Equity Mutual Funds See Biggest Outflow Since August Despite Market Ramp

Tyler Durden's picture

While once upon a time, retail equity capital flows would be a perfect coincident indicator to the overall market, with any notable spike in the S&P promptly matched by inflows into domestic equity mutual funds, this is no longer the case. As ICI reports, in the week ended July 12, equity mutual funds saw their 8th consecutive outflow, amounting to $5.9 billion, the largest outflow since the debt ceiling and US downgrade fiasco in August, and a number which brings the total year to date outflow to ($99) billion. True to form, the capital rotated once again out of stock and into bonds with $4 billion in inflows for the week. More than anything this confirms that retail no longer chases day to day market performance out of a profound skepticism for market structure, and the record volatility and well-documented near 100% correlation across all asset classes has driven out all but the bravest. Unfortunately, news like this just released report by Reuters that the Nasdaq hackers from February, also "installed malicious software on the exchange's computers that allowed them to spy on scores of directors of publicly held companies, according to two people familiar with an investigation into the matter." Hardly the stuff that build up confidence in fair and efficient markets.

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LawsofPhysics's picture

Finally getting the rest of the weak hands out of the market?!?

instituation smucks, or a big tip off?

Jay Gould Esq.'s picture

The Retail Investor: confounding the collective conventional wisdom of the Cognoscenti once again.

wombats's picture

Perhaps its nothing more complicated than people selling out of paper assets and buyiung phyiscal gold, silver...and maybe lead.

TruthInSunshine's picture

Off Topic but astounding (and credible evidence, viewed in the correct context, that TPTB really do want and need PERPETUAL debt slaves - both individuals and nations):

In 2000, economists were projecting that the U.S. would pay off its national debt.

At least, that's what we know now, thanks to a secret report called "Life After Debt" obtained by NPR's Planet Money through the Freedom of Information Act.


The Clinton Administration Was Terrified About What Would Happen If It Paid Off The Entire National Debt

Debt slaves; it's the same as it ever was. Those now in control, just like in times past, find it the most lucrative business of all to keep nations and people in perpetual debt. Allowing nations and people to free themselves of debt would ruin this most lucrative of businesses.

Don't let the tone of the article linked above fool you; the only reason we didn't and won't pay off our national debt is because our political "leaders" are bought and paid for whores, who carry water for their masters.

The House of Red Shield lives, bitchez.



DormRoom's picture

The CBO used economic data during the nasdaq bubble to construct their future models, and projected a debt free US by 2015.  Then the Neo-Cons, after seeing the CBO report, decided to implement the project for a new American century.  They reasoned taht iF the US was going to be debt free, it could afford a few wars to promote 'American values' abroad.  And so we got Bush & the Neo-cons going to war in Iraq.


They were going to invade Iran also, but US finances had changed, by the time they had control of Iraq.  So Iran was no longer an option.  Israel was very displeased by this.  And that's when they started their secret stuxnet program.

Mr Lennon Hendrix's picture

This makes it sound like Clinton could have paid off the debt.  Clinton ran a surplus for three out of his eight years, only one of those years was a significant surplus, and he had to shut down the government to do so.

DormRoom's picture

No way.  zerohedge readers, which are presumably  market experts, can't understand this market.  How is ma & pa suppose to understand.  Cash in a bank account is an easy investment for them, given an irrational market.


But this is like the late 60s, after the big index fund bubble pop, and retail stayed away for 15 years.   The big banks have scared off their golden goose (retails) with all the volatility, and algo trades.  Retails won't come back for a decade.


Also you have a demographic shift, as baby boombers stop being savers, and will draw down investments soon, so they'll either put it in safe vehicles, like bonds, or cash.

LawsofPhysics's picture

Bullshit, most sheeple I talk to are still buying dividend paying equities as fast as they can so they can do that "dollar cost averaging" thing by rolling over the dividends to buy more stock when the price is low.  I try to tell them companies are looking out for their interests, not yours, take dividends go to cash, physical, or any dividend paying asset where YOU have an OWNERSHIP stake.  A shareholder (unless a large one) is not an owner and will be diluted away or stabbed in the back should the company fold or require a bailout.  Being an owner is the only way to get on the other side of the usury, which I presume is where we all want to be at the end of the day.  Last November I sold paper gold for more land to lease to an asian firm for soybean production.  That was my best move this year.

disabledvet's picture

who the hell has any money to begin with? I'm just waiting for the massive deflation in Europe to begin and then we can go back to having slaves period.

pavman's picture

I think you mean to say massive inflation in Europe/deflation in the US.  I'm waiting for that too.  I messed up tho, I thought we were tanking when we started tanking, but then my buddy tells me he recommended to all his clients to buy US equities.  Dam.  Should have told me that *before* I sold off the low volume stock.  Could've made about 120K out of that in about a quarter.  But NOOOO have to wait to tell me after its said and done.  DOH.

