And Scene: ICI Reports 13th Consecutive Week of Massive Domestic Equity Outflows As Banks Start To Panic

Tyler Durden's picture

What more can we say here that we have not said for 12 times in a row already. Retail investors are dunzo. The latest update from ICI shows that the week ended July 28 saw a record 13th consecutive outflow from domestic mutual funds as stocks bloody surged. Good thing the HFT algos can now essentially communicate with each other in the actual unique flow patterns of cancelled stock bids, thereby announcing to all other participants the plans of one which promptly become those of all, in the most under the radar concerted effort to "club" the market's HFT participants as one big trading force. As for retail: it is all over. We won't even chart the latest move. Figure it out: nearly $50 billion in outflows YTD as the market is well green. When the coordinated computerized front running game (of stupid carbon based lifeforms) in which one Atari machine sells to another, and repeats into infinity, while all book liquidity rebates, comes to an end and the theater is finally perceived to have been burning all along, watch out for the binary stampede.

But don't take our word for it. According to the FT, banks are starting to panic that as a result of collapsing trade volumes, profit target misses and massive layoffs are just around the corner.

US banks with Wall Street operations are bracing for a slump in trading profits this year after the third quarter got off to a poor start, with global economic uncertainty and Europe’s sovereign debt woes leading to a slowdown in market activity in July.

Executives said volumes and profitability last month were even lower than during the sluggish second quarter, with hedge funds particularly reluctant to take big bets on equities and debt.

“July was a miserable month for trading,” one senior banker said. “If August and September don’t rebound sharply, banks will be forced to cut jobs.”

The squeeze in trading profits highlights the rising importance of groups’ consumer and commercial banking operations, whose performance is improving as the economy heals.

The lack of activity led many banks to miss internal targets for trading revenues in both fixed income commodities and currencies – a key recent driver of profitability – and equities.

John Brady, senior vice-president at MF Global, said: “A lot of the drop we have seen in trading volumes during June and July follows violent changes in markets during the preceding months.”

Retail investors have also shunned stocks. US equity mutual funds have been hit by 12 straight weeks of outflows totalling $40.7bn, says the Investment Company Institute.

Better make that very unlucky 13.

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sysin3's picture

Market only goes up, bitchez.  ;-)

mule65's picture

Flash Crash 2.0?  Get your 59% limit orders in place!

unwashedmass's picture


i think the peasants turned off the TV.....

time to make a monitor -- always on -- mandatory like it is in North Korea...

I mean, dont' we all understand that we are obligated to give every dime we have to Jamie Dimon?

what's wrong with these people?

StychoKiller's picture

It's not enough to fear Big Brother, you must love Big Brother!

Ragnarok's picture

We won't even chart the latest move. Figure it out: nearly $50 billion in outflows YTD as the market is well green.


Shame, because a chart can say 50 billion words.

Boilermaker's picture

For example, my parents, both 60 years old, are waiting to get back 5% more (which puts them 5% down from their peak) and they are pulling the trigger.  They don't trust this shit anymore and can't risk losing a good portion of their nest egg.  They'll liquidate several hundred thousands of dollars themselves.

I have to believe tons of others like them are out there.  This won't stop as the boomers look for the exits.  Kind of a cruel trick to gun the market in hopes of sucking in people only to see those looking for the exit split.  Problem is, the boomers have the money.  Gen X and Y are tapped.

confimationbias's picture

I'm two months from 60, and while I've been out since mid-'08 (the only time I've ever gotten things right) I'm hearing reasonably identicle stories from my peers. Burned twice in 10 years?  Enough is enough.  As much as the PTB will do everything within their powers to prop things up,  ultimately the market will win, though it's taking longer than I had imagined.

I wish your parents the very best...and you, too.

SWRichmond's picture

I'm 53, sold everything and went into cash in Oct/Nov '07, saving myself and my wife six figures (X multiple) in unrealized losses.  Started moving assets into precious metals then, still employing the barbell strategy of PMs in the role of wealth preserver, hedged heavily with cash.  Told my family and some friends, too, they chose to not listen.  FWIW I told my friends "everybody out of the pool" on June 6th this year.  It was obvious that the energy had ended when QE ended, and that the "stimulus" had been back-loaded to try to ramp the economy into the elections but that that was failing to have any real effect. 

The PMs are for wealth preservation, moving it into the next currency regime, whatever it might be.  Miners are for "investment".  No leverage.  Cash stands guard over the mess to avoid forced liquidation of the PMs and miners during any prolonged deflation.  I am personally convinced that we're headed for either QE until something (like the currency) breaks, or prolonged deflation leading to a sovereign debt crisis that in turn triggers a currency crisis.  Either way, the cash becomes a throwaway once it's no longer needed to guard the PMs.  That's my story and I'm sticking to it, until something fundamentally changes.

