Thursday, August 12, 2010

Main Street Telling Wall Street That The Equity Markets Stinks!

As expected, more money is pulled out from the equity markets.

  • Equity funds had estimated outflows of $2.87 billion for the week, compared to estimated outflows of $4.08 billion in the previous week. Domestic equity funds had estimated outflows of $2.79 billion, while estimated outflows from foreign equity funds were $82 million.

There you go! The only conclusion I can get from these actions is that Main Street USA is telling that the equity markets stinks!!!

And I have the USD 49.126 Billion proof to back the above statement!!!

From 28th April 2010 to 4th August 2010, Main Street USA had pulled out 'a mere' USD 49.126 Billion out from the equities market!!!

And if you are counting, that's ONLY 14 weeks in a row that Main Street USA is taking money from their equity markets!

Tell me if USD 49.126 is some small change!!!

So pardon my flawed interpretation but this suggests to me strongly that Main Street USA is telling Wall Street that their equity markets stinks!!!!

Yes, in fact, stinks to hell hell!

They just don't trust the equity markets anymore!

Remember the AIG bailout fiasco? The laughing stock of the entire century?

Here's an excellent posting from Jesse: Why The Bankers, The Fed, and Their Allies In Washington Are Afraid of Elizabeth Warren . It highlights the The AIG Bailout Scandal: Bailing out AIG effectively meant rescuing Goldman Sachs, Morgan Stanley, Bank of America and Merrill Lynch (as well as a dozens of European banks) from huge losses. Those financial institutions played the derivatives game with AIG, the esoteric practice of placing financial bets on future events. AIG lost its bets, which led to its collapse. But other gamblers—the counterparties in AIG’s derivative deals—were made whole on their bets, paid off 100 cents on the dollar. Taxpayers got stuck with the bill!

Last night the US markets fell and surprise, surprise the volume increases!

LOL! Up on wafer thin volumes and down on increased volumes. I wonder what does this suggest?

Now with so all these money pulling out from the equity markets, who do you think is hurting?

The following article is from WSJ: Barclays Layoffs: The First of Many Axes to Fall?

  • By Michael Corkery
    Don’t worry. It is just a few hundred support staff in the sales and trading unit, right?

    Barclays Capital, the investment-banking unit of the U.K.’s Barclays PLC, plans to lay off hundreds of employees.
    While it is mostly to affect back-office operations, the move no doubt is causing at least a few upset stomachs across Wall Street.

    That is because Wall Street just experienced a dismal second quarter for trading....

Yeah.. a dismal second quarter for trading! How can they make money when there is no customers to trade/invest for?

Would you expect many axes to fall?

Well at the rate of how much money is pulled OUT from the equity markets, I won't be surprised at all!


zainal said...

Dear Moolah,
Stock market is zero sum game. If one sell (take money out from equti), there must be other people buy ( putting money in equiti).So I cannot understand the meaning of so much so much money being taken out from the equiti market, expecially when the index is on the increase. I would appriciate so much if you can explain this. Thank you in advance.

Moolah said...

The data posted tracks money flow in and out of long term mutual funds that invest/trades in the equity markets.

The data does not track the buying/selling of the equities. And yes, you are absolutely correct, it's a zero sum game. For every transaction, there's always a buyer and a seller.

Now the past 14 weeks, some 49.126 billion was withdrawn out from the long term mutual funds, which invests in the equity markets. Meaning to say, these funds now have 49.126 billion less to invest/trade with.