Friday, August 28, 2015

The Bureau of Labor Statistics claims that 215,000 jobs were created in July and that the unemployment rate is 5.3 percent. This is far from true. If counting those who have given up finding a job, the unemployment rate would be 23 percent! One would think that investment advisors would know this. But, no, many of them expected the stock and bond markets to rise this last two weeks because of the BLS lies. Now they are puzzled. Yesterday's big drop was partially undone at the last minute, encouraging them to believe that today it would keep on rising. But no, the Dow, S&P, and Nasdaq struggled all afternoon to avoid a rout. And finally Bloomberg and other financial outfits began to wonder if "Moms and Pops" might be bailing out. But not THIS Pop! By the end of the day, seven of my nine picks were in strongly in the green (e.g., +4.91%), one 0.0%, and the only one in red was only -0.24%. The Dow was red all day long, as much as -0.35% but magicaly reduced itself to -0.07% in the last fiew seconds.


Retail Investors Pull Out Billions in Wild Week                                               Original w/ Video Here

  • Credit Suisse report shows
  • First back-to-back months of simultaneous outflows since 2008
Mom and pop are running for the hills.
Since July, American households -- which account for almost all mutual fund investors -- have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse.
Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta.
“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting,” Saporta said in a phone interview. “It may be that this is an interesting oddity but if we continue to see this it could reflect a more broad-based nervousness on the part of household investors.”
Withdrawals from equity funds are usually accompanied by an influx of money to bonds, and an exit from both at the same time suggests investors aren’t willing to take on risk in any form. While retail investor sentiment isn’t the best predictor of market moves, their reluctance could have significance, Saporta said.
“It might suggest households are getting nervous about holding investments, and that could lead to some real economic implications including cutting back on spending,” she said. “Should the market turn lower again, it will be interesting to see if we have the traditional move back into bonds or if households move to cash.”
After an 11 percent plunge in the Standard & Poor’s 500 in the past week, investors are searching for signs of strength in the U.S. economy in the face of slowing growth abroad. The S&P 500 gained 2.4 percent Thursday as data showed gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg.
While the flows out of mutual funds suggest retail investors -- who held 89 percent of U.S. mutual fund assets last year, according to ICI -- may not have faith in financial markets, recent economic data show the average American is spending more. Sales at U.S. retailers rose 0.6 percent in July and the prior two months were revised up, according to Commerce Department data on Aug. 13.

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