The S&P 500 Index has been on an upward trajectory, hitting record highs and showing remarkable growth. According to Citigroup Inc. strategists, short-sellers are now beginning to give in. In a note written by the strategists led by Chris Montagu, it was stated that investor positioning in S&P 500 futures is extremely one-sided. This one-sidedness has led to new highs being set for four consecutive weeks, and the hold-out shorts are gradually capitulating.Appetite for US Equities: Unabated Growth
This year, the appetite for US equities shows no signs of slowing down. The S&P 500 has made multiple record highs, surging by an impressive 27%. This growth has been powered by technology shares and a widespread preference for US assets. The rally continued even after the election of Donald Trump, which raised hopes of tax cuts and deregulation.Contrasting Positions in Euro Stoxx 50 Futures
In contrast to the bullish trend in the S&P 500, positioning on Euro Stoxx 50 futures remains net bearish. At the same time, ETF outflows are accelerating. Investors are shunning the region's stocks due to sluggish economic and earnings growth, as well as political instability in France and Germany.European Short Positions and Long Flows
For several weeks, investors have been net short on Europe. In fact, 100% of futures long positions are in the red. However, since the selloff has been moderate so far, the risk of a major unwind remains low. There have been signs of long flows into DAX and FTSE 100 futures, which could potentially indicate that some investors are selectively starting to re-enter the European market.Impact of French Politics on European Equities
Montagu pointed out that this data does not take into account the recent news flow regarding French politics. This news is likely to dampen enthusiasm for European equities among those investors who are underweight or short European equities. The political situation in France and Germany continues to create uncertainties in the European market.
