ICI Reports Ninth Sequential Equity Fund Outflow In A Row
ICI reports that topping off the underperforming H1 market action was yet another equity market outflow, this one to the tune of ($227) million. This represented the ninth sequential domestic equity mutual fund outflow in a row, and accounts for fund flows of over ($30) billion YTD. This follows on the heels of last week's once again deteriorating AMG/Lipper HY fund outflow report. Retail investors are not only not participating in the market, but are actively continuing to redeem capital out of any form of equity, transferring it into taxable bond funds. Mutual funds continue to not only be low on cash, but facing ongoing redemptions. Luckily, HFTs have none of these problems: all they need is to sniff out a major block bid from a dealer with discount window access, front run it while blowing up the NBBO via subpennying, accelerate the momentum, without needing any actual material capital, and end flat on the day. Mutual Funds will of course take the pick up in price levels and thank HFTs kindly, knowing full well they are unable to be marginal price setters any longer. So aside from the logistics of ramping the market on capital liquidations and margin calls, 4% market surges such as those seen in the past two days make perfect sense.