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ICI Fund Flow Survey | More is More

Takeaway: ICI has provided more detail in its weekly survey which will assist investors in pinpointing trends in the asset management sector.

 

Investment Company Institute Mutual Fund Data and ETF Money Flow:

 

The weekly ICI survey has just become more robust with the Investment Company Institute now providing additional categories within domestic equities, world equities, and taxable bonds in its weekly fund flow information which canvasses 98% of all publlically traded mutual funds. Please let us know if you would like a copy of the underlying information. For example, a fairly general aggregation of international equity flows has now been broken out into Developed versus Emerging Market survey results which are very different in trajectory and magnitude.

 

ICI Fund Flow Survey | More is More - new intro 

 

In the 5-day period ending February 24th, domestic equity funds had their second week of positive inflows in the last 22 weeks; investors contributed a net +$2.1 billion to the asset class with Large Cap (new category) driving the contribution. In fixed income funds, investors resumed withdrawals from the taxable bond category with investment grade outflows (new category) being offset by new risk taking in high yield (new breakout) which had a solid inflow. Meanwhile, tax-free munis continue to be the story for 2016 thus far taking in another +$1.0 billion in contributions (their 21st week of consecutive inflows). Money funds took in a large +$15 billion contribution last week, which is likely due to tax refund receipts and on going risk aversion.


ICI Fund Flow Survey | More is More -  5 ICI1

 

In the most recent 5-day period ending February 24th, total equity mutual funds put up net inflows of +$4.4 billion, outpacing the year-to-date weekly average outflow of -$346 million and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net outflows of -$100 million, outpacing the year-to-date weekly average outflow of -$777 million and the 2015 average outflow of -$475 million.

 

Equity ETFs had net redemptions of -$5.0 billion, trailing the year-to-date weekly average outflow of -$4.5 billion and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$2.3 billion, trailing the year-to-date weekly average inflow of +$2.4 billion but outpacing the 2015 average inflow of +$1.0 billion.

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. Exchange traded fund (ETF) information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.



Most Recent 12 Week Flow in Millions by Mutual Fund Product: Chart data is the most recent 12 weeks from the ICI mutual fund survey and includes the weekly average for 2015 and the weekly year-to-date average for 2016:

 

ICI Fund Flow Survey | More is More -  3 ICI2

 

ICI Fund Flow Survey | More is More -  5 ICI3

 

ICI Fund Flow Survey | More is More -  4 ICI4

 

ICI Fund Flow Survey | More is More - ICI5

 

ICI Fund Flow Survey | More is More - ICI6



Cumulative Annual Flow in Millions by Mutual Fund Product: Chart data is the cumulative fund flow from the ICI mutual fund survey for each year starting with 2008.

 

ICI Fund Flow Survey | More is More - ICI12

 

ICI Fund Flow Survey | More is More - ICI13

 

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ICI Fund Flow Survey | More is More - ICI15

 

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Most Recent 12 Week Flow within Equity and Fixed Income Exchange Traded Funds: Chart data is the most recent 12 weeks from Bloomberg's ETF database (matched to the Wednesday to Wednesday reporting format of the ICI), the weekly average for 2015, and the weekly year-to-date average for 2016. In the third table are the results of the weekly flows into and out of the major market and sector SPDRs:

 

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ICI Fund Flow Survey | More is More - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors flocked to gold last week, contributing +$1.9 billion or +7% to the GLD ETF.

 

ICI Fund Flow Survey | More is More - ICI9



Cumulative Annual Flow in Millions within Equity and Fixed Income Exchange Traded Funds: Chart data is the cumulative fund flow from Bloomberg's ETF database for each year starting with 2013.

 

ICI Fund Flow Survey | More is More - ICI17

 

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Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$775 million spread for the week (+$1.5 billion of total equity inflow net of the +$2.2 billion inflow to fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52-week moving average is +$438 million (more positive money flow to equities) with a 52-week high of +$20.5 billion (more positive money flow to equities) and a 52-week low of -$19.0 billion (negative numbers imply more positive money flow to bonds for the week.)

