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BofA Stumped: Fund Managers Have Highest Cash Levels Since Lehman Yet Nobody Is Selling
The latest BofA Fund Managers Survey has left the report authors stumped: on one hand fund managers have the highest cash levels since Lehman at 5.5% (most since December 2008 and prior to that November 2001), which combined with a capitulation in risk appetite due to ongoing stress in Greece and China would suggest a screaming buy signal... but there is one problem: the same fund managers refuse to actually capitulate and sell, and as a result not only are bank longs at record highs, but equities remains solidly overowned but the group, offset by "protection" levels which are the highest since February 2008. In short, the current positioning is a "complete contrast to 2008."
Confusion indeed.
More details from BofA:
Lehman II: risk capitulation…
Cash levels soar to 5.5%, highest level since Dec'08, and prior to that Nov'01...
and yet: ... highest level of “protection” since Feb’08.
- Highest net % of investors since Feb’08 have taken out “protection” against equity fall next 3 months
The catalyst: Greece & China capitulation…
Eurozone breakdown = biggest “tail risk”; FMS 12-month EUR forecast = 1.04; China growth expectations 2nd lowest since Dec'08; FMS 12-month China GDP forecast = 6.5%; by 2018 <23% think China grows >6%...biggest July FMS allocation cuts in commodities, telco, Eurozone, energy.
So one would think that a broad rush from risk means selling of actual cash equities? One would be wrong because there is
… no macro capitulation
Fed rate hike expectations shift from Q3 to Q4 as growth expectations drop to 9- month lows (US GDP forecast = 2.4%); but profit & inflation expectations stable & investors stay stubbornly long stocks & cash, and short bonds.
So what is going on here? It appears that "everyone" is concerned about Greek and Chinese risks as well as a global slowdown, "everyone" believes the Fed will hike in 2015 and thatt this may push risk lower, and yet "everyone" is "stubbornly long stocks and short bonds" still hoping that whatever hedges they have on will protect them.
In short: not only is everyone on the same side of the boat when it comes to underlying cash positioning, but this groupthink is doubled down as virtually everyone has all the same hedges. If nothing else, this explains why even on down days volume lately has been anemic (we know "up" volume barely exists): the smart money no longer sells at all but merely buy index puts.
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becuz they're buying call options instead of the security as well
So bullish then. Ok good.
a 2% dividend rate, left in teh funds, would create the cash without selling, or buying securities.
all the cash came from the fed for free, so they don't need to sell stocks. indeed, they are encouraged to stay put by their paymasters.
Have to do something with all that laundered drug money!! lol
In the end, this will have proven to be a sustainable bull market in smoke and mirrors, and not much else. The gains in stocks of the last seven years will mostly wash away.
Indeed, someone is licking their chops on the other side
William Dudley's Fed magic money.
If and when the day comes to sell TPTB will make selling illegal.
Maybe they already have, just without saying it publically: if you don't sell, we won't prosecute for past crimes.
I am a firm believer that that sort of pressure has been brought to bear.
me too. 5 phone calls - blackrock, fidelity, american funds, t rowe, and maybe vanguard,
its for the children. and the 401ks.
Maybe some day TPTB will make nail gun suicides legal.
No one is "selling" and somehow all of Greece's loan payments have been "paid".
Mark to fantasy motherfuckers.
The producers like me are about to go the fuck off line. Good luck to all the sheep in those mega cities.
Shit. The smart money are getting smarter. What should we do?
Translation:
Underowned = real things (energy etc).
Overowned = fake financial shit.
Digital fiat fairy dust allocation brought to you by the Masters of Central Planning.
What's the mystery? ZIRP leads to funny money everywhere. I even have some 1 million $ bills I got on ebay.
zerohedge, in case you missed one issue you can read it here .... Goldman camp already have slipped a possible way this can be countered ... the incentive to sell will have to be reduced in order to stop participants from selling.
http://just-a-thought-from-thinair.blogspot.com/
http://just-a-thought-from-thinair.blogspot.com/2015/06/evidence-2-engin... <- this has a link to a goldman story.
Arrest sellers.
BTW, stop with the 9/10 stupidity. Study fractions--you know, the stuff you skipped in grade school.
I understand your frustration at not being able to even understand the problem. But, the good thing is you at least tried.
Because money is free and they have no idea what to do with it. The only thing that is not going to happen is loaning it outside of the financial system.
Money for nothing and the Girls are free.
"... not only are bank longs at record highs, but equities remains solidly overowned but the group, offset by "protection" levels which are the highest since February 2008. In short, the current positioning is a "complete contrast to 2008." ..."
Assuming this is true, it aligns well with the Fed loaning to banks and banks doing the Fed's bidding to own shares and more importantly, SPX, NDX and DJI futures.
Owning these futures is key, since the banks can ram the markets up overnight without any nuisance selling volume getting in the way.
These banks (aka the "collapse prevention team") includes all banks outside of the US including those in China. This is a global effort.
The mortgage business is dead in the US (and likely everywhere else), so banksters need to do something - and so they bid markets.
And with goobermunt data aligned to show stability (yes, they're lying), everything is fine.
One problem. VELOCITY IS BEYOND DEAD. Have fun with that banksters.
FMS ?? what is BoA looking at. perhaps total nominal level of money market cash is high (due to qe) but as a % of mutual fund assets....this doesnt jive with ICI data, which while a small uptick the % in 'cash' is very low.
US government is afraid to let the DOW collapse.
Russia and China too strong to allow collapse.
Very interesting watching shit float.
401K to 601K. Then 101K.
What part of BTFD don't they understand?
It's just the same old story, there's so much (funny) money floating around, and so few brains.
"since Lehman"
Drink.