Key takeaways
* HY blinks...3rd largest outflow ever; EM shrinks...debt outflows largest 42 weeks; Tech winks...2nd largest inflows ever
* Mini taper tantrum kick-started by ECB reminds investors of Draghi as savior of global liquidity & risk assets
* Air in risk assets getting thinner but Big Top still ahead of us
* Our big 2017 bull: ECB & BoJ have bought $2.0tn of financial assets, Bitcoin up from $952 to $7800, yield on European HY bonds fell below yield on US Treasuries; market cap of FAANG+BAT grew $1.5trn; equity vol fell to 50-year low, bond vol to 30-year low
* Weekly flows: $0.9bn redemptions from bond funds (largest in 47 weeks), $3.2bn into equity funds ($9.9bn into ETFs, disguising largest week of LO outflows in 2017)
* BofAML Bull & Bear Indicator: drops to 6.7 (on equity breadth, big HY outflows, less bearish GT2 positioning); peak-to-trough moves following recent Bull & Bear peak of 7.6 on Oct 26 …SX7E -7%, BKX -6%, EMD -3%, JNK -3%, EEM -3%
* Mario, Salvator Mundi: recent 3-week "mini taper tantrum" kick-started by ECB tapering announcement; EU HY spreads up 50bps since Oct 26 (back above Treasuries); investors remain heavily reliant on Draghi as savior of global liquidity & risk assets
* HY blinks…EM shrinks: 3 largest week of High Yield fund outflow on record ($6.7bn); note Q4'15-Q1'16 meltdown in HY saw $25bn outflows; EM Debt outflows (largest in 42 weeks); but IG inflows continue to be strong
* …Tech winks: 2 largest inflow ever to tech funds ($1.1bn) after record last week ($1.3bn); EM debt, financials & tech big 3 flow winners of 2017
* HY to Treasuries: Treasury funds see 1 inflows in 9 weeks ($0.5bn); note HY redemptions have led to UST inflows 70% of time since 2014
* China, Salvator Mundi: big PBoC liquidity injections (CNY360bn thus far in Nov, driving China 10-year yields back below 4%) + no IG contagion from HY + CPI still not surprising to upside + US tax reform = Nov sell-off "dress rehearsal" not Big Top
* Dip & rip: consensus "no fear of Fed/ECB/BoJ/PBoC" unshaken…dip'n'rip price action; inflation catalyst missing; air in risk assets getting thinner but Big Top still ahead of us
Asset Class Flows
* Equities: inflows 21 of past 23 weeks ($3.2bn; $9.9bn into ETFs, $6.7bn largest weekly outflows from mutual funds YTD)
* Bonds: small outflows for first time in 35 weeks ($0.9bn)
* Precious metals: small week of outflows ($0.2bn)