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As US Investors Pulled Cash Out Of Stocks In December, Foreigners Purchased The Most US Equities Since July 2009

Tyler Durden's picture




 

One of the more perplexing developments in the end of 2012, when as we pointed out previously US investors scrambled to deposit some $220 billion into the "safety" of savings accounts, resulting in major cash outflows out of US equities - cash which has since been returned, explaining the spike now declining, in equity reallocations back into stocks - ahead of the confusion over the Fiscal Cliff dividend and capital gains tax rates, was how US stocks did not tumble far more on this accelerated withdrawals out of equities. We now have the answer.

As the TIC data reported minutes ago, in addition to purchasing some $30 billion in Treasurys, and $18.1 billion in MBS, as well as $2.6 billion in corporate bonds, foreigners bought a whopping $25.9 billion in US stocks in December, just as US investors were withdrawing over tax-related fears. This followed another $21.5 billion inflow from foreigners in November, and was the highest equity inflow since the $30 billion allocated to US stocks in July 2009. This in turn brings the 6 month moving average to $14.2 billion, also the highest since the summer of 2009. Mystery solved who the banks have to thank for keeping the US stock market afloat in those days in mid to late December when the US equity investors was getting the hell out of dodge.

Total flows broken down by month and category:

And just foreign inflows into equities:

 

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Fri, 02/15/2013 - 10:46 | 3246252 ziggy59
ziggy59's picture

Foreign banks using FEDs money to prop the markets up?

Fri, 02/15/2013 - 10:48 | 3246264 Tsar Pointless
Tsar Pointless's picture

Took the words right out of my...well, I suppose fingers, seeing as I was going to type them, not speak them.

Fri, 02/15/2013 - 10:58 | 3246288 ekm
ekm's picture

Ditto. People forget that only 6 of 21 primary dealers are US based. The rest are foreign primary dealers.

 

So, still, a primary dealer or two will have to hold the bag

Fri, 02/15/2013 - 11:10 | 3246339 fuu
fuu's picture

Must be all the traders at huge European banks.

Fri, 02/15/2013 - 12:44 | 3246711 Selftodayfulfilled
Selftodayfulfilled's picture

Folks this is not speculation.

The Fed is purchasing Eurozone Bonds to keep the country propped up for as long as possible.

In return, those foreign Eurozone banks are bidding the US Equity markets up.  These eurobank's need the stock market to rally over 20 % to buy another 2 years of kicking the bankrupt eurozone can down the road.   

It is the largest fraud on the American Public ever.   No congressional approval.  Nada.

The US taxpayer is bailing Europe out since Bernanke's so called MBS monthly purchase policy.   What they didnt say was that these MBS didnt have to be domestic.

One loophole after another.

Most americans are going to look the other way however since they love to see their 401k at new highs finally.   

This again not speculation,  it si fact.  you can see the line item on the weekly Fed Pomo activity reports.

Why not continue the Fraud on the little people.   total joke.   when this does break, and it will,  it will be so ugly it may begin the next massive crash.

 

Fri, 02/15/2013 - 14:50 | 3247161 TruthInSunshine
TruthInSunshine's picture

"Most americans are going to look the other way however..."  

 

98% of Americans couldn't even describe what the Federal Reserve Bank (or banking system) is within even a remote degree of accuracy, let alone describe its reason for being (its stated and official reason for being; I'm not even speaking to its actual one).

Fri, 02/15/2013 - 15:00 | 3247188 bidaskspread
bidaskspread's picture

You may have a point:

In “Boomerang,” Michael Lewis’s book about the European debt crisis, he writes that when Wall Street banks “sent their sales forces out to scour the world for some idiot” to invest in their securities, a “disproportionate number of those idiots were in Germany.”

Fri, 02/15/2013 - 10:46 | 3246253 Everybodys All ...
Everybodys All American's picture

Yen carry traders.

