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Retail Capitulation: Stock Outflows Surge By Over $7.5 Billion In 18th Consecutive Week Of Record Stock Market Boycott
This is getting really ridiculous. In the week ended September 1, domestic equity mutual funds saw $7.5 billion in outflows: the biggest one week outflow in 2010 since the $13.4 billion redeemed in the Flash Crash week. The trend developing is simple: retail investors withdraw increasingly greater numbers in weeks in which the market is down even a little, and withdraw just a little in weeks in which the low-volume melt up presents them with an opportunity to get out at a better price level. Of course, the common thread is that as we have said for 18 consecutive weeks, retail just wants out. And now that, courtesy of Mary Schapiro, retail has finally put two and two together, and knows that even the regulators are concerned about redemptions, which are perceived by the SEC as being a function of distrust in market structure, we now fully expect more and more redemptions.
Year to Date the total pulled out is a whopping $62 billion, incidentally with both inflows and the market having peaked at the same time in April. On thr other hand, if the market were tracking mutual fund redemptions (whose net liquidity is now down to just 3.5% of assets and getting worse by the day), the S&P would be in the 900 range. Once the destructive impact of the Fed's daily meddling in the stock market is eliminated, it will get there. The longer stocks are artificially held up at current artificial levels, the greater the crash when reality and anti-gravity finally meet.
PS, for those confused by contrary media reports elsewhere, ETFs, as we disclosed previously, saw a major outflow in August as well (except for notable gold ETF exclusions). This is a secular rotation out of stocks. Period.
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Game, set and match to Mr. McHugh.
Game, set and match to Mr. McHugh.
Yup, just like they tried to do to our social security a while ago.
Oh wait, they borrowed it and won't pay it back, that's how they got it [headsmack].
Pair this article with the previous one,
"The Dangers Of Mass Psychology (Or Why Overwhelming Majorities Are Always Wrong)"
and one would conclude the market should go up, because the mass psychology is to sell, right?
There is still hope for the masses
this hippy diatribe is proof positive that there is no helping the masses.
What's the market cap of the NYSE? 10-12 trillion or so. 62 billion is a drop in the bucket. The last time I tabulated the data, the retirement market (which is really what you're calling the retail market) was responsible for around 3-4 trillion in equity assets, which makes a $62 billion drop merely noise.
are you serious? You actually think that 18 straight weeks of outflows isn't significant? That means the retail crowd is not putting any net new money into the market and that is ok?
18 weeks of outflows? It's been going a lot longer than that. It's been awhile since I've tracked the weely ICI releases, but if memory serves, 2009 was a net loser for equity fund inflows. There's nothing new here.
i'm quite bearish, but the more retail wants out, the more i want in.
i do think the numbers are squat though, 62b is a drop in the bucket, so not time to go long yet.
critical thinking hat time.
The reported outflows. Do you BELIEVE what they are reporting? Don't!!! Don't trust anyone with your money. Nobody! least of all Wall Street.
This is war and it's total war to the end. So expect anything and everything from everyone who has money to lose if the maket drops. So, if and when it drops. I'm more on the when side; it is the end of the cold war!
Up to now, just battles and buying time. Avoiding reality. Not much longer, not much longer. Then it heats up.
Ponzi schemes are not designed to pay out. Please tell me you don't believe that if we liquidated the market we'd get 10 Trillion out.
Tim Geithner is still a phucknut.
Bernanke is a bigger phucknut.
Larry Summers is a phucknut in a complete genus and species of his own.
So much for my contribution this evening....
Did I mention that ZH is unquestionably the best financial blog in the world?
Missed you motherphucker !!
peace pal
thanks miles!
I read zh daily, just haven't been commenting much, mainly due to lack of time to write something intelligent (though calling geithner, bernanke and the diet coke boy phucknuts is clearly an intelligent statement).
hoping all is well with you!
Excellent. Thanks. Hope ya got that hello from afar earlier this year. Best wishes brotherman as your sail gathers up some cool breezes.
I did receive that 'hello'....howard is a fine man, for sure.
just waiting around for the spx to plummet, hopefully will teach the spinmeisters and crooks a lesson or two.... i still think we end up mimicing the 1930s with a long, slow grind into the bowels of a secular bear.
