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Second Consecutive Week Of Outflows From US Equities

Tyler Durden's picture





 

It is funny what one finds when one actually looks at the data behind the headlines, such as in this case the trumpeted amazing return of investors to the US stock market. Because what one does find is that after that one blistering week after the new year, in which wealthy individuals dumped cash they had put aside (for lack of knowledge of what the dividend tax would be in 2013), we now have, for the second week in a row, seen a material outflow from US equity funds as tracked by Lipper, bringing the total two week outflow from the domestic equity sector to some $5.8 billion. Oh, and the great non-rotation out bonds continues with some $8.5 billion pumped into taxable bond funds and $2.3 billion into municipal bonds in the past two weeks.

From the week ended January 16 (source):

And from the week ended Januar 23 (source):

"But the bulk of the outflows is from ETF outflows" the purists will say. Why yes, but remember - the only inflows in the period 2009-2012 was courtesy of ETFs. After all that was being paraded non stop to mute out the fact that some $300 billion got pulled out of equity mutual funds: "mutual funds are dinosaurs" we heard over and over. Turns out that is no longer the case. Or maybe it is time for the spin to enter the rinse cycle.

Either way one thing is clear - the cash influx into bond funds has not stopped and will not stop, which means there is no rotation out of bonds and into stocks, and the only rotation is out of marginal money market funds into stocks, which in turn is a function of some residual cash rotation out of TAG accounts which no longer have an infinite FDIC insurance. In other words, the inflows into the non-ETF part of market will end in a week or two tops. At that point one can only hope the ETF bleeding ends or else there will be nothing to offset what will be an overall outflow from equity funds.

From Reuters:

Investors in stock mutual funds continued to favor international stocks while still directing a substantial amount of cash toward U.S. stocks. Mutual funds that specialize in U.S. stocks attracted $1.42 billion, while those that hold international stocks attracted $2.24 billion.

 

The strong turnout for stock mutual funds again failed to apply to ETFs overall. Stock ETFs had total outflows of $735 million, as investors pulled roughly $3.1 billion from ETFs that hold U.S. stocks. Those that hold international stocks, however, stood out with inflows of $2.35 billion.

 

Investors continued to pull money out of the SPDR S&P 500 ETF, with $4.36 billion leaving the fund in the latest week.

 

"Apple is a big holding in the fund, so this could be a vote against Apple," Tjornehoj said. Shares in Apple,, which is the world's most valuable publicly traded company, fell 8 percent on Wednesday after the company recorded quarterly revenue that slightly missed expectations while sales of its iPhone came in weak.

 

ETFs are generally believed to represent the investment behavior of institutional investors, while mutual funds are thought to represent the retail investor.

 


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Fri, 01/25/2013 - 09:10 | Link to Comment holdbuysell
holdbuysell's picture

The non-domestic equities category is showing inflows on par with bonds. Why isn't this significant?

Fri, 01/25/2013 - 09:13 | Link to Comment Tyler Durden
Tyler Durden's picture

It is. For non-domestic equities.

Fri, 01/25/2013 - 09:13 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Then that would make sense.

Fri, 01/25/2013 - 09:19 | Link to Comment holdbuysell
holdbuysell's picture

I'm having a hard time reconciling the understanding that there's a public aversion to equities with the data that people are indeed still buying equities, but only those being the non-domestic type (of which, I presume are the emerging market-based equities and similar).

Fri, 01/25/2013 - 09:26 | Link to Comment jcaz
jcaz's picture

...It's simple-   When a Chinese bicycle shop fund is now getting $3 per week coming in the front door, when they were getting $2 per week last year, their flows have "increased"-  However, I don't give a shit about $3.....

Fri, 01/25/2013 - 09:30 | Link to Comment holdbuysell
holdbuysell's picture

The other way I look at it is that in aggregate, the inflows to all equities is rather meager and well below that of the aggregate flow into all bond funds, with the exception of the previous week as Tyler points out.

