The streak of consecutive outflows from stock equity mutual funds by Americans ends at 33 straight weeks babe!
Yes, last week there was an inflow recorded!
Americans have put money into their equity funds.
How much?
Err... just 335 million.
Here's the score. From 28 April 2010 to 22 Dec 2010, Americans withdrew some 100.898 Billion (yeah.. that's no typo and it's Billion) from their stock equity mutual funds.
*** 13 Jan 2010. This posting is rendered pointless! LOL!
Just for the record, another 677 million outflow was seen in equity mutual redemption. Since 28th April, we have now seen a total 89 Billion withdrawn by Americans from their long term stock equity funds. That's 28th consecutive weeks of outflows!
Yeah.. remember little Carol Anne answering the phone?
They're baaaaaack!
Here's the latest update:
And so far...
The facts: Since 28 April 2010, some 87.1 had been redeemed by equity fund investors. That's 26 weeks in a row! That's 6 months in a row!
Monthly breakdowns.
Just for a rough comparison, here's SP chart. The pink area denotes the performance of SP from 28th Aug to present day, which also represents the period where equity fund investors have withdrawn some 87 Billion from equity mutual funds.
Latest data from ICI showed another 202 million withdrawn from equity mutual funds. It's the 25 week of continous outflow. Total outflow during this period is now some 84 Billion since 28th April 2010.
Data from ICI showed another 623 million of outflow from stock equity funds. This means that we have now seen 24 weeks of consecutive fund outflows and during this period, some 83.9 Billion had been withdrawn from stock equity mutual funds.
But this week's data which shows an outflow of 623 is the smallest amount of outflow since 28th April 2010.
........ Morningstar Director of Personal Finance Christine Benz spoke to Editorial Director Kevin McDevitt to delve deeper into the wayward ways of investors and the risks of following trends.
Benz: So, Kevin, I'd like to discuss the ongoing trend toward bonds. It appears that we're still seeing investors showing a strong preference for bonds over equities. Why do you think that is? What are the drivers there?
McDevitt: Absolutely, there are a couple of drivers. I think the main one is just people are trying reduce risk in their portfolios. And you're seeing it on two fronts. One is getting out of equities, but then there is also a push, I should say, which is not necessarily tied to risk, it's more tied to the lack of return on money market funds.
It's amazing that trends we've seen since the Fed took rates to zero back in December of 2008. Ever since then you saw a huge push into short-term bond funds in particular.
So I think on one hand, again, it's risk aversion in terms of equities, but then even more than that perhaps it’s money moving from money-market funds into short-term and intermediate-term bond funds.
Benz: So seeking a little bit of yield pickup. Whether that's a good idea or not, I guess we're not so sure about that, but…
McDevitt: Right.
Benz: …It's the trend we're seeing.
McDevitt: It's certainly understandable, but right, it's a different issue as to whether that's the most prudent use of your assets.
Benz: Right. So, in terms of the risk-averse group, I know that you mentioned to me earlier that you think that the Flash Crash may have been a little bit of an inflection point for some retail investors. Talk about your thoughts there?
McDevitt: Sure. Well, we had that strong rebound, that great rally in 2009, and you had maybe some investors trying to dip their toe back into equity funds. But things really turned on a dime in May. You started to see big outflows again, and I think in part that's due to the Flash Crash.
Again, on that very day, the market was only down about 3%, which in the scheme of things, is not that bad. But for some reason, or I shouldn't say for some reason, I think there was an intellectual or a psychological response to that, where investors felt like there was an issue of market manipulation. And I think there was somewhat of a lack of trust or a loss of trust in the equity markets.
So, I think for some investors after what they've faced in 2008, in the fall of 2008, and then this on top of it, the Flash Crash. I think for a lot of investors that was the last straw, and they said no matter what happens from here on out, I'm never going to get burned that way again....