Oh the bear is back...and it will grind lower. But flashy crashies will stir it up too with 56% of all trading being HFT and 11% retail. LOL!
So glad to see you commenting DH. I have been doing the same as you for the most part--reading and not commenting for quite a while. I cannot tell you how happy I am to see the word phucknut in print--and you. You have been greatly missed. Can you believe this junking bullshit? What a bunch of phucknuts!
Unjunk.
Me likes me deadhead! Glad to see you posting, good to know you are out there. Hope the new job is going well.
Sometime or other we are going to need to hear from that phucknut Rham, who you channel so well.
Peace.
Two papers from TrimTabs you may find interesting and perhaps useful.
A tickler from one of them:
TrimTabs Research Note: Flow of Funds and Institutional Investors’ Returns
http://www.trimtabs.com/global/pdfs/Flow_of_Funds_Inst_Returns.pdf
TrimTabs Research Note: Using Equity ETF Flows as a Contrary Leading Indicator
http://www.trimtabs.com/global/pdfs/ETF_Flows_and_Market_Returns.pdf
-profd
"The mysterious ?household sector apparently timed the 2008 crash—and the subsequent rebound—perfectly."
x marks the spot of pandora's box
This is Layne, talk after the beep.... except my broker who can go fuck off.
It's not a "Boycott" -
The fact is - people are selling because they need the money to live.
I know of several cases personally.
By the pigs propping this cesspool up at these levels, they are allowing people to monetize at prices they are very lucky to get out at......
Propping up? Don't you mean shorting it? You have any idea how friggin cheap the market is right now? Certainly "the pigs" wouldn't allow these retail people to "get out" at a good price, now would they?
I'm sure that's part of it.
But I can also tell you, this is the longest I've gone without making a trade in ten years, and I won't be trading again (long or short), until GE files bankruptcy, because until that happens (and we start putting crooks in jail) we're living in never-never land.
I don't think they intended to cash people out at these levels, they were trying to restart the ponzi. I think they are genuinely confused and dismayed that the masses aren't falling for it this time.
Agreed.
This is one of the most interesting trading periods of our lives. For once, I think retail investors have folded it in-- and I do think it is for a multitude of reasons.
While the retail investor can always go back in and provide the equity market support (at just the wrong time), I'm thinking this time may well be different. Retail people who got fed up with daily low volume ramp jobs figured out the casino where the dealer always wins.
The retail investor has, perhaps, also figured out that the market structure has significantly weakened with HFTs dominating volume and incremental price direction.
For those who are contrarian and are willing to make another bet against the retail investor need to keep in mind a couple of things: (a) they are entering under a much weaker and unstable market structure; and (b) even some smart hedge fund managers have decided to fod their hands as well... and not because of net redemptions.
The Fed is an ultimate battle between saving the dollar and crashing the equity markets; or printing so much currency that the dollar risks going into a tailspin and into a full-fledged USD crisis. Does the Fed REALLY want to have the world lose total faith in its reserve currency status and put the Fed's own existence at serious risk? Perhaps... if the Fed is planning to be a major part of the new currecy order.
We may not know it now, but perhaps, the Fed has already chosen. I do think they will continue the same ZIRP/QE policy for as long as they can get away with it. When that becomes untenable, my guess is that the Fed will sacrifice equity prices to keep the bondholders from hitting the exits. The Treasury stil desperately needs yields as low as possible across the curve. And I think will intervent to support that above all else.
An equity crash is not a desired option. A bond market crash at the juncture would be catastrophic, and should be avoided at all costs, pardon the pun. A currency crisis would be catatrophic-- unless it is engineered with precision and forcefulness.
Feels engineered now. I have never seen this much open discussion about hyperinflation in the press, ever. I am not sure what you meant though. Are you saying that a clear plan for transferring to the new currency would need to be out here and debated (with a Fed defined frame) already, before they let it be defined as failed? Is that forcefulness and precision?
You think PCLN is leading stock? What about DLTR?
They are both rallying and profitable because of PRICE WARs and DEFLATION.
Hardly indicative of a robust economy / rising tide.
big rally is ahead.
