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One Week After Flash Crash, Investors Continue Pulling Cash From Equities As Money Market Holdings Plunge

Tyler Durden's picture




 

One week after the flash crash which caused the biggest redemptions from domestic equity funds in years, equity mutual funds continue to see accelerating redemptions, with Lipper/AMG reporting that equity flows in the week ended May 19 came at -$4.3 billion. We are confident that next week's data will show an exponential spike in redemptions after fears of global contagion and rampant liquidations finally shift across the Atlantic. High beta credit in the form of HY also saw a material outflow of $378 million, however less than last week's near record $1.7 billion figure which ground the primary HY market to a stop. Other capital flows were mostly noise with the exception of money markets, which once again saw a staggering outflow to the tune of $27 billion, or 1% of assets, bringing total YTD money market redemptions now to $410 billion! Somehow, we have the feeling that with stocks now negative for the year, all those lemmings who got on the momo train and shifted their money market holdings into stocks, both domestic and foreign, are now regretting it.

 

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Fri, 05/21/2010 - 09:27 | 365477 MaxVernon
MaxVernon's picture

So, I checked Investopidia, but I still cannot figure out what HY is.  High Yield?  But High Yield what?  Bonds?

Fri, 05/21/2010 - 09:29 | 365481 Whizbang
Whizbang's picture

These used to be called junk bonds before someone with a marketing degree was hired by one of the wallstreet firms. That is opposed to IG which is investment grade.

Fri, 05/21/2010 - 09:31 | 365485 MaxVernon
MaxVernon's picture

Thanks!

Fri, 05/21/2010 - 10:18 | 365598 Calculated_Risk
Calculated_Risk's picture

Like going from "toxic assets" to "legacy assets".. LOL, the bullshit they try to push...

Fri, 05/21/2010 - 09:27 | 365479 Whizbang
Whizbang's picture

Pulling money from equities and covering forex shorts. It appears this will continue today as well. Does anyone have any idea how big of a squeeze this will be. A few days ago, every major bank in the world was short the euro and yen. If this is going to be a protracted event, it is going to get very very messy in equities.

Fri, 05/21/2010 - 09:30 | 365483 MarketTruth
MarketTruth's picture

GET OUT of Money Market as they can legally lock you out of accesing your funds at their whim.

Fri, 05/21/2010 - 09:35 | 365493 ArkansasAngie
ArkansasAngie's picture

Surely you jest.

They said they'd never do that ... except in an emergency.

How do you stop a wounded elephant?  Bazooka? 

Not with PETB (politicians for the ethical treatment of Banks) watching every move. 

 

Fri, 05/21/2010 - 09:53 | 365536 Fish Gone Bad
Fish Gone Bad's picture

Denninger wrote about the new money market rules : http://market-ticker.denninger.net/archives/1909-Money-Market-Funds-No-L... Pretty scary stuff.

Fri, 05/21/2010 - 11:13 | 365710 MarketTruth
MarketTruth's picture

It is and will say again to ZH'ers:

GET OUT OF MONEY MARKET NOW!

Fri, 05/21/2010 - 11:00 | 365679 Crab Cake
Crab Cake's picture

Circumstances sure are starting to get that exigent feeling...

Fri, 05/21/2010 - 09:33 | 365490 MaxVernon
MaxVernon's picture

And what is with gold dropping like a rock?  Isn't a scared market supposed to run to safety?

Fri, 05/21/2010 - 09:35 | 365498 ArkansasAngie
ArkansasAngie's picture

Not when there is no such thing as a free market

Fri, 05/21/2010 - 09:36 | 365499 Internet Tough Guy
Internet Tough Guy's picture

Winners get sold to cover losses. It's not down much.

Fri, 05/21/2010 - 09:37 | 365501 snowball777
snowball777's picture

Likely a result of margin calls...it's been up, so that's what they can sell to cover their asses.