I still think the ship will go down eventually, but now I'm not sure if it will be before the end of the year (and that dam not following your plan thing screwed me because my plan of a plan was to hold until the EOY for this company and then selloff, as the fundamentals are still really solid).  Dam you HFTs and naked assholes who don't have any money!

pavman's picture

My Doctor cousin is always bragging about his dollar cost averaging strategy.  Although he moved offshore a while back, but I keep thinking...eventually he'll get his and won't see it coming.  The one thing I know for certain is that offshore is really smoke and mirrors until the people w/ the big cajones pull the rug out from under the pigs.  Although I guess its alot easier if you can't manage a portfolio real time.

Henry Chinaski's picture

It doesn't take an extra eye to see that the building is smoking.  It is an orderly move to the exits before the conflagration.

DeadFred's picture

It shows not everyone is a fool, unfortunately it just makes things worse. As fewer people compete with the 'bots they gain more and more control of market flows. The idea that the market works to fund and reward businesses becomes less credible as the correlations strengthen. Why not just convert all stocks into SPY shares and set their value according to EURUSD exchange rate? Not much different than what we have now.

Imminent Crucible's picture

I think the crux of it lies here: "100% correlation across all asset classes has driven out all but the bravest."

You can call it bravery if you like, but there's this old saying: "Sometimes discretion is the better part of valor."

After all, when the Fed has so crippled and distorted the markets that there are really only two asset classes: (a) the USD, and (b) everything else, you have to ask yourself, "Do I feel lucky today? Well, punk, do ya?"

No, I don't. There is no investing any more, there is only trading/speculating, and the only trade is attempting to market-time the USD, aka second-guessing the Fed. I'm not that brave, and I've never been very lucky. So I'm just standing back, watching the chimps try to snatch pennies in front of the HFT steamroller.

pavman's picture

I think you forgot the third asset class.... PMs.  It trumps USD and all other assets, unless its part of a derivative contract, then you're frucked.  PMs will rule the day eventually, its just a matter of time.  Although I do agree w/ the orderly part of the argument.  I keep getting the feeling like this is an orderly destruction of derivatives.  Slowly but surely you won't see what they're not doing until it all just kind of sneaks up on you like a bunch of teenagers playing 'get the old geezer' in a philly park!

Maybe its just the Guinness talking....

Imminent Crucible's picture

I haven't forgotten the PMs. But if you watch the markets tick by tick, you know that gold is rising and falling with the stock markets, and against the USD. So, for now, precious metals are lumped in with category B: everything else besides the dollar.

But yes, that will change. PMs will decouple when the mass of investors and traders realize that paper promises, whether they are stock certificates, bonds, or federal reserve notes, are all just counterparty liabilities. Probably not too far off at the rate financial orbits are decaying.

SDRII's picture

fucking monkey joey d or whatever this fast moran's name is spouting off about how the market is dismissing deflation and recession and that why gold down? QE  off the table per the oracle. This after JPM VP Jess (up) quoting Orzag editorial. Sureal

jcaz's picture

That dude is only on the show to talk his book-  his prognosi is pretty much always 180 degrees wrong,

Mark123's picture

Nobody in their right mind believes this is a real market anymore, but a lot of folks think they understand how it is rigged and they can make money trading. 


ArkansasAngie's picture

It's forward guidance sweetie.

All you got to do is ... do exactly what uncle benny tell's you to.

Horse manure.

Where are the cops when you need'em.

DeadFred's picture

Celebrating the recent "donations" by Wall Street.

