RIP Rotation: Two Weeks Of US Equity Fund Outflows

Tyler Durden's picture

If it appears that there has been a period of perplexing quiet in the financial comedy TV's hammering on the topic of the great rotation, it is because that is indeed the case. The reason? As per ICI, following the start of year inflow surge into domestic equity mutual funds, we have experienced a steady trickle lower in inflows, and then, as noted last week, have had not one but two consecutive outflows, confirming that the pattern from 2011 is fully set. Finally, for those curious where the surge in early 2013 inflows came from, we suggest rereading our post from December on "A Record $220 Billion "Deposit" Injection To Kick Start To The 2013 Market." In summary: there has been zero, zilch, none "great rotation" out of bonds into stocks, especially since bond funds have seen far greater inflows in 2013 compared to stocks, and the only money "rotating" has been the parked deposits in year end 2012 ahead of the Fiscal Cliff, being reallocated back into equities (of which there is now no more), and some modest money market fund moves, which also have now tapered out.

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NoWayJose's picture

Out of equities is smart, but into bonds not so much. I do think it is possible bonds could do well when the bubbles pop, but the better move is to cash out equities and buy physical PMs.

prodigious_idea's picture

Perhaps, but unfortunately the vast majority of individual investment value is thru employer-sponsored plans that don't offer precious metals as an investment option.  For the tiny fraction managing their investments outside ERISA plans, notwithstanding ZHers, yesterday's feature on Kyle Bass may have presented the best LT investment - short JPY and buy gold.

fonzannoon's picture

lol. my guess is GS etc are getting firmly positioned in treasuries and they should make a nice profit on the ride back down to 1.5% on the 10yr. same as it ever was.

Quinvarius's picture

They let gold get too cheap.  Everyone knows it is all about printing.  Why go into expensive stocks that have to perform in some kind of economy when you can recognize hyperinflation.  No point making stuff harder than it has to be.  Besides, if gold is not rising, you don't want to be in stocks.  Stocks follow gold in the printing press environment.

Sandy15's picture

Unless the Bernack shorts gold every morning at 8:00 am to 'control' inflation............

fonzannoon's picture

It's getting cheaper.

This is the big push. Don't fight it. Don't short it. Take your dog for a walk and go do something else. This market may climb to unimaginable heights. Gold may be pushed down to unimaginable lows. There is no one in these markets so they can just set the numbers. At some point someone will be forced to sell 2 shares of apple and this whole things will come crashing down. But that could be a long ways away.

UnRealized Reality's picture

The delusions you Goldbugs have cease to amaze me. The Bondholders ( Bankers) aren't going to let Fed print to infinite and put them in the poor house. SEE: Euroland, Greece.

According to you lunatics the Bankers are ALL manipulating, so they are not going to make YOU rich,HA HA HA, and make them poor with this so-called hyperinflation propaganda. Wake up.

Ghordius's picture

I beg to differ: historically bankers are usually very happy about inflation and even hyperinflation

in the Weimar HI, for example, banks had to expand heavily and were very profitable, also thanks to the stock market entry of millions

further, your "bondholders" comment makes no sense when the FED buys them up from the megabanks

what we continental europeans are doing has nothing to do with banker profits directly, and a lot with "Austrian School" policies (believe it or not, I don't care)

Goldbugs? Do you mean those who don't care about today's price or do you mean nearly all central banks with the exception of the FED and the Bank of England? ;-)

UnRealized Reality's picture

Bankers will be very happy with hyper-inflation???????? Now I know you are a Goldbugs, do you even know what hyper-inflation means, other than from all the gold propaganda sites? They will sit back and let their wealth be destroyed so the FED could print to infinite. I know of NO Empire that died from hyper-inflation, sorry history proves your statement is more propaganda.

Euroland is BROKE and are squeezing the people for every last penny, why? To make sure they pay that interest to the, wait for it, bondholders. You need to lift you head out of those one way Gold websites.

Pegasus Muse's picture

"The Bondholders ( Bankers) aren't going to let Fed print to infinite and put them in the poor house." --UnReal

Mish put out a good piece on Inflation Targeting this morning.


Inflation Targeting Revisited; Three Major Fed-Sponsored Bubbles; Who Benefits From Inflation?

Inflation is an insidious hidden tax that benefits those with first access to money (the banks and the already wealthy), and government (via sales taxes, property taxes, and income taxes).

Government bureaucrats take your money and redistribute it primarily for wasteful pet projects in their districts or to those who contribute to the politicians' campaigns.

