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The "Smart Money" Just Sold The Most Stocks In History
Last week, following the Fed's latest rate hike punt, stocks soared higher after realizing that not only is the Fed not ready to hike, but it will almost certainly not hike in September nor December (as the country will be covered by GDP crushing snow then). And despite some modest selling on Friday as the first images of Greek ATM lines spread, the S&P still finished nearly 1% higher for the week.
Any other week this would have been a perfectly normal event but according to Bank of America last week, this was not any other week. In fact, according to BofA's Jill Hall, "BofAML clients were big net sellers of US stocks in the amount of $4.1bn, following four weeks of net buying. Net sales were the largest since January 2008 and led by institutional clients—after three weeks of net buying, institutional clients’ net sales last week were the largest in our data history."
What was sold? Pretty much everything, although mostly large caps:
- Net sales last week were chiefly due to large caps (biggest sales ever of this size segment), though small and mid-caps also saw outflows.
- Institutional clients were broad-based net sellers of stocks in all ten sectors last week, led by Financials and Tech. Only ETFs saw (small) net buying by this group.
- Hedge funds were net sellers of eight of the ten sectors last week, led by Health Care and Materials. Only Tech and Utilities, along with ETFs, saw net buying by this group.
It wasn't just the mutual funds: "Hedge funds were net sellers for the ninth consecutive week." Who was buying? Sadly, the dumb, "retail" money: "private clients bought stocks last week following the previous week’s net sales."
Then again, as the chart below shows, the "retail" money is hardly that dumb these days, and has been consistently selling all throughout the rally, leaving the "smart money" scrambling who to sell to, and also leading to such amusing demands as Carl Icahn telling AAPL to please buy his stocks. Because nobody else will...
Actually it's not just retail that no longer "buys", both literally and metaphorically, the market. Pension funds have also seen their cumulative stock purchases go back to levels last seen in 2007!
What is perhaps even more surprising is that on a rolling basis, every client class has been a net seller:
- Hedge funds are net sellers of US stocks on a four-week average basis, which has been the case since late April. They are also net sellers YTD, after selling stocks in 2014 as well.
- Institutional clients are now net sellers of US stocks on a four week average basis, after being net buyers since late May. They were the biggest cumulative net sellers in 2014, and are also net sellers YTD.
- Private clients are net sellers of US stocks on a four-week average basis, which has been the case since late April. They were cumulative net sellers of stocks in 2014, but are net buyers YTD.
Which begs the question: how is the market just shy of all time highs... we ask rhetorically, of course...
So was this all a pre-Grexit cash out panic? Perhaps, but it also appears to have been quite targeted, with an emphasis on what has become the biggest industry bubble within the broader market: health care. In fact, healthcare selling was the biggest ever:
Net sales last week were broad-based, with stocks in all ten GICS sectors seeing outflows, led by Health Care and Financials. Net sales of Health Care were actually the largest in our data history (see our Chart of the Week, below), and the sector continues to have the longest net selling trend at six consecutive weeks. It has also seen the largest outflows year-to-date. This sector has generally outperformed the market over the last four years. The more defensive sectors of Staples, Utilities and Telecom saw the smallest outflows last week; only ETFs saw net buying.
The two Consumer sectors, Financial, Health Care, Energy, Industrials and Telecom saw net sales from institutional clients, private clients and hedge funds alike last week. Only ETFs saw inflows from all three groups.
Charted:
Finally, in the New Normal, it is no longer the smart, or dumb, money that is the marginal price setter but corporations themselves, via record amounts of stock buybacks. This is how they fared:
Energy stocks have notably seen a tick-up in buybacks by our corporate clients over the last three weeks, with <$6mn per week in Energy buybacks year-to-date through June but between $40-100mn each of the last three weeks.
Buybacks last week were largest within the Financials sector, followed by Consumer Staples. This was also true the previous week.
Indeed, with everyone else selling, it was corporations that continued their buyback ways.
And the worst news: with everyone else dumping stocks at a (near) record pace, the buyer of last resort, corporate buybacks, are about to enter that most dreaded period of the quarter: the blackout period that surrounds earnings releases. As such, starting this week and continuing for the next month, stock repurchases will grind to a halt.
One can hope that the Bank of Japan and the Swiss National Bank have some serious firepower left to pick up the slack: they are now, quite literally, the buyers of last resort.
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I hit the sell button by accident. I meant to BUY MOAR MOAR MOAR. It's all good, Yellen Smellen got my back.
So Bof A Merrill Lynch clients are the smart money? How soon can I open an account?
Stocks look like real estate - fewer buyers and higher prices. Go figure.
More middlemen + infinite funding = higher prices
Most important bit in this piece is about the blackout period for the corp buybacks. Good work. That's the cascade point potentially~
gotta get the bells and whistles goin off for the suckers to take the casino chips........
A Fox News anchor hit a guy with an axe resulting in an accidental publicity stunt
https://youtu.be/Mw3jssYRz_A
"This time it's for real!"
Yeah, right. Wake me up when the sky is actually falling.
What, so they BTFD next week.
We dont got no sell buttn over here, yellen took em all.
I am an American. All I saw on top of some chart was "CUM FLOWS".
Those flows decrease proportionately with whiskey sales.
those who got out really were smart. they collected all the way up and now they know the party is over, or at least too risky to participate in anymore. all they have to do now is convert those profits into tangible assets that will weather the coming storm and they'll be freakin' geniuses.
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Those year to date cum flows are hard for retail to swallow.
Withe the Greece deadline here...can you blame them..no one believes that it will be contained....and many think it might take down the EU..and the Western world as far as that goes....just CYA i think.....but no run to gold and silver..quite the opposite
Hard to know by price what's going on with supply and demand in the gold and silver markets -- as those "markets" aren't markets.
