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Retail Buying Panic – S&P ETF Saw Biggest Inflow In 27 Months Yesterday

If yesterday’s exuberant spike in stocks (surging Dow above 21,000), on a day when economic growth expectations were crushed, was not enough to scare you about the ebulient animal spirits in the markets, then perhaps this will. The largest S&P 500 ETF (SPY) was inflows of $8.2bn – the biggest daily inflow since Dec 2014 (and second largest in 6 years).

In the past, these massive floods of retail panic-buying flows have stalled the rallies (and not ended well).


This massive inflow appears to confirm what JPMorgan has been seeing, that the latest “Great Rotation” is one not from bonds into stocks, but from “smart money” to retail investors who have finally joined in the market euphoria, traditionally seen as a topping sign for rallies.

Confirming what BofA observed last week, JPM writes that in contrast to retail investors, institutional investors appear to have overall reduced rather than increased their equity exposure YTD.

JPM’s punchline:  

“This apparent unwillingness by institutional investors to raise their equity exposures YTD reinforces the argument that it is retail rather than institutional investors that most likely drove this year’s strong inflows into equity ETFs and as a result this year’s equity rally.”

There are several implications from these findings.

The first is that with ETFs the dominant vehicle of expressing market sentiment at this moment – almost excluslively by retail investors – it means that certain distinct market “aberations” have become an odd fixture of the market, such as the now daily market ramp in the last 30 minutes of trading, which was on display most recently on Friday when as we discussed, a last minute burst of buying pushed the S&P not only to the green, but sent the Dow Jones to a new all time high just 7 seconds before the close of trading.

The other obvious finding is that the vast majority of professional, active investors and asset managers are taking advantage of the current market rally to sell risk and offload exposure to retail investors, who remain in the driver seat and provide ever higher prices against which to sell. 

How long this unstable equilibrium persists is unclear, and JPM refuses to make any predictions. However, with the fate of the market, now hitting record highs in the longest streak since 1987, it won’t take much to spook “mom and pop” daytraders and halt the ETF bid, resulting in the first market selloff under the Trump administration. We wonder what Trump, who has repeatedly pointed to the market’s outperformance as an indication of his successful policies, will say once the S&P prints its first correction (or bear market) under his watch.

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Italy Government Budget

Italy recorded a Government Budget deficit equal to 2.40 percent of the country’s Gross Domestic Product in 2016. Government Budget in Italy averaged -3.43 percent of GDP from 1995 until 2016, reaching an all time high of -1.30 percent of GDP in 2000 a…

The post Italy Government Budget appeared first on Central bank.

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Rights groups says Philippine police has falsified evidence

Associated Press
Thu, 2017-03-02

MANILA, Philippines: A human rights watchdog on Thursday accused the police in the Philippines of falsifying evidence to justify unlawful killings in the government’s war on drugs that has caused more than 7,000 deaths, and pointed the finger at President Rodrigo Duterte as being ultimately responsible.
Human Rights Watch said in a report that Duterte and other senior officials instigated and incited the killings of drug suspects in a campaign that could amount to crimes against humanity.
The United Nations should create an independent investigation to determine responsibility and ensure accountability, the report said.
Presidential spokesman Ernesto Abella said the presidential palace will issue a statement later Thursday in response to the report.
The report said police have repeatedly carried out extrajudicial killings of drug suspects, then falsely claimed self-defense, and planted guns, spent bullets or drugs on the bodies.
“Our investigations into the Philippine drug war found that police routinely kill drug suspects in cold blood and then cover up their crime by planting drugs and guns at the scene,” said Peter Bouckaert, emergencies director at Human Rights Watch and author of the report. “President Duterte’s role in these killings makes him ultimately responsible for the deaths of thousands.”
Human Rights Watch said masked gunmen taking part in killings appeared to be working closely with the police, casting doubt on government claims that vigilantes or rival gangs are behind majority of the killings. It said in several instances it investigated, suspects in police custody were later found dead and classified by police as “found bodies” or “deaths under investigation.”
The report draws heavily on interviews in metropolitan Manila with 28 family members of victims, witnesses to police killings, journalists and human rights activists. It also references initial police reports of killings, which Human Rights Watch said its field research consistently contradicted.

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