Investors pulled a record amount of money out of stock funds in the week ended Wednesday, signaling “Total Risk Surrender,” as a Bank of America Merrill Lynch note puts it.
Equity funds saw $29.5 billion head for the exits, the largest weekly outflow on record, the note said, citing data going back to 2002.
This massive exodus perhaps set the stage for the stock market’s big gains on Wednesday and Thursday. It was “capitulation,” the BofA note said, using a term that refers to so much selling that a bottom can be formed. The bank talked about capitulation last week for emerging markets, commodities and energy-related stocks.
Tuesday’s outflow was $19 billion, according to the latest “Flow Show” note dated Thursday from the Bank of America Merrill Lynch investment strategy team led by Michael Hartnett.
2--Investors dash to cash
3--America’s Dangerous Bargain With Turkey
Washington’s policy has been inconsistent and vague, but it always envisioned a post-Assad Syria that would be pluralistic and guarantee minority rights. Turkey recognized early on that Mr. Assad’s brutal policies would lead to radicalization, but the Turkish policy of seeking a Sunni-dominated Syria, governed by forces rooted in the Muslim Brotherhood, has not helped matters.
4---Money Pours Out of Emerging Markets at Rate Unseen Since Lehman
This week, investors relived a nightmare.
As markets from China to South Africa tumbled, they pulled $2.7 billion out of developing economies on Aug. 24. That matches a Sept. 17, 2008 exodus during the week Lehman Brothers went under. The collapse of the U.S. investment bank was a seminal moment in the timeline of the global financial crisis.
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8---Fed acts to push US stocks higher
9--China's 'QT' is the real global economic threat
11---What china's liquidating UST means
12---Poor U.S. bond sales raise concerns about foreign demand
Treasury auctions on Tuesday and Wednesday featured worrisome signs that foreign central banks were not the big buyers they had been up to now. Foreign central banks typically purchase new Treasuries through bond dealers who bid on their behalf, a category of buyers identified as "indirect bidders."
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