By Tyler Durden
While stocks continue their scorching post-Christmas rally, the big story so far of 2019 is not so much the move in the market which was to be expected once the Fed capitulated to petulant traders, but the fact that investors have so far shown no faith in the sustainability of the rally and instead have been withdrawing capital from equity funds for the duration of the rally.
Confirming this, the latest BofA Fund Managers Survey showed that professional investors’ 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.
Logically, this bizarre divergence can end in one of two ways: trader skepticism is validated and stocks resume their slide to the abyss of the 2018 December lows, or bears capitulate and plow back into equities.
Until then, however, the “pain trade” is back, and as Nomura’s Charlie McElligott comments on yesterday’s action in the markets which has continued on Wednesday, “it was not pretty within the Equities-space today despite the large index rally, as many in …read more
Source:: Zero Hedge