Thursday, October 7, 2010

22nd Weekly Outflow from Mutual Funds. SPY stays up??

It is not at all surprising that ICI's latest weekly flow report confirms what everyone with half a brain has known for a long time: the 22nd weekly outflow from domestic mutual funds is now in the history books. One more month, and we will have had an unprecedented 6 months of consecutive outflows, even as the market continues to levitate ever more incredulously on nothing but Fed POMO action (and Brian Sack's much more stealthy "collaboration" with Citadel), vacuum tube upward feedback-loop momentum on no volume, and the custodian banks' terrorist forced buy-in action in ETFs like SPY and IWM. Absent these three factors stocks would have been around 50% lower. In the meantime, and contrary to what CNBC was misrepresenting on national TV, the 22 weeks of consecutive outflows now amount to $76 billion in capital taken out by retail investors from domestic stock funds, and $75 billion YTD. And here is the scariest statistic for the administration, the Fed, and bankers around the world: in September $20 billion was pulled out from domestic stocks. This occured despite the nearly 9% surge in stocks. Which means that the bankers, the HFTs, the Fed, and whoever else may be accumulating stocks in expectation of retail jumping in for the latest round of passing the hot potato, is out of luck. With the failure of this latest attempt to sucker retail "dumb" money into stocks, cannibalization time for the big boys has finally arrived. Have fun passing the steaming bucket of explosive feces to each other, boys.
Weekly:

Cumulative:

And as for CNBC, can someone please explain to us how Mr. Robert Pisani can say, on national TV no less (albeit to an audience which according to Nielsen is at the lowest it has been in 3 years) at 10 seconds into the clip that, "we had inflows into stock mutual funds." Um, no. That's not true. In fact, someone less polite than us may say you are completely full of shit Bob. Luckily, since we are far too polite, and since all the data above is sourced directly from ICI, we would politely ask, Mr. Pisani, where on the above chart is this "inflow" you talk about.
We are eagely awaiting Pisani's reply.

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