Fri, 01/25/2013 - 09:32 | Link to Comment negative rates
negative rates's picture

I sense a split up, or a parting of the ways, where one ends up with very little money in their hands.

Fri, 01/25/2013 - 09:12 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Shares in Apple, which is the world's most valuable publicly traded company, fell 8 percent on Wednesday

 

Then it fell 12 percent on Thursday......here a lttle.....there a little.

Fri, 01/25/2013 - 09:14 | Link to Comment BandGap
BandGap's picture

Cashed out 2/3 of my IRA in the past 45 days. Time for a new plan, man.

Fri, 01/25/2013 - 09:30 | Link to Comment francis_sawyer
francis_sawyer's picture

Better start SPENDING it on useful things... 'Cashing out' is only part of the equation... The good news is that it's in your hands... The bad news is that it still may become suddenly worthless at any given time...

Fri, 01/25/2013 - 09:53 | Link to Comment BandGap
BandGap's picture

Taking the advice of many here I am turning paper into tangible items that will be worth something no matter what happens. Some of them even distribute lead.

Fri, 01/25/2013 - 12:33 | Link to Comment phalfa5
phalfa5's picture

A BandGap  "redistribute"    there, fixed it for you

Fri, 01/25/2013 - 10:05 | Link to Comment Dapper Dan
Dapper Dan's picture

Cashing out?

More than $114 billion exited the biggest U.S. banks this month, and nobody’s quite sure why.

The Federal Reserve releases data on the assets and liabilities of commercial banks every Friday. The most current figures, covering the first full week of 2013, show the largest one-week withdrawals since the Sept. 11, 2001, attacks. Even when seasonally adjusted, the level drops to $52.8 billion—still the third-highest amount on record, and one for which bank experts and analysts were reluctant to give a definitive explanation.

http://www.businessweek.com/articles/2013-01-23/missing-114-billion-from-u-dot-s-dot-banks

but then, explain this.

http://wallstreetexaminer.com/uploads/image2005.png

Fri, 01/25/2013 - 10:41 | Link to Comment S5936
S5936's picture

Pitchforks & axes = useful things

Fri, 01/25/2013 - 09:17 | Link to Comment Lost Wages
Lost Wages's picture

Strange how this inflow data seems highly inconsequential in comparison to market activity. No matter how many people bail from equities and go to bonds, the prices say the opposite. Not sure this retail activity even matters anymore.

Fri, 01/25/2013 - 10:22 | Link to Comment dwdollar
dwdollar's picture

It may not matter in the market right now... but it does matter in the REAL economy. That is, fewer and fewer people are participating in Bennie's "wealth" creation engine. Probably not what he was expecting at this point on the charts.

Fri, 01/25/2013 - 09:17 | Link to Comment PUD
PUD's picture

Money in = market up

Money out = market down

No need to read the tea leaves here

Fri, 01/25/2013 - 09:20 | Link to Comment francis_sawyer
francis_sawyer's picture