Are you throwing your penny into the wishing well?
You guys think this whole collapse thing can wait until the NFL season is over - I mean it's really inconvenient timing... cause, you know, the Jets finally have a good enough team to make a serious run and it would be a real shame to have a complete economic meltdown distracting from MNF.
NFL = Perfect distraction.
AUM in the mutual fund industry is roughly $20 trillion. So while impressive, the $60 bn or so coming out YTD represent something like one third of one percent of the assets. This is small scale, for now, although I do believe there is a growing disenchantment with stocks.
As boomers start nearing retirement or retiring, it would be natural for them to rotate out of equities into what they perceive as less risky investments, and then to start liquidating in order to pay living expenses. Which seems to be what we are seeing. And this trend would probably increase in the next decade as more and more boomers retire.
But for each seller, there must be a buyer. So I wonder who is buying these equities? Where is the money coming from?
I am not questioning the posting. But I feel that it is only telling half the story. I wonder who the buyers are, where their money is coming from, and whether there are enough of them out there to buy out the baby boomers.
In a steady-state system, stocks sold by retirees would be purchased by young people saving for retirement. But there are more boomers than young people, so it seems to me that stock investments could get caught by the same demographic squeeze that will affect Social Security and Medicare when the ratio of workers to retirees increases.
You have seen the crack in the cosmic egg. Go to the next step. WHO is buying? Go ahead, give it your most paranoid shot. Who is buying? Does not make sense, does it? Hint: Go ahead and imagine something you know to be illegal.
Yeah, investors want out of stocks alright. They're liquidating equity mutual funds and reinvesting the proceeds into food, heating oil, clothing, iPhones, school supplies, used cars, gasoline, booze, tires, cigarettes, dog food, on-demand, and widescreen HD.
Fuck, who needs an equity mutual fund anyway? Only the manager makes any money, and 2008 was the last time I'm ever gonna lose two 150 inch plasma TVs worth of dough in an afternoon. Best Buy better not go bankrupt before that 401k check gets here.
http://www.examiner.com/investing-in-baltimore/high-frequency-trading
Investors are doing more than selling equity to buy bonds folks, how about the massive delveraging that is going on...I like to think of it as "repression proofing".
That's why this market will attract all of the sheeple in on the cyclical moves higher in a longer term secular bear. The smart ones will sell the rallies and get short on tops. F' going long, buying this market is for amatures and clients at Edward Jones!
Long bonds, metals and Delever bitchez!
The stock market is broken, fundamentals don't matter as it's all momo/quant algo trades from the machines run by the failed banks and hedge funds trying to out scam each other. I never laughed harder in my life as I did when I heard the "fat finger" explanations for May 6th. The change directed upon the markets and traders from computers has totally been underestimated or worse ignored. Regardless, it's too late - the genie is out of the bottle. Good luck.
and there was 25billion in inflows to ETF equity... the new normal
If $62 billion has left, how much remains?
All your outflows are belong to us!
If the retail side is dead and gone, there is a fix for that America.
All your Pension are belong to us.
Just wait, rather than forcing state pension funds to buy stocks, those 5 star washington clowns will force them to capitialize the failed banks most directly. Can you imagine all the state banking commissioners rubbing their hands together to decide which good ol' boy institution survives the wrath of the FDIC. The stealth trade right now is the methodical consolidation of the banking (capital holding) industry. Its musical chairs folks. What happens when the music stops? Who are the largest Fed shareholders? Who is TBTF? Who will be the only beneficaries, regardless of what happens?
Stocks are just an illusion of owning these traded companies. The states will be made to recapitlize their regional banks for mom, dad, apple pie and Chevrolet. Trillions of public promised money into failed banks to bailout their side of bad bets - payable a la AIG-GS. Its all a holding action, untill Basel III, when your license to be a bank will require a cubic acre of gold bricks.
My prediction: Basel III will be the pale shadow of Basel II. Those reserve requirements will be frittered away to near-nothing because the US banks could not - and would not, and WILL NOT - meet the Basel II requirements.
