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Retail Investors Celebrate 32 Consecutive Weeks Of Equity Outflows By Pulling Money Out Of Taxable Bond Funds As Well

Tyler Durden's picture


That ICI has just confirmed the 32nd consecutive outflow from domestic equity mutual funds is not surprising. After all, we have long been saying that retail's love affair with stocks has gone straight to the bitter divorce stage. That the amount of outflows was a massive $2.7 billion is a little more surprising: after all the prior week (ending December 1) was just $1.7 billion, and the market really hit the after burners since then in its last ditch attempt to get the dumbest money in. It failed (and total outflows year to date are not $96 billion: we expect $100 billion through the end of the year). But what is truly surprising, and what debunks every myth that investors are now rotating out of bonds and into stocks, is that in the last week in addition to a surge in domestic equity outflows, for the first time in what seems forever, there was also an outflow of $401 million in taxable bond funds (in addition to $1.3 billion in outflows from muni bonds). Hopefully we can now leave all debate about capital rotation out of fixed income into stocks, courtesy of rising rates, in the dust (same as debunking the whole "money on the non-repatriated sidelines" falacy). In fact the only asset class that saw any inflows were foreign equities. Of course should the reverse decoupling that the "experts" on TV are predicting, and the US outperform developing markets, the foreign asset flows will promptly reverse as well. Yet the bottom line is that all who were expecting a rotation out of bonds and into equities, are proven wrong, and just as we have been predicting for 32 weeks now, equity-related capital withdrawal decisions are completely disconnected from what happens in the rates domain, and the primary objective is capital extraction. Simply said: the latest target of all outbound sector rotation is cash.

Weekly flows:

And cumulative flows - indicatively, since the market surged from its September lows, there have bee over $41 billion in cumulative outflows.



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Wed, 12/15/2010 - 18:29 | 809704 Cdad
Cdad's picture

"Retail Investors pulling money out of taxable bond funds as well."



Wed, 12/15/2010 - 18:55 | 809788 scatterbrains
scatterbrains's picture

I'm worried about karl D.   every time I try to load his page I'm getting timed out.. specialy since he ran that piece on dude that snapped on his local board of ed.

Anyone know whats up ?   The tin foil in me has his site getting attacked by


Wed, 12/15/2010 - 19:27 | 809910 Stock-Paper-Silver
Stock-Paper-Silver's picture

Hindenburg 2nd day in a row, Bitchez.

Wed, 12/15/2010 - 19:29 | 809926 boricuadigm-shift
boricuadigm-shift's picture

Out of Bonds and Out of Stocks.... hmmm?  Into... Yep  Gold/Silver!

Wed, 12/15/2010 - 20:05 | 810065 whaletail
whaletail's picture

Some, yeah. But the majority will hoard. Then, the QEn will debase and then all those dollars will flood the system and the Austrians will be proven right. [cue the horns of irony]

Wed, 12/15/2010 - 19:45 | 809992 dogismyth
dogismyth's picture

whattya talking about??  The US Fascist regime loves splinter groups like Denninger that incite panic, chaos and more confusion to the situation.  He's a helluva guy!

Wed, 12/15/2010 - 18:31 | 809714 Ragnarok
Ragnarok's picture

the primary objective is capital extraction


Restores faith that not every American is a sheep waiting to be sheered.  If only theyd make the next logical step and move that cash into physical PMs.

Wed, 12/15/2010 - 18:39 | 809745 OpenEyes
OpenEyes's picture

the primary objective is capital extraction

Could mean that the wolves are running out of sheep to shear.  I think that quite a few folks are raiding their nest-eggs, 401K's, IRA's not to re-invest in PM's, but because they need the money to pay bills, buy stuff, continue the dance.  When there are no more sheep to shear the game is up.

Wed, 12/15/2010 - 18:45 | 809762 Ragnarok
Ragnarok's picture

A little of column A, a little of column B....

