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This Is Who Was Buying Stocks When Bond Yields Were Collapsing...

Tyler Durden's picture




 

The week ending May 30th was an odd week for many... US treasury bond yields were collapsing but US equity prices were soaring to ever higher higher highs on weaker and weaker data. We know institutional asset managers were net sellers during this time and we know that the indiscriminate and non-economic corporate buyback-machine was in full swing but still... who was really the bid day in day out with no sense optimal timing... Thanks to tonight's Japanese flows data, we know... Japanese investors bought the most foreign stocks in that week since 2009...

 

 

In fact, this is the most stocks that Japanese investors have bought since the week of March 6th 2009... the lows in the S&P 500... but note they were buying in this size at the top... as Lehman collapsed and all the way down...

One can't help but wonder who has the firepower to buy all the way down into the 50% collapse of US equities in 2009 and then again last week as bonds started to flash danger signals... (and note the selling in early 2013 - when the Nikkei was exploding higher relative to US)...

 

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Wed, 06/04/2014 - 20:17 | 4825176 Yen Cross
Yen Cross's picture

 Are pension funds buying the top of equities, or selling yield for value?

Wed, 06/04/2014 - 20:23 | 4825198 economics9698
economics9698's picture

Japanese did the same thing with real estate, buy at the top.

Thu, 06/05/2014 - 02:17 | 4825883 Say What Again
Say What Again's picture

I suggested this idea back on 5/30/14

http://www.zerohedge.com/news/2014-05-30/buy-bonds-stocks-may-buy-every-...

We are all complainging about our Federal Reserve, but I believe the problem is much larger.  All of the major Central Banks are printing at an ever increasing rate -- And they can print for a very long time before TSHTF!

Don't you wish you rode the SPY, QQQ, IWM wave for the last 5 years...  Never mind - don't answer that question.

Wed, 06/04/2014 - 20:30 | 4825213 disabledvet
disabledvet's picture

GREAT question...and leaving aside the fact that their is no way of knowing this...generally speaking "pension funds run on auto pilot."

The sell off in small caps is very problematic to me because that's an inflation hedge being taken to the woodshed.

"I smell a rat" here as the "trenders" simply hyperinflate the economy to protect their "sacred cows" (mega cap growth.)

High beta has been utterly annihilated YTD...although some of those names have staged an impressive recovery too (Tesla being one of the best.)

Sorry but General Motors really looks bad to me here...as do many other "incumbents" who simply have too much debt to compete with the New Kids in town. (Amazon, Google, Apple, etc)

I still think this next collapse will start in the junk bond markets as the Fed barely had to do anything to blow up that space last year.

Inflation matters...but that's the numerator to the economy's denominator.

A collapse in earnings will hit much faster than the money printers can "conjure" growth.

The scary thought is that earnings collapse "just in time for fuel costs to soar." Europe is paying ten bucks or so a gallon for fuel...don't know why the USA feels it's so special.

Wed, 06/04/2014 - 20:17 | 4825178 Spungo
Spungo's picture

This is what happens when the media and the government lie about there being a recovery. Without boots on the ground, how are the Japanese supposed to know our economy is a disaster? It's bad enough Obama wants to victimize American investors. Now he has Japanese investor blood on his hands.

Wed, 06/04/2014 - 20:23 | 4825194 fonzannoon
fonzannoon's picture

The 10yr jgb is .59bps. this ain't about a recovery. it's about yield.

Wed, 06/04/2014 - 20:32 | 4825217 Yen Cross
Yen Cross's picture

  My best to you Fonz. The Fed can "never" take the path of Japan. No-one in their right mind would buy t-10's at 56 basis points.

  Here's my likely scenario Fonz.

The usd tanks over the next several months. (things slow down after q-2 reporting)

Wed, 06/04/2014 - 20:37 | 4825228 fonzannoon
fonzannoon's picture

I'm with ya man. I just mean the low yields over in Japan are forcing Japanes investors to buy over here. SPY at a 2% yield with the bernakyellen behind it. 

I honestly have no idea where we go from here. I just know I will be buying it the whole way and not selling and practicing my best stupid ignorant face for when time comes.

Wed, 06/04/2014 - 20:44 | 4825245 Dr. Engali
Dr. Engali's picture

Just think of how much they can lever up to buy equities and raise the world debt levels if the U.S becomes the next carry trade.

Wed, 06/04/2014 - 20:49 | 4825260 Yen Cross
Yen Cross's picture

 Hey Doc.  Reserve currencies have their 'setbacks'  How do importers and exporters hedge their "repatriated" profits?

Wed, 06/04/2014 - 20:33 | 4825221 BringOnTheAsteroid
BringOnTheAsteroid's picture

There might be a market for a translation of ZH into Japanese. 

Wed, 06/04/2014 - 22:27 | 4825536 Wild Theories
Wild Theories's picture

Nope, ZH will get shunned in Japan on 2 offences: rampant swearing and anti-Americanism.

Japanese don't like to be rude, and they also hold the US in high regard.

Thu, 06/05/2014 - 01:07 | 4825812 BrosephStiglitz
BrosephStiglitz's picture

They hold them in high regard for now.  Once the markets crash and their wealth is erased they will convert their industry to produce kamikaze drones.

Wed, 06/04/2014 - 20:19 | 4825182 Dr. Venkman
Dr. Venkman's picture

Looks like the tried and true buy high and sell low strategy.

