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With Just Five Months To Go, Stocks Are 90% Short Of Meeting Goldman's Full Year Equity Inflow Target
In his earlier presentation, David Kostin (way back on page 28), candidly admits that anyone who follows rule #1 in finance, which is "Always Follow the Money" can easily skip through the first 27 pages of his presentation and realize that there is simply no way that the market can meet the permabullish strategist's expectation for equity inflows for the full year 2010. While way back in December, Kostin speculated that stocks are so undervalued they would see $600 billion in net equity inflows, with seven months down, there have been only $57 billion on inflows Year To Date, of which retail flows are actually negative $16 billion. Will stocks be able to make up the $543 billion shortfall in 5 short months even as the market is unchanged for the year, and would be far lower if it weren't for the constant HFT intervention on low or no volume to stuff assorted bids ever higher? The chart below shows just what a great disappointment the market has been year to date for all those who seek validation in sizable net inflows.
And the other scary observation we have been discussing for over a year, is that as Goldman acknowledges, "Mutual fund assets continue to shift from money markets to higher-yielding bond funds, not equities." In fact, it gets worse: while US households purchased $80 billion in corporate equities (including ETFs) in all of 2009, they have sold $125 billion in Q1 2010 alone. Something tells us that with the flash crash smack in the middle of Q2, this trend will only deteriorate. Lastly, it is somewhat sad to see that while US consumers were the de facto owners of the stock market back in 1946, the ownership stake of US households has plunged to just a third, as the ownership stake of mutual funds, ETFs, hedge funds, government retirement funds, pension funds, and international investors become an ever prevalent stakeholder in the cash flows of the S&P 500 companies (and in the mark-to-unicorn assets of the insolvent US financial sector).
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Let them eat cockle.
Be fair, HFT works both ways. In fact, I'd argue that HFT would love a down market more than up market because there's more volume to jump onto.
Think you have missed the fact that HFT guys at the moment anyway are skewed to the bullish side (read the HFT reference posted yesterday, great post). Understandably they play the long side (maybe its so intriguing that HFT computers are programmed on volume as well, low volume skewed bullish, high volume neutral to bearish), what I mean with understandbly is that I think HFTs could cause a flash crash every week if they wanted. But if they did that they would very fast be banned from the market and probably indicted for the irregularities they do every day, so the regulators are fine with law breaking as long as its on the bullish side.. Funny!
Could Goldman be right this time?
The bond bubble is alive and well. Just when the sheeple thought they had this bubble thing figured out, Bernanke feeds the bond bubble with the printing press.
This one is not going to end well, people are going to lose it.
You folks here have too much worries.
Not enough cupcakes, perhaps?
Look, the market is working. Everything will be fine.
The shortage of equity inflow is not a big problem.
We have many cards to play. For example, untold billions of dollars currently locked in physical gold and silver (and other commodities) **can** 'flow back' to where it belongs. The people in Asia (India, Vietname, China, Korea, Taiwan, Japan, Indonesia...etc.) hold large sums of physical gold & silver in their household. Did you remember back in 1998, Korean people sold their gold and silver to save their country from a total economic collapse? I'm not saying this is going to happen... but it is one of many possibilities that cannot be ruled out.
"THE SPICE WILL FLOW"...
You have nothing to worry about. And no, there won't be any 'manipulation'. We assure you, the market will be fair to both biggies and tinies.
Plans are in work, and everything will be fine.
Sweet lovely smell of freshly baked cupcakes will fill your heart.
Enjoy a great weekend.
Is gold price on a crash course?://www.commodityonline.com/futures-trading/technical/Is-gold-price-on-a-cra...
'Possibility of gold experiencing a meltdown'The author is head of emerging markets at Morgan Stanley Investment Management
http://economictimes.indiatimes.com/Opinion/View-Point/Possibility-of-go...
And always... the gold bug...
http://business.financialpost.com/2010/06/17/bull-and-bear-symposium-dow...
Smile!
You are the unicorn sh!$#ng rainbows on our ZH parade.
I sense a little Goldman deep inside your heart.
Hey SuperBull, you were supposed to get away from the computer this weekend and bang your wife or something like that I remember. You're posting at a 2:00pm on a Sunday! Sacre Bleu, mon dieu. You are a hypocrite.
I also delight in your ignorance. You post three links, 1 for and 2 against Gold. Are you drunk right now or just high?
Are you coming or going? Are you aware that just about every economist thinks the economy is in la toilette and will be indisposed for many years to come?
Oh how glorious your lack vision, I bathe in your stupidity and fart in your general direction.
a little mis leading in that mutual funds are a proxy for households...
Check the numbers guys, is it me or is this complete nonsense?
Negative YTD numbers get doubled when annualised. So (16)-> (33), (65)->(130).
All this makes sense at end of Q2.
However positive numbers get, erm, a bit more than doubled. So 100 -> 400, 35->140.
Both those make sense at end of Q1.
WTF is GS doing? They blatently aren't going to get $600Bn inflows, and their revised $384Bn is clearly nonsense too, its just completely illogical.
If Mr van Praag is reading, you need to find the analyst who put this together and fire him/her.