Anybody who was trading Taseko Mines (TGB) today, experienced a brief heart attack when the Canadian company lost nearly half its value around 2:33 pm Eastern time. In the blink of an eye, the stock price plunged from $7.20 to the mid $4 in what appeared to be another mini flash crash. Subsequently, it recovered, but only modestly, ending the day down about 10% from its open. What is odd is that not only did a circuitbreaker not get activated following the 40%+ drop, but that the exchanges have not canceled any of the trades, meaning that whoever started the selling avalanche is going to be stuck with their $4.58 sales. And as the charts below show, quite a few shares traded at the new baseline. What is oddest, is that there was absolutely no news in the market to cause this move, and to the best of our knowledge there was no rumors circulating either. Mootley Fool reports: "President and CEO Russell Hallbauer issued a statement saying that management "is unaware of any information that would cause the price of the Company's stock to change materially, as occurred on October 14, 2010." The stock had been trading up as much as 11% before the drop, and had hit a 52-week high. The upward movement was largely because of an upgrade from Jennings Capital analyst Peter Campbell. According to The Globe and Mail, Jennings issued a research note that was bullish on copper prices and upped its price target on Taseko by 28% to $10." Could this be the first time when an inexplicable flash crash driven by some jittery algo will not result in the exchanges handing back the HFT's forfeited money right back to them? We hope going forward every since robotic instability is punished appropriately. To all those whose 30-40% OTM limit buys got triggered, congratulations. Once again, we suggest readers establish limit buy positions 40% away from NBBO in stocks and sectors of preference, as the next flash crash is usually just a millisecond away. If lucky, just like in TGB, your trades will stay good
Shh.. market's going higher, let's not mention the fund flows or better still let's ..... ask CNBC to talk about the current fund flows.
WOW!
Did Bob Pisani said that there was inflows into stock mutual funds in September???
Tide is turning?!!
Uh ah!
With that data from ICI, it would mean that we have seen 22 consecutive weeks of fund OUTflows!!!
And CNBC is telling America and the rest of the world that there's INFLOWS!
Here's the data. 22 consecutive weeks of outflows and 78 Billion withdrawn from stock equity mutual funds!
Monthly breakdowns.
5 consecutive MONTHS of outflows! Wall Street With Funds With Lesser Funds? No wonder Meredith Whitney predicts that there could be 80,000 layoffs in Wall Street!
Yeah I was expecting that data would be bad again this week but the CNBC clip certainly put everything in a nice perspective, yes?
Equity mutual fund investors are PULLING money out of their equity funds but Bob Pisani and CNBC reckons it's best to tell America and the rest of the world that investors are PUTTING money into their equity funds instead!
Nearly five months after the May 6 Flash Crash, many individual investors see the stock market as rigged, and they have little confidence in regulators to fix it.
Most of the poll's 1,035 respondents view the market as unfair to small investors. In a new CNBC/Associated Press poll, 86 percent of the 1,035 respondents view the market as unfair to small investors..... ( more here )
Perhaps CNBC should ask investors if they trust CNBC!!!
Markets is going UP. And Gold is going UP. And long term treasuries is soaring! And world markets is going UP! And USD is falling! LOL! And Japan is now on ZERO percent rates! LOL! Stock mutual fund is UP too! Insiders selling is also UP too! Bura Malaysia is also UP too! LOL!
Investors pulled a net $16.53 billion from stock funds in August as the market fell.
It was the most since May's $24.76 billion outflow and was up from July's $10.45 billion outflow, according to the Investment Company Institute.
Indications were that stock fund outflow slowed slightly this month.
August's outflow was the fourth straight monthly net withdrawal. For the year to date, stock funds gave back $18.19 billion vs. $14.48 billion of inflow in the year-earlier period...
The money wasn't flowing as abundantly through Wall Street this summer. Big banks are beginning to slow their hiring and reduce their workforces. And these aren't entirely back- or mid-office jobs, as front-office employees will also be affected. This indicates pessimism on the part of the financial industry, which is likely bad news for the broader economy as well. Earlier this week, we learned that Morgan Stanley has implemented a hiring freeze on investment banking jobs through the end of 2010. Trading and underwriting have been slow and aren't expected to pick up much in the near-term. Usually, that means layoffs aren't far off.
