J.P.Morgan: The Previous Short Base In Non-US Equities Has Largely Normalised

J.P.Morgan note that a "previous advantage for non-US stocks appears to have been diminished as short covering advanced. Indeed, 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. In our mind, 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. And as we argued before there is still 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 pre-virus despite recent declines. The positions of asset managers and leveraged funds in US equity futures remain low and well below pre-virus levels."