Tanz der Lemminge's picture

Upper 50s here. Only 100 more shares to go and I'm out. Let em trade among themselves - sooner or later one of the players will get cold feet.

Citizen of an IKEA World's picture

Superb nick. 

I did in fact laugh out loud.

rmsnickers's picture

I have said it before but I will say it again: I liquidated a half mil of my parent's money (both about 62) during april and may (last positions on may 6).  I tell everyone I know to get out of the market, regardless of age.  Good luck to your folks and no, the 50% downside risk is not worth the imaginary upside gain.

geminiRX's picture

......but Leo says it is?

bankonzhongguo's picture

To all those liquidators, make sure any cash that doe not go into fixed income and its going to sit in the bank - make sure its in a small community bank or creidt union.  Make it a point to walk into your bank, the one you have a forty year relationship with, and tell the branch manager in the Private Bank to their face that the way they have treated Citizens these last years; insurance, mortgages, reverse-morgages, credit card rates and fees, and finanical advising is hateful to the Republic.  Get crazy with the rhetoric.  Poke your finger into their chest (That means you little old ladies). and take your money somewhere else.  The only way to hurt the big banks is to take money and their income away. And for G_d sakes don't do any business with a bloodsucker "trust company."

Geoff-UK's picture

Your money isn't safe there either.  Get a contractor to jackhammer up some concrete in a walk-in closet, and pour new concrete around a newly-installed floor safe.


Don't trust any banks at this point.

foofoojin's picture

my grandparents are 90 and 89. they been 100% tax free bonds since 1971 with the exception of $40,000 in 2003 on a bankruptcy reorginization. there broker begged them not to do it. told them it was throwing there money away.   and it did.  I stay up late at night worred my grandparents are going to live through two great depressions.  what is  so sad for me is that grandpa read the wall street journal religiusly for 50 years. and nothing i can tell him will sway his opinion on money. he thinks he safe. i lose sleep.

Rainman's picture

It's all good. X and Y will be able to buy a McMansion for a buck and a half before this is all over. And a cool Chevy Volt for 18k after federal rebate. If you're nice to your Boomer parents, they may even leave you a few stray coins come check out time ......unlike my parents who gave me a swift kick in the ass on the way out the door.   

AccreditedEYE's picture

Only the very wise Boomers will have a few coins to pass along to their children. The great majority of the "Plague" (as I like to call them) will be destitute as they spent up all of their wealth trying to out purchase their neighbors in some kind of freak suburban spending contest. Sorry to be a wet blanket here, but X & Y have a TON of crap to clean up with little equity to collect for doing so. (while at the same time fighting Boomers for jobs that X and Y should have but can't because Boomers already SPENT their retirement and now are forced continue to work) Pardon me for not having any feelings of compassion, but this is the current State of the Union... and it SUCKS.    

Pondmaster's picture

AccreditedEye -


Quitcherbitchin !!! Cry me a river . Boomers died for your sorry whining  butt. Not our fault if you sniveling ,gotta have it now , no matter the damage brats have screwed up the markets . Don't see no boomers at the Squid , just young dumb selfsih self centered egotistical punks like you 

AccreditedEYE's picture

All top brass at the Squid are well as most of the other PD's. You invented the culture of debt. You developed and perfected short term-ism. You inherited a legacy from the generation before you and squandered it, passing much less in resources and opportunity to the generations that follow you. I'm not "crying" anything, I simply state the facts sir. Pardon me for not having sympathy for your generation, nor an overwhelming feeling to share anything with it.


101 years and counting's picture

your parents are getting greedy waiting for that extra 5%.  good luck to them.  i have a feeling they wont get it and will decide to liquidate down 20% from here.

Oracle of Kypseli's picture

Agreed. They should get out of stocks immediately. If his parents have let's say 500k in the market, hi-risking half a mil for 25k is nonsensical.

John_Coltrane's picture

Or at least buy some 5-10% OTM protective puts on their positions.  Cheap insurance at todays low volativility levels.  Buy insurance when you don't need it.

Lord Welligton's picture


You had already made the point.

Lord Welligton's picture

Should they not just suck up the 5%.

The peak was a mirage.

Lord Welligton's picture

"Hey! Think the time is right for a palace revolution
But where I live the game to play is compromise solution"

LePetomane's picture

If August and September don’t rebound sharply, banks will be forced to cut jobs.”

I love the smell of ransom notes during midterm season. It smells like, September 15-17th, 2008.

Problem Is's picture

"I love the smell of ransom notes during midterm season."

It does, huh...
It smells like you better pass some damn Wall Street friendly welfare in a BIG hurry you bribe takin' little Democrat whores....