Indeed, reports also indicate that Bank of America has begun to shed jobs from its capital markets group for the same reason.
A Bloomberg article by Michael J. Moore on the Morgan Stanley freeze says:
Companies including Barclays Capital and Credit Suisse Group AG also have started reducing staff in Europe. Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, bank analyst Meredith Whitney of Meredith Whitney Advisory Group LLC said in a report dated Aug. 31.
According to a source who spoke with John Carney of CNBC, U.S. fixed income groups will be severely affected. The source describes volume down across the board, predicting a "bloodbath." Part of the problem is new financial regulation, says the source:
"It's a one-two blow for fixed income. The derivatives are being commoditized and put on exchanges. Swoosh. Now you don't need half the people you employ to trade and track those. And volume on corporates and agency paper is way down."
Usually when Wall Street firms begin laying off workers, a full-fledged firing wave begins. If volume is down for a few, then it's down for everyone. And for layoffs to ensue, they either overestimated the speed of the recovery or see a double dip. Either way, this is probably bad news for Main Street, since Wall Street firing tends to be a leading indicator for the rest of the labor market.
Bank of America, according to a person briefed on the decision this morning, is already planning to eliminate up to 30 proprietary trading jobs, or almost one-third of its proprietary trading division. JPMorgan has revealed plans to move proprietary traders into its Asset Management division in order to salvage some of their prop trading desks, reported the New York Times on Monday. Goldman Sachs will reportedly dissolve or spin off its proprietary trading teams entirely. Credit Suisse recently forked $425 million for a stake in Swiss bank York Capital (a deal that is compliant with the Volcker Rule, which allows banks to own hedge fund managers while limiting the investment of the bank capital in funds itself). Despite strategies to deal with the impending regulations, these firms have already seen an exodus of talent to private equity firms and hedge funds, such as Blackstone. But many think that when the dust settles, not every cute puppy will be able to find a new home.
THE CASE OF DE SHAW Following $7 billion in redemptions in the past few months, esteemed quant hedge fund DE Shaw is cutting 10% of its work force, which, in this case, represents 150 of the brightest math geniuses around. Many have purported that job cuts in the financial services industry would be mainly limited to secretaries and back room staff, but these across the board cuts include partners and portfolio managers as part of a long term strategic review by the company. The decision was clearly not taken lightly, which makes it that much more telling. Perhaps (gasp!) the opportunities for quantitative exploitation of our financial markets are reaching a head, or is becoming saturated to the point that further expansion in that space is darn near impossible.Although slightly off topic, it is interesting to consider the possible implications of DE Shaw’s massive redemptions, per ZeroHedge. Given the rally in equities over the past few months, it is also fair to presume many of DE Shaw’s losing positions were bearish ones, and the unwinding of those positions contributed, at least in part, to the acceleration of the rally. Many market participants have been left wondering, "who continues to buy this stuff?" Now, we have an example of at least on type of example. Hedge Fund titans like David Tepper of Appaloosa and Bill Gross are mindful that you must always be mindful of the Fed, and the implications of its actions, when developing a core investment strategy, but the recent the recent ramp up in equities (to the detriment of quant funds like DE Shaw) shows the dangers in setting such a precedent for market manipulation by our great central bank. It seems that is the current environment, the only way to deliver consistent returns is by essentially front-running the Fed.
The DE Shaw is the most interesting.
7 Billion Redeemptions and 10 percent layoffs ( they laid off their math geniuses!)!!!
And Morgan Stanley is taking a related approach: it’s asking bosses to hold off on new hires unless the position absolutely needs to be filled. As Nelson D. Schwartz pointed out in The New York Times last week: After an unusually sharp slowdown in trading this summer, analysts are rethinking their profit forecasts for 2010. … While the numbers will not be known until after the third quarter ends and financial companies begin reporting earnings in October, the pace of trading this summer was slow even by normal summer standards. Trading in shares listed on the New York Stock Exchange was down by 11 percent in July from 2009 levels, and August volume was off nearly 30 percent.
