The latest Lipper fund flow data is an and it is not pretty: in the latest week, there was $12.2 billion in equity outflows, the largest weekly redemption in 5 months...and more importantly, this represents 7 straight weeks of outflows: the longest streak since 2008.
Concurrent with the flight from US equities, we have seen the biggest European equity redemptions since October 14.
This was offset by an inverse 7 consecutive weeks of government bond inflows, with $1.69bn in fund deposits in the last week up from $0.98 billion, and explains who has been buying all those Treasurys that SWFs, EMs and China have been selling.
And the punchline: we just had the biggest 2-week gold inflow ($3.2bn) since May’10, which according to BofA is a "hedge against “risk-off” & “dollar-off”
Michael Hartnett's summary:
Equity outflows closer to “capitulation” levels: $53bn equity outflows past 7 weeks (0.8% of AUM) exceeds $36bn outflows during Aug’15 sell-off; approaching prior bear market levels of Aug’11 debt ceiling outflows ($90bn), '08 GFC outflows ($85bn) & '02 bear market outflows ($65bn); note BofAML Feb FMS also showed big reduction in equity exposure, albeit not yet to the UW position in equities that coincided with 2002/2009/2011 lows.
The only problem is that while this capitulation should have led to buying at the 1812 bottom, the surge in stocks had nothing to do with bulls buying, and everything to do with shorts covering. And now that shorts have largely covered, even as buybacks continue, all those who have delevered and unwound position, have a choice: buy at ridiculously high valuations at a time when the S&P is facing 7 consecutive quarters of negative annual earnings... or wait for the market to once again crash before stepping in.
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