Wed, 12/15/2010 - 18:53 | 809781 Rainman
Rainman's picture

I agree, the housing ATM is probably being replaced with the 401-k withdrawals or borrowings. Old spending habits die hard, but this time I think people really gotta have cash to pay monthly necessity data plans for the latest handheld devices. 

Wed, 12/15/2010 - 18:54 | 809784 Violetta (not verified)
Violetta's picture

"the trouble with socialism is that you eventually run out of other peoples' money".  -- margaret thatcher

Wed, 12/15/2010 - 19:21 | 809890 Founders Keeper
Founders Keeper's picture

["the trouble with socialism is that you eventually run out of other peoples' money".  -- margaret thatcher]---Violetta

And, the trouble with free enterprise


Oh yeah!  The trouble with free enterprise is that governments eventually run out of bureaucrats.


Mon, 01/10/2011 - 01:50 | 863118 Violetta (not verified)
Violetta's picture


Wed, 12/15/2010 - 19:36 | 809941 boricuadigm-shift
boricuadigm-shift's picture

I wasn't allowed to take out my 401k at all.  They only allowed it for very specific reasons or termination.  I maxed out my loan and bought precious metals back when it was 1050/17 (first time buy).  I'm repaying them in devalued fiats!  Not a bad investment at all!  :-) 


I keep exchanging fiat with PM every quarter, following harvey and others to buy the effing dips of that quarter.  Happy camper so far! :-)

Wed, 12/15/2010 - 20:15 | 810086 IQ 145
IQ 145's picture

 excellent. good for you.

Wed, 12/15/2010 - 18:42 | 809757 SheepDog-One
SheepDog-One's picture

Move cash into physical PM's, thats good, but physical non precious metals are great as well! Copper encased lead, brass, etc.

Wed, 12/15/2010 - 22:26 | 810444 Iam_Silverman
Iam_Silverman's picture

True point, but to be serious, I would think that copper could very well be moved into the PM column here soon.  Anyone read the article where China was looking into a tri-metal backed monetary system?  Who is stockpiling copper reserves?  China, and to some extent JPM - but only because China is too!

Reload.  It is relaxing and you can see the satisfying results as the finished product build up on your workbench!  You get to handle the brass, jacketed lead, and feel the satisfying crunch as your Lee factory crimp die seals the deal.

Wed, 12/15/2010 - 18:35 | 809720 pamriallc
pamriallc's picture

consider that in waves, people will pull funds from the debt side and rotate to the equity side.  due to the relative "myth of stability" with respect to bonds vs stocks, we witness that people re-rotate back toward the equity side much more carefully.  huge franchise businesses are *CHEAP* and as such, will be the willful recipients of the cash over the next few years while the *junk rally* we have witnessed will fade into memory like those "uber-hot" leasing stocks people priced like an internet bubble--- as in the 1970's.  quality will again reign supreme.  patience will be a necessary virtue.  we would rather rather load our portfolios with CVX, MO, COP, PEP, MCD, PFE, MRK, LLY, XOM, KO, WMT, CSCO, MSFT, INTC at an average P/E of 9X (after deducting all of the cash per share) and get an after-tax 11%+ earnings yield for 10 years (plus inflation) vs (even) a 7% 10 year bond.  not particularly difficult work, but it takes patience so no one wants to do it.  Shawn A. Mesaros, Pamria, LLC

Wed, 12/15/2010 - 18:54 | 809783 pitz
pitz's picture


Wed, 12/15/2010 - 19:10 | 809838 Bill Lumbergh
Bill Lumbergh's picture

I believe data would actually support people are more heavily weighted (at least prior to all these withdrawals) equities than fixed income.

Wed, 12/15/2010 - 20:41 | 810147 IQ 145
IQ 145's picture

 Like the generals in WW I you have the perfect plan for the last war. It's not going to happen. growth exists in the past tense. crash and burn doesn't pay returns in the stock market.