  

ICI Fund Flow Survey | More is More - ICI10

 


Exposures:
The weekly data herein is important for the public asset managers with trends in mutual funds and ETFs impacting the companies with the following estimated revenue impact:

 

ICI Fund Flow Survey | More is More - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 

 

Joshua Steiner, CFA







The Macro Show Replay | March 3, 2016

CLICK HERE to access the associated slides.

 

 


CHART OF THE DAY: Is There A Pick Up In U.S. Real Consumer Spending? No

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... 'A pick up in US real consumer spending' – as you can see in the Chart of The Day, everyone and their brother/sister who does macro math should know by now that Real Consumption Growth was great at last year’s cycle peak of 3.32%; in rate of change terms the top is in; saying it’s “picking up” vs. the cycle peak is an obfuscation of the bigger picture."

 

CHART OF THE DAY: Is There A Pick Up In U.S. Real Consumer Spending? No - 03.03.16 chart


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Establishment Economists

“Archaic humans did not initiate any revolutions.”

-Yuval Noah Harari

 

And archaic economists certainly didn’t initiate an ability to call economic slow-downs, market crashes, or recessions in the last 20 years. As you know, the Federal Reserve hasn’t proactively predicted ANY recessions over that time span, and Old Wall consensus macro missed calling 3 US economic cycle peaks in a row (2000, 2007, and 2015).

 

Yes, you can become Trump style you-ge! on Wall Street by selling people who are in the business of being long reasons to be bullish. You just need to keep changing the reasons. It’s actually a good business. So is selling porn. As Harari reminds us in Sapiens, “the ability to create an imagined reality out of words enabled large numbers of strangers to cooperate.” (pg 32)

 

After doing an entire day of meetings with Institutional Investors in New York City yesterday, I realized that the same group of people who dismissed our Industrial #Recession call as “being a small part of the economy” are now hanging their entire bull case on industrials, PMIs, etc. “bottoming.” In other news, Costco (consumption side of the economy) comped 0% in February.

 

Establishment Economists - 4  growth cartoon 03.02.2016

 

Back to the Global Macro Grind

 

“Phew” wrote Nancy Lazar, “the US economy appears to be picking back up.” Thank goodness for that, eh? Let’s pass that note around to all the bottom-up “value” stock pickers who have been getting crushed for the last 3-6 months. They’ll feel relieved.

 

Was it the new cycle low in US Consumer Confidence of 92.2, a 17-month low in growth in signed contracts for Pending Home Sales, the Markit Services PMI going sub-50 for the 1st time since 2009, or the Russell 2000 crashing in February that revealed that the 70% of the economy that really matters isn’t slowing from its cycle peak?

 

Just to knock down the pins on our views vs. the same economist who was looking for what “felt” like 4% US GDP growth in 2015, here are my Top 3 rebuttals to her very huge and excellent perma bull research note yesterday:

 

  1. “A pick up in US real consumer spending” – as you can see in the Chart of The Day, everyone and their brother/sister who does macro math should know by now that Real Consumption Growth was great at last year’s cycle peak of 3.32%; in rate of change terms the top is in; saying it’s “picking up” vs. the cycle peak is an obfuscation of the bigger picture
  2. “A rebound in construction spending” – as you all know (see our bullish research on US Housing for all of 2015), Autos & Housing aren’t “rebounding” – they’re slowing from their 2015 rate of change cycle peaks. For details see YTD returns for fund managers who are levered long GM, Ford, and Housing stocks (or the recent Pending Home Sales report of -1.4% y/y)
  3. “The lagged impact of lower oil prices” – that one is my favorite. Remember that one? Ed & Nancy (different firms now - they broke up) would write that every other week at the all-time #bubble high for US stocks in July of 2015 – “low gas prices” are going to create rainbows and puppy dogs for as far as the eye can see. Isn’t the new bull case “rising gas prices” btw?

 

Nancy also likes what all #LateCycle labor economists (like Janet Yellen) like to see, which is “solid employment growth” – which, by the way, you always see at the END of a US economic cycle.

 

Tomorrow, that’s actually the catalyst for the real bulls on Wall Street (the Long Bond and Utilities Bulls) – yet another rate of change slow-down in US Non-Farm Payrolls (NFP) from its FEB 2015 Labor Cycle PEAK of +2.34% growth.

