Submitted by Tyler Durden on 10/26/2011 16:55 -0400
fixed
Forced Short Squeeze
If the purpose of the forced short squeeze between stocks and the EURUSD was supposed to get retail investors back in the rigged casino, it has failed. In the week ended October 19, yet another $3.5 billion in funds was redeemed from domestic equity mutual funds, with all of it and then some once again rotating into fixed income funds, which even despite offering persistently record low yields, continue to be far more attractive to Joe Sixpack than the joke of a centrally planned policy yoyo that has become the US (and global) stock market. And in the meantime, baby boomers who need stable sources of annuities (read: not equities, not even the bubble that is dividend stocks) are not getting any younger. In addition, after this week, the 10th sequential outflow in a row, we have now surpassed $100 billion in outflows from domestic equity funds, and with it the total outflow of all of 2009. With mutual fund cash at all time record lows, or just about 3.4% the smallest tremor in risk assets which forces mutual funds to mark equities to fair value instead of "to short squeeze", will likely set off a liquidation wave unless enough new capital mysteriously appears to fill what will be the equity hole, that will serve as a springboard for even more redemptions and so on in the mutual fund death spiral.
chart
http://www.zerohedge.com/news/relentless-equity-outflows-continue-ytd-mutual-funds-redemptions-surpass-2010-total-despite-bro?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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