Fri, 05/21/2010 - 09:37 | 365503 primefool
primefool's picture

Gold is safe? Just because a bunch of metals brokers repeatedly claim its safe all over the internet - does not make it safe. Gold is just another risk asset. Unfortunately over the last several months hedge funds sem to have piled into all things gold. Anything hedge funds pile into - is unsafe. Why? Because HFs are short term traders and they dont have permanent capital. So they are mostly pure momo traders and when they get redemptions they have to sell- fast.

Fri, 05/21/2010 - 10:17 | 365596 Spitzer
Spitzer's picture

Ok buddy, short gold. bet against John Paulson, Soros et al.

Fri, 05/21/2010 - 09:38 | 365504 Whizbang
Whizbang's picture

Gold has been treated like a mix between currency and an equity as hot money blew a bubble underneath. This is a problem because it is a Commodity. This site has a ton of goldbugs, but I think most people knew that the market was overheated. The bubble is being drained as investors pull money from equities and commodities to cover fx shorts. Hopefully it drains and doesn't pop.

Fri, 05/21/2010 - 10:19 | 365602 Spitzer
Spitzer's picture

1180 as we speak ohhhh !

Gold was up $25 the day of the flash crash. Another flash crash imminent.

Fri, 05/21/2010 - 10:34 | 365634 Whizbang
Whizbang's picture

So what commodity dealer do you work for?

Fri, 05/21/2010 - 10:44 | 365651 Pegasus Muse
Pegasus Muse's picture

COMEX expiry is next Tuesday for gold & silver.  Standard beat-down of metals by the bullion banks in progress.

Plus some people said funds have sold gold this week to raise cash due liquidity issues.

Fri, 05/21/2010 - 09:41 | 365494 Flounder
Flounder's picture

"The real news is that already notorious photo: the president of Brazil, our largest ally in Latin America, and the prime minister of Turkey, for more than half a century the Muslim anchor of NATO, raising hands together with Mahmoud Ahmadinejad, the most virulently anti-American leader in the world"

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/20/AR201005...

 

Fri, 05/21/2010 - 11:00 | 365680 Apostate
Apostate's picture

I dunno how many times this has to be said for it to sink in... Mahmoud is merely a figurehead. The Iranian presidency is essentially powerless.

WaPo can't go bankrupt fast enough. I loathe those bastards.

Fri, 05/21/2010 - 13:01 | 365975 Porter
Porter's picture

So whose finger will push the button that launches the rocket from Iran?

Fri, 05/21/2010 - 09:39 | 365505 mikla
mikla's picture

Yes.

Fri, 05/21/2010 - 09:37 | 365500 Minyan Vince
Minyan Vince's picture

Why is retail buying such a good contrary indicator...

Fri, 05/21/2010 - 09:42 | 365514 Chemba
Chemba's picture

Tyler,

How do we encourage more thoughtful dialogue on the zero hedge comment forums?  I'm sure you have noticed that 90% of comments (not necessarily this thread, but in general) are sarcastic and/or juvenile attempts at humour while adding very little to the community's knowlege.  It's a shame, because the folks here are smart, including those emphasising sarcasm rather than insight.

Perhaps a rating system tagged to ID.  We could even have separate ratings for insight/additive vs humour (since I value humour sometimes as well)

What do you think?

Fri, 05/21/2010 - 09:46 | 365523 jdrose1985
jdrose1985's picture

Don't forget the ignore function

 

Fri, 05/21/2010 - 09:49 | 365527 Porter
Porter's picture

Send everyone to Eton for a stiff upper lip implant?  Boring.

Fri, 05/21/2010 - 10:01 | 365553 doublethink
doublethink's picture

 

Isn't Eton a place in LA for boob jobs?

 

Fri, 05/21/2010 - 10:44 | 365652 Whizbang
Whizbang's picture

Sure, I would love to see the conspiracy theorist, metals salemen, and trolls booted out. But I really like the feeling of the open forum as well. I also like to make infantile attempts at humor...Penis Penis Penis, Vagina Vagina Vagina

Fri, 05/21/2010 - 11:09 | 365701 Double down
Double down's picture

Qualifier:  Yes to all the above, but the humour is a hugh reason for why I am here.  Furthermore, this is a "social club" as well.  We come here to play as well as learn. 

