Posted By thestatedtruth.com on January 7, 2010

There was a lot of buzz around Wall Street about a report released by TrimTabs yesterday.  In the report, Charles Biderman goes through a lot of potential fund flows to fuel the rally that spiked market cap $6 trillion since March.  He found them all wanting and speculated whether the rally had been funded with buying by either the U.S. Treasury or Fed or both.                                                                                                        

OUTFLOWS from U.S. stock funds all year!

RECORD AMOUNT ($311 billion) of new stock offerings (includes IPOs, secondaries, and converts, but particularly a large offering of secondaries in the second half of the year);

Announced cash M&A, as well as corporate stock  buybacks,     LOWEST LEVELS FOR ANY YEAR THIS DECADE. 

 U.S. stock funds: $32 billion OUTFLOWs………………………

1. U.S. ETFs: $18 billion OUTFLOWS
2. International stock funds: $26 billion INFLOWS
3. International ETFs: $35 billion INFLOWS
4. U.S. bond funds: $370 billion INFLOWS
5. U.S. bond ETFs: $39 billion INFLOWS  

             This Via CBS Marketwatch:

• Charles Biderman, chief executive of TrimTabs Investment Research,a research firm that tracks liquidity flows in the market. He is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market.
• We cannot identify the source of the new money that pushed stock prices up so far so fast,” Biderman said in a statement Tuesday. 
• The source of approximately $600 billion net new cash necessary to lift the market’s overall capitalization by $6 trillion last year could not be identified by TrimTabs, Biderman said. The money, didn’t come from traditional players such as companies, retail investors, foreign investors, hedge funds or pension funds.
• “We know that the U.S. government has spent hundreds of billions of dollars to support the auto industry, the housing market, and the banks and brokers. Why not support the stock market as well?”  The Federal Reserve or the Treasury, Biderman said, could have easily manipulated the stock market by purchasing $60 to $70 billion worth of futures of the S&P 500 Index on a monthly basis.
• “The fact that the government stepped into the abyss [angered] a lot of people, and the fact that things are better a year later flies in the face of some long-held beliefs about free markets.”
• “While the absolute percentage gain off the recent lows has been more powerful than anything since the Depression era, there is no denying that historical rallies in the equity market have recouped a greater percentage of the declines from the highs,”
• From this seat it is not the degree of the market rally that strikes me as “suspicious” – as I believe in reversion to mean and the drop in 2008 and early 2009 was SO dramatic; hence a huge rebound would be expected.  Instead it’s “how” it has happened that causes the senses to tingle – especially if you’ve watched the market day after day for years upon years..  So much of this epic move has been overnight or premarket.  Whenever a key technical level was about to be broken to unleash the sell orders in the computers, a mass of buying occured from out of the blue – even on days there is limp volume. We had months on end mid 2009 where “3:30 PM” buying set off fireworks (remember that?)  And “V shaped” moves after any sell off usually are seen once every year or two.  We now see them almost every month, stocks were never consolidating after minor selloffs; they simply rocketed back up. Repeatedly…… So it’s not the SCOPE of the rally that raises this writer’s eyebrows; it’s the COMPOSITION of the rally.

A market that saw net outflows in equities, along with massive new share issuance, and very low corporate stock buybacks, et al – and you have to question the “coincidences”.

   Charles Biderman, Chief Executive of TrimTabs Investment Research

Categories: Commentary, Commodities, Economy, Finance, National News, Wall Street
Tags: