EL-ERIAN & Michael Gayed & BofA & Tyler Durden: This ‘Great Rotation’ Is Actually Money Falling Off Of The ‘Trillion Dollar Deposit Cliff’, Credit Spreads Widening And ‘SELL-SIGNAL TRIGGERED’. It’s Deja Vu, All Over Again LIKE 2011… Completely The Same!

Saturday, February 2, 2013
By Paul Martin

Investmentwatchblog.com
February 1st, 2013

EL-ERIAN: This ‘Great Rotation’ Is Actually Money Falling Off Of The ‘Trillion Dollar Deposit Cliff’

Citi strategists pointed out, though, that January is always a strong month for inflows, which means what we are seeing likely owes to seasonality.

Even still, flows into equity funds this January are much bigger than usual.

In an interview with Bloomberg TV this morning, Mohamed El-Erian, the CEO of PIMCO – which is the world’s biggest bond fund manager – offered a very simple explanation.

Flows into equity funds could have been driven in part by the expiration of unlimited deposit insurance on bank accounts with balances over $250,000, which happened on December 31. (Bank of America’s Priya Misra dubbed this the ‘$1.6 trillion deposit cliff.’)

El-Erian told Bloomberg TV:

If the “Great Rotation” is happening, it’s not happening at PIMCO.

What I think we are all seeing – the equity funds, the fixed income funds, the commodity funds – is a rotation out of money market funds and out of bank accounts that no longer have complete FDIC insurance.

So, what we’re seeing is cash is being pushed into both the equity and fixed income markets, and we’re not as yet seeing any “Great Rotation.”

So, what we’re seeing is cash is being pushed into both the equity and fixed income markets, and we’re not as yet seeing any “Great Rotation.”

The Rest…HERE

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