25th Sequential Stock Fund Outflow, $81 Billion Year To Date

Tyler Durden's picture

To all those (most Bob Pisani) who hoped last week was going to be the last sequential outflow from domestic equity mutual funds, after a modest decline in redemptions, we have some bad news. Today, ICI reported the 25th outflow in a row. Total YTD money redeemed is now $81 billion. From the market bottom in July, all the way to the current 2010 highs, the market has seen $51 billion in 16 sequential outflows. So to recap: mutual funds are not buying, pensions are not buying, retail is no longer even remotely interested in touching stocks... yet the market surge won't end. Some 2010 market highs money can't buy. For everything else, there's Bernanke Card. It is clear now that in the Fed's pursuit of chasing the "wealth effect" of the 1,000 or so remaining traders, logic will simply not stand in the way.

And even if this eventually turns positive: whether it is next week, next year, or never, what does it matter? Obviously plain vanilla money is no longer relevant to asset flows. In a central planning regime, all asset levels are determined by one person and one alone.


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King_of_simpletons's picture

Money going to the sidelines. LOL !

centerline's picture

401k's getting cashed out too.  Between a rock and hard place is starting to look rather plush now.

midtowng's picture

Inflows might go positive for a short time, but if the market dumps again watch the outflows resume.

DormRoom's picture

err that's because ppl are reallocating from US equities to commmodity &PM based foreign equities (TSX, ASX, etc)

foreign equity inflows remains very strong.

Dr. Richard Head's picture

So it's a good time to go into equities then right?  Sell my gold, pull out a HELOC, and buy by the fistful right?  /sarc

HarryWanger's picture

Looks like it's trending up though. Maybe next week it turns positive? 

Bill Lumbergh's picture

Or maybe there is nothing left to be taken out by those people who want to exit.

Hype Alert's picture

as in who is left to sell???  May be the same issue with insider selling.  Is there such a thing as dry heaves for stock selling where there is just nothing left to come out?

Minion's picture

It seems the outflows are always greater near price bottoms and lesser at tops.  I could see it going positive (briefly) before the market trend reverses. 

"Everyone is a trader at bottoms and an investor at tops" - Prechter  :D

rocker's picture

Prechter is clueless. He said go 200% short in February. How did that work out?  But hey, he's got 20 ways to take your money and prove to you that he can predict Nothing.  He does not trade either. Too busy selling you Fear.  

treemagnet's picture

Its not real until you hear it on CNBC.

<Sarcasm on>

Cyan Lite's picture

-$202m is getting really tiny.  We could see it go positive next week.

(Of course the market will then rally another 30% on this second derivative change)

HarryWanger's picture

Yes, it is. I think we could see it positive next week.

BTW: ERCI is now about 35% above it's low a few weeks ago and continues to trend higher.

MarkS's picture

If Retail comes back in we'll know we're near the top...

It is possible that that the outflows will tail off for tax purposes - people can't take anymore 'hardship/education' money out without having to pay the 10% penalty.


midtowng's picture

That's sort of an exaggeration. The ECRI is still at negative 7 and has hardly budged from when it went below negative 10.


erik's picture

ECRI went from -10s to -5s in mid-2008.  What a leading indicator.  At best it was coincident with what the stock market was doing.  Take a look at 2008.  It didn't lead shit.

Same goes for today.  It has improved because the market has rallied on QE2 hopes. 

The ECRI is a coincident indicator dressed in leading indicator clothing.

firstdivision's picture

The problem with the ECRI is how much did 'expected' QE2 pricing on stocks effect the ECRI.  If the stocks have a decent weighting on the ECRI, then the reading is quite skewed.  I am ignoring all index's like the ECRI and such, as leading indicators in that have been all have been affected by the QE hopium that has flooded the system.  Like it has been pointed out economy != markets, and markets != economy.  I am at a sit back and watch mode as I have an decent put position, but 90% cash at the moment.

President Palin's picture

Maybe.  If next week the flow of funds into stock mutual funds goes positive by only 1 cent, the MSM (especially CNBS) will run the headline, "Massive inflow of cash into stocks!".

Waterfallsparkles's picture

Does it really matter as the FED has put in twice the amount of the outflow thru Pomo.

rocker's picture

When will the promo pomo team sell ???  On the First inflow ?    YUP.

Hype Alert's picture

I hate jokes I can't laugh at and this market is a big one.

Spalding_Smailes's picture

Apple,Cat,Amzn,IBM, all down after-hours before pomo ...???

firstdivision's picture

CAT is shooting to the moon right now.

