Monday , October 25 2021
Home / Zerohedge / First Weekly Outflow From Stocks In 2021

First Weekly Outflow From Stocks In 2021

Summary:
First Weekly Outflow From Stocks In 2021 After a tremendous stretch of non-stop weekly inflows into mutual funds and related investment products since before the start of 2021, the latest week showed net selling of equities for the first time this year. According to EPFR, net flows into global equity funds turned negative in the ...

Topics:
Tyler Durden considers the following as important:

This could be interesting, too:

Calculated Risk writes Sunday Night Futures

[email protected] (New Deal democrat) writes My Big Picture

Calculated Risk writes Final Look: Local Housing Markets in September

Calculated Risk writes Real Estate Newsletter Articles this Week

First Weekly Outflow From Stocks In 2021

After a tremendous stretch of non-stop weekly inflows into mutual funds and related investment products since before the start of 2021, the latest week showed net selling of equities for the first time this year.

First Weekly Outflow From Stocks In 2021

According to EPFR, net flows into global equity funds turned negative in the week ending September 22 to the tune of -$28.6BN vs +$45BN last week (which was one of the top 3 largest inflows on record), alongside the sizable drawdown in markets in the start of the week (if not the end). This was the biggest outflow from US stocks since Feb 2018. Offsetting the equity outflow was a massive $39.6BN going into cash (the largest since May’21), a modest $10.0BN into bonds (the smallest in 9 weeks), and a small $84MM into gold.

A more detailed breakdown of the equity flows by geographic segment:

  • US: largest outflow since Feb’18 ($28.6bn)
  • Japan: largest inflow in 8 weeks ($0.5bn)
  • Europe: largest outflow since Dec’20 ($1.8bn)
  • EM: inflows past 7 weeks ($2.6bn)

By style, the outflows were focused on US small cap ($2.9bn), US value ($3.3bn), US growth ($9.8bn), US large cap ($14.2bn).

By sector, the selling was pervasive with ever sector seeing outflows: energy ($0.2bn), real estate ($0.2bn); outflows materials ($12mn), coms svs ($0.1bn), utils ($0.2bn), hcare ($0.1bn), financials ($0.5bn), consumer ($1.0bn), tech ($1.2bn).

A key driver for the outflow according to BofA is pessimism over passage of $1tn BIB (Bipartisan Infrastructure Bill) scheduled Sep 27th & $3.5tn BBB (Build Back Better) Reconciliation which caused 2nd biggest outflow ever from infrastructure funds and largest consumer funds outflow YTD.

First Weekly Outflow From Stocks In 2021

As Bank of America notes, we also had the first outflow from tech funds - the perennial market generals - since June.

First Weekly Outflow From Stocks In 2021

The net selling was concentrated in the US market, although investors also net sold Western European shares. While Europe saw a total of $1.8BN in outflows, Goldman shows that demand for German equities has cooled ahead of this weekend's federal elections as shown in the bank's chart below.

First Weekly Outflow From Stocks In 2021

Modest net selling of global EM benchmark products was more than offset by net inflows into country-specific products, including China-dedicated funds. By sector the largest net outflows (scaled by AUM) were from industrials.

Flows into fixed income products also cooled slightly (though remained positive), while FX flows favored CNY.

The question, as BofA's CIO Michael Hartnett suggests, is whether this is the end of the torrent of institutional and retail buying observed YTD. It matters because as the Bank of America strategist notes, global equity flows & global equity prices have been 93% correlated since ‘02, with both at all-time highs although in ‘21 equity inflows are much higher (>90%) than price (12%).

First Weekly Outflow From Stocks In 2021

The BofA strategist also notes that despite the massive inflows in 2021, broad global indices such as NYSE (US stocks, ADRs, bond ETFs), S&P500 equal weighted, and ACWI ex-US have been stuck in elevated holding patterns for the past 6 months.

First Weekly Outflow From Stocks In 2021

Finally, while the Monday meltdown may explain the outflow, how does one explain the latest week meltup? Well, as Hartnett explains, confirming the "bubble zeitgeist", majority of traders are “full-invested bears” but the anecdotal ratio of clients in “melt-up” vs “melt-down” camps currently 8:2, hence bullish price reaction to China/Fed/fiscal events this week, i.e., a vast majority are BTFDers.

According to the BofA CIO, history says the best way to hedge “bubble” is via “long leadership, long distressed” barbell, i.e. long leadership of bull (today = IG, tech, biotech…) & long distressed, cyclical plays (today = EM, energy, small cap) as investors chase laggards (the only market that outperformed Nasdaq in ’99 TMT bubble was Russia).

First Weekly Outflow From Stocks In 2021

Tyler Durden Fri, 09/24/2021 - 17:00
Tyler Durden
Tyler Durden (a pseudonym) represents the idea that a return to truly efficient markets is a possibility and a necessity. After having experienced the inner workings of capitalism at various asset managers and advisors, Tyler believes that the current model is flawed and a deleveraging at every level of modern society is needed to reinspire the fundamental entrepreneurial spirit. Visit his blog: ZeroHedge (http://www.zerohedge.com/)

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.