Wed, 12/15/2010 - 18:32 | 809723 max2205
max2205's picture

Looks like the trend is decelerating Buy the tail!!!

Wed, 12/15/2010 - 18:33 | 809726 unwashedmass
unwashedmass's picture


you have to wonder when these morons are going to figure out that the peasants -- who now have had every dime stolen from them, and don't have jobs, or if they do, are trying to keep heads above the non-existant inflationary waters -- when these idiots praying retail will come back to take the stock they pumped to the moon off their hands.....

when are they gonna figure out they've taken EVERY FRIGGIN' DIME FROM THE PEASANTRY and there is no more to steal???

Wed, 12/15/2010 - 18:44 | 809751 SheepDog-One
SheepDog-One's picture

Exactly right, WHO does the FED believe is available for endgame, that is dumping their trillions worth of stocks and bonds to is beyond my comprehension, and the only real relevant question!

This is the fuking Underpants Gnomes!!
Step 1- Collect underpants.
Step 2- ??
Step 3- PROFIT!
Exact same fucking thing!

Wed, 12/15/2010 - 18:47 | 809766 Cdad
Cdad's picture


Step 1- Collect underpants.
Step 2- ??
Step 3- PROFIT!


Wed, 12/15/2010 - 18:52 | 809778 SheepDog-One
SheepDog-One's picture

Ever seen that episode? I tried but couldnt find a good clip, hillarious!!

Wed, 12/15/2010 - 19:49 | 810003 dogismyth
dogismyth's picture

the Fed is only doing what its alway meant to do...and that goes for all the Central Banks.  They have no use for fiat currency and could care less what they pay for treasuries and other bonds.  They are simply buying the Titles to all the world's property and land.  They'll control everything through default.

Wed, 12/15/2010 - 21:47 | 810356 merehuman
merehuman's picture

BINGO!   Dogismyth has it!

Wed, 12/15/2010 - 18:33 | 809727 Critical Path
Critical Path's picture

The second chart looks oddly similiar to net government revenues

Wed, 12/15/2010 - 18:34 | 809730 random shots
random shots's picture

How about a comparison to 2000 and 2007 (market tops)?

Wed, 12/15/2010 - 18:35 | 809731 I Am The Unknow...
I Am The Unknown Comic's picture

I am 100% confident that capital outflows are good for stocks.  It's ALL good (and don't you ever f#$king forget it you rebels)! 

Wed, 12/15/2010 - 18:35 | 809733 TheSettler
TheSettler's picture

investors are rotating out of bonds and into stocks ?????


is this not backwards?

Wed, 12/15/2010 - 18:41 | 809754 SheepDog-One
SheepDog-One's picture

Nope, investors are rotating out of stocks as well, and rolling towards the gun store.

Wed, 12/15/2010 - 19:29 | 809928 Founders Keeper
Founders Keeper's picture

[...investors are rotating out of stocks as well, and rolling towards the gun store.]---SheepDog-One

Rotating into gun stores.


Wed, 12/15/2010 - 22:30 | 810449 Twindrives
Twindrives's picture

Buy the dips, in ammo prices.

Wed, 12/15/2010 - 18:37 | 809738 Spalding_Smailes
Spalding_Smailes's picture

Buy the fucking dip'

Wed, 12/15/2010 - 18:39 | 809743 Spitzer
Spitzer's picture

Your buying US bonds here ?

Wed, 12/15/2010 - 18:54 | 809790 pitz
pitz's picture


Wed, 12/15/2010 - 18:57 | 809800 SheepDog-One
SheepDog-One's picture


Wed, 12/15/2010 - 19:26 | 809903 Spitzer
Spitzer's picture

don't insult me like that. I would not buy US treasuries with ben Bernankes money

Wed, 12/15/2010 - 20:04 | 810061 pitz
pitz's picture


Wed, 12/15/2010 - 18:42 | 809739 Problem Is
Problem Is's picture

32 Weeks of Increasing Cash on the Sidelines
Now, let's go to our head dickweed correspondent Dennis Kneale to tell us why this means a big surge in equities ahead...

