Treasury Shorts At 6 Year Highs; Hedge Funds Quietly Exit Stocks As Oil Shorts Crushed Again

With the last traces of the Trumpflation rally still noticeable, US equity inflows continued last week as positive economic data surprises rose to a 4-year high. Inflows into US equities ($4.4bn) continued for a 4th straight week, cumulatively adding $45bn. This is the longest consecutive stretch of inflows since June 2014, i.e., when the severe dollar shock began. Recent inflows have been in line with the macro data surprise index, MAPI, which reached a 4-year high this week, which however is likely set for an abrupt reversal once the hangover from the soaring dollar and the surge in interest rates hits.
For now, however, as the bottom right chart shows, investors just can’t seem to get enough of equities for 3 consecutive weeks.

And while European equities saw large outflows resume this week after a brief 2-week respite while EM saw outflows pause, as expected ahead of today’s Italian referendum, what is more surprising is that equity positioning has been cut back to neutral in what is a sharp disconnect from data surprises, almost as if the institutional investor base is not so sure the data will persist, and that the US will shortly recouple with the rest of the world.

This post was published at Zero Hedge on Dec 4, 2016.