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QE "Barbell" Returns: Biggest Junk Bonds Inflow In 8 Months; Most Gold Buying In 7 Weeks
The cross asset whiplash events, coming at a furious pace unseen since 2009, continue, and while the late September surge driven by a historic short squeeze served to massively boost equities (because as DB's Jim Reid notes "markets have slowly come to terms with the fact that the 'great' global central bank liquidity story of '2008-20XX' is far from over"), other risk assets were also impacted. Case in point: junk bonds, which after becoming one of the most unloved asset classes in 2015 due to their exposure to energy assets, took advantage of the latest vicious squeeze in crude, and notched their biggest inflow in 8 months, even as gold just saw its biggest "QE-on" buying in the past 7 weeks.
Here is the latest fund flows as summarized by BofA's Michael Hartnett
- Junk-on: largest HY bond inflows in 8 months & largest EM debt inflows in 5 months (Chart 1)...collapse in Fed hike expectations gives oversold junk "yield" a bid.
- Risk-on: equity & bond funds both record inflows for first time in 10 weeks...signals turn in risk-off sentiment...note BofAML Trading Rules remain in "buy" territory, bar the Breadth Rule which flipped from "buy" to "neutral" this week (Table 3 & Chart 4).
Paradoxically, it's not only risk on assets that are catching a bid. Just as importantly, "central-bank policy failure" inflows are also starting to move:
- Gold-on: largest inflow in 7 weeks...reflects weaker US$ and QE "policy failure" hedging.
Some other flow takes:
- EM-on: first EM equity inflows in 14 weeks...first signs of rotation to "weak US$" plays Europe-defiant: $3.1bn inflows (inflows in 20/22 weeks)...many clients using Eurozone as hedge against surprise EM-upside.
- US cyclical-on: muted $0.7bn inflows belie divergence between $2.8bn ETF inflows & $2.0bn mutual fund outflows; ETF inflows all to macro-sensitive, cyclical themes e.g. QQQ, IWM, XLI, XLY...hints that growth expectations troughing.
- Unhealthy: 4 straight weeks of global Health Care fund outflows (longest streak since Jan’13); by contrast, global Consumer funds see largest inflows in 3 months ($0.9bn).
- GWIM resilient: BofAML private clients have added risk in each of the past 4 weeks (Chart 5); and note 2015 on course to be first year since 2012 that private clients have bought more common stocks than ETFs (Chart 6).
Still, what was until a few days ago a massive contrarian buy signal with nearly 100% of global equity markets trading below their 50 and 200 DMA, has been now fully rejected following this furious rally on more QE hopes:
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Sure jump into HY. Buy the ETS! They're large and very liquid so if anything bad happens you can always get out. Everybody's doin it!!
It's all fucked up.
After all, it's OK to harvest body parts form aborted still living babies but bad to execute mass murderers or kill an animal.
http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/...
So what else are we to expect?
I'd personally have the unborn treated like mass murderers and elephants.
Buy your gold while you still can. If you think this is fucked up, just wait another week or two for the next Progressive meme.
Like Gold Owners are Terrorists or sumptin'
All part of the plan knukles. Why pay them welfare later when you can funnel them into PP and collect money on the body parts now?
The Fed has to do keep doing larger and larger forms of QE to prop up the phony economy and keep their financial buddies afloat.
QE4 will be called something else next year. More people are getting on-board with this, just a matter of time when the Fed will announce it.
Well that's what happens when your job depends on you not knowing what's phony or what it will be called.
Global financial meltdown.... delayed. Again.
What we really need is for the markets to break for a couple hours this afternoon. Then it would really be party time into the close.
Been delayed forever, can keep going forever.
So what?
Oblivion can come going straight up or straight down.
You may have all the money in the world, but have nothing to buy because the true state of the economy has put everything out of business.
In the good news column I hope the FDA and the lawyers shut Theranos down. Fucking biotech scam bullshit. $7 billion for a company that essentially sold machines based on flawed research and faked clinical trials. Turns out almost every test they ran for disease didn't work. Who would have thought that diluting blood with water would cause mis-diagnosis? The test failed to detect diseases most of the time and flagged serious conditions that weren't there. Although knowing how our fucked up medical system works, perhaps that was the plan all along. Scam medical machine says you have a bad liver, and the next thing you know you are paying $500k for a liver transplant you didn't need.
If you put Silicon Valley in front of a company there is 99.9% certainty that they are a scam operation with no real business model.
Imagine how bad they would feel if they knew there was no cure for cancer, that it was their own bad behavior which created the cancer to begin with and their cure was more public money and denial. Boy that would be big.
Our local news, using a "doctor", was picking on "Supplements" again and thus said the most trusted FDA and CDC agencies that 20K emergency room visits per YEAR were from supplement, then it mentions mostly the "weight loss ones".
They neglected to state that 20K emergency room visits occur EACH DAY because of pharmaceutical medicines.
There simply will not be any crash, meltdown, or collapse etc. until the supply lines break and or SNAP cards and fiat are no longer accepted...
The Law of Fiat Corruption!
There will be many more gyrations until it just utterly fails. The question is when and I say, and have been saying & will continue to say, it happens/resets before the next inauguration and we have "King Obama" and that was the plan since his inception; wherever he came from.
Look at the trend...watch the bigger picture.
If you bought SPY a year ago and simply held it, you've made nothing. That is an inalterable fact.
QE works only while it is exponentially increasing the money/market float. Crashes decrease the float, so QE has to offset that and then some to work. While I assume that QE has quietly continued in the face of the Fed's ludicrous hawkish rate pose, it is obviously proving inadequate as evidenced by market action.
Meanwhile, there is a global cyclical recession within the larger secular depression underway.
There is no exit from objective mathematical reality...
The Fed has already lost control. Whether they are aware of that or not, I cannot say. Given the way the bureaucratic imperitive negates intelligence, it does not actually matter what they know.
Greeks accept the deal ($$$), but ask for more, then detain the refugees and after payment, use some funds to airdrop refugees at the German border. Go Greece!!