‘Stampede of Cash”, “Floodgates have Broken Open”, – here comes more cash to buy equities

Earlier this month I said “The so called “great rotation” from bonds to stocks may be upon us”.  The data is confirming the rotation is indeed driving funds out of bonds and into stocks.  The quotes in the title of this post are from an article on Business Insider (here). They note there has been $50 billion pulled out of taxable bond funds and $30 billion flow into domestic equity funds since the start of June.  It is no mystery why the equity market has enjoyed strong gains.  The chart below was produced by Goldman Sachs to illustrate the degree of shift in stock vs. bond fund flows since 2008. You can see we are in a “risk on” phase. How long can it last? – you might ask. I suspect we have months and billions of dollars of bond outflows before the “rotation” slows much less is over.  Jeb B. Terry, Sr. July 22, 2013

Equity v Bond flows 7-17-13

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