* More broad-based selling, led by institutional clients
Last week, during which the S&P 500 climbed 1.4%, BofAML clients were net sellers of US
stocks for the eighth consecutive week, in the amount of $1.4bn—suggesting clients still
doubt the sustainability of the rally. This is the longest selling streak since Oct-Dec 2010,
when clients sold stocks for 12 consecutive weeks. (Following this, they were cumulative
net buyers during the first quarter of 2011 and for the year as a whole). Similar to the
prior week, all three client groups (hedge funds, private clients and institutional clients)
were net sellers, led by institutional clients. Net sales were chiefly in large caps, while
small caps saw inflows. Buybacks by corporate clients decelerated slightly last week, but
were still elevated. On a four-week average basis, buyback activity is tracking at its highest
levels in two years (see chart below), and year-to-date cumulative buybacks by our clients
are 45% above year-ago levels.
* Clients bought ETFs, but sold single stocks across all ten sectors
Last week clients were broad-based net sellers of single stocks across all ten sectors,
led by Financials and Consumer Discretionary stocks. Only ETFs saw inflows last week.
Telecom is the sector with the longest net selling trend (for the last four weeks), while
Health Care, Tech and Industrials have all seen three weeks of outflows. Both cyclical
and defensive sectors in aggregate have seen net sales each of the last few weeks, with
bigger net sales of cyclical sectors in aggregate.
Other notable flows: three sectors leading buyback pick-up
• Consumer Discretionary, Consumer Staples, and Energy saw net sales by hedge funds,
institutional clients, and private clients alike last week. No sector saw net buying by all
three groups.
• Buybacks of Materials stocks were near record levels again last week. Materials,
Discretionary and Industrials have contributed most to the YoY increase in buyback
activity by our corporate clients.
• Pension fund clients were net sellers of us stocks for the third week, led by ETFs
and Financials stocks. Staples and Tech stocks saw the largest net buying by this
group last week. Net sales were entirely due to small caps. See pg 9 for details.