Wed, 12/15/2010 - 18:39 | 809744 homersimpson
homersimpson's picture

Don't worry - Harrywanger has been propping up Nasdaq with his APPL purchases.

Wed, 12/15/2010 - 18:40 | 809747 doolittlegeorge
doolittlegeorge's picture

and yet again you hit upon something terrifying but fail to note it.  it's not the "imminent 2008" scenario but instead "that foreign outflows will be reversed."  this is in fact where "the debt lards" have been "going great guns for growth."  in "safe foreign lands."  indeed "should those foreign fund outflows actually be reveresed" you will see a dramatic a material impact upon those who basically see the imminent debt apocalypse as "nothing equities can't shit upon on their way higher."  phucking pigs--"always claiming greater equality than all the rest."  i say DRAW THE LINE AT HAPPIUM!

Wed, 12/15/2010 - 18:41 | 809755 tmosley
tmosley's picture

Is everyone getting cash to stuff in their mattresses, or are they getting cash so they can go buy gold at the local coin dealer without alerting their respective governments?

Wed, 12/15/2010 - 18:47 | 809764 SheepDog-One
SheepDog-One's picture

Getting some rifles and cases of ammo as well. People think someones money has to either be in stocks or bonds, most people now have neither. Roll to the Costco and gun store, stock up.

Wed, 12/15/2010 - 18:59 | 809806 Violetta (not verified)
Violetta's picture

now boys, let's play nice.

Wed, 12/15/2010 - 18:47 | 809765 redrob25
redrob25's picture

East Asian bonds also are seeing inflows.

Wed, 12/15/2010 - 18:52 | 809780 I am a Man I am...
Wed, 12/15/2010 - 18:59 | 809807 SheepDog-One
SheepDog-One's picture

Dang...maybe I'll try to get on as a GS janitor, hell theyre probably pullin down at least $100K a year right? Not counting bonus and all, coke breaks etc.

Wed, 12/15/2010 - 19:03 | 809820 I am a Man I am...
I am a Man I am Forty's picture

thanks TD, not sure how I missed it

Wed, 12/15/2010 - 19:12 | 809846 Bill Lumbergh
Bill Lumbergh's picture

What's new...the money changers make money coming and going.

Wed, 12/15/2010 - 19:20 | 809879 lizzy36
lizzy36's picture

Look at it as finishing his internship and being promoted to a full time gig.

Wed, 12/15/2010 - 21:50 | 810363 merehuman
merehuman's picture

since lithium and fluoride in the water found its way to our brain, duh?

Wed, 12/15/2010 - 18:55 | 809786 Dan The Man
Dan The Man's picture


1100 ounces and free baby...bring on armageddon!

Wed, 12/15/2010 - 18:55 | 809794 pitz
pitz's picture

That's a lot of fucking weed!

Wed, 12/15/2010 - 18:56 | 809798 pleseus
pleseus's picture

The are no jobs.  Reduced income and work hours.  People need the cash to live.  There will be no cash rotation into stocks.

If the 10 year hits 4% expect another big fall in housing this spring.

Wed, 12/15/2010 - 18:59 | 809808 buzzsaw99
buzzsaw99's picture

If J6P didn't need the money to live I doubt he'd be pulling it out now.

Wed, 12/15/2010 - 19:03 | 809821 Ferg .
Ferg .'s picture

It seems probable that the higher the market climbs , the longer capital will continue to flow from equity mutual funds . Loftier prices make for better exits . Nice slice of irony .

Wed, 12/15/2010 - 19:16 | 809860 Misean
Misean's picture

I agree with others, it's going into stocks...stocks of food, clothes, necessities, gas tanks....

