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Equity Outflows Unstoppable, As 7th Sequential Outflow Of Domestic Equity Funds Brings Total YTD Redemptions To $29 Bn
The market has gotten to the point where, at least according to ICI, no matter what stocks do, all equity investors do is pull money out. The week ending June 16 was the 7th sequential week in a row to see domestic equity mutual fund outflows: $1.8 billion was redeemed, bringing the total for the 7 week period beginning May 5 to ($30) billion, and year to date to ($29) billion. Yet instead of following the trail of money (wrong direction), stocks are hanging on to the EURJPY and the several HFT algos, which together with the prime broker brigade keep the market afloat against the natural flow of funds. And even as equity redemptions refuse to abate, inflows into bond funds are as resilient as ever, perhaps explaining the surprisingly strong bid for both IG and HY over the past two weeks, where some very shady bonds have broken above par as HY underwriting syndicates hope the issuance window stays open at least one week more, before we see yet another record HY fund outflow.
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If CNBC and Cramer couldn't convince the American public to join this Kabuki dance by now, it ain't ever happening. The depression is an open secret. The FIRE complex must be tossing and turning at night. Good luck Warren et al....
Curiously there seems to be an inverse relationship between their actions and BP in the Gulf of Mexico.
Where they are furiously committed to plugging and staving off the sucking vacuum and vortex of a financial blackhole, BP is...well, you know the story
A day is coming, very soon, where we will see a 2000+ point range in the market. Flash crash followed by a rapid rebound followed by another crash and so on. Finally and unequivocally, the jig will be up, the proverbial cat out of the bag. ALL public confidence in our sham/ponzi markets will be shattered permanently.
...and this will coincide with much of the general public losing all confidence in our government which has strayed too far from the framework set forth by our founding fathers...
Gott mit uns...
there is a name mapping error on the domestic flow graph..... just sayin'.
<Outflows?! What are you guys so worried about? As long as AAPL keeps going up we're as good as gold...>
so people are piling into treasurys.....gee, I wonder what the bubble is ?
Is it that hard to spot leverage?
http://finance.yahoo.com/echarts?s=IYR+Interactive#chart1:symbol=iyr;range=1d;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
What were the numbers today?
*This is a small snapshot in the grand scheme of things.
A massive dash flash crash will occur within the year (bonds)
Well, if a share of stock remains a valid ownership share in a legally incororated, exchange-traded corporation why would you care if HFT computers whip their values around like a yo-yo? If the ownership contract is good it is an opportunity, no? And if the argument is all securities will be void and worthless what is the point of talking about it. To abandon stocks is to predict the end of Capitalism. In which case be careful what you post online! God Bless.
First, when you buy a stock through your brokerage, you are buying the 'privilege' of being an unsecured creditor to the brokerage, who promises to hold the stock you think you bought in street name (i.e. not your name). Unless you take delivery, you are a creditor to the brokerage. Second, you still call whatever this is capitalism?
Bingo!
"To abandon stocks is to predict the end of Capitalism."
Maybe people are abandoning the ponzi?
Perhaps capitalism with surive and thrive in another form of investment, the bond market.
Becoming more and more apparent every day that it's [capitalism] survival will be in the form of underground economy.
**WTB - Leathers and 170' of sucker rod for a hand pump.
+100% out of equities!
analysis of where the money flows are coming from are worthwhile.
However, describing a rising market as one with cash withdrawal is difficult to substantiate.
Attributing the rise to HFT would also ascribe that HFT has money in the game at the End Of Day and that it is increasing to compensate for the equity withdrawals. The equations won't balance. I don't have the answer but HFT is not a net cash investment source.
There was a distinct mention of primary dealers somewhere in there as well
What's wrong here?
Isn't this a good sign for equities and a bad one for credit?
Send it in!
It only goes up bitchez.
Only a small chunk of the population can get rich off of equities. That chunk of the population keeps getting smaller and smaller by the day.
The bounce in equities once the sellers have been exhausted should be epic.
The dream is always the same every night for world Central Bankers who now dream in synchrony: I wake up, pick up my iPad and there it is, another piece of news the economy is melting. Then the eerie smiling icon of Tyler Durden breaks in on the screen, laughing and getting bigger, laughing harder and getting even bigger!
I wake up screaming.
Contrary indicator?
It´s again and again and again the same story, repeating itself in 90 % of the case. As sson as retail investors leave the stock market and sh.t their pants => buy, buy, buy, buy, buy, buy, buy, buy, buy....
Maybe that has been the story, but when will the current generation of people come back into the stock market?
Do you believe the baby boomers are coming back in full force like the good old days?
The boomers are too close to retirement age to feel comfortable in the markets. They're not going back.
you are correct...this is a generational correction.
a market is a "seller" and a "buyer", and the "buyers" are leaving, and will stay out because they choose to or because they are out of discretionary money, for the rest of their lives.
ergo: the market (in its current form, which is far from true "capitalism") is in its death throes...
"7th sequential week in a row"
should read:
"7th sequential week"
http://noir.bloomberg.com/apps/news?pid=20601103&sid=a3ZW8JOYef8U
Macro Hedge Funds Add $2.5 Billion as Global Trades Proliferate
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By Katherine Burton and Saijel Kishan
June 24 (Bloomberg) -- Hedge funds that bet on economic trends are attracting cash at almost double last year’s pace as they seek to profit from events such as Europe’s sovereign debt crisis and China’s decision to let the yuan trade more freely.
"last year's pace" was abysmal. Doubling a small number is easy.
Do not discount the possibility that just as the housing/mortgage buffet lines have been shut down, many of those who are not walking away from homes and defaulting, have only one bag of goodies to reach into - their piggy banks.
I think their are many retirement & college accounts being raided to fund the purchase of new iphone4s.
Uhhh, I think your math is a little fuzzy here - you say that outflows from mutual funds from May 5th to now was ($30B), but YTD outflows were ($29B)?!! How does that make any sense. And, I couldn't help but notice, the inflows, according to ICI, have been ramping up over the last week. I'm just going by the link you provided.
Am I missing something here?
I am skeptical about that contrarian indicator theory. It's an argument usually offered by fund companies who are trying to keep people's money in the game. They'd show charts about how this "correlation" was so secure, only they'd only use a time frame going back to the 80s (i.e., structural bull market). Does that mean it will hold in a structural bear? I doubt it. I think the sellers are leaving the market, stocks and bonds probably have net outflows this year.
Also, Augustus, I'm skeptical about your argument on HFT as well. The HFTs are traders moreso than proprietary. They are, as I understand it, totally focused on the transactions. If they amp up bids by the millions (billions, trillions), that would look like increased demand and would drive stocks up, no?
Anyone got the same stats for Europe?
Question for the crowd (or Tyler):
On this site, we've talked about the lack of volume in recent rallies. If HFTs account for much/most of that volume, doesn't that mean that actual volume (real, true volume, as in buyers buying stocks) is incredibly low? If you could somehow adjust for HFT, then the real volume must be miniscule. Know what I mean?
My only thought at the moment is that next Wednesday is the end of quarter, so I wouldn't be surprised in the least to see some sort of bounce from here.
Last night's moves around the FOMC were certainly very strange and the hour or so before, to me at least, felt very 'algo-ish' - the minute charts showing slow pips up followed by a sudden drop of three or four pips every so often, followed by slow pips up again. And the 12 point move in S&P action just after the announcement was weird.
DavidC
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