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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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Thu, 10/20/2011 - 17:03 | 1794789 LawsofPhysics
LawsofPhysics's picture

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

instituation smucks, or a big tip off?

Thu, 10/20/2011 - 17:07 | 1794801 dwdollar
dwdollar's picture

Comic relief most likely.

Thu, 10/20/2011 - 18:48 | 1795167 Jay Gould Esq.
Jay Gould Esq.'s picture

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

Thu, 10/20/2011 - 17:17 | 1794832 wombats
wombats's picture

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

Thu, 10/20/2011 - 17:31 | 1794839 TruthInSunshine
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.

 

 

Thu, 10/20/2011 - 17:36 | 1794890 DormRoom
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.

Thu, 10/20/2011 - 20:13 | 1795470 disabledvet
disabledvet's picture

oooops.

Thu, 10/20/2011 - 22:48 | 1795529 Mr Lennon Hendrix
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.

Thu, 10/20/2011 - 17:27 | 1794858 DormRoom
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.

Thu, 10/20/2011 - 17:33 | 1794886 LawsofPhysics
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.

Thu, 10/20/2011 - 19:20 | 1795304 ricocyb13
ricocyb13's picture

Monsanto?

Thu, 10/20/2011 - 20:17 | 1795479 disabledvet
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.

Thu, 10/20/2011 - 21:16 | 1795624 pavman
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!

Thu, 10/20/2011 - 21:18 | 1795636 pavman
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.

Fri, 10/21/2011 - 01:02 | 1796007 GiantVampireSqu...
Thu, 10/20/2011 - 18:06 | 1794982 Henry Chinaski
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.

Fri, 10/21/2011 - 01:25 | 1796032 DeadFred
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.

Thu, 10/20/2011 - 20:51 | 1795570 Imminent Crucible
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.

Thu, 10/20/2011 - 21:23 | 1795651 pavman
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....

Thu, 10/20/2011 - 23:18 | 1795846 Imminent Crucible
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.

Thu, 10/20/2011 - 17:10 | 1794811 SDRII
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

Thu, 10/20/2011 - 17:16 | 1794833 jcaz
jcaz's picture

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

Thu, 10/20/2011 - 17:12 | 1794812 Mark123
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. 

 

Thu, 10/20/2011 - 17:15 | 1794826 ArkansasAngie
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.

Fri, 10/21/2011 - 01:29 | 1796038 DeadFred
DeadFred's picture

Celebrating the recent "donations" by Wall Street.

Thu, 10/20/2011 - 17:29 | 1794872 Long-John-Silver
Long-John-Silver's picture

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

Thu, 10/20/2011 - 17:32 | 1794881 ArkansasAngie
ArkansasAngie's picture

aka banksters

Thu, 10/20/2011 - 18:40 | 1795107 walküre
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

Thu, 10/20/2011 - 17:12 | 1794814 kito
kito's picture

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

 

http://online.wsj.com/article/SB10001424052970204346104576637290931614006.html

Thu, 10/20/2011 - 17:20 | 1794847 kaiserhoff
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.

Thu, 10/20/2011 - 19:30 | 1795339 razorthin
razorthin's picture

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

Thu, 10/20/2011 - 17:13 | 1794819 buzzsaw99
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.

Thu, 10/20/2011 - 20:07 | 1795456 midtowng
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.

Thu, 10/20/2011 - 17:13 | 1794821 Belarus
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.

Thu, 10/20/2011 - 20:19 | 1795489 disabledvet
disabledvet's picture

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

Thu, 10/20/2011 - 17:13 | 1794822 kaiserhoff
kaiserhoff's picture

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

Thu, 10/20/2011 - 17:13 | 1794823 monopoly
monopoly's picture

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

Thu, 10/20/2011 - 17:21 | 1794850 slewie the pi-rat
slewie the pi-rat's picture

go w/ the flow, BiCheZ!

Thu, 10/20/2011 - 17:23 | 1794854 Trimmed Hedge
Trimmed Hedge's picture

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

Thu, 10/20/2011 - 18:41 | 1795128 walküre
walküre's picture

Investors getting out of markets is never a good thing.

Thu, 10/20/2011 - 21:28 | 1795657 pavman
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?

Thu, 10/20/2011 - 17:28 | 1794870 Jackson Wood
Jackson Wood's picture

Do these numbers include ETF inflow/outflow?

Thu, 10/20/2011 - 17:42 | 1794905 ziggy59
ziggy59's picture

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

 

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

Thu, 10/20/2011 - 18:09 | 1794991 JR
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!

Thu, 10/20/2011 - 18:30 | 1795069 rocker
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.

Thu, 10/20/2011 - 19:03 | 1795241 SwingForce
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. 

Thu, 10/20/2011 - 20:09 | 1795458 midtowng
midtowng's picture

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

Thu, 10/20/2011 - 19:05 | 1795248 Chappy
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.

Thu, 10/20/2011 - 19:22 | 1795283 poor fella
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*

Thu, 10/20/2011 - 19:17 | 1795294 Rainman
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.

Thu, 10/20/2011 - 19:30 | 1795344 Manthong
Manthong's picture

HFT does to the market what the machine gun does to the battlefield. 

Thu, 10/20/2011 - 19:27 | 1795325 moskov
moskov's picture

America is going to collapse soon. Could't find a better country for that

Thu, 10/20/2011 - 19:28 | 1795329 razorthin
razorthin's picture

Who'da thunk it.  Mutual fund investors are now a leading, NON-contrarian indicator.  Remember this past summer?  Good for them on a good call.