The NYFed (I believe it was them) recently put out a point paper that said X reserves aren't really required, that contrary to CW the banks operate just fine without them. One may agree with its argument or not, but I believe this is why II is down the toilet and they're talking about III: The US told the international banking community to pound sand, and got away with it thanks to the Goldman/Treas/Fed Nexus and its "evil" plot to save itself (and the lumpen 401K investor) via HFT/Frontrunning/cheating/whatever to keep the markets from tanking.
Bottom line: The international banking community thought it could twist America's arm (see Sept 2008) into accepting a supra-national authority but it was wrong. It's all over but the whining. And the cleanup. And the revenge. Stay tuned.
That means more dollars are available for purchasing items instead of investing in growth. Growth should suffer as well as stocks because lack of money to push for growth. No growth, and values of items go up in value because of lack of growth to make more. Dollar should suffer with all of them floating around, thus sending the DOW to 36,000 shorlty. Yea I know, this does not make sense much like the markets.
Yup. Economists claim that 'capacity utilization' is very low, but if that were the case, why does America have to import half its oil? Why are most high-tech products imported? Why is most high-tech labour imported? There certainly can't be low 'capacity utilization' in an economy where imports are so dominant, and the trade deficit so high.
The real problem is that, while there's 'capacity' out there, its the wrong kind of capacity. Instead of oil wells, we have strip malls. Instead of R&D facilities, we have armies of lawyers on Wall Street who can churn out derivative contracts. Meanwhile, real 'capacity' continues to languish, and collapse.
I don't know about Dow 36,000, but I am pretty sure, over the coming years, that productive and real industries are going to be massively revalued relative to finance garbage.
Can we get a longer perspective on this dataset? If my memory serves me correctly outflows were equally massive sometime between 2001-2003.
I'm not really trying to be a wise ass here, but you could look it up for yourself:
http://www.icifactbook.org/pdf/2010_factbook.pdf
I am trying to reconcile my bearish leanings with these retail asset movements. So retail is selling stocks and buying bonds? Isn't retail pretty much always wrong eventually, especially when they move en masse?
If anything, this data and the retail treasury flows argue for an eventual powerful stock bull, accompanied by a treasury meltdown. I think that is the most likely long term scenario anyway.
But, in the short term, better not to second guess, better to go with the trend.
Morning. Writing this from Finland. Even I share zh's quite pessimistic views of the economy and future overall, one could think that this retail outflow could be also a short time bull signal. Whenever retails have been in right predicting market moves? Never. Retails get screwed every time. Get ready instituotionals bidding the shares up, then retails coming back late, and then institutionals out, you know...
the bottom chart is starting to look a lot like the new ZH T-Shirt
Nice. What are the prospects for a tall tee and/or an XL hoodie in the future?
Well, the XL Tees are Tall if you are not XL yourself.
No plans for an XL hoodie right now, sorry, they are really limited quantities and Large is the biggest for now.
Obama has been purchasing stocks with tax payer money from his first day of work and he is sacred shit-less that he used your money specifically for a political agenda. "You can see the fool feeling in his face". And to do it he gave away trillions and will be left with the bag of dirty real estate and over valued everything.
Wall street uses the black man!
A best seller, movie rights and Hollywood is last man standing.
Impeach Obama ,, Make him eat a Pork Sandwich..
We all want an American in the white house..
Muslims did not build the USA ..
Can't believe the idiots who want in because retail wants out. It's not cheap at all unless you use phony operating earnings as your metric. On a GAAP earnings basis, you're paying 17 times earnings, and for what? No growth/low growth for as far as the eye can see. You've got $65 in earnings and a 1% global GDP in front of you that will pull that $65 back down to $50 or $55. And even that's with phony bank earnings based on mark to myth. Cheap? It'll be cheap at SPX 500.
And good luck getting a bid from the
'bots when Schumer and Schapiro eliminates sub
penny pricing and quote stuffing. They
won't be there.
I will watch from the sidelines as
the street distributes to you prior to the third quarter warnings of big time revenue misses. Guess nobody has
heard of new normal yet. lol
Great chart. As posted earlier, hopefully the IBs will be left holding the bag. They've artificially inflated stocks for their habitual handover but the people aren't buying this time.
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Nice article thanks.
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