Paul Bogdanich's picture

Regrettably 640 million last week 200 this.  SO they have a shot at breaking the streak for the last week in October.  I think we turn down again in November but the XX consecutive outflows sure makes for an engaging headline plus the trend encourages these idiots that stil believe this market to be free.

Comrade de Chaos's picture

"For everything else, there's Bernanke Card."

and multiple semiconductor arrays...


Waterfallsparkles's picture

Does it not seem suspicious that the FED wants to own all of Americas Debt?  Why?  If the FED owns all of Americas Debt do they in effect own America?  What is interesting is that they are using Taxpayer money to buy America.  How interesting.

Think about it for a minute.  The FED owns 80% of AIG the largest insurer in the world, C the largest Bank in the world, FRE, FNM 80% ownership, which owns 50% of the Mortgages in America, GM the largest car manufacturer in the US.  Now they want to own all of the Bonds? 

Just what is going on?  Do they want to own America in total?  Forget about a Stock Market think about the total control of the FED.

Waterfallsparkles's picture

Are Pomo's being used to buy back debt from the Chinese? Is the FED not telling us that the Chinese want to cash out their American Bonds?  So, they do a Pomo so it will not be noticed, yet the Market rallys.

mikla's picture

You are not crazy for speculating such things.

The original Fed charter banned the Fed from purchasing securities that were not backed by the full-faith-and-credit of the US Federal Government exactly for what concerns you:  (1) The Fed should not be able to make taxpayers liable for debts without Congressional approval, and (2) The Fed should not be able to "snap fingers" (i.e., print money) and seize assets.  Today, they are doing both at an absolutely massive scale.

Unfortunately, the Fed does not follow its charter.  It doesn't care, because it should be disciplined by Congress, and the Fed knows they are toothless morons, and Congress is beholding to the Fed anyway.  Further, the Fed Charter states there is no punishment for the Fed violating the charter.  So, it wouldn't matter even if the Fed were found (by Congress) to be in violation of the Fed charter.

What you see now is literal wholesale asset seizure by the Fed.  The Fed actually doesn't care what is the value of the dollar -- that is absolutely irrelevant.  The Fed only cares that the dollar is used, because the Fed has the unilateral power to inflate and deflate the dollar, skimming and front-running every transaction.  The Fed uses this power to convert dollars to assets and profits, as well as move "friends" into positions of power.

Further, while it is true that Congress (and the Executive Branch) is subservient to the Fed, it is *also* true that the Fed (e.g., Bernanke) is actually the puppet of the Fed shareholders (about a dozen private banks/institutions).  Literally, the Fed is the physical manifestation of the international banking cartel as it manipulates the world reserve currency (which the Fed indisputably controls).

After the capital/asset "grab", the old system will be removed, and a new system will be installed -- by the ones with the capital.  You'll notice the middle class, evicted from their homes, doesn't have that capital.

Long story short:  It's big.  Too big for most humans to understand.  However, that's how the system works.

On the "bright side", it's possible the international banking cartel is actually bankrupted.  This would be a political action, based on "laws", and liabilities the banks created for themselves through indefensible leverage.  IMHO, Fed death without international banking cartel death would make things (far) worse.

Yes, we are playing with very big poker chips in a game of international brinkmanship.

optimator's picture

In Stalin's Soviet the Goverment owned everything, isn't that what we're aiming at?  This is just a little more peaceful way of taking everything.  So far!  Once the Serfs catch on...........

KillerCoke's picture

That is so far from true as to be delusional.  But it seems that delusion is a sound currency these days.

TooBearish's picture

ICI needs to be hedonically adjusted

Cognitive Dissonance's picture

Did I see Bob Piss-on-me with a major Woodie the other day when he stood in front of the "heat-map" wall on CNBC and all he could see was green forever?

let x equal x's picture

Yep, Pissant-i must wear viagra patches or something.  Mr. Positive really is pathetic sometimes.  "Market's ONLY down 110, BOUNCING BACK from down 150...back to you Erin..."

Waterfallsparkles's picture

With the FED owning almost all of Americas Debt could they take over America?

Qoheleth's picture

My question is the converse: If the gov't nationalized (absorbed) the Fed, would all that debt that the Fed holds just go away?

mikla's picture

If the gov't nationalized (absorbed) the Fed, would all that debt that the Fed holds just go away?


There are several categories of debt.  The "guaranteed 6% return" that the taxpayer gifts to the Fed would technically "go away", but that is (mostly) irrelevant since the value of the Fed is that it can monetize every Treasury auction.

The value of the Fed is its value in obfuscating the debasing of the US currency.  Absorbing the Fed would make that transparent (it would trigger a "sudden stop"), and absorbing the debt is independent of the *real* problem:  Fraudulent accounting to hide Federal liabilities that can never be fixed.

