Paradox: With The S&P At All Time Highs, US Stocks Suffer Longest Streak Of Outflows In 13 Years

Tyler Durden's picture

The paradox of the US stock market continued for yet another week, because according to Bank of America citing EPFR data with the S&P effectively at record highs, US equity funds have suffered their longest outflows streak in 13 years, as investors pulled out another $2.6 from US stocks in the week ending Wednesday. That brings total outflows since late June to $30 billion, as investors allocated $36 billion to the rest of the world. The stretch of capital flight has surpassed such market "stress points" as the trough of the great financial crisis, the 2015 market peak and last year's Shanghai Accord.

"Since late June investors have withdrawn $30 billion from U.S. funds while adding $36 billion to the RoW (EM, Europe, Japan)," said BofA's Michael Hartnett in his latest "Flow Show."

While the outflows are the latest evidence investors are shunning US stocks in favor of better growth prospects elsewhere, having lost faith that President Donald Trump can deliver on his ambitious tax cut and spending campaign pledges, they are also a paradox because with investors - both retails and institutional - pulling money out of the US stock market and with buybacks suffering their biggest plunge since the financial crisis...

... it remains unclear who is actually buying.

And speaking of selling, nowhere was it more obvious than it the consumer sector, which posted its 3rd largest weekly outflow on record:

In more bad news for professional investors, broken down between passive (ETF) and active (Long Only mutual fund) investors, there has been a whopping $278 billion in ETF inflows YTD, offset by $73 billion in outflows from active managed funds.

Hartnett also noted that Japanese equities attracted $3.1 billion over the week, the biggest inflow in 21 weeks, while emerging markets pulled in $200 million. European equity funds posted their first outflow in 7 weeks, although the $200 million that was redemeed is dwarfed by this year’s inflows which now total $32 billion

Emerging market equities continued to top BAML's table of cross-asset winners in 2017, returning 27.4% year-to-date in dollar terms. European equities were in third place, delivering 18.7 percent, but suffered their first outflows in seven weeks, losing $200 million.

Overall, global equities attracted $3.1 billion, while bond funds pulled in $5.5 billion, with government bond and Treasury funds enjoying their largest inflows in 10 weeks at $900 million. Digging into the details reveals that the junk bond party appears to be on its last legs: there have been outflows from HY funds in 8 of past 10 weeks, with $2.2bn outflows in the past week.

Finally, Hartnett points out that in the past 4 weeks High net worth private clients have turning more defensive with inflows to healthcare, REITs, staples, low-volatility funds, and total capitulation from energy ETFs & MLPs, while private client allocation to precious metals ETFs remains near record low as everyone now appears to hate gold and silver.

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spastic_colon's picture

who are these "investors" you talk about??

Haus-Targaryen's picture

Side note -- Andy Hoffmann got fired. 

Looney's picture


The S&P has become a huge septic tank with the Central Banks working hard at keeping it full of shit.  ;-)


Joe Davola's picture

...unclear who is actually buying.

Huh, who could it be?

silverer's picture

This is a good question. Because when everybody wants to sell you would either have to accept a lower price (markets adjust accordingly), or in a panic situation, you face no bids, and the stock is essentially worthless. So to be able to sustain selling at these astronomical PE's without depressing the price, I'm smelling something fishy at the FED trading desk. I think you already knew that.

Arnold's picture

See those hills over there?

That's where we are running for.

elMente's picture

Guess Andy got a lil over-enthusiastic, touching "SOMEONE'S" sore spot with his way of writing (to wit: "in-your-face-facts") and so:

"Andy Hoffman was hired to be a spokesman for our philosophy and views.  Over time, the newsletter became a platform for his philosophy and views. We had reached an impasse and we decided to move in a new direction."

sharkalert's picture

Good if true! He spent the last 6 months talking about bitcoin and not gold and silver! His boss was paying him to market gold and silver and they got tired of his antics. Plus his last interview with Shawn at SGT Reports was a complete unmitigated disaster!

Haus-Targaryen's picture

I think his blowup at the SGT report was the last straw for them, as he came across as a jerk. 

He's filled with good information, but when he gave up his YouTube channel last year I knew it was coming close to the end. 

EmeraldWI's picture

The chart seems to show a cyclical pattern. It doesn't look too concerning.

spastic_colon's picture

PS - and who are the suckers piling into "bond funds"?? let the shearing begin..............

GooseShtepping Moron's picture

So, basically the only thing holding this market up is the paint, right?

GunnerySgtHartman's picture

While the outflows are the latest evidence investors are shunning US stocks in favor of better growth prospects elsewhere, having lost faith that President Donald Trump can deliver on his ambitious tax cut and spending campaign pledges

Or perhaps some people are realizing that the US stock market is overheated, built on a foundation of sand, and it's time to GTHO.

Nah, that makes too much sense.  We'll just blame Trump - he's a convenient target.

LawsofPhysics's picture

Well, technically, it isn't a "profit" until you actually sell and book it!

order66's picture

"having lost faith that President Donald Trump can deliver on his ambitious tax cut and spending campaign pledges"

Market is up 20% since the election on nothing but hope. When we have a 250-300 point down move in ES, then you can talk about losing faith. Right now, the dumb money is still desperately clinging to these hopes.

BitchesBetterRecognize's picture

S&P record highs while largest outflow of investors........... 

Who else has the money to buy S&P at all time highs? 

The FED & very likely other central banks filling up the void..? 

gm_general's picture

I thought we had established the inflow is coming from US company stock buybacks. Now with record leverage, how long can they keep up the idiocy is the question, since they tend to buy most at tops.

lester1's picture

Who's buying ???.. Come on Tyler's, you guys know the answer!!


The unaudited Federal Reserve !!!

Jtrillian's picture

Technically it would be the ECB, BOJ, SNB, NCB, and the BOE.  But it's primarily the ECB and the BOJ. 

This is what happens when central banks run amok.  Can't say when it will end (probably when folks begin to starve and revolt - as it the case hitorically) but I can say it will not end well. 

ilovetexas's picture

Well, it looks bad on the surface. 13 years. That means the outflow is worse than 2008! If the outflow is that bad and the market barely tanked, contrarily speaking, it may mean the market still has legs. It may still have potential to go even higher.

CHX13's picture

Paradox? Not at al, not at all... Music's still playing, for now, while the D(B)OW is rising...


/#paging T. et al.

/no sarc, but sad truth.

/REM Hemmingway's way of bankruptcy

SillyWabbits's picture

The inflows come from the in-flowers who supply inflow.  Also called suckers.

The outflow flows to out-flowers who capture the inflow supply.  Also called ripoff artists or crooks.

So suckers to crooks.

In flow/outflow sounds better.

Ungaro's picture

Effluence sounds even better.

buzzsaw99's picture



[/Michael "Vizzini" Hartnett]

bshirley1968's picture

Paradox: With The S&P At All Time Highs, US Stocks Suffer Longest Streak Of Outflows In 13 Years

Only a "Seeming Paradox".  Only people who are too lazy to look or are afraid of the truth don't know the answer to this.

Cycle's picture

Central banks and sovereign wealth funds buying in. No mystery here.

Your Creator's picture

outflows!? that's downright bullish.the dow is going to 30,000.

Umh's picture

Does that mean this is the sell high part?

Pernicious Gold Phallusy's picture

So, the people or institutions buying want to buy the stocks even more than the people or institutions selling want to sell the stocks.