In spite of the often-heard mantra that "inflation wipes away debt", I suggest otherwise. Income typically does not keep up with expenses, and most have too few assets to inflate. The poor (last on the credit totem pole) overpay for their assets with cheap credit given to them at precisely the wrong times (as happened right before the housing bust).


Ghordius's picture

goldbug perhaps, I do own gold. personal experience with HI, yes, been there, for example in Serbia at that time. hobby historian, yes

yes, banks do thrive on inflation and if they don't make colossal mistakes they thrive on HI. that's a fact

Quinvarius's picture

I am not trying to get rich on gold.  I am trying to get get poorer along with everyone else.  If I want to swing at the fences I'll buy JGBD and ride around on Kyle Bass's coat tails.

Downtoolong's picture

Which begs the next obvious question, "Who is buying this stock market up on low volume?"


prodigious_idea's picture

Who?  Among others, the fund managers investing the steady flow of new money from employer-sponsored retirement plans where the participant has elected an equity option.

Sandy15's picture

Funny how they keep going up, up and away each day.  The Bernack menions are idiots!!!!!!

UnRealized Reality's picture

More narrow mindedness, this is a domestic view. Inflows are coming from

Euroland and other failing economies. Yes, the US is the best of the worst,

Wake up and face it. The Markets aren't only bound by a view of US

capital only, and these people call themselves analyst, GEEZ.

pappacass's picture

So why aren't European markets crashing, or Euro bond markets blowing up?

UnRealized Reality's picture

Well, maybe it has something to do with the ability to move Billions in a

week, month or year. You can't just point and click Billions and move the

Money. France is forcing money to get out of dodge, Were is that money

going? Lets not forget what Japan is doing. Not to mention what it would

do to markets and I'm sure ZH would be screaming manipulation right

along with the Goldbugs.

thedrickster's picture

Domestic Equity Funds as in mutual funds holding US equities.

The chart isn't measuring flow of domestic funds into equities and doesn't purport to say anything about hot money QE4EVA Global flows. It is specifically directed at the absurd propaganda meme "investors are rotating out of bonds into stock". Being a proxy for main street clearly, they are not.

UnRealized Reality's picture

The tone here, as usual is that the markets are ready to crash due to capital flow of US capital. Sorry, the absurd propaganda meme here is on ZH and inferring something that is not. Foreign inflows can support US markets without us capital and to infer they can not is absurd. But, I guess ZH has to feed the herd.

thedrickster's picture

The "tone", please. If that is the infrence you draw, it's your problem.

I don't infer anything from this post. I take it face value, the TV talking heads are full of shit, there is no great rotation occurring. The catalyst must be something else. Like say $85B a month in funny flow.

Oh and way to avoid addressing my actual point fuckhead. You are misrepresenting the chart as presented.

Yen Cross's picture

  I pulled this chart last night so z/h readers can keep track of this charade. It's a list of longest stock market runs. 10 day runs have only happened 8 times in history! It just goes to show how completely manipulated these markets are.

    Dow Jones Longest Streak of Daily Increases

Edward Fiatski's picture

God damn terrirsts buying bonds.

Mr. Saxby's picture

Just because Joe Lunchbucket has changed his 401(k) allocation to the "stable fund choice," doesn't mean that the money has actually moved out of the equity market anywhere but on Joe's account statement. Considering all the fraud, propaganda, and chicanery that we've seen from Wall Street, putting retirement funds of those 20 or more years away from retirement all in the stock market is a no brainer.

vjmali's picture

What I see is that much of all that money that came out since Oct 2012 is still sitting on the sideline itching to jump in.

Pike Bishop's picture

I've been doing regression on these numbers since summer '08.

March is a high significance month, but you track it in distance from neutral, not prior because Dec/Jan are bullshit months. It's the dumb money, but the first movers in a clear trend, haven't been wrong in 4 years.

So far this year we have a solid 4-5 weeks positive push, the rest is tracking in a neutral range. If you get 3 or more weeks moving neg ~5B with net neg foreign/domestic, start packing your bags. You'll have that long because the smart money always says the dumb money has it wrong during the first 2 weeks.

The blind disrupter is the fucking ETFs etc, which we only get quarterly. In some insane compromise to reality, people have been afraid of getting fucked in a mutual fund, so they have been moving into ETFs etc. Yeah, that makes complete sense. If this thing is hitting the shits, we may not see the move until the print for the ETFs.

The lemmings silence has settled in with everybody quiet at the edge. This bitch could go tomorrow or sideways for 2 years, then cut our nuts off.

Thanks Ben, the past 4 years have been worst piece of shit melt-up the Market has ever had.

It hasn't been a wall of worry, it's been a wall of toilet paper we should have fallen through months/years ago.