The Flow Show - Long Live the Long-Only
* Stocks over Bonds: $6.2bn inflow to stocks vs $2.1bn to bonds
* Still crazy for Credit: $3bn inflow to IG bonds… investors still in love with corporate bonds (YTD flows to IG bonds of $115bn actually exceed inflows of $98bn to stocks)
* Long Live the Long-Only: $2.3bn inflow to Long-Only equity funds (largest since April)…secular top in stocks most unlikely before big resumption of uptrend in LO inflows
* Markets stop panicking when central banks start panicking: $1.3bn redemptions from European stock funds (Chart 4)…but contrarians note European (BE500) stocks @ 6-year highs today post-ECB
* Trading update: flows don’t signal imminent danger for stocks; traders wait for BofAML Bull-Bear index to hit 8, FMS cash levels down to <4% from >5% before going short; that said, frothier credit markets must be watched…HY spreads unable to break below 300bps & spreads very correlated with VIX index
Asset class flows:
* Equities: $6.2bn inflows ($2.3bn inflows to long-only funds = biggest weekly inflows since Apr’14)
* Bonds: $2.1bn inflows (smallest in 4 weeks) (Table 1)
* Precious Metals: $0.2bn outflows (2 straight weeks)
FICC flows:
* 37 straight weeks of inflows to IG bond funds ($3.0bn) (Chart 3)
* Tiny $32mn outflows from HY bond funds (first outflows in 3 weeks)
* $1.4bn outflows from Govt/Tsy funds (2 straight weeks)
* 2 straight weeks of modest inflows to EM debt funds ($0.2bn)
* 8 straight weeks of outflows from floating-rate debt ($0.5bn)
Equity flows
* Europe: $1.3bn outflows (outflows in 8 out of past 9 weeks) (Chart 4)
* EM: modest $0.7bn inflows (13 straight weeks and longest inflow streak since Feb’13) (Table 2)
* US: $5.8bn inflows (majority via ETF’s – SPY, IJH, IWM)
* Japan: $0.4bn outflows