The Blow-Off Top Is Here: Second Largest Weekly Inflows To Wall Street In History

For confirmation that the market is now in its "blow off top" phase, contrary to claims that the market keeps "climbing a wall of worry" and that the "money on the sidelines" refuses to enter, look no further than the latest BofA "flow show" in which Michael Hartnett reports that capital markets just saw their biggest week of equity inflows since the US election ($24.6bn), another chunky inflow to bonds ($9.0bn), which combines to "the second largest week of inflows to Wall Street ever (largest was $35.5bn in Dec'2014)."

Unfortunately for active managers, the news was anything but good because for another week in a row, the big winner was ETFs with $26.3bn equity ETF inflow vs $1.7bn outflow from equity mutual funds, while fixed income saw 4.8bn bond ETF inflows vs $4.2bn into bond mutual funds; seven equity ETFs (SPY, IVV, IWM, VO, VTI, XLF, VUG) & one bond ETF (EMB) had inflows >$1bn

Another winner according to BofA: "yield": investors are still piling into "high-yielding" fixed income product with inflows to IG, HY, EM debt = $35bn past 4 weeks, fastest pace since Feb'15 (Chart 2)

Other observations:

Deflation>inflation in bonds: government bonds (deflation asset) see largest inflows in 20 weeks ($1.0bn) but TIPS (inflation asset) saw outflows ($0.1bn) for 4th week in five

Trump trade rotation: rotation to YTD "Trump losers" of value, small cap, financials this week as tech inflows ebb...

Tech's redemption-less wreck: nasty tech sell-off (SOX -8.4%, EMQQITR -7.3%, QNET -6.5% peak to trough) coincided with lower tech inflows but no redemptions…as noted before tech "euphoric" YTD (Chart 1), hence violent reaction to Fed policy shift



"Robin Fed": Fed hiked, announced balance sheet reduction this week to subdue Wall St speculation, not to rein-in Main St boom; Fed now acting to reduce inequality via lower asset prices; wants tighter financial conditions (loose vs history; Chicago Fed - Chart 3)

End of an Era: central banks have spent $10.8tn on financial assets since Lehman, have bought massive $1.5tn YTD inciting Icarus trade and return of tech & high yield leadership; central banks will be sellers of assets in coming years (Chart 4)

New theme...global synchronized monetary tightening: Fed, China, Canada, UK, ECB...we are in the beginning of a synchronized monetary tightening in H2

Humpty-Dumpty: won't spark immediate bear market...EPS, inflation, cash, credit positives remain; but this inflection point in monetary policy will become negative in coming quarters; Icarus trade likely followed by Humpty-Dumpty (a "big top" or big flash crash) later in year...finally volatility is a buy

Comments

Serfs Up Fri, 06/16/2017 - 09:58 Permalink

Finally!The algos couldn't form an actual top because they were simply too fast for each other.  Bagholderes were desperately needed.They are being found as we speak.  Flow on, suckers!!

Sliced into ribbons Fri, 06/16/2017 - 10:03 Permalink

Why no mention of this on ZH?  President Trump has officially reversed his campaign pledge to deport the so-called Dreamers, undocumented immigrants who came to the United States as small children.The Department of Homeland Security announced late Thursday night that it would continue the Obama-era program intended to protect those immigrants from deportation and provide them work permits so they can find legal employment.

Overleveraged_… Fri, 06/16/2017 - 10:07 Permalink

Oh boy, here we go again. Tightening, schmightening. The fact is the true buying behind the scenes won't stop. The President's Working Group on Financial Markets is still standing buy READY TO CONTAIN EVERY HUMAN SELLERS DOLLARS WITH FRESHLY CREATED DOLLARS INJECTED into the markets.I've heard it all. I've heard every argument. The fact is if stocks could crash, they would have crashed in 2014, 2015 or 2016. They are not going to crash.I don't care what CBs say they are going to do, I don't care about earnings, I don't care about anything really. All I know is that world asset prices, especially the S&P 500 are controlled by people who wish for them to be at all time highs.If you short the market now, you are only falling right into the trap. I on the otherhand will remain 3x Leveraged and Long S&P 500 indefinitely. This is not a bubble, this is the new normal. S&P 3000 by year end, and 4500 by Q1 2019.But hey, do what you want. The "big crash" is right around the corner right? LMAO.

Consuelo Overleveraged_… Fri, 06/16/2017 - 10:52 Permalink

  Even if one were to take your analysis at face value, there are important variables conspicuously absent.   Key of which is, outside influences which are not subject to PPT/Fed/Treasury/Exchange Stabilization Fund, etc., ad-nauseam monetary chicanery.      In that important regard, what you present is incredibly (but predictably) myopic. And with that, best of luck.  

In reply to by Overleveraged_…

insanelysane Fri, 06/16/2017 - 11:44 Permalink

Instead of grabbing pussies TRUMP IS A PUSSY.  The guy feels the need to reply to every comment someone makes about him.  He needs to grow a set of balls, ignore the comments, and get to fucking work.TRUMP IS A COMPLETE DISAPPOINTMENT along with the Republican "majority."  These fuckers can't focus on anything.  So much opportunity wasted.

decentraliseds… Fri, 06/16/2017 - 15:10 Permalink

 Why waste time on this alligator when the swamp’s most critical economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying. The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world. It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option. This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment 28th Amendment: Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to: 1, prohibitions against any corporation; a, owning another corporation; b, becoming economically indispensable or monopolistic; or c, otherwise distorting the general economy; 2, prohibitions against any form of interference in the affairs of; a, government, b, education, c, news media; or d, healthcare, and 3, provisions for; a, the auditing of standardized, current, and transparent account books; b, the establishment of state and municipal banking; and c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.