Current US unfunded liabilities like Social Security and Medicare are over $100T.  They are generating increasing cashflow problems, weekly, which is forcing them onto the current budget.  There is no scenario by which this is repaired.

These debts will default.  The Boomers will not get what was promised.  The Congress absorbing the Fed would merely hasten the day of reckoning (plus trigger a bunch of other interesting chain reactions).

Derp2012's picture

I thought that the fed refunded its profits to the US Treasury, after deducting expenses and a dividend.

If that's the case, then in some sense when the Fed buys a treasury bond it cancels out most of the interest payment on that bond.

The Fed could also forgive the loans.. but it doesn't really matter anyway since none of this debt can possibly be repaid.

mikla's picture

I thought that the fed refunded its profits to the US Treasury, after deducting expenses and a dividend.

This is true.  However, those "profits" are negligible/irrelevant in scale and absolute nominal value.  Rather, they are accounting "tricks".  After buying $1.4T in MBS, and the AIG black hole, and all the Maiden Lane toxic crap, any assertions that the Fed makes a "profit" are insane.

If that's the case, then in some sense when the Fed buys a treasury bond it cancels out most of the interest payment on that bond.

No.  The bond forces dividends, which triggers an increasing forward demand for future increased money supply.  These dividends are not redeemed to the Treasury.  That's why deflation is so destructive to the Fed:  The entire monetary system is built on the assumption of a perpetually *increasing* money supply.  Even a "constant" money supply would trigger system collapse.

Further, these dividends and "profits" are "in the noise".  In percentage and absolute terms, they don't matter.  The power comes in the ability to front-run public announcement of Fed actions.  Do you know how big the Nov 3 action will be?  The Fed and its friends do.  Check out the perfect Fed Front-Running Records to see who are the Fed's friends.

That's also why the Fed monetizes every Treasury auction.  It knows this money won't ever be paid back (e.g., they are merely debasing the currency), but they don't care.  It doesn't matter.  The magic is being able to use "inside information" to front-run and manipulate all market activity.

Remember, the Fed is the "head regulator" for the entire banking industry.  In addition to controlling the money supply and the price of money, they get to see *all* the numbers that nobody else gets to see.  They get to cut international currency swap deals without vote and without review.  They get to screw sovereigns anywhere on the planet whenever they want.  Now *that* is power.  The "profits" that theoretically are redeemed to the Treasury through accounting tricks mean nothing whatsoever.

The Fed could also forgive the loans...

No, the Fed cannot forgive the loans (in an overt manner).  True, the Fed can ensure certain counter-parties benefit from Fed actions, with the Fed incurring all the losses.  That's why the Fed bought the MBS market -- to transfer private losses to taxpayer (Fed) losses.  That's also the purpose of all the Maiden Lane and numerous other "alphabet soup" Fed programs since 2007.  That's also the purpose of (private/secret) Central Bank currency swaps, and the reason for the Fed to purchase foreign sovereign bonds.

However, no, the Fed cannot legally forgive any loan.  (Yes, in actuality, it does through deceit.)

...but it doesn't really matter anyway since none of this debt can possibly be repaid.


Derp2012's picture

Thanks for the detailed answer (from a long time ago -- I recently discovered the "Track" function)!

Your point that the Fed has immense power to manipulate the markets, and funnel money to their patrons, is an excellent one. I would only add that in some sense, buying the bonds back is sharing a little of the benefit with the US treasury. The Fed screws the UST less than it does the other central banks... second in line on the mantrain so to speak.

However, no, the Fed cannot legally forgive any loan.  (Yes, in actuality, it does through deceit.)

I meant more that Congress could in principle revoke the Fed's charter, and nullify any bonds it held. 

Spalding_Smailes's picture

Something just happened with Apple just dropped over $2.50 in a few seconds ....


Now down 4 bucks ...

pat53's picture

BS, AAPL is down a little over $1 !

Vampyroteuthis infernalis's picture

Down $3.50 at the moment. Little panic going on from the last few human traders?

Something Wicked This Way Comes's picture

Bob would look good in a tinfoil hat.

The retail outflows might stop, but inflows are not going to resume. This market is the last fucking cookie jar. If they can't float this beyotch, the lid is gonna come off this whole charade. "Monetize the debt, who me? 

Gordon Freeman's picture

But...there's TRILLIONS on the sidelines, just waiting to rush in and save the day

Right? Right?

carbon based unit's picture

the big guys say:  its about time those retail pukes stepped up to hold the bag.  we have gains to lock in!



digilante's picture

$81 billion. That's about 35% of MSFT's market cap. Hardly earth-shaking.