"Dumb Money" Refuses To Be The Dumb Money For Yet Another Week

Tyler Durden's picture

Goldman screams it is a generational buy, Larry Fink goes all in stocks, Notorious BIGGS is 90% long, anchors on comedy-financial fusion channels are channeling the producer in their earpiece and screaming at the teleprompter to "sell bonds and buy stocks", even as stocks are at their highest in nearly 5 years and... what happens? In the latest week, ICI just reported that domestic equity retail funds just saw another $2.9 billion outflow, the 4th consecutive in a row, and the 23 of out 27 outflows during the entire parabolic blow off top phase the market has undergone since October, and instead put another $9 billion in fixed income funds "soaring" yields be damned. What does this mean? Probably that the stock ramp is about to get uber-parabolic for the simple reason that this is the only thing left in the status quo's arsenal - to keep doing the same old same old, hoping for a different outcome, because this time it's different. Only this time the dumb money either doesn't have the cash to burn, or just doesn't want to participate in a rigged, corrupt, centrally-planned market. Whatever the case, the Primary Dealers and the Fed will just have to keep hoping more central banks pull a Bank of Israel and sell the hot grenade axes to them, since Joe Sixpack is done being the "dumb money."

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monopoly's picture

Market moving higher on fumes. But it can last a lot longer than we think.  And notice the tiny downer on AAPL today. Hmmm.

ACP's picture

I'm just waiting for the Fed to be wired directly into the exchanges so they can have complete control of prices and who is allowed to buy/sell.

Bartanist's picture

They already are. Look up who the DTCC is, what their function is and who owns them.

buckethead's picture




DTCC's customer base extends to thousands of companies within the global financial services industry. DTCC serves brokers, dealers, institutional investors, banks, trust companies, mutual fund companies, insurance carriers, hedge funds and other financial intermediaries - either directly or through correspondent relationships. Increasingly, DTCC's customers operate both in the U.S. and overseas, where DTCC continues to provide them with services.

In the U.S., DTCC provides critical services to the markets for U.S. Government and mortgage-backed securities, and to all U.S. equity marketplaces, including the New York Stock Exchange, The Nasdaq Stock Market, the American Stock Exchange, and regional U.S. markets, as well as electronic trading and communications networks (ECNs).



ndotken's picture

My profit is locked in because every day I just keep raising the strike price on my APPL STOP order.  

rocker's picture

Here, here for You.  Seems like a great plan.  Is your stop low enough to cover the 20 dollar swings? Must be.  I might even think of trying it.

My take is this. Commodity stocks are beat up and the hedge funds are still beating on them. Without them. I do not want anything.

Excluding "OIL"  the rest are dirt.  Even though many are being consumed faster than above ground supplies.

What does Dr. Market have to say about that.  We build motors out of aluminum instead of steal.  Super Poor for those high heat fuel injected monsters.

Can you say WARP drive or Warped Motor.  Almost seems like a plan.  When I see basic mineral stocks going down, down, down. 

I am not a believer.  Even the white metals are failing.  And unless there is demand for them vs. above ground supplies.  I buy nothing.

Without a good foundation. The market is a farce.   If I see the whites go up. I can believe.  Without that demand, it's a bull trap.

Winston Churchill's picture

With this rate of investor participation in th 'market' you could run that system on the old Apple IIe.

Very ironic.

iamgogi's picture

This "Muppet" revolt will not stand. Must be put down. I will set interest rates to -.25. Should work.

- Ben

Buck Johnson's picture

They are trying to keep the market and economy looking nice until after the elections, and it won't work.  This market and the economy wants to burst and go down hard and Obama is afraid of it happening.  Just look at what happened to Bush the second, even though it was his second term he couldn't keep what was happening from happening during an election.  And Obama is fighting for his life for votes and he needs the market to stay nice.

dzyd's picture

Can someone answer me -  Is AAPL the most massively overbought large cap stock of all time? TIA

ekm's picture

I don't think their intelligence has changed much. I just think they are getting old and their liabilities (house price and credit cards) exceed their assets (house) and they are getting older and older.