Careful mucking with a great thing.

(Would like to see a + button) 

Fri, 05/21/2010 - 09:43 | 365515 You Cant Handle...
You Cant Handle the Truth's picture

Look at that volume today!  Wow.

Fri, 05/21/2010 - 09:46 | 365522 You Cant Handle...
You Cant Handle the Truth's picture

if (volume.isUp() ) { shortLikeFuck() }

if (volume.isDown() ) { buyTheTown() }

 

Fri, 05/21/2010 - 09:48 | 365525 snowball777
snowball777's picture

You forgot some semicolons, but extra credit for rhyming. ;)

Fri, 05/21/2010 - 09:56 | 365537 You Cant Handle...
You Cant Handle the Truth's picture

Thanks.  Rhyming code is self documenting.

Oh, and my excuse for the semicolons:  it's Scala, not Java.  Same VM though.  :-D

Edit:  market is now above open, so if it closes up, I'm going to blame the business analyst and not the coder. 

Fri, 05/21/2010 - 10:06 | 365569 snowball777
snowball777's picture

Ahh...I went straight to C++ since I write videogames for a dayjob; I helped make the only economy more virtual than this one...WoW.

Let's hope this bounce is short-lived...

<levers up more SDS>

Fri, 05/21/2010 - 10:32 | 365623 You Cant Handle...
You Cant Handle the Truth's picture

WoW was fun.  (But I haven't played in years.)  Better than EQ, for sure.  But I miss the user-extensibility of old MUD-engines like DikuMud, LPMud, MUSH.  That's what I used to build the C/C++ engines for.  Of course, user-created content would require a fairly sophisticated system to prevent economy problems, but it's not impossible if the components and special procedures for the items are properly balanced.

I've still got a copy of the original Stroustrup C++ book, and the "draft standard library" book too;  and C++ FAQs book (back when they published faqs as books).  But I couldn't write a lick of C++ these days without learning it all over again.  Right now I'm enjoying getting reacquainted with Objective C and Interface Builder, which I haven't touched since the NeXT days.

Odd to meet another game coder and financial person on here, but that's what Zerohedge is all about I guess.

Take care.

Fri, 05/21/2010 - 10:38 | 365640 Whizbang
Whizbang's picture

Seriously, volume is through the roof. Everyone be careful, the elephants are scared and they are stomping around the room like crazy. Whipsaws are the order of the day today.

Fri, 05/21/2010 - 09:44 | 365518 doggings
doggings's picture

Can't wait for Dow 10,000.

lol, 12 points to go, might even be there by the time Ive typed this..

 

Fri, 05/21/2010 - 10:36 | 365637 Whizbang
Whizbang's picture

The psychological strength of the 10,000 dow will make it hard to break, not to mention that the crash control will be fighting it tooth and nail.

Fri, 05/21/2010 - 11:23 | 365741 doggings
doggings's picture

indeed, i expect that's the line that must be held at all costs.

Fri, 05/21/2010 - 09:53 | 365533 kalum
kalum's picture

I.m ignorant. Where has all the money gone? All to cover FX shorts? Where else? Obviously, not going to gold. Please enlighten.

Fri, 05/21/2010 - 10:41 | 365650 Whizbang
Whizbang's picture

Yes, my theory is that is has gone to cover shorts and make margin on other losing bets. The problem isn't the fx shorts though. Its the central banks flooding the markets with capital and buying the dips on huge volume. Its just causing chaos. Stay the hell out unless you are very savy. Although the no nonsense bet is to be in the equities that were beaten down most yesterday, as there will be an inevitable bounce.

Fri, 05/21/2010 - 10:01 | 365551 cowdiddly
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"Welcome to the machine" Pink Floyd

Do NOT follow this link or you will be banned from the site!