• Phoenix Capital...
    07/11/2014 - 11:24
    So… just WHO actually has a CLUE about the true state of the banks in Europe? More importantly, who will actually bother WARNING investors about the risks therein?  

Fund Flows

Tyler Durden's picture

Three Years Of Domestic Equity Fund Flows In One Chart





There has been much discussion about fund flows into domestic mutual funds in the past few weeks for one simple reason: there have been inflows into domestic mutual funds (as tracked by ICI). For some reason, pundits correlate this inflow with the move higher in stocks. What remains unsaid is why there was little to no discussion of fund flows into domestic stock funds for about 90% of the time in the past three years. The reason is just as simple: there were no inflows, as can be seen on the chart below. There were, however, other "exogenous" events during this time: such as QE2, LTRO 1 + 2, Draghi's whatever it takes language and Operation Twist of course, and then QE3 which will likely continue indefinitely and be replace by QE4 the second it is fully "tapered." So what is relevant: inflows (or, gasp, outflows) or whatever central banks do? You decide.

 
Tyler Durden's picture

US Retail Investors (Alone) 'Rotate' All-In





With revenues fading, profit margins collapsing, and only financial institutions' entire lack of transparency providing any lift in EPS, the 'great rotation' continues to provide enough cognitive dissonance to sink a boat for the asset-gatherers. The trouble, as we showed previously, is this 'rotation' is dominated by US retail investors (more specifically non-US domiciled and non-retail investors are rotating away from US equities). The US retail investor has shifted in a great-rotationary manner by the greatest amount since Feb 2000 - just as the last great bubble burst. US equities are the 3rd most over-crowded speculative long asset in the world after Crude Oil and the Brazilian Real. It seems the Fed is getting just what it wants but, just as Kyle Bass warned, "investors should be really careful doing what the central bankers want them to do."

 
EconMatters's picture

US Oil Imports Hit 13 Year Lows





The world can only build so much storage to store extra supply; at some point demand has to eat up this extra supply.

 
Tyler Durden's picture

Is This The Chart Reflecting The True State Of The US Economy?





Since the US monetary system is (mostly) a closed loop, it has become impossible to rely on the US stock market for anything besides "analyzing" how many hot potatoes the excess reserve-funded Primary Dealers are juggling with each other. However, there may be one place that remains untouched by the Fed's intervention: foreign opinion of the US, which manifests itself in capital fund flows, the same fund flows that the TIC data reports every month with a 2-month delay. Because if foreign capital flows remain the only remaining objective indicator of US economic health, then the US has some very serious problems on its hands...

 
Tyler Durden's picture

The Credit Market Sees Things Differently





Both the absolute levels and the implied volatility of credit markets are significantly divergent from the recovering exuberance in stocks. As we discussed here and here, this cannot last. If you 'believe' that Bernanke was bluffing and the taper is off then credit is grossly cheaper than stocks; if not, equity shorts seem an appropriate position into Q3.

 
Tyler Durden's picture

Putting It All Together: What Wall Street's Cross-Asset Trading Desks Are Saying Right Now





With most market participants (what's left of them) traditionally narrowly focused on one specific asset class, be it stocks, bonds, rates, or commodities, they sees a few trees but miss the whole forest - a perspective which has to include all cross asset perspectives, which in our day and age is quite complicated, to say the least, due to the prevailing and oftentimes irreconcilable cognitive biases among such traders (all of which tend to interpret Bernanke's market signaling in their different way). So courtesy of Citi's Stephen Antczak, here is a comprehensive summary how every single asset class is viewing the market right now.

 
Tyler Durden's picture

Sea Of Red





In the brief but tempestuous fight between Abe and the "deflation monster", the latter is now victoriously romping through an irradiated Tokyo, if last night's epic (ongoing) collapse in the Nikkei is any indication: down 6.4%, crushing anyone who listened to Goldman's "buy Nikkei" recommendation which has now been stopped out at a major loss in three days, and now well in bear-market territory, it would appear that a neurotic Mrs. Watanabe is finally with done with daytrading the Pennikkeistock market, and demands Shirakawa's deflationary, triumphal return to finally clam the market. Only this time the Japan's selling tsunami is finally starting to spill, if not to the US just yet (it will) then certainly to Asia, where the Shanghai Composite which was down 2.7%, and is once again well down for the year, and virtually all other Asian stock markets. Except for Pakistan - the Karachi Stock Exchange is an island of stability in the Asian sea of red.

 
Asia Confidential's picture

Emerging Market Rout Spells Opportunity





Emerging markets have tanked but some of the reasons for their underperformance will prove overblown, providing opportunities for long-term investors.