They just can't be dumb any longer even if they wanted to dumb down.

mendigo's picture

Bernanke built it; they will come as they must. But for a little while they will remember - will be less dumb.
Could be the setup for epic event.
The market is dead man walking and Dr bernankenstein and his minions have everything under control. How long can this thing maintain - 3 months or 3 years. The problem with Tylers analyses is I think he underestimates thier willingness to trash everything and every one to maintain thier status. Give them what they want 2x.

TooBearish's picture

Until ETF flows are netted into this line of reasoning it will continue to make no sense at all....

Tyler Durden's picture

From a recent ConvergEx report: nobody appears to like domestic equities very much... Except for Apple of course. But we already know all about the NASDAPPLE.

LawsofPhysics's picture

Vanguard has a lot of state pensions.  When that bubble pops, I might expect some shooting to start.

derek_vineyard's picture

Inflationary deflation

Everything we consume costs more ... every capital asset we own is worth less

Seems like most everyone is waiting for stock market to get crushed-----hurry up already

Cdad's picture

Joe Six Pack AGAIN...selling into strength and kickin' ass, bitchez!

LawsofPhysics's picture

Wait a minute, "Joe six pack" has money?

HD's picture

Yup. Joe found 35 cents in the washing machine and a couple of quarters under the couch cushions. Living large is back in the land of milk and honey.

Pete15's picture

Time for bonds and cash until the crash is over with, FED must print then into hard assets. Easy enough.

TradingJoe's picture

Me like "dumb money" being smart for once! They sell as the market gets higher because they all sat on loses for so long now and just want to get out! Which is commendable, given valuations and levels of gov intervention...ahm...manipulation!

No one will be sucked in this FEDster induced, slowly dwindeling "liquidity", algos can keep playing ping pong wiht each other and then finally canibalize one another for good, i'll be watching in delight!...AND SHORT THE SHIT OUT OF EVERYTHING MOVING :)))

OpenThePodBayDoorHAL's picture

Great chart, I love how retail can be counted on to be consistently wrong. It's the only business in the world where people do not buy when things are on sale.

LawsofPhysics's picture

Price it however you like, if there are no real buyers (a.k.a. no demand) do it really matter?  I don't consider companies buying their own stock or the Fed, or the primary dealers real buyers, do you?

ekm's picture

The answer is yes, they are real buyers until the weakest link ends up like Bear Stearns, Lehman and very recently MF Global.

I'm saying Merryll Lynch is the next in line. Let's see.

LawsofPhysics's picture

That is a fair call, where do you see Morgan Stanley?  I have always said it won't interesting until all the insiders start eating each other.  At some point though you have exponentially more entities/corporation/banks/governments holding exponentially more bad paper promised to each other that has no purchasing power.  Do you really think 707 trillion dollars in CDS is real?  No fucking way.  Once it is decided who is really "in the club" and who is not.  All these entities will have to look at each other and say "call it even".  If they don't, we get WWIII.  Either way, paper burns, period. Same as it ever was, hedge accordingly.

ffart's picture

Why do retail investors need to be in this market anymore? The Fed can just set the S&P to whatever they want and we'll all reap the benefits.

Sudden Debt's picture

Maybe for the short squeeze when the FED tries to buy the last remaining shares on the market that's not yet on their books?

ffart's picture

Can't have a short squeeze without shorts. And you can't have a crash if noone's buying at the margins. I guess that means S&P [0,infinity]?

ffart's picture

Hey wait I get it, the Fed can trade S&P shares between their NY office and their offshore shell corporations. That's what I call.... an economic circle jerk!

LawsofPhysics's picture

Yes, essentially front running themselves creating exponentially more paper with exponentially less purchasing power.  A good gig, if you can get it.

prodigious_idea's picture

Short interest (aggregate) has been declining, which will make the absence of a retail investor that much more problematic.

Cdad's picture

Why do retail investors need to be in this market anymore?

It is called capital formation.  It matters.  Without it, eventually, the wheel falls off the wheelbarrow being used to haul dollars down to the Pigly Wiggly to buy a loaf of bread.

centerline's picture

Capital formation?  What's that?  Isn't that something the government does?



MachoMan's picture

We took the concept and rudimentary bases of capital formation out back and put them out of their misery...  and then fed them to the pigs...

The mechanisms used to keep the economy afloat run opposite of the forces that create and maintain capital.  It's THE governor on the system and ultimately the gravity that the donkeys are fighting against...  kind of odd really...  sort of like a rocket that has a lot of fuel, gets into the air, but can't really keep up escape velocity...  hovering until losing the battle with gravity.

StychoKiller's picture

Well, if all the freeloaders would just get off and flap their arms...

cooperbry's picture

Thanks for the chuckle. :D

ffart's picture

How do "investors" provide "capital" to corporations by transferring infinitely dilutable currency into infinitely dilutable stock certificates? At this point isn't the only thing that provides capital the willingness of banks to lend? 

Sudden Debt's picture

Laudinum, the drink for investors!

breakyoself's picture

It's just a matter of time before the analysts and Jamie Dimons of the world begin to appear on live television and curse us retail investors, AKA muppets, for not doing our civic duty by buying the garbage they are trying to unload.

Cdad's picture

Larry Fink made just such an appearance back in October, declaring that through more easy money policies, the Fed should "make them buy equities."  I posted about his comment back then, including that the BlowHorn [CNBC] had edited that specific comment out of their replays throughout the day...but no one seemed to care about it.  Fink, of course, would later go on to say "people should be 100% in equities", which was followed in less than 24 hours by dislosure that he had sold $35 million dollars woth of BLK stock.

So as to your suggestion, it has already happened.

rocker's picture

Take note, Larry Fink is a salesman for his own business. Being the largest holder of equities of any fund manager.  

Negro Primero's picture

"Rollover"....'ring, ring' ...it's over: @1:42:18


Cheiro's picture

Where do ETFs fit into all of this? Are equity ETF's cannibalizing equity mutual funds. Or is it all just going out of equity funds into bonds?

Bartanist's picture

Pretty sure most ETF are just tracking bets run by the banks. They don't really own any equity. From that perspective the are cannibalizing the market for real equities (all of which are actually owned by the Fed through the DTCC... so ALL equities are just a scam anyway because there is no real ownership ... just purchasing the right to be a beneficiary if the Fed decides to continuing to honor those right ... which it has given itself the legal right to cancel at any time with no repercussions ... sound fair?)

thedrickster's picture

Meet the new Ponzi Vigilante! Joe Craftbeer Sixpack.

Shleprock's picture

I can't afford a friggin six-pack!!

prodigious_idea's picture

The first wave of baby boomers are retiring.  An aging population, coupled with the brutal beating that equity investors have experienced the last few years, may be enough to keep the retail investor from entering the equity markets.  Regardless, it must be a real quandary for investment advisors whose clients are following the advice they've always received about reducing their "risk" as they age.

MarcusLCrassus's picture

It will be interesting to see how they deal with this.  Will the algos keep pushing the market higher on this low volume, playing footsie with anyone sitting on the sidelines? 

Or will TPTB sell all their shares first and then let the market tumble before the first big wave of Baby Boomer retirement pullouts begin?  It would be funny to see the Baby Boomers out there with the OWS folks protesting the corruption.   


I should be working's picture

And yet the market keeps going higher? Go figure.

How can this be a generational buy? Fair value for the S&P 500 is 1200 at best.

LawsofPhysics's picture

True price discovery has not been allowed for 20+ years now.