And there won't be until a status-changing event in Ukraine or China's regional waters upsets the apple cart enough for both of those nations to take decisive action in the markets.
Yeah my gold ain't exactly going up... wonder what's happening with tulips...
tulip season is coming to a close.
Poppies
are the new tulips
Beavis he said cum flows.
Nothing like subtle sexual double plus not so good propaganda programming to add secondary meaning into a deflating stock market.
If they are all blowing their loads who or what is the cum dumpster then?
an algo just came. what else is this market?
Unsure about the current cum dumpster, but here's a prediction you can bookmark: the H2 2015 cum dumpster will be all the alleged "smart money" that's been selling the past three months.
One way or another, every institutional guy is comp'ed on outperformance. September will roll around, and the 'smart money' will start thinking "Shit! Where's that goddamned pullback / correction / crash / apocalypse my research team has been going on and on about? I'm lagging my index by [x] bps... this sucks! And I promised my hooker I'd upgrade her SL600 to a DB9 next year. Now how am I gonna get laid?"
So sometime around the middle of Sept. you'll see a stampede back into all the assets currently getting sold, and we'll have something akin to a market blowoff. That's when the truly smart money will start to sell.
But I'm open to being wrong about this.
haha missed your comment Dewey. Are you an American like me? We tend to pick up this type of subliminals due to all the propaganda displayed 24-7 .
If ur sellin
really sellin
just call fugly Yentil Yellen
She's buyin what ur sellin like a jewish jail house felon.
Kevin Henry got her back.
Poor guy.
I wonder why the smart money cashed out and left the table.
Too much skim, perhaps, by dishonest dealers?
Can the Casino of Wall Street be broke?
Broke, no.
But maybe getting close to closing time.
Some jurisdictions still have blue laws.
The muppets are about to take one for the team.
the few
the brave
the muppet..
this is bullish, right?
o.0
Right. Institutionals are scary, whiny pissbabies.
If some benevolent stranger were to be so kind as to provide me with a non-collateralized signature loan, I would be delighted to buy all the stocks I can get my hands on.
I could even quit my current job making 64,000 every weekend on the Internet.
The dollar is up on "exit."
Liberty is a demand. Tyranny is submission.
Buy everythings while blood in the streets . Proceeds from sales of Dow20k hats will go to me charitable foundation.
Death to the human race. Long live the non human species!
If everyone is selling...then why is the market still up? Someone somewhere is buying..just not through BofA.
They will be buying again when Yellin gives them the green light
Markets can do anything, exciting stuff if you are playing and in the game, amazing how this has happened, mindboggling that its all absurdity, yet continues, it simply has to come apart, hardware is breakin up, the makers of the rules are losing it. But everyone is gonna hate the medicine, we all are gonna suffer regardless of any precautions too many varibles to be certain.
The Blood on the streets is not the primary move, its the deadly shit they will spray on'em from above thats the real goal....
once they're all snuffed out, then there will be no complaints from anyone about anything... Just like Rome "had no enemies"
A trillion here and a trillion there and soon you're talking about REAL money.\
3 ,'s just is so, yesterday.
If they are with BOA I doubt they are the "smart money".
Sell now before it's illegal later.
Karl Marx famously said, "History repeats itself first as tragedy then as farce." How can some money be called "Smart Money" if it hadn't purchased state power and all its institutions in the first place? No, it's not smart moeny per se but the power sucking blood from society at large.
Surf's up and its gnarly.
Okay, fine, tell me, what did they buy?
LOP or anyone, can you explain in simple terms how net sales can be so high yet the composites still go up?
i ask myself that everyday about my local RE market.
Very little selling, but the prices keep going up.I used to just put it down to LSD flashbacks,
but now I'm not so sure.
The answerr my friend, is they are lying about everything.Capice ?
Exactly. If everyone is going to cash, should the "market" fall?
But I digress, we all know that the Fed is back-filling...
IMO hyperinflation has begun already.
Clearly friend, hyperinflation is inevitable.
with the price of gold and silver
wonder if they bought in on the cheap
It is really quite polite of corporations to buy back stock. Taking it for the team.
Smart? And then, what do you do with $5T?
Put it where?
All I see with all this churn is stock broker extravagant (yeah I had to look it up to make sure I spelled it correctly) penthouse buying.
Oh, by the way, here in Florida, Cumberland is building gas stations like they know something is coming. (Maybe all the cash from stock sales.)
Something?
An army of old people.
And so what did they do with the proceeds?
I bet they didn't buy bonds.
i;d hedge that bet
"they loot the treasury last"
ie treasury bonds
If I was an investor with toxic stock to offload, I would be loving buybacks. Just gotta move wealth and self offshore so the suckers can deal with fallout.
Hahaha! And we're green! Who the ef cares about the "smart money?" Ef them!
China’s stock market fell hard last week—really hardhttp://qz.com/433012/chinas-stock-market-fell-hard-this-week-really-hard/
so it begins...
1
Pop goes the weasel.
"...me?, no, I'm just going to the washroom. Maybe some bad Kobe, I'll be right back."
Sounds convincing but for one major detail. This is the 21st century so why would actual buyers or sellers be relevant to the price of anything? There are two main pricing mechanisms in today's age and neither one cares about supply and demand at least in the USSA. One is the conglomerate of private interests we call government and the other is people with fancy enough computers and enough money already under the supervision of the aforementioned and usually at least tangentially a part of them. I fail to see how the decisions of the masses effect that of the aforementioned in any material way thus most price is non correlated to supply and demand.
Why are institutions considered to be "smart money"?