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

Tyler Durden's picture

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.

Good to know that it wasn't retail who sent the DJIA to new all time highs.

Who could it be? Who could it possibly be?

Of course, the above simply means that Maria Bartiromo's favorite topic: "the pent up demand from all that cash on the sidelines" (which incidentally is going to buy Treasurys with the same fervor as any week in the past four years), will be back to the daily talking point rotation, at least until such time as the DJIA is back solidly below its 2007 highs.

Source: ICI

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kliguy38's picture was fun while it back to my stacking

CPL's picture

Looks like it's that time again to print.

lineskis's picture

Tyler, while domestic in/outflow is one side of the story, how about international in/outflow in equities? Do you have such data? Because after all we're in a globalized economy, and if there's a slight domestic outflow and a massive international inflow, well in the end we have a net inflow... Which IMHO is what matters.

camaro68ss's picture

MDB will tell you to double down on the DOW NOW!

TruthInSunshine's picture

Just looking at the S&P, it has gained 128% since the lows put in as of March of 2009, compliments signicantly of...

....wait for it....

...the 1.5 trillion USD companies listed on the S&P 500 have expended in buying back their own shares of stock ...

Why wouldn't they when they can float a 3 year corporate bond for 1%, and the execs that are massively compensated vis-a-vis share price can so easily boost that compensation by using such share buybacks?

"In this run-up, nearly all the buying has come from companies repurchasing their own stock in an effort to boost its value. Companies in the S&P 500 have bought $1.5 trillion since the Great Recession began in December 2007."

See Dow closes at all-time [nominal] high, beating 2007 record

I'm trying to find similar ratios for the Fab 30 Dow and the Nasdaq, but I'd imagine it's roughly proportionate on a market cap ratio basis, as that excerpt suggests.

Think about that; a 4 year, Fed induced (see comments below about ZIRP relating to corporate buybacks), artificial rally, creating an approximate 10 trillion USD in paper, ledger "wealth" across all stock indexes, including the S&P, and of that, a massive % of the S&P's rally has been funded by 1.5 trillion in corporate buybacks of their own shares.

So, the Fed has printed trillions from thin air, distributed this money base to Primary Dealers and banking/financial entities at near zero cost basis to "invest" (aka speculate, aka gamble), while at the same time, the Federal Reserve has swapped Treasuries for shitty assets banks and financial firms wouldn't otherwise be able to unload (aka "a way above fair market value transaction"), and corporations that are publicly traded on the Dow, Nasdaq & S&P500 have used near free loans to buy back a record amount of their own shares.

Even more critically, the Fed has "fixed" (i.e. manipulated to the point of breaking it) the largest market in the world by far, that being the interest rate market via ZIRP and NIRP, which is how those corporate buybacks of shares can be funded at a loan rate  of literally 0% interest -- even if the shareholders holding or buying common shares of those same companies don't fare so well ultimately.

And that's your rally in a nutshell, which will end in tears for nearly every person who has purchased or will purchase anything stock "market" related with their own money; aka same as it's always been, but this one is a 10 trillion dollar bubble inflated in 4 years that will ultimately (once the extreme leverage being utilized, even by recent, historical standards, is accounted for) dwarfs the 2000 bust and the 2008 bust.

This is why The Bernank can't stop printing, either in the open or via the intricate, elaborate and shadowy ways he's doing so now:  If he stops, or un-ZIRPs the "fix," the largest, notional bubble he's created (also known as "creating paper wealth from thing air"), that's allowed the system that's now supported by a fundamentally broken economy to kick the can, implodes.

That bubble will burst, as all bubbles do with inevitability, but The Bernank needs to try and stretch the clock, so that another scheme to allow the can to be kicked can be devised and implemented.

All's well that ends well, and for that which ends badly, well...

azzhatter's picture

I love how every analyst on TV, whilst in the middle of orgasm, takes a pause and says this will end badly. They then continue to splooge all over Bernanke

CunnyFunt's picture

Look out below ... those icicles look precarious.

Cult_of_Reason's picture

Gotta defend 1540 bro.

tawdzilla's picture

how many greater-er-er-er fools are left?

Cookie's picture

28.6.08  Guardian

The week's financial bloodshed means that American shares are now in negative territory for the millennium. The Dow Jones index is below the mark of 11,497 at which it closed at the end of December 1999.

ben has a way to go yet to outpace gold

Black Markets's picture

Retail is flowing out because more people are retiring than starting their first job and saving.

TrumpXVI's picture

It's also flowing out because more people who aren't retired are being forced to support themselves on their savings instead of with a JOB.

Black Markets's picture

True, people are liquidating their equities because there is less demand for labour

SheepDog-One's picture

Also people need da moneez to buy ammo, and baseball bats with nails in them! Screw food, eat the rich!

Waterfallsparkles's picture

Or buy a Hydrolic Nail Gun.  That will stop em.

PAWNMAN's picture

Wall Street had to give it a name. They think a lot like our Dear Leader that if you repeat a lie enough times it can become reality. The real "great rotation" is once productive workers rotating into food stamps and disability.

Jason T's picture

Armstrong thinks we get a high by next week, then get the correction and they'll be a lot of "i told you so's" .. but that could be a major buying opportunity as Euroland goes into full blown debt crisis, the Euro tanks.. as does the British pound and money from Europe comes piling into US stocks.   .. makes sense to me.

Timmay's picture

Won't the dollar rise then? Not so good for levered "assets", and there is alot of that around here.

Floodmaster's picture

Powered by Unfounded Fear of Inflation.

pleseus's picture

And so the rally will come to an end.

Shizzmoney's picture

The only rotation I'm interested in is cleaning my .38 revolver (which I did last night).

SheepDog-One's picture


Hongcha's picture

Covered my short of this morning.

Edward Fiatski's picture

"Ben, we're not closing RED again, are we, Ben..?


Sheep will be sheep - Buy High, Sell... We don't Sell. LOL!

azzhatter's picture

Were the obamaphones a casuality of sequestor?

Tijuana Donkey Show's picture

No, Obamaphones are funded by a branch of the FCC, which is funded by tarriffs. The universal access fee on your phone bill is obamaphones. 

Clowns on Acid's picture

Yeh, but does the FCC or that "funded" branch run a deficit? Any bets ?

ATG's picture

Still too many stock bears (36.6% AAII) for a top:

and too many precious bulls for a bottom:

intj87's picture

How do people buy into these catch phrases really?
"The great rotation"
What the actual fuck does that even mean? 

SheepDog-One's picture

I guess they meant they were desperate for the sheeple to 'rotate' into the slaughterhouse pen, but it didn't happen or something.

No one takes the markets seriously anymore.

lasvegaspersona's picture

rotate= missionary position to doggie

Black Markets's picture

The great rotation is one of ownership.


Real people are giving up ownership and large organisations with vast deposits over loans are taking up ownership.


I wonder why?

Waterfallsparkles's picture

Are Retail Investors getting smarter than the Street by beating them to the Sell?

Kaiser Sousa's picture



dislclaimer: cant stand the Maria Bitchoroma bitch...

market whore.........

Overflow-admin's picture

Buy at the top, sell at the bottom. Stock muppets 101

Edward Fiatski's picture

Works every time like the first time.

ekm's picture

I am thinking FEW WEEKS, not months or years. Just give it few weeks and it's over.

youngman's picture

I needed some cash to pay my i sold and cashed out some gold and silver profits from years ago...

Herkimer Jerkimer's picture




It's called "mutual fund season" for the suckers.