Ahem!
Note the very last sentence: trading in shares listed on the New York Stock Exchange was down by 11 percent in July from 2009 levels, and August volume was off nearly 30 percent.
Last week we pointed out that Jefferies group, one of the last few remaining non-BHC broker-dealers, has just experienced its single most disastrous drop in trading volumes, as its principal trading revenues plunged by 80% QoQ. This is merely confirmation of what we have been warning ever since we started highlighting the series of 20 consecutive outflows from domestic equity funds: banks will soon be forced to lay off thousands of people as the primary revenue driver for the bulk of Wall Street firms - stock volumes - is now gone. BofA and RBS have already confirmed they are letting people go. Next up: the electronic trading giants such as ITG, Knight and Schwab. And it will only get worse. As the FT reports, September trading volumes are already 8% below August's, which in turn was the lowest in 3 years! Of course, the Fed is fully confident that if the DJIA ends September at 11,000, investor confidence in stocks will return. We have one word for that - LOL.
The continuing decrease in volume reported by the US’s largest electronic trading groups has triggered a fear among analysts that the fall in market activity might be more than a seasonal phenomenon.
Trading-focused groups such as ITG, Knight Capital and Charles Schwab enjoyed upbeat second quarters when the European debt crisis sparked extreme volatility. As fear has given way to unease with the global economy, however, trading volumes have fallen sharply.
“You’re starting to see some real pain,” said Christopher Allen, an analyst at Ticonderoga Securities. “September is not a material improvement over August. Aside from possibly the US election, I’m not sure what the catalyst is for trading.” A record-long streak of outflows from equity mutual funds – now 20 successive weeks beginning in May, according to the Investment Company Institute – and reluctance by even normally bold hedge fund managers to take big bets has suggested that there are more than seasonal factors at work.
Mr Allen’s figures, compiled last week, show that trades for the trading industry are down 8 per cent so far in September from August, when trading fell to a three-year low.
And what is funniest is that the decline in volume is blamed on the (lack of) intervention in the HFT's daily attempts to pickpocket slow money institutions
Diego Perfumo, an analyst at Equity Research Desk, said that efforts by global regulators following the May “flash crash” were reducing volumes by high-speed firms, which was making it more difficult for other investors to trade.“Higher trading scrutiny combined with tighter regulation is drying up the liquidity provided by high- frequency traders. Lower liquidity is symbiotically affecting volumes from traditional investors,” he said
Oh really? Has anybody been affected by the "decline" in liquidity in SPY, Amazon or Apple? Last time we checked the only three products that trade had no problem with hitting bids (of course, front run several trillion times by $0.0001 bids just ahead of the submitted one to get the price high enough so that the last HFT bagholder can offload to you). Instead of lying, perhaps Diego and his firm, which incidentally makes money from the status quo and sees to lose millions should HFT scalping be impaired, as it seems the firm provides "Execution services from ITG, Credit Suisse, BNY and Instinet", but oddly enough the FT did not feel relevant to disclose this blatant conflict of interest, should look at the primary cause for volume collapse: that confidence in stock markets is gone, period. Nobody dares to hold stocks overnight, as nobody still has any clue why the market crashes 1,000 point in the span of a few seconds. If anyone hopes to revive faith in the stock market without someone getting punishment for the most ridiculous market crash since October 1987, they have another thing coming.
Wall Street may have gotten off scott free from the greatest absolute household wealth destruction episode in history, but when it comes to capital formation, pretty much everyone save for a few vacuum tubes, have had enough. And luckily, that means that worthless HFT, and other high volume parasite traders, will soon be out of a job. No tears will be shed as equilibrium reestablishes itself, and those providing absolutely no value to the stock market will become extinct. If the market will not self-correct, the market will be forced to self-correct.
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ahem...
A record-long streak of outflows from equity mutual funds – now 20 successive weeks beginning in May, according to the Investment Company Institute – and reluctance by even normally bold hedge fund managers to take big bets has suggested that there are more than seasonal factors at work.
