No End In Sight To Equity Outflows As Stock Boycott Persists Despite Largest Bond Outflow Since Lehman Failure

Tyler Durden's picture

For the second week in a row, those claiming that flows will shift away from bonds and go to equities are proven dead wrong. ICI has just reported that in the week ended December 15, not only was there another massive outflow, the 33rd in a row, from domestic equity mutual funds to the tune of $2.4 billion, but taxable and municipal bonds saw a stunning $8.6 billion in outflows, including another record $4.9 billion in muni outflows. At this point absent another major pull back in bond prices, we anticipate that bond inflows will once again resume, even as stock outflows persist indefinitely. Year to date investors have pulled just under $100 billion in money from US-focused equity mutual funds, offset by just $16 billion in comparable inflows into equity strategies via ETFs as we described yesterday. The reason for this seemingly endless boycott of stocks via the bulk of the population was given best by Geoff Bobroff, who told Bloomberg: "I would guess most retail investors are staying put
because you aren’t seeing the money go anywhere else." Another explanation, and just as spot on: nobody, save for a few hedge funds, gives a rats ass about manipulated stocks prices anymore.

More observations on this ongoing farce from Bloomberg:

Bond mutual funds had the biggest client withdrawals in more than two years last week as a flight from fixed-income investments accelerated.

U.S. bond funds experienced withdrawals of $8.62 billion in the week ended Dec. 15, up from $1.66 billion the week before, according to a release from the Investment Company Institute, a Washington-based trade group. Last week’s withdrawals were the largest since the week ended Oct. 15, 2008, when investors yanked $17.6 billion from bond funds.

Investors are retreating from bond funds after signs of an economic recovery and a stock market rally increased speculation that interest rates may rise. The selloff in Treasuries accelerated after the Federal Reserve last month pledged to buy $600 billion in assets to revive the economy. The 10-year note yields 3.35 percent, up from 2.49 percent Nov. 4, according to data compiled by Bloomberg.

The $250 billion Pimco Total Return Fund, managed by Bill Gross, had its first net withdrawals in two years in November as investors pulled $1.9 billion, Morningstar reported. Pimco Total Return this month said it is expanding its policy to allow investments in equity-linked securities for the first time since 2003.

We can't wait to hear how the spin doctors will adjust their stories now that the much anticipated equity inflow continues to be a mirage, as Americans realize all too well that the stock market, just like the mythical economic recovery, is nothing but a house of cards scam built on trillions of monetary and fiscal stimuli, even as the organic economy (and market) are a pale shadow of their former selves.

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tmosley's picture

Obviously people are getting cash to spend on Christmas!  This is bullish!


Arius's picture

or they are running out of cash after many months of unemployment...

these people do not live in the real world; for them if you sell smt got to buy smt about when you need the money to survive???

Lord Koos's picture

Thousands (maybe millions) of Americans are cashing in their retirement accounts early, just to pay bills.

unwashedmass's picture

bring on the dancing girls! boo yah! call jim cramer! we need the bagholders now bad....

maybe the government can mandate that all retail IRA holders invest their cash now! No holding cash! They have to buy and let JPM and GS rape them....

they own Congress, so let's see some action corraling the peasants after the first!

dwdollar's picture

Looks like it's time to implement plan U.S.S.R. or Ultimate Social Security Returns.  It's a new tax of 25% on top of what you already pay and will be invested on your behalf via JPM or GS.  It's called "Ultimate" because this plan has 0% change of failure.  It's called "Returns" because this time you'll be getting it back, unlike the old Social Security program.  We promise.

Dr. No's picture

Payable in a new IRA currency.  To be accepted at approved stores.

StychoKiller's picture

Saint Peter don't call me, 'cause I cain't go...I owe my soul to the Govt store!

bonddude's picture


-Tennessee Ernie Ford

parrumph's picture

The more that individuals take money out of the market, the higher it will be pushed.  Dow 36,000 if there are no investors left!

pemdas's picture

How can there be no investors left, when they pulled a cumulative $100 billion out of stock funds this year?  

Maybe the dumb money (mutual funds) will start coming back when the market is 1,000 points higher.

mynhair's picture

it where the sun don't shine.

AccreditedEYE's picture

he sure did, but I gotta say that I'm getting a warm feeling knowing every Wall St. strategist thinks it's to the moon next year.

Problem Is's picture

Bernake put...

      your BALD head...

             where the sun don't shine.


That's better...

Panafrican Funktron Robot's picture

"Pimco Total Return this month said it is expanding its policy to allow investments in equity-linked securities for the first time since 2003."

Bad news.

random shots's picture

We know how this works (some of us longer than others) goes up high enough that all the bond chasers will kick themselves for not being in equities. Stupid peasents rush back into stocks right at the top as the "house" sells into the panic buying. Market goes down and the cycle continues.

You think this is all new? That it has happen over the last 5-10 years? It is not. Just more people becoming aware. And just like gambling, people will come back even though they know the odds are against them!

Caviar Emptor's picture

Yup. There was selling into strength each day this week. Sign o smart money tiptoeing toward the exit

merehuman's picture

gambling is a lot more fun and more honest.

ebworthen's picture

CNBC was pumping equities today, inbetween noting that many stocks, and the indices, were at two year highs, then having more pump-monkeys on talking about buying financials. 


Croesus's picture

Alrighty, who junked that? :o)

It's a guy making fun of Chris Crocker, you know the "Leave Britney alone, NOW" guy, and has to do with crash JPM - Buy Silver.