Long-John-Silver's picture

You are partially correct. Intelligent people left this rigged market years ago. Only the Keynesians remain.

walküre's picture

but a lot of FOOLS think they understand how it is rigged and they can make money trading.

there fixed it for ya

kito's picture

check out ron pauls latest post that will shirley get ignored. im surprised the wsj would even print it........



kaiserhoff's picture

The WSJ also did a brief, but honest piece on Paul's economic plan a couple of days back.  The ONLY MSM outlet to do so.

razorthin's picture

I won't ingnore it.  And don't call me shirley.

buzzsaw99's picture

i support spying on directors of publicly held companies. also if anyone wants to spy on the murdochs they are now fair game as well.

midtowng's picture

I also support spying on directors, but only if they release their information to the public.

Otherwise it just sounds like corporate espionage.

Belarus's picture

The only way for the 99% to win is to quit equities, stop paying their mortgages, pull alll money out of the banking system, buy physical, and that Sir Watson will stop the corruption of the Federal Reserve, Banks, and Washington D.c. as the power will have finally shifted.

And this doesn't take a single ounce of violence. But it'll never happen, too many people living on their friends from Governmnet. And, so, expect every paper rogue trade to be glossed over until it one day just all blows up.

disabledvet's picture

i thought we already did that. it doesn't seem to be working.

kaiserhoff's picture

Ya wants volume?  I got yer volume for ya right cheer.

monopoly's picture

"Fair and efficient markets:. Now that is funny, too funny.

slewie the pi-rat's picture

go w/ the flow, BiCheZ!

Trimmed Hedge's picture

And as we all know, the general investing public always gets out of the market at just the right time....

walküre's picture

Investors getting out of markets is never a good thing.

pavman's picture

I know, I'm so worried I'll miss the express to inflationville.  But hey, I gots me some equities I inherited, so that should tide me over as we transition to the 666 plan!

The problem is, I'm swimming in cash right now and really hoping for a depression.  Is that wrong?

Jackson Wood's picture

Do these numbers include ETF inflow/outflow?

ziggy59's picture

of course it was the specualtors who did it....


more someone doing g-ds work? im sure...

JR's picture

Famed economic newsletter personality, Harry Schultz (HSL International Harry Schulz Letter), always had one major piece of advice for his readers and admirers worldwide: buy on the valleys and sell on the peaks.

He would probably be the first to admit that with High Frequency Trading, this formula no longer works. For the HFT machines don’t buy or sell in peaks and valleys, they create the valleys and peaks; when a valley is created the machine is there buying before you arrive and when the peak is reached, guess who’s there selling?

Fellow travelers like the FT are constantly manipulating the market peaks and valleys by creating the innuendo and rumor: “Everything’s going to be okay.” ZOOM!  “Uh-oh, things are not as well as we thought.” SWOON!

 Guess who’s there waiting…every time!

rocker's picture

 Good Stuff JR. Reminds me of the talking heads on CNBC and Bloomberg. 

 Telling us that this is a news driven market.

So what happens in Germany matters. The fact that U.S. Data this week sucks, did not.  Hmmm.

I know one thing. Correlations are not applicable to the markets results.

Earnings Do NOT matter and don't even talk about growth. The economy is contracting.

Seems that the market is working on HFT's Software which knows what money comes in or out.

Then the sucking machines move to hedge it out or take it out.

Anybody telling me I am wrong and I'll tell you you're wrong. Eh.

The Squids lives on.

SwingForce's picture

Who wants to be stuck in a mutual fund? High management fees, you can only buy or sell at the market on close price? The front-running game is up, State Street & BONY. People aren't as stupid as they used to be, but it's still relative. This is a bullshit indicator, it doesn't mean that people aren't buying stocks in their OptionsHouse account or ETFs, it just means Mutual Funds are a dying breed- we know that. 

midtowng's picture

Most 401k's can only be invested in mutual funds.

Chappy's picture

I don't get it.  Isn't 6 billion chump change?  POMO's moved the market but weren't they levered 40x?  I would'nt expect 99billon out this year to do much if any damage.

poor fella's picture

"[hackers] installed malicious software on the exchange's computers that allowed them to spy on scores of directors of publicly held companies, according to two people familiar with an investigation into the matter." Hardly the stuff that build up confidence in fair and efficient markets.


I'd say this is about the only thing that might help build confidence in fair and efficient markets.   *too many secrets*

Rainman's picture

Like it or not, technology has destroyed market cred. Solution will be returning to hand signals, paper slips and the pay telephone. Humans are just now beginning to figure out that all machines are capable of failure and compromise. No exceptions. Digital expressions on a screen are worth zero.