In this morning’s Breakfast With Dave, Rosie explains how as the S&P continues its bull rally like that of years past, retail investors are seeing a flight from equities and money market funds into bonds due to the volatile nature of the markets.
Income has officially become more important than taking big risks it seems.
Breakfast With Dave: The bottom line is that even after the low-volume rebound in that past couple of weeks, the S&P 500 has done nothing over the past five months as it puts in a topping formation that is highly reminiscent of what we saw in 1987, 1990, 1994, 2000 and 2007. The retail investor continues to take advantage of any whippy rallies by selling into them and re-balancing into the fixed-income market in what certainly seems to have become a secular shift towards income and away from risk-taking capital appreciation strategies.
Stock funds suffered a net outflow of $5.6 billion last week — $5.2 billion from U.S. funds and $400 million was withdrawn from foreign equity funds. True to form, bond funds took in a net $6.8 billion after $7.8 billion of net inflow the week before. It is fascinating to see where this so-called ‘mountain of money’ the equity bulls talk about incessantly is being put to work seeing as money market funds saw redemptions of $39.7 billion last week. They are going into bonds.