Wed, 06/04/2014 - 20:22 | 4825187 fonzannoon
fonzannoon's picture

 

Seems like there will always be a buyer, whether it is institutional, retail, or soveriegns etc etc. 

Wed, 06/04/2014 - 20:34 | 4825222 BringOnTheAsteroid
BringOnTheAsteroid's picture

Are you classifying the Fed as institutional?

Wed, 06/04/2014 - 20:39 | 4825235 fonzannoon
fonzannoon's picture

I wish they were institutionalized. 

Hey OT since this will prob be a boring night. Did Tyler or that Mike Kreiger guy post this yet? Decent rant, pretty funny.

https://www.youtube.com/watch?v=fpbOEoRrHyU

Wed, 06/04/2014 - 21:12 | 4825306 thecoloredsky
thecoloredsky's picture

great link. I found this too about Mr K Alexander

https://www.youtube.com/watch?v=k8lJ85pfb_E

Wed, 06/04/2014 - 20:39 | 4825238 Dr. Engali
Dr. Engali's picture

Well they certainly should be institutionalized.

Wed, 06/04/2014 - 20:25 | 4825202 Yen Cross
Yen Cross's picture

  hERE'S THE "NUTS AND BOLTS"  over the 1st half of June. 

  Risk is already priced in.

 in August the risk premium will rise in front of M/T elections. I've deeply evaluated PPI and CPI through (forward) shipping channels.

Wed, 06/04/2014 - 20:33 | 4825220 maskone909
maskone909's picture

Risk is priced in when the fed is the market? Oxymoron if i might say so

Wed, 06/04/2014 - 20:32 | 4825211 Dr. Engali
Dr. Engali's picture

So tiny little Belgium is buying our bonds and broke ass Japan is buying our equities. Nothing suspicious here. MyRa anybody?

Wed, 06/04/2014 - 20:49 | 4825261 disabledvet
disabledvet's picture

You have to factor in a worthless dollar.

Sure...the counter cyclical policy "was on steroids" (2008) and had the "desired effect." (Huge double top in gold, massive rally in equities, even more massive rally in fixed income...but ZERO recovery)

So entire municipalities start popping off like they were Government run Ponzi schemes.

Sorry but you want to bail on Big City Slick here as the federal outlay vis a vis the collapse has been truly epic. (Google "Silver Line" if you're interested. More than enough to take out the Postal Service.)

Moonshoting prices only makes The Collapse Part Deaux that much worse. Municipal Governments had better get in the game of providing dirt cheap internet access. That's been the prime form of communication now going on thirty years.

Of course you can give all the money to Google instead...watch them drive the price down to less than a PO box...for a year....and that will be that.

Wed, 06/04/2014 - 20:53 | 4825266 Yen Cross
Yen Cross's picture

 The Belgium connection is exposed Doc.

 Released killers, demographic, geographic/

Wed, 06/04/2014 - 20:33 | 4825219 NAP
NAP's picture

Japanese investors or central bank?

Wed, 06/04/2014 - 20:42 | 4825246 slingshot
slingshot's picture

yea its those japanese housewifes buying  25k-65k blocks of ES at the close and  pushing the market up...  

Wed, 06/04/2014 - 20:49 | 4825259 RiverRoad
RiverRoad's picture

When the Emperor has no clothes even the cleanest dirty shirt looks good.

Wed, 06/04/2014 - 20:55 | 4825273 Yen Cross
Yen Cross's picture

   He/She is running behind a "cloven driven" wagon looking for sanctuary.

Wed, 06/04/2014 - 21:12 | 4825308 buzzsaw99
buzzsaw99's picture

my guess is that margin borrowing is fueling the nikkei and the nyse

zirp 4 evah bitchez

Wed, 06/04/2014 - 21:18 | 4825323 Herdee
Herdee's picture

The start of big flows out of Japan instead of them buying Government debt?Could be a signal.Maybe the smart players see danger and are playing it safe in foreign assets like U.S. stocks.Kyle Bass described this some time ago that it would be an indication of trouble.Time to buy GYEN?( Long Gold - Short Yen) or Gold in YEN terms?

Wed, 06/04/2014 - 21:23 | 4825339 WMM II
WMM II's picture

makes perfect sense.

print phunny money.

buy foriegn companies.

'silly' japanese.

buy bonds at the same time.

why not.

after all.

just print more.

 

:)

Wed, 06/04/2014 - 21:56 | 4825433 Yen Cross
Yen Cross's picture

 I've tried to have fun and be med-evil. The simple fact is that we're looking at "over-supply".

  The ports and oil terminals are plugged. That's a fact/  Why?

Wed, 06/04/2014 - 22:22 | 4825530 Wild Theories
Wild Theories's picture

Thank you, Tylers, I always suspected the Japanese were coming in.

The only people more willing to drink the kool-aid of US omnipotence than Americans themselves.

Thu, 06/05/2014 - 02:35 | 4825901 syntaxterror
syntaxterror's picture

As long as there's a Bigger Fool to keep buying, it's all good.

Thu, 06/05/2014 - 05:18 | 4825933 AGoldhamster
AGoldhamster's picture

BBs in the weekly predict A HUGE move just around the corner in USDJPY.

PS: Cycle wise it seems US equities could be in for a sideways period or a smooth correction into July and maybe even August. Again what will that do to rates and USDJPY?

 

Thu, 06/05/2014 - 07:07 | 4826019 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Big surprise. Japanese "investors" they say. Just look at the defense of a breakdwon in Nikkei, it's all clear.

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