Economic Charts

All economic charts are at the bottom of the page.

Wednesday, September 22, 2010

Money Flows (Mutual Funds and Bonds)

I find it astounding that the stock market is holding up and even increasing in value (recognizing it is still moving in a channel, but upwards) as the flight from Mutual funds has continued for the 20th consecutive week. This week we had another $3.6 Billion leave Mutual fund (thus the stock market).  So exactly what or who is buying up all these stocks that is driving the Dow towards 11,000.  It concerns me because if the market has departed from general understanding (fundamentals, inflows, outflows), then the rug can be pulled out from under you at any time with no indications prior.  While domestic mutual funds saw and outflow of $3.6 billion, Foreign funds saw an inflow of $582 Million dollars.
Bonds saw a inflow of $7.375 Billion in Taxable bonds and $375 Million into Municipal bonds, thus perpetuating what some are calling a bubble in the bond market.  
When you take a look at the total outflows in the Mutual funds to the total inflows in the Bonds, you observe that money is flowing out of stock market and into the bond market.  
After seeing the total money flows chart, you begin to wonder, where the money is coming from to hold up the stock market.  The health of the economy or economic fundamentals surely don't support what the market has done or is doing currently (regardless of what those who got it wrong in 2007 say on CNBC).

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