Wed, 12/15/2010 - 19:19 | 809877 BORT
BORT's picture

I am pretty convinced that people are starting to pull money from 401 K and investments to fund their lives.  I have been speaking to many friends, of some considerable upper middle incomes in the past.  They are still putting kids through school, but have taken buyouts from the companies they worked for.  They need the money to fund their current lives.  The theme lately is pouring over every monthly auto pay to see what can be diminished.  I pity the phone carriers, cable companies, etc. as people reconsider their priorities.  I don't think this is a sector rotation, but an unwillingness to abandon a life style.  There are some very real couple issues at work here.  The guy left his job, but the wife ain't lowering her expectations kind of thing.  Don't see the outflow stopping soon.  It is generational

Wed, 12/15/2010 - 20:48 | 810165 hettygreen
hettygreen's picture

Occam's Razor. The simplest explanation is usually the correct one.

Unemployment is high and unusually persistent (for a recovery). People need money to pay the bills and live on ergo their savings (equities, bonds, perhaps eventually precious metals) are being liquidated. I do not understand what alchemy is levitating the market indices but at least these folks are getting a good price.

There is too much fraud, too much dissembling of magical theories by pundits and policy makers who do not appear to know their asses from a hole in the ground.  There is a decidedly growing lack of trust with those in power (this is my theory why treasuries are getting dumped; it's why I sold my position out when the long bond was sub 4%). And what's that record insider selling foretelling?

Why am I left with a picture of rats fleeing a sinking ship or elephants going to high ground as unbeknownst to all the smart humans, a tsunami is about to strike?

Wed, 12/15/2010 - 20:53 | 810188 IQ 145
IQ 145's picture

 Agree. similar experiences. So; American working class spending their savings; what happens next? hmm. Is this not serious as a heart attack?

Wed, 12/15/2010 - 19:41 | 809978 ElvisDog
ElvisDog's picture

I recently changed jobs (my old company lost its contract to a new company). I had an Employee Stock Option Program with the old company, about $25K. I was given the option of rolling it into an IRA or taking a 10% penalty and a lump sum distribution. Instead of locking up that money for 10 years in an uncertain world, I took the cash. It's going to help us buy a new car that we need, take a trip to Hawaii, and put $7K into the kids' college fund. I suspect more and more people are in this same situation, going through the same thought process, and coming to the same conclusion - take the money now.

Wed, 12/15/2010 - 19:58 | 810042 Comrade de Chaos
Comrade de Chaos's picture

Well, yeah.. when you have a stagnant income and under -reported invisible but real inflation, you ve got to cover your living expenses in some way. Group it together with outflow required by huge number of retirees and .. PARTY like it is 99 !

Eventually though, some expenses have to be cut, our consumption will go to its natural level and all of those consumption good for economy / recovery pundits out to shovel it in their arses .... 

Wed, 12/15/2010 - 20:56 | 810195 IQ 145
IQ 145's picture

 And the stock market will a.) exhibit "growth" or b.) fall apart ? timeline-next 24  months. What seems more likely?

Wed, 12/15/2010 - 21:03 | 810208 Racer
Racer's picture

They NEED the money for basic needs like fuel and food that is not part of the "inflation" that isn't counted. They aren't getting any interest on prudent savings so are being forced by the Fed to take out money for basic things that you need to survive on.

when this is exhausted then what happens next? Will the US be asking for handouts for the starving masses in tent camps?

Thu, 12/16/2010 - 02:28 | 810899 StychoKiller
StychoKiller's picture

You'll know it's rock-bottom when Haiti holds a telethon to help the starving Americans!

Wed, 12/15/2010 - 21:33 | 810310 greenewave
greenewave's picture


Then Watch the YouTube Video “AMERICAN DREAM DEAD ~ DENIAL, THEN PANIC” at (


It’s time you STOPPED getting SCREWED by the BIG RED WHITE and BLUE !!

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