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Largest High Grade Bond Outflow On Record
While it was no surprise to readers that equity mutual funds saw the 32nd consecutive outflow from domestic stock funds (for a total of $95 billion YTD), what was far more surprising is that flows out of credit, and particularly high grade, surged. As Bank of America notes, "high grade mutual funds saw outflows of $2.5 billion, the largest dollar amount on record and just the fourth occurrence this year so far, according to data from EPFR." The question then becomes where did, and will, all this cash go: if now following such a massive outflow from the traditional flow safe-haven, no money still goes to equities, then it will be fairly simple to conclude that no matter what happens, that equities are now thoroughly embargoed by the vast majority of retail investors: those that, incidentally, account for just under 40% of market capitalization (a number which curiously is almost comparable to the amount of stimulus notional, both fiscal and monetary, since the Lehman crash).
From BofA:
High grade mutual funds saw outflows of $2.5 billion, the largest dollar amount on record and just the fourth occurrence this year so far, according to data from EPFR. As we highlighted yesterday, negative net flows in high grade funds tend to follow large sell offs in rates, which has occurred since the beginning of this month. In other asset classes, high yield mutual funds saw $222 million in net flows, the second consecutive weekly inflow, but lower than last week’s figure of $533 million. Factors pointed to a mild but positive number, as daily flow figures were inconsistent, with two positive and two negative readings. CDX indices performed well early in the week, but softened towards the end, also providing an inconclusive signal. Net flows from institutional and retail investors were largely split, with institutional investors reporting inflows of $153 million or 0.2% of assets, and $120 million or 0.2% of assets from retail. Importantly, non-US domiciled funds saw their third consecutive weekly outflow, $28 million this week, compared to an inflow of $233 million from US domiciled funds. Finally, inflows to loans reached a record by dollar amount, according to AMG/Lipper data.
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Even without retail investors, I think the FED can still push the market higher. At one point, the entire market will be held by the FED and their puppet companies. The DOW will reach 20,000 before the end of 2011.
(d)
Simple, it's going to PMs, land, supplies and hoarding.
And of course paying down the one debt that can and will be collected, taxes.
A broken dam, unrepariable at that will continue to haemorrage, no surprise.
ORI
http://aadivaahan.wordpress.com
Thats too much $ to fit under a mattress. PM's fo shizzle.
My prediction is that within 2 years, equities will be able to be traded 24/7 on smartphones and iPads.
And as soon as the $250 billion a year sports wagering public finds out how much safer and easier it is to bet on stocks while controlling your risk vs. attempting to beat the Vegas lines.....where risk control is very difficult.
You can put a stop loss on a stock order.
You can't put a stop loss on Michael Vick....
The public will once again return to stock trading with a vengeance.
Who knows, maybe even fx trading and commodity trading will also be popular, especially if we take off in a Weimar meltup.
(d)
Your comment made me chuckle as I've already seen the exact same thing. During the last week in November I went for a beer with a few friends to a local "old boys" club. The regulars were in there. These guys used to talk constantly about sports (and their sports bets) but were now talking constantly about small cap speculative stocks.
A couple of guys came over to our table (as two brothers at our table were regulars in this club) to compare stock quotes (using their phones). One fellow commented that he has given up on sports-line betting and is playing the stock market exclusively.
I agree with your assessment 100%.
By the way, have a Merry Christmas.
You're dreaming. All the people who invested from the 90's are out. And their kids, as my kids refuse to invest. These are working age kids in their 20's and know it is rigged. My kids especially. So enjoy trading with the robots.
Definitely see that generational effect, and I was very active in the '90s. Younger gen also has less aggregate capital to place at risk due to a shrinking economy. I've been in the game a long time with a long memory. Stock manias come in waves. But there are large cyclical and generational trends that affect the magnitude of the waves.
robot, I always get a kick out of your posts and appreciate the alternative perspectives you bring to the site.
You can put a stop loss on a stock order.
You can't put a stop loss on Michael Vick....
... gave me a good chuckle.
Now, if you're playing fantasy football, and depending on your league's rules, you CAN put the equivalent of a stop loss on a player. Cheers.
B of A says "high grade mutual funds". The word "bond" isn't used
Watch shares outstanding on LQD. It's been showing outflows for awhile and been accelerating. HYG and JNK seem stable on flows. Surprisingly mub has been stable. Dealers must be happier long shares of mub than underlying bonds.
Two words: Off Shore.
+1.....
Offshore might be a superior alternative to equities, specifically the Swiss Franc.
Personally, I think what will happen is what we saw Friday and so far today.
Namely, people who left bonds . . . will return to them. There will be no growth. It is scared money and scared money (the vast majority of money is rightfully scared) will never, EVER go to Gold. Nor will it go to stocks.
It will go to US bonds, as it always has. There, it will be protected from default by printing and from inflation by perpetual oil choked zero growth.
How much money is locked up in 401K's? Has any of this money been shifting into money markets?