, providing a secondary thrust to the market.

Then, one month ago, in the June 16th version of Flows and Liquidity, the JPM quant doubled down by asking if there is a regional bias to the shorting activcity, namely “how much higher is the short base outside US equities?”, arguing that the regional short base backdrop favored non-US equities, in particular European stocks, something which subsequent price action confirmed.

The argument at the time was that while the post-virus short base in individual US stocks had been largely covered, short covering had looked a lot less advanced outside US stocks. In particular, less than a third of the previous short base that had opened up on Euro area and UK stocks during Feb/Mar had been unwound by mid-June. Across EM stocks, around half of the previous short base had been unwound by mid-June.

However, in his latest observation on this topic, Panigirtzoglou writes in his latest weekly F&W report that “this previous advantage for non-US stocks appears to have been diminished as short covering advanced.”

Indeed, as the following four charts show, the bulk of the previous short base that had opened up during Feb/Mar across Euro area, UK and Japanese stocks has been largely normalized. It is only in EM stocks that there is some remaining short base, around 20% of that opening up during Feb/Mar, left to be covered.

To JPM, this raises the chance that the past two months outperformance of non-US vs. US equities is close to being exhausted “and that going forward US stocks are more likely to resume their outperformance trend.” Why the pro-US bias? Because as the JPM strategist noted before, there is a modest remaining short base to be covered in US stocks at an index level even as the previous short base at individual stock level has been more than fully covered. For example, the short base in important US equity ETFs such as the SPY ETF remains above previrus despite recent declines as shown in the chart on the left…

… while the right and final chart shows that the positions of asset managers and leveraged funds in US equity futures remain low and well below pre-virus levels.

Zerohedge

Latest news

Biden’s immigration reform plan reportedly provides pathway to citizenship: ‘Stunned by the boldness’

President-elect Joe Biden's robust legislative plans during his first days as president will include what the Los Angeles Times called "a groundbreaking legislative package"...

INQUISITION: Florida teacher FIRED for saying ANTIFA at Capitol riot; Florida professor FIRED over Tweets after ‘WITCH HUNT’

“Supporters arrived and suddenly there was violence. Already, three of those have been identified as Antifa members,” said a middle school substitute teacher in...

Iran Releases Rare Footage Of Prior IRGC Ballistic Missile Attack On US Forces

Via AlMasdarNews.com,Iran's military has published on social media a new video clip of the Iranian missile strike on the Ain Al-Assad base in western...

13 Israelis Suffer Facial Paralysis After Pfizer Covid Jab

Creepy Bill Gates is proposing several rounds of this vaccine. At least 13 Isrealis suffered facial paralysis after taking the Pfizer coronavirus vaccination. RT reported: At least...

Related news

Biden’s immigration reform plan reportedly provides pathway to citizenship: ‘Stunned by the boldness’

President-elect Joe Biden's robust legislative plans during his first days as president will include what the Los Angeles Times called "a groundbreaking legislative package"...

INQUISITION: Florida teacher FIRED for saying ANTIFA at Capitol riot; Florida professor FIRED over Tweets after ‘WITCH HUNT’

“Supporters arrived and suddenly there was violence. Already, three of those have been identified as Antifa members,” said a middle school substitute teacher in...

Iran Releases Rare Footage Of Prior IRGC Ballistic Missile Attack On US Forces

Via AlMasdarNews.com,Iran's military has published on social media a new video clip of the Iranian missile strike on the Ain Al-Assad base in western...

13 Israelis Suffer Facial Paralysis After Pfizer Covid Jab

Creepy Bill Gates is proposing several rounds of this vaccine. At least 13 Isrealis suffered facial paralysis after taking the Pfizer coronavirus vaccination. RT reported: At least...

Judge releases leftist activist charged in U.S. Capitol riot despite objections

A judge ordered the release of a liberal activist who was arrested for his...

89 Year Old Donald Tober, Who Popularized Sweet N’ Low, Jumps To His Death From Park Ave. Apartment

An 89 year old business magnate who was "struggling with Parkinson's disease" leapt to his death from the top of his Park Ave. apartment...

Massive Migrant Caravan From Honduras Busts Through Guatemala Border en Route to US (VIDEO)

Another migrant caravan has formed in Honduras in anticipation of a Biden Administration. According to Center for Immigration Studies, the new caravan left San Pedro...

Not so fast? Virginia man with handgun and ammo ARRESTED at new D.C. checkpoint; Family says he’s in SECURITY

The MSM is so excited about threats to the Capitol that they can’t wait to talk about it. And they jumped all over the...