Exposing the “Great Rotation” Exaggeration in 1 Chart

Posted by Louis Basenese Chief Strategist Wall St Daily

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Let this be yet another reminder to trust, but verify, every bit of information on Wall Street.

For months, we’ve heard that a “Great Rotation” is underway. That is, investors are dumping bonds and promptly putting the money back to work in equities. And this uptick in buying activity is precisely why the stock market keeps hitting new all-time highs.

Sounds perfectly logical. And Wall Street appears to be corroborating the theory. 

“You have this huge migration moving from grossly overweight fixed income back into equities,” says John Stoltzfus, Chief Market Strategist at Oppenheimer.

The only problem? The data tells an entirely different story. 

Here’s the proof in a single chart – and, more importantly, why Wall Street’s latest deception ironically bodes well for us…

Stocks Back En Vogue

I’ll be the first to admit that a transition is afoot. 

In January, investors (finally) rediscovered stocks. U.S. stock funds reversed 20 consecutive months of outflows by attracting a record $18.4 billion. 

And over the course of the first quarter, the enthusiasm for stocks intensified. According to the fund tracker, EPFR Global, investors plowed a total of $53.9 billion into stock funds in the first three months of the year. 

Yet none of these purchases were fueled by the sale of bonds.


…….read more HERE