GlobalMarketsStrategy18March2019F&LLibraryPositionindicatorsGlobalMarketsStrategyNikolaosPanigirtzoglouAC(44-20)7134-7815nikolaos.panigirtzoglou@jpmorgan.comBloombergJPMAFLOWJ.P.MorganSecuritiesplcMikaInkinen(44-20)77426565mika.j.inkinen@jpmorgan.comJ.P.MorganSecuritiesplcNishantPoddar,CFA(91-22)6157-3255nishant.poddar@jpmchase.comJ.P.MorganIndiaPrivateLimitedSeepage183foranalystcertificationandimportantdisclosures.www.jpmorganmarkets.comBelowareexcerptsofpastissuesofFlows&Liquidityonthetopicof:Positionindicators.Theexcerptscanbefoundinreversechronologicalorder,withthemostrecentupdatebelow.Theexcerptsarenotupdatedandareaccurateonlyasofthedateindicated.Generally,wedonotemailoutthisdocument,butmaintainitonJ.P.MorganMarketsasareferencetool.HowextremeareEuropeanunderweightsposttheECB?(extractfromFlows&Liquidity,08Mar19)Intheequityspace,hedgefundsappeartohaveincreasedtheirnegativestanceonEuropeanbanksoverthepastweek,shiftingtowardsmoreextremenegativeterritory.ETFinvestorshavebecomeprogressivelymoreunderweightonEuropeanequities.Theircurrentunderweightstandsatmorethanadecadelow.Intheeuro,CFTCdatasuggestthatheavyspecshortsvs.thedollararenotonlyconfinedtohedgefundsbutextendtonon-hedgefundinvestorsalso.Thisweek’sbondrallymayhavebeenexacerbatedbyshortcoveringbyactiveEurobondfundsandashiftbacktowardslongdurationpositionsinUSTsbyCTAs.MoreconfirmationfromUSFlowofFundsthatthe2018USrepatriationepisodeislargelybehindus.Ourbestguessisthatlastyear’sUSrepatriationflowof$430bnwasmostlyusedforsharebuybacks,byaround2/3rds,withtherestsplitbetweencorporatebondwithdrawalandcapex.AstheUSrepatriationflowappearstobelargelybehindus,thisraisestheprospectofdownsiderisktoUSsharebuybacksandcapexgrowth,andupsiderisktoUScorporatebondissuance,relativetolastyear.TLTRO3’sprovideameaningfulextensionofexistinglowcostfunding,andcreatesaround€120bnofadditionalborrowingspaceforperipherybanksonaggregate.Themarketreactiontothisweek’sECBmeetingwasratherpuzzling.ThecollapseinEuropean...