It was wrong to junk that post.

A_MacLaren's picture

I wasn't aware that Jamie Demon and Blythe disAsters had identities on ZH to rate posts as Junk...

Problem Is's picture

Say... Isn't that MacIntyre's tartan...

You know one of those Clan Chattan rowdies...


ebworthen's picture

I enjoyed it, thanks.

Jamie Dimon and Banksters and Wall Street puds are worshipped like Brittany Spiers; the worshippers just think of themselves as better than everyone else and "doing God's work".



bonddude's picture

Is that Johnny or Edgar Winter ?

winks's picture

What will outflows be if we ever have a "down" week?

spongeBOB's picture

Do you recall those days a couple of years ago with "sell Imbalance" at the close?

scatterbrains's picture

outflows ? I thought they been flowed allready? I keep thinking the shadow market is probably trading aaple at 43.50 but for appearances the ppt has a few hft bots making it appear to be trading at 325.50  for the dumb retail guys like me sitting at the kitchen table with the laptop.

AUD's picture

nobody, save for a few hedge funds, gives a rats ass about manipulated stocks prices anymore.

Yet they seem to give a rats ass about manipulated bonds. Central banks don't buy alot of stocks, they prefer bonds, especially government paper.

Who's the chump?

spongeBOB's picture

Is there any data on what goes into "inverse" ETFs as well ?

RobotTrader's picture

Bed, Bath, and Beyond gapping up $3.00 to a fresh, new, world record high after hours.

Wow, I guess that the "Endgame for the Financial System", the "Total Collapse of the Global Economy", and the "Systemic Meltdown of The Consumer" has been delayed for a few years....


Cheesy Bastard's picture

Food stamp usage gapping up to 1 in 7 Americans, a fresh,new world record high.  Wow, I guess that the "Summer of recovery" and the "Economic santa claus rally" has been delayed for a few years...


RobotTrader's picture

Last I heard, food stamps is now the biggest freebie fraud game being played here in Los Angeles.

Virtually anybody can get food stamps if you fill out the right forms.

And people can buy anything with them:  Starbucks coffee, sheets and pillowcases at BBBY, Lululemon workout outfits, even yoga classes....

Cheesy Bastard's picture

Last I heard, Governator Arnold fixed all that.  Or was that the welfare credit cards he fixed?

gerd's picture

let me get this straight- you recognize fraud at the lowest

strata of society, but Fraud as a business model for TBTFs escapes you?!

Come on Man!

RunningMan's picture

Robo - I enjoy your bullish contrariness, but am a little confused as to how you reconcile a market that is headed up with the dismal facts facing this country. Unemployment stubbornly high, and the overall sales environment much more challenging. Results only look good relative to a lousy prior year. Maybe you don't try to reconcile, but still... things are tough, and it is hard to see how that can be good for the country, let alone stock valuations in the near term.

Caviar Emptor's picture

All good things must come to an end. The ice gets mighty thin way out here. The market i just a 'Funny Money Gauge'. If the spigot gets turned down even a bit, we're going lower. 

merehuman's picture

you are getting uglier to me as the days go by Robocreep. Dont you sense the underlying anger of the public?

You wont be needing the blindfold since your vision is already narrow.

And surely we will offer you a last cigarette.

Feel me, i am the common man.

capitallosses's picture

I'll be cruising Melrose in my 997 TT tomorrow. Where do I get dem food stamps? Time for a small refund of what I've already for!

Internet Tough Guy's picture

Yes, BBBY is the economy; well played. Now get back on the LA city bus.

spongeBOB's picture

BBBY who's biggest competitor went BK ? Best Buy is more of an indicator of today's consumer and they're not sharing the same enthusiasm for the "Consumer".

El Hosel's picture

  Circuit City went belly up, one of BBY main competitors, that should help them but apparently they are are not in the club... Its all smoke and mirrors, the fucking banks are insolvent and  they lead the rallys.

Home builders, Banks,  and Retailers rallied  because that was the "play of the day" put in by the "deciders". The Bernank and the TBTF Banks blasted those sectors with their Ol Buddy Hank Paulson's Digital Bazooka. Nothing new.

gwar5's picture

Retail goes up this time of year for Christmas. BBBY will be back down before 1QTR whisper #'s are out

My prediction for May 2011 -- oil/gas prices rise --- DIG up big by March.  You heard it here first. 

HarryWanger's picture

Thanks for the chart. I pointed this out on another thread as well. As with my company we are seeing another, albeit much larger, example of how strong the consumer is.

Also, as I mentioned on the other thread regarding my company's name and location, I do not want to list it here as it is a small business. However, if Tyler wants to verify my information, I will gladly tell him the name and website on the condition it is not listed here. At least that way, you will know from him/her/them that I am legitimate.

Caviar Emptor's picture

You're trying to say: 'micro = macro' . If I'm OK, then you must be OK. 

Not the real world, Harry. The pie is shrinking fast. That doesn't mean there aren't still some crumbs to be had

The Profit Prophet's picture

Wow...this is first ZH post.

Harry, you're a douche!  There is likely not a single thing that you have posted on ZH that is "legitimate".  You probably don't even have a Harry more than likely have a Bald Pussy! 

T.E.I.N. everyone. 

Ham Wallet's picture

Good smelling soaps & other assorted crap doing well during Christmas?  Reminds me of the Simpsons episode where Homer invested in pumpkins, noteing that they peak during Halloween.  Thanks for the insight *eyeroll*