Last week, when looking at the latest fund flow data, we noted an unexpected finding: as BofA itself said, "clients don’t believe the rally, continue to sell US stocks" and added that the "smart money" has now sold stocks in the face of this bear market rally for a near record seven consecutive weeks."
Submitted by Eric Bush via Gavekal Capital blog,
Stock prices and oil prices have been moving in a more positive correlated fashion recently than at any point since 1980. The 65-day correlation between Brent Crude Oil and MSCI World Index peaked at 52% on 11/13/2015 and has since fallen back a bit to 41%. The 200-day moving average is also at 41% and continues to climb higher. The current correlation of 41% is the highest correlation between stocks and oil prices ever over the history we have for both series.
For years, the so-called experts laughed at SocGen's Albert Edwards who not only steadfastly claimed that his "Ice Age" thesis is in play with central bank intervention only kicking the can - something that no longer works as Deutsche Bank so poignantly explained when it begged over the weekend for no more "easing" - but that once the realization and revulsion to artificially inflated markets hits, the "S&P will fall 75%" as he predicted in mid-January and we duly noted.