LONDON (Reuters) – Investors put a record $68.3 billion into equity funds in the week to March 17, even as a spike in government bond yields sent the high-flying Nasdaq index reeling, BofA data showed on Friday.
U.S. equity funds sucked in $53 billion as ultra-easy monetary policy continued to boost risk appetite.
BofA warned of tightening global financial conditions, however, with eight interest rate hikes across the world so far this year versus five cuts. Meanwhile, the U.S. Federal Reserve pledged to look past inflation and keep interest rates near 0% until at least 2024. Still, the yields on 10-year notes spiked on Thursday to 1.75%. That move sparked a massive sell-off on Wall Street with the tech-heavy Nasdaq 100 slumping 3.1%, wiping off more than $400 billion from company valuations in a single session. BofA said the “uber-dovish Fed backfired” with bond vigilantes moving quickly to try to bully the central bank into yield curve control – pinning down yields on bonds of a particular maturity.
Global equity funds have attracted $347 billion so far this year, matching record inflows seen for 2017 as a whole. On an annualised basis, this year’s inflows are a “breathtaking” $1.6 trillion, BofA said.
“We are in (the) midst of (the) strongest macro data of our lives,” BofA investment strategist Michael Hartnett wrote in a note to clients. Nick Note: I have been at this for a little while now. And I have studied every market theory that came along. From the Nifty Fifty to the Bricks to the FANG, high frequency trading and My favorite algorithms. I studies earnings and P/E and EVERY theory that has come a long to establish valuations. And as usual i have learned the more complicated the theory is and the more PHD mathematicians the more likely its total bullshit. If i can not write my trade rational on the back of a match book it will not work. What drives the stock market is very simple. If the suckers are buying for what ever fad rationale right or wrong usually wrong the stock market rallies. New blood feeding the bull their money. NO MATTER WHAT the market rises. Its really as simple as that. And when the money runs out down the market goes. It does not even need selling to go down. The rocket ship needs a constant supply of fuel (money) to keep the engine running. No fuel the rocket engine shuts down and you get the inevitable crash. It has nothing to do with inflation or interest rates. A stock market born again bull is not a bond buyer. He is not playing the game for a 3% return. I doubt most of you even know how to buy bonds or understand the auction process or the when issued markets. Never mind the bid to cover ration. In fact to be honest with each other your still scratching your ass trying to get my bond calculator working never mind my Strips calculator. If i put a gun to your head and asked you to calculate yield to maturity manually with a pencil and piece of paper you could not do it. AND you more informed then the average stock market buyer. Who as long as they have cash new age ha ha ha investor millennial. People do not do complicated. I am sure most of you do not understand bond yields, reverse bias or even how the bond markets works never mind calculating values in fractions like 32/100. The bond market is still dominated by sophisticated investors and is not a mass market. When i started in this business the stock and futures markets were populated by sophisticated investors. No More. The Ha ha “democratization” of the markets means that any dumb fuck can open a self directed account and lose his her its money! ITS have made the stock market little more then a casino or lottery. In fact its more convenient to buy stocks or futures using your smart phone then a lottery ticket. the masses can PRETEND they are investing when in fact they are gambling. So i say lets continue my lives work of taking money from stupid people no matter how prestigious their institution of PHD is.