Or it's SODOMY time!

RobotTrader's picture

John Brady?

Anyone see the size of the neck on that guy?

I wouldn't want to run into that guy in a dark alley.

I doubt I'd take his trading advice, either.

I'd probably do the opposite of what he recommends to the public.

chet's picture

Anyone know what percentage of total assets a $50 billion outflow amounts to?

Ragnarok's picture

Does it matter what the % is? These were the long term investors in equity, not the traders.  I see it as akin to the withdrawl of the reserves of a bank which the leverage builds itself off of.

whatsinaname's picture

great comment Rag.

aka the real money before th 300 % + leverage happens.

Ragnarok's picture

A volatile heart attack awaits the market as there is no more floor (long term fundamental investors) and no more ceiling (shorting is quasi illegal).  As I am not a robot with that can react millisecond by millisecond I'll watch this one from the sidelines.

Problem Is's picture

Aren't pension funds the last saps in the game?
Aren't pension fund managers bribed to be Wall Street's patsy losers with pensioner's money? CalPERS et al?

It's a novice's question....

Marvin_M's picture

Yes, I think it does matter.  I had the same question.  What is the first question that comes to mind when you hear a certain stock lost $10 a share?  And if for no other reason to support the dire nature of the reporting.


Bartanist's picture

In addition to the lack of trust in the market and the people who run it, we always knew that there would be large outflows due to aging boomer demographics. The demographics get a lot worse before they gets better.

RockyRacoon's picture

Wanna know where a lot of that money is?  Check this out:

In Cash Glut, Banks Try to Discourage New Deposits

With attractive lending opportunities hard to come by, bankers are finding themselves doing what would have been unthinkable just two years ago: discouraging deposits.

Most large and regional banking companies are drowning in deposits, raising concern that excess liquidity could be a drag on earnings in coming quarters.

Though interest rates on deposit accounts are manageable, due in part to historically low rates, costs remain associated with handling those relationships. Banks have also seen their ability to charge certain fees, on overdrafts, for example, constrained by the recent wave of financial reforms.

"The bottom line is that it hurts your margin if you get a lot of deposits and have nowhere to put them," said Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LLP. "The margin is the one thing banks are used to controlling, so it requires behavior modification to tone down an appetite for deposits."

"Fear of inflation, combined with uncertainty about the prospects of meaningful economic recovery, is causing some consumers to sit on their cash."

James Dimon, the chairman and CEO at JPMorgan Chase & Co., gave insight into such an issue with the New York company's middle-market clients. In early 2009, these clients had virtually even levels of loans and deposits, at $100 billion on each side of the balance sheet. "Now we have $90 billion of loans and $130 billion of deposits for those clients," he said during the company's July 15 call.

Much more very interesting reading here:

Kali's picture

Well maybe they should start lending money then.  Shoo, freaking banks!  They don't want to do what, traditionally, banks were for.  Now they want to trade on stock market and rip people off on credit card and checking fees. Har dee har.  So hard for me to feel sorry for them.  They slit their own throats.  Thought they were so smart.  Well, they outsmarted themselves.  I find it heartening that maybe people aren't as dumb as they think.

RockyRacoon's picture

They should start lending money?  To whom?  Those few who qualify under the more stringent guidelines don't need (or want) money.

More in the article:

With attractive lending opportunities hard to come by, bankers are finding themselves doing what would have been unthinkable just two years ago: discouraging deposits.

Their definition of "attractive lending opportunities" usually includes the borrower's ability to repay the loans.   Not so easy to do today.   I agree with your general analysis of bankers, however.

GoldmanSux's picture

Small, but this site has been consistent in pointing out since last summer, it has been about $5billion a week. So, 10 weeks worth. It is insightful to watch the CNBC show fast money. Not for their advice, but for their body language. They are hedge fund managers and are starting to suffer redemptions, if my reading of body language is accurate. Today's show was particularly insightful.

InconvenientCounterParty's picture

Financial sector layoffs right around the corner?

I like my soylent green with favas and a nice Chianti.

RockyRacoon's picture

Financial sector layoffs of a significant amount will bring out some whistle blowers as well.  It'll be good to see some former big hitters going for the 10% gov't fees for squealing!

OldTrooper's picture

Would they actually pay if you were ratting out their friends?

Problem Is's picture

They have no friends.
They are all rats that will eat each other... Beside spreading disease and filth... that is what rats do...

RockyRacoon's picture

Whatever pays the bills...

digitalhermit's picture

Everyone's got a mortgage to pay (the Yuppie-Nuremberg defense).



Vampyroteuthis infernalis's picture

The HFTs will start to cannibalize each other. No more retail money to rob. The question is when the feast will begin?