Thu, 10/20/2011 - 19:39 | 1795373 antonwarnung
antonwarnung's picture

Please help. I've had a difficult time trying to trade this market.  I like the metals and have been trying to trade the paper silver market.  Here be the problem.......like a lot of others I've had a new asshole created numerous times the past three weeks.  The whiplash and rumor mongering, and the melt up have been ridiculous.  Like a lot of times over the past two years we seem poised between inflation and deflation so I really can't be comfortable taking a medium term position.  On the one hand, I think we will eventually end up with more QE and higher PM prices.  On the other hand, I think that if we get moderate asset deflation, and some assets selling off to cover margins elsewhere I think the PM's could trade significantly lower.  Honestly it seems if the European situation was delt with in a way to move forward and write down debt we would see $15-25$ silver. Perhaps some lesser than responsible approach gives us 27-32 dollar silver.  So it is kind of hard to think about dollar cost averaging into paper markets at least from my perspective.    Recent economic data seem consistant with economic stagnation (jobs, real wages, future layoffs) in the US with continuing CPI and PPI inflation.  Anyone think we will get stagflation going forward and what would we expect if that is the case regarding PM's?   Obviously PM's are assets subject to inflation but I don't think the value of my house(some might call an asset as well) is going up anytime soon.  Can anyone smarter than me look at charts during previous episodes of stagflation and make any kind of general statements such as leading or lagging PM price correlations  to consumer economy, employment, equity prices or tell me why get some other outcome.  I think if we keep going sidways without resolution a lot of hedge funds trying to trade this shit are going to get burned.  How much more can we take before the roof caves in?  I know there aren't easy answers but enlightenment would be appreciated.  Thanks in advance.

-A

Thu, 10/20/2011 - 19:45 | 1795394 razorthin
razorthin's picture

I've been buying and shorting ad nauseum on AGQ.  Others here will scoff, but you simply need to get a good daily charting software, draw your support and resistance lines and place buy-stop and sell-stop orders to capture short term momentum changes.  There really is no other way to trade this market if you must trade.

Thu, 10/20/2011 - 19:51 | 1795400 hambone
hambone's picture

Is this a joke???  looking for enlightenment and insight??? 

Paper silver is the wild west and criminals run this town...law is what they say it is.  You enter this city of vice at your peril.  Stakes purchased at sunrise and sold by sundown...or else.

Thu, 10/20/2011 - 20:24 | 1795450 antonwarnung
antonwarnung's picture

Not a joke.  I really think a lot of folks are smarter than me here from reading ZH posts.  Look I know paper markets are a joke, but you know so is the premium on pslv and so it the $50 silver and $2000 Krugerands I bought and have stuffed in the mattress.  Remember the Fed can postpone WTSHTF longer than cans of beans in the basement can remain solvent.  I really don't have a lot and am just trying to increase the pile largely worthless fiat money in my account so someday I can buy things with it before it becomes completly worthless of course.

 

-A

Thu, 10/20/2011 - 20:24 | 1795500 slewie the pi-rat
slewie the pi-rat's picture

hey!

welcome! 

need an avatar?  avatar.ant

Thu, 10/20/2011 - 23:19 | 1795856 fuu
fuu's picture

Now where have we met before?

Thu, 10/20/2011 - 21:01 | 1795588 Stax Edwards
Stax Edwards's picture

edit: the post mistakenly says 'July'

Thu, 10/20/2011 - 21:17 | 1795631 ShankyS
ShankyS's picture

Wonderful sell indicator with the max inflows at the top in Jan/Feb. LOL - stupid sheeple. 

Thu, 10/20/2011 - 21:51 | 1795695 msmith
msmith's picture

It is very likely that the path of least resistance is higher for equities.  This is largely due to the DX pushing lower and CL breaking higher in the days and weeks ahead.  It appears "risk on" is ahead.  http://bit.ly/nHdrwL

Thu, 10/20/2011 - 22:46 | 1795779 Caviar Emptor
Caviar Emptor's picture

What's keeping this market rising? America, Corporate Welfare Capital of the World. Shining example of how some people are more equal than others. Your taxes will be collected at higher rates and your benefits cut in order to support not just banks, but anything with pull and influence in DC. They'll complain that scientific research is "pork", but with the left hand they'll dip into your pocket and grab your money to support Countrywide Financial (via BAC). And don't forget big oil (still gets tax subsidies, then you get taxed again at the pump) and big defense (we will never leave Afghanistan despite Bin Laden's death. That's just good business)

Thu, 10/20/2011 - 22:59 | 1795801 Sigma X
Sigma X's picture

So we've had 2 months of positive flows in mutual funds since last April and we're essentially flat over that time period?  I'd love to know what Charles Biderman has to say about this phenomena.

Thu, 10/20/2011 - 23:31 | 1795880 user2011
user2011's picture

All the shorts are squeezed out and leaving the table. 

That's why IRS increase the limits on the 401K today.    That way, more sheeple will hand over more their hard earn money to the "PROs".   And those PRO will have to invest the money into equities.

I think the HFT is approaching the limits of how much they can melt up without volume.    They really need new blood... a lot of new sheeple blood.   I am guessing the machinese are starting the cannibalizing each other now.  

 

 

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