“Big Fat Buyers’ Strike”: Traders With $515 Billion Boycott The Market

Tuesday, February 12, 2019
By Paul Martin

by Tyler Durden
Tue, 02/12/2019

One of the bizarre observations to emerge over the past month has been that despite the torrid rebound in stocks so far in 2019, culminating with the best January for the S&P since 1987, investors have generally shunned US equities, selling stocks when they should be buying, and allocating the proceeds into bonds and emerging markets, as the following recent chart from Bank of America demonstrated.

This peculiar behavior has prompted several questions, among them how much longer can professional investors stand on the sidelines as stocks continue to surge (assuming the rally persists of course) and, more importantly, if investors are selling stocks who is buying, with the most likely culprits being the return of stock buybacks and a historic short squeeze.

We recently covered this perplexing behavior in the past few weeks in the following posts:

Is It All Just One Giant Short Squeeze: Investors Rush To Pull Money Out Of US Stocks
Deutsche Bank: The Market’s Rally Makes No Sense
“This Is Strange”: Despite Historic Rally, Investors Continue To Dump Equities

Now, in the latest BofA Fund Manager Survey which CIO Michael Hartnett has aptly titled “My Big Fat Buyers’ Strike”, we get a conformation that the rally of the past 7 weeks has indeed been mostly shunned by professional investors because as Hartnett writes, there has been virtually no improvement in investor sentiment, and investors continue to slash exposure to stocks while allocating to bonds and cash. In other words, Wall Street has been boycotting the rally.

Here are some of the key findings from the latest survey which polled 218 respondents who manage $515 billion in assets under management.

First and foremost, the allocation to global equities tumbled 12% to just net 6% overweight, the lowest level since September 2016, and the biggest MoM drop relative to the performance of global equities (+7% from Jan 4th start of Jan’19 survey) to Feb 7th (end of Feb’19 survey) on record. This confirms that nobody has any faith in the current rally, which may indeed be simply a lingering artifact of Steven Mnuchin calling in the Plunge Protection Team in late December.

The Rest…HERE

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