Money in = market up

Money out = [PRINT MORE MONEY ~ FAST]

~~~

there... fixed it

Fri, 01/25/2013 - 09:28 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Just let the money dry a little before you put it in......or you'll have one hell of a mess on your hands.

Fri, 01/25/2013 - 09:25 | Link to Comment youngman
youngman's picture

Actually today its more

Money in = market up

Money out = used to be market down now its turn on the HFT´s.....

I think 30% of the value of this "market" is HFT´s gassing up the numbers...its not demand...its not money...its a computer program running so fast that it can raise a stock without any money changing hands....IMHO

Fri, 01/25/2013 - 09:20 | Link to Comment Super Broccoli
Super Broccoli's picture

whatever, corporations don't need to borrow anyway, what could they do with the money ? invest in R&D ? LOL no way, that is sooo 1999 mate !

Fri, 01/25/2013 - 09:26 | Link to Comment youngman
youngman's picture

A year or so ago Microsoft sold bonds so the could pay a divident.....lol

Fri, 01/25/2013 - 09:26 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

don t fight the fed..unlimited qe will do wonders ..all the baby boomers are taking money out to live in retirement and it will go on that way for years..so our money masters will print and be the put on the market..hard to think they get away with it and no usa debt downgrades..corruption much too easy ..much too accepted..bond rating co's should just go out of business, whats the point of them now.

Fri, 01/25/2013 - 09:58 | Link to Comment caimen garou
caimen garou's picture

+ one million, and there you have it baby boomers and forced retirees like myself are living  on some of that so called side line money that the talking heads keep saying is comming back into the market. food, energy you know the things that are not counted in the inflation numbers, thats where that money is going! oh and whiskey and women!

Fri, 01/25/2013 - 09:49 | Link to Comment spanish inquisition
spanish inquisition's picture

The bulk of out flows was HAVLED from the previous week. Sounds bullish.

Fri, 01/25/2013 - 09:51 | Link to Comment Downtoolong
Downtoolong's picture

$5.8 billion. Ha, that’s chicken feed, chump change, a clipped penny on my books. Do you little ingrates really think you can thwart me and my engineered market ramp with a pittance like that?  I can print that amount of money faster than you can look up the word inflation in the dictionary. And how dare you start buying and grossly overpaying for more Treasury’s and bonds. That’s my job now. Don’t you watch CNBS?

I will defeat you. I will turn you back to the rigged and manipulated Wall Street casino to feed their profits. If not, you will die of slow and painful starvation in the outback of my financial kingdom while being hunted by an army of sell side analysts each toting 500 rounds of buy recommendations. There will never be another down day in the stock market. Let it be written, let it be done.

Sincerely yours,

Ben.

Fri, 01/25/2013 - 10:20 | Link to Comment El Hosel
El Hosel's picture

5.8 billion VS 85 billion... hmmmm

Fri, 01/25/2013 - 09:57 | Link to Comment venturen
venturen's picture

how can there be outflows and the market ramps? Only on Wall Stree. Does this count the FED buys the market?

Fri, 01/25/2013 - 10:22 | Link to Comment Sandy15
Sandy15's picture

When have you EVER seen APPLE down 60 points and the market remain positive?  Since March 2009 the entire market has exploded up on Apple positive news, since Dec 2012 Apple has detached from the SPX.........

THE BERNACK SUCKS!!!!!!

 

WE SHOULD ALL COPY OUR MONEY ON A COPIER AND PAY OUR BILLS.......

Fri, 01/25/2013 - 10:03 | Link to Comment Silver Garbage Man
Silver Garbage Man's picture

Beware Big Bad Bond Blowup Bitches!

Fri, 01/25/2013 - 10:21 | Link to Comment El Hosel
El Hosel's picture

.... make mine a big bad blond blowup.

Fri, 01/25/2013 - 10:40 | Link to Comment Jim B
Jim B's picture

Agree, I would rather be in stocks that the bond BUBBLE......

Fri, 01/25/2013 - 10:50 | Link to Comment yogibear
yogibear's picture

But wait, teachers pension funds are loading up and buying......

Plus Bernanke and the Fed's member banks are buying it up with the central bank's infinite money machne.

LOL, Bernanke and the Fed are making the market go exponential.

 

Fri, 01/25/2013 - 21:20 | Link to Comment the misanthrope
the misanthrope's picture

I know I'm a little late and it's unlikely anyone will note but as I decided to look at the front page

of the NYtimes (I know, I know it's a rag - not sure why I did it) - the top left headline was -

"

Stocks Near New Heights as Small Investors Regain Faith By NATHANIEL POPPER 3:56 PM ET

Money pouring into stocks in the last three weeks through mutual funds — the common investor’s way to play the market — has helped push the S. & P. 500 over 1,500, close to its highest level ever."

 

All the news that's fit to print, right?

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