Fri, 02/15/2013 - 10:48 | 3246259 buzzsaw99
buzzsaw99's picture

Suckers

Fri, 02/15/2013 - 11:47 | 3246473 kito
kito's picture

im starting to think that perhaps the ones who are fighting the fed are the suckers....................

Sat, 02/16/2013 - 13:38 | 3247133 TruthInSunshine
TruthInSunshine's picture

Until they're not.

It's not as if one has to fight the fed 24/7/365, either.

One is perfectly capable of picking as many or as few times and places for "fighting" as they wish. It's almost as if the Fed is highly vulnerable to assymetric warfare.

Just ask Michael Burry about that.

Fri, 02/15/2013 - 10:49 | 3246268 taniquetil
taniquetil's picture

Maybe the GPIFs of the world? If I were a Japanese fund manager, given Yen devaluation, shouldn't I be buying non-Yen denominated assets with both hands?

Fri, 02/15/2013 - 10:49 | 3246269 vote_libertaria...
vote_libertarian_party's picture

Mr. Bag, meet Mr. Holder.

Fri, 02/15/2013 - 10:57 | 3246290 Seasmoke
Seasmoke's picture

Foreigners seem to be buying everything here. If I didn't know better I would say we are at War.

Fri, 02/15/2013 - 11:03 | 3246311 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

I wonder if that conveyor belt of USD from the FED via QE going to foreign banks had anything to do with this?

Fri, 02/15/2013 - 11:03 | 3246312 Jim B
Jim B's picture

 

Probably China! If I were them I wouldn't sit on that large pile of US fiat dollars!  PMs and Physical assets! 

 

Fri, 02/15/2013 - 11:07 | 3246317 falak pema
falak pema's picture

it truly is an oligarchy family protecting its crown jewels; FED helps foreign banks which help support the WS asset base when it requires liquidity pumping when others are dumping.

All in a common cause. Now we know WHY the SQUID network is so VITAL to the workings of international finance...

They provide the grease  for the ball bearings of international financial machinery, more, the vital grey matter to keep the spider's web from tearing asunder. All Oligarchs bow to the Squid! 

Fri, 02/15/2013 - 11:07 | 3246326 adr
adr's picture

Hang'em high!!!

Fri, 02/15/2013 - 11:08 | 3246327 chdwlch1
chdwlch1's picture

Anyone who thinks the Central Banks of the World are not colluding in order to manage the commercial bank's de-leveraging is not paying attention.  The Fed hands over billions in dollar swaps to foreign banks prior to an expected US equity sell-off at the end of the year.  The newly enriched foreign banks then use their newly aquired 'wealth' to fill the gap left by the year-end US equity exodus. 

Following the 2008 crisis, FASB mark-to-market rules are suspended and bank stress tests are conducted to create the illusion of healthy bank balance sheets (FASB still suspended!!).  Backdoor bailouts to the big banks continue ad infinitum to fill the gaping holes in their real balance sheets while they continue to de-lever.  Potential downside risks associated with mortgage fraud, LIBOR rigging, money laundering, etc. are dealt with during this de-leveraging cycle so the banks come out the other end squeaky clean and ready to repeat the process of fleecing the public all over again in the next century.

At this point, I think they are just hoping that they can keep the charade going without the populace waking up in the meantime.  And if the populace does wake up and refuses to play along? Well, there are plenty of potential tinder boxes currently set up around the globe that could be lit if 'we the people' get too close to the truth....

Fri, 02/15/2013 - 14:50 | 3247143 TruthInSunshine
TruthInSunshine's picture

The banks are about to receive EVEN MORE LUDICROUS leeway to mark their assets to unicornium-valuations:

 

Proposal Gives Banks More Freedom to Value Assets Published: February 14, 2013

The board that sets American accounting rules moved on Wednesday to substantially reduce the use of market values in financial statements. The move, if adopted, would give banks more freedom to value financial assets as they deem appropriate.

 

Long live the Ponzi.

