Talking Points
* Wall Street’s Wall of Money: record week of $43.3bn equity inflows; more humble $2.4bn into bonds
* Raging Bull: equities annualizing blockbuster $717bn inflows, first time equity flows outpacing bonds since 2013
* Silicon Mountain: 2018 equity inflows YTD led by tech ($9.8bn – Chart 1) & financials ($7.3bn), by region EM equities ($41bn) & Japan ($31bn)
* Record Flow of Nothing: yet chart-topping inflows not coinciding with headline returns...check out $25tn NYSE index (NYA Index) down YTD
* Credit Creaking: clear negative inflection point in HY flows; broader “yield trade” (IG+HY+EM) inflows & returns peaking (Chart 3)…headwind for equity returns
* Bull not Bear: sentiment remains bullish despite tick lower in BofAML Bull & Bear
Indicator 6.8 to 6.5 on accelerating EM debt/ HY corp outflows & placid equity returns
* Cracks in the Wall: flows indicate clients positioned for higher EPS, higher short rates, higher bond yields, lower US dollar; Treasuries & bunds hinting at “growth scare” makes
* stocks vulnerable; LIBOR leading to tighter financial conditions, higher US dollar required to ding tech & EM
>>> Asset Class Flows
- Equities: record $43.3bn (record $43.9bn ETF inflows, $0.6bn mutual fund outflows)
- Bonds: small inflows ($2.4bn)
- Precious metals: small inflows ($0.2bn)
>>> Equity Flows
- US: record inflows ($34.6bn)
- Japan: inflows for 15 straight weeks, first time since 2013 ($2.9bn)
- Europe: modest outflows ($1.3bn)
- EM: modest inflows ($2.7bn)
- By style: 4th highest inflows into US large cap ($22.0bn), record into US growth ($5.8bn), US small cap ($5.4bn), US value ($4.1bn)
- By sector: inflows into tech ($2.6bn, record), financials ($1.6bn), materials ($0.3bn), healthcare ($0.1bn), consumer ($0.03bn); outflows real estate ($0.03bn), energy ($0.3bn), utilities ($0.2bn)
>>> Fixed Income Flows
- IG bond fund inflows 63 of past 64 weeks ($1.3bn)
- HY bond outflows for 9 weeks, longest streak since 2007 ($0.9bn)
- Small EM debt outflows ($0.7bn)
- Small muni fund inflows ($0.2bn)
- Govt/Tsy inflows for past 8 weeks, first time since Feb’16 ($0.3bn)
- TIPS inflows 20 of past 21 weeks ($1.0bn)
- Largest bank loan fund inflows in 46 weeks ($0.8bn)