{"id":64752,"date":"2017-07-24T02:27:04","date_gmt":"2017-07-24T00:27:04","guid":{"rendered":"http:\/\/beta.next-finance.net\/news\/the-flow-show-cash-at-record-low-as-active-revives\/"},"modified":"2019-12-31T02:04:15","modified_gmt":"2019-12-31T01:04:15","slug":"the-flow-show-cash-at-record-low-as-active-revives","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/news\/the-flow-show-cash-at-record-low-as-active-revives\/","title":{"rendered":"The Flow Show: Cash at record low as Active revives"},"content":{"rendered":"

Talking Points<\/strong><\/p>\n

Risk-on flows:<\/strong> $9.9bn into equities & $10.7bn into bonds (nearly all corporate bonds), as global stock markets and credit indexes hit all-time highs<\/p>\n

Active funds make comeback:<\/strong> largest inflows of $3.5bn to active equity funds in 2\u00bd years <\/p>\n

Soaring returns:<\/strong> annualized YTD returns…tech stocks 55%, EM stocks 50%, biotech 36%, EAFE stocks 33%, European HY 27%, banks 27%, US stocks 18%, US CCC HY 16%<\/p>\n

Lovey-dovey central banks:<\/strong> Fed\/ECB\/BoJ all dovish in recent weeks…only bond sectors with outflows this week = Treasuries and floating-rate bank loans (latter previously big YTD inflow winner in anticipation higher rates)…and biggest inflows to HY in 3 months as investors aggressively buy “yield” theme<\/p>\n

Europe & EM over US:<\/strong> past 3 months $24bn outflows from US stocks, $19bn into European stocks & $20bn into EM stocks, driven by more attractive rates & EPS outlook<\/p>\n

Private client cash at record low:<\/strong> GWIM cash allocation % AUM falls to all-time low of 10.4% (Chart 1); note equity allocation at 60.3% still below Mar’15 high of 63%<\/p>\n

Icarus:<\/strong> strong inflows, “active” inflows, big returns, record low private client cash…Icarus won’t soar forever; but big Humpty-Dumpty fall in risk assets awaits hawkish central banks + EPS\/GDP reversals; in absence of immediate negative impact on small business employment following Obamacare repeal\/replace failure and\/or lurch toward tech-negative Occupy Silicon Valley policies, we think big fall in markets an autumn not summer event; meantime 2660 SPX & 510 ACWI = global market cap as % of GDP reaches record highs…both remain reasonable Icarus targets<\/p>\n

Chart 1: Private client cash allocation at record low as % of assets<\/strong>
\n\"chart_1_-_private_client_cash_allocation_at_record_low_as_of_assets.jpg\"<\/a>