Fri, 02/15/2013 - 11:10 | 3246329 John Law Lives
John Law Lives's picture

The recent Ron Paul interview by John Stossel is required viewing for ZHers.  This was filmed after the SOTU by TOTUS.

http://beforeitsnews.com/economy/2013/02/ron-paul-on-state-of-the-union-...

Good interview.

 

Fri, 02/15/2013 - 11:26 | 3246394 yogibear
yogibear's picture

There is no fixing it. Fraud is in the bankster DNA now.  No prosecution for the crimes of the past. Move on to bigger and more massive schemes until there is a US currency crisis.

The Federal Reserve is running out of bubbles.

When the masses can no longer afford to eat is when the change occurs.  

Fri, 02/15/2013 - 12:34 | 3246659 John Law Lives
John Law Lives's picture

The interview with Ron Paul was quite good.  I realize this ZH thread is about another topic, but this seemed as good a place as any to post the link to the interview.

BTW, there was a Q&A session with Stossel's audience at the end of that interview that wasn't included in the video I referenced.  Perhaps there is another video out there that includes the Q&A session with the audience.  There were some good questions and answers.

Fri, 02/15/2013 - 11:19 | 3246370 ekm
ekm's picture

Reposting:

 

People forget that only 6 of 21 primary dealers are US based. The rest are foreign primary dealers.

 

So, still, a primary dealer or two will have to hold the bag

 

http://www.newyorkfed.org/markets/pridealers_current.html

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
UBS Securities LLC.

Fri, 02/15/2013 - 14:54 | 3247172 fonzannoon
fonzannoon's picture

EKM your seth klarman dude is buying AIG. Any thoughts?

Fri, 02/15/2013 - 18:36 | 3248002 ekm
ekm's picture

If you read the book, you wouldn't be surprised.

He's got one full chapter dedicated to companies in distress.

Fri, 02/15/2013 - 11:27 | 3246392 razorthin
razorthin's picture

Hey, We'll fukk the willing no matter where they live.  As if holding their nose and buying our debt at negative real interest weren't enough, wait 'till the equity crash and watch the currency/trade/hot wars heat up.

Fri, 02/15/2013 - 11:36 | 3246435 AlphaHunter001
AlphaHunter001's picture

 

This is the scary thing, once US investors start poring money into the market, we could see a massive push up in stocks.... The rotation out of bonds is real and could last years...

Fri, 02/15/2013 - 12:10 | 3246526 TruthInSunshine
TruthInSunshine's picture

Your thesis doesn't compute.

Any "great rotation out of bonds" and into equities, whether by current fixed-income large AUM institutions, or by whatever is left of "retail equity traders" (which would only signal the beginning of equity market cratering) joining an equity beta chasing exercise definitively spells the end game for POMO operations and any further ability of the Fed to size their flow of funds in any proportion that would do anything other than cause interest rates (and yields on sovereign debt) to skyrocket.

Bernanke has thus far only been able to thread the needle he has by inducing a massive bubble in equity AND bond markets, SIMULTANEOUSLY.  Any "great rotation" that's been mentioned upsets the Fed's apple cart and literally immediately sours the Fed's balance sheet in a way that does real and extensive damage that's transparent in a way that it massively impairs their operations and further ability to size flow.

At what level of price impairment to the Fed's current holdings will it be constrained from further "sterile" POMO funding?

It wouldn't take much at the historically low yields, and even relatively and historically mild increases in interest rates would do tremendous damage given that "sterile" funding equals roughly 50% of all POMO operations/production of flow.

Fri, 02/15/2013 - 12:23 | 3246567 thepigman
thepigman's picture

He seems to have a lost a bit of his edge on the bond side and overdone it on the equity side. I'm assuming the Bernank has just steepened the curve a bit for his bankster clients before we proceed into the real economy's downturn.

Fri, 02/15/2013 - 11:43 | 3246462 babylon15
babylon15's picture

Just trying to get clarification on the second graph; is that US equities only, or all equities including international?

Fri, 02/15/2013 - 17:01 | 3247724 larz
larz's picture

hey wait a minute isnt the fed funding foreign banks

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