 
Tyler Durden's picture

Is This The Biggest Threat To The Market?





The Fed’s zero lower bound policies have dislodged credit risk as the primary concern for investors, only to replace it with a major technical headache: interest rate risk. If rates remain too low for too long, financial stability suffers as investors reach for yield, companies lever up, and lending standards decline. The greatest of financial stability risks is probably the least discussed among those that matter at the Fed: the deterioration in trading volumes. As such, we suspect that the longer low rates persist, the worse the unwind of QE may be. And it may, in fact, already be too late. As events in the past two weeks have shown, credit markets also appear vulnerable to a rise in rates that occurs too quickly or in a chaotic fashion. Moreover, to the extent that issuers sense demand may be waning for bonds, there’s a distinct possibility the pace of supply increases precisely at the same time that demand decreases. Invariably, it’s this sort of dynamic that ends in tears.

 
Tyler Durden's picture

Jeff Gundlach Corrects The "Bonds Bad, Stocks Good" Meme





While, as we recently destroyed here, the current meme is that "bonds are mispriced" due to the Fed and so holding them is an idiot's play as at some point they will normalize (which somehow means equities are a great investment - as they apparently never drop in price). DoubleLine's Jeff Gundlach appeared on CNBC this morning laying out a few very obvious (but entirely overlooked by the mainstream) reasons why a 'rise' in interest rates (and the bond price drop implicit in that) is not necessarily positive for most of the equity-type investments currently. We see four reasons why the "bonds bad, stocks good" meme is fundamentally flawed and why a great rotation remains a myth... Gundlach also warned flow-driven equity bulls, "QE effects are in the eighth inning."

 
Tyler Durden's picture

The Complete Chartpack Of The Top Global Themes For The Next Five Years





The investment environment is changing at a rate that's representative of global economic imbalances, fund flows, and geopolitical risks. We believe this decade will continue to witness greatly increased volatility and instability in the economies of the world and the global financial system. Very few past models are still valid (and most have been proved 'empirically' in real-time to be entirely fallacious). Such a situation has contributed to the extreme uncertainty that currently prevails. Our guiding principle is to help investors understand and navigate through all the complexities of an unstable, inflation-prone world. The following ten themes will be key drivers of financial market performance over the next 1 to 5 years.

 
Tyler Durden's picture

The "Great Rotation" Of Retail Inflows Lasted A Total Of Seven Weeks





When a month ago we wrote "It's Deja Vu, All Over Again: This Time Is... Completely The Same" as the endless din over some non-existent "Great Rotation" had the TV anchors on the financial comedy channel giddy with excitement, we said one thing, when we compared the current environment with its carbon copy observed back in 2011: "Fund Flows into equities were unstoppable. Yes - that was 7 consecutive weeks of major equity inflows into stocks... back in January 2011." Moments ago ICI just released its latest weekly US equity mutual fund flow data for the week ended February 27. We can now officially end the 2013 version of the "great rotation" myth because we just got our first outflow, after how many weeks of inflows? That's right: seven. Just like in 2011.

 
Tyler Durden's picture

"No Rotation" - Fund Flows Lag Returns, Not Lead





There is a simple reason why the real money (as opposed to fast money tweakers) has been far less excited about the domestic equity fund inflows than the financial media and their sponsoring commission-takers would suggest. The reason is - as Goldman shows empirically, not anecdotally - fund flows 'lag' performance, 'not lead'! As we have noted previously, the great rotation myth is simply that - a unicorn-like belief that the investing public will sell down their bond portfolios (high-yield, investment-grade, and sovereign) to stake their future on stocks - when the reality is the flows (which are not rotating to stocks 'net' anyway) simply reflect the sheep-like herding of performance-chasing index-huggers hoping to beat the greater fool. There always has to be someone left holding the bag...

 
Tyler Durden's picture

"Great Rotation", Over





It would appear that the hopes and commissions of each and every talking head wealth manager and/or central banker has been dashed on the rocks of 'fiscal cliff' tax-hike front-running and a citizenry who remain far more cognizant of the unreality of the real world than the reality being preached by the market. There were some fund flows this week into equity funds (the lowest in six weeks) but, as Reuters notes, it was all into international funds as domestic funds saw outflows and domestic bond funds once again saw inflows. As Goldman Sachs' funds flow and positioning monitor shows - Rotation, Over.

 
EconMatters's picture

The Brent Oil Contract is a Sham!





We have gone from a supply and demand market to a funds flow market and this really sucks for consumers. 

 
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