 

To give Nancy some credit, she did mention that the “foreign backdrop remains a headwind… pulling down Global PMI to 49.8, the lowest level since early 2013.” The problem with that truth is that her partner Francois Trahan has been calling for PMIs to “bottom” globally since US and Japanese Equities peaked in July!

 

It’s not “mean” to call out Establishment Economists and hold them to account for their research views. God knows, The People can’t afford the Old Wall missing it again. I’d be more than happy to debate any economist in an open forum, anywhere, any time. If we want to evolve as a profession – if we really “want America to be great again” – we really need to have these debates!

 

Since the best macro exposures you could have been long for the last 2-3 weeks (during the slow-volume squeeze after hedge funds shorted the YTD lows) are precisely the ones that ruined most portfolio returns for the last 6-8 months, I have no doubt that people who are in the business of being bullish are going to be looking for “the economy to be picking up”…

 

Reality is they aren’t highlighting the most important things at this stage of The Cycle (the profit cycle and the credit cycle). Instead, they’re cherry picking one-off data points that are actually still slowing in trending (year-over-year) rate of change terms.

 

With S&P Earnings down -8.2% year-over-year (that’s a non-GAAP number, the real # is down double-digits on a percentage basis), High Yield Spreads > historical mean, and Long-term Bond Yields hovering around all-time lows (1.86% UST 10yr is -41bps YTD), the most forward looking and accurate economist I know (Mr. Market) still sides with my team - not Nancy, Ed, and Francois.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.65-1.87%

SPX 1
RUT

VIX 16.99-24.13
EUR/USD 1.08-1.12
Oil (WTI) 28.93-35.66

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Establishment Economists - 03.03.16 chart


Cartoon of the Day: A Growth Fairy Tale

Cartoon of the Day: A Growth Fairy Tale - 4  growth cartoon 03.02.2016

 

The truth can be a tough pill to swallow.


JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls

Takeaway: What to watch on the election 2016 campaign trail.

Below is a brief excerpt from Potomac Research Group Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning.

TRUMP TAKING OVER THE REPUBLICAN PARTY:

 

JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls - trump deal with it

 

He's now won in the South, in the West, and the Northeast -- even notching a major 30-point win in MA.  While the Republican establishment weeps, gnashes its teeth, and plots to deny him the nomination, the Clinton campaign is licking its chops at the chance to turn the general election into a referendum on blustering billionaire. There are only two viable scenarios now where Trump is denied the nomination:

 

  1. The first starts with John Kasich and Marco Rubio joining Ted Cruz in winning their respective home states, and locking up enough delegates to force a contested convention in July.
  2. The other is if the anti-Trump forces unite around a single candidate (again, quickly) and the nomination comes down to a true two-man race.

 

Neither is likely to happen anytime soon. 

RUH ROH RUBIO:

 

JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls - marco rubio 22

 

 

Rubio barely dodged an ugly "winless" label with a sole victory in MN, but suffered a severe blow last night after finishing below the 20 percent threshold in AL, TX and VT, missing out on any delegates in those states.

 

Kasich was the spoiler in VA, where Rubio came within 30,000 votes of beating Trump while Kasich snapped up nearly 100,000 voters in the state, crushing his chances of pulling off an upset.

 

As if the stakes for FL weren't high enough already -- Rubio's last, best hope is that he gets an endorsement from Jeb Bush before the FL primary, and it helps him to close the gap with Trump in his home state. That is, unless rumors that sitting FL Governor Rick Scott will endorse Trump become reality. Rubio will trudge onward for the same reason the party establishment hasn't totally given in yet -- if surrender means death, then there's no incentive to surrender.  

 

Amusing that he said Cruz had a bad night after winning three states... 

TED TAKES TEXAS:

 

JT Taylor: An Analysis of Super Tuesday & The Republican Hopefuls - ted cruz 22

 

The biggest delegate prize of the race so far went for the home state Senator, along with OK and AK. Cruz's path forward from here looks bleak however -- he doesn't have much to stand on after Trump dominated evangelical voters across the Southern states, handily defeating him in AR, AL, GA, and TN -- which were touted as Cruz's southern firewall.

 

The math for Cruz (read: we're mostly shifting to northern primaries shortly) simply doesn't add up unless Kasich, Carson, and Rubio drop out and he becomes the party's sole anti-Trump standard bearer.

 

Again, not likely.


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