click on image or HERE to listen to Santellii’s comments on leverages and outflows. 

Transcript: (Ed Note the 3 min video is superior to the transcript)

Courtney, thanks. Let’s go from the New York Stock exchange to the Santelli Exchange. over to you, Rick. 

Listen, i have to continue to talk about the deleveraging because it is the topic du jour. even with the big Blackhawk celebration, a lot of the talk continues to be exactly what happened, why did it happen, when it happened, how important was that?

In order to try to pick or help you viewers or listeners get an idea where interest rates may go, where equities may go, where leverage may go or not go ever again, we have to understand what happened. and let’s start in a very simple place, leverage. i’ll tell you why this is so fascinating a conversation i had with a couple of my sources yesterday. That in the world of hyperleverage, there isn’t going to be any money left for excess margin. In other words, it’s counterintuitive that the trading community, investors, funds, have a certain amount of leverage on and it’s not the same everywhere but it’s still rather large. What is excess margin?Excess margin means you have some money laying around,whether it’s your Gold position, Bond position, S&P, or ETF, whatever it is, that when the position starts to work against you and you need to pony up more money, where does that money come from?

That is at the epicenter, in a simple way,  of what may have been the catalyst for much of what we’ve seen.

Now, i know you always hear me talking about the Fed, the FOMC, Ben Bernanke and that the markets still have their moments of power, but i do have to say the other big conversation the last 24 hours is no matter what you think about all of those topics, that Ben just happened to be the guy that we all identified, everybody seems to identify with being the culprit. Somehow as to the catalyst. I’m not so sure that’s true. i think in leverage, no excess funds, things have a way to work in reverse in an aggressive fashion but it’s even more interesting.everybody wants to talk about the great rotation. Now, you could go to CNBC, they will have a boat load of stories about the exact numbers. i’m going to round out. There’s been basically record outflows for the last month or so in the bond world, just the last week it’s been rather large. You could break it down into taxable, non-taxable, municipals, whatever. But here is the key, equities and equity etfs are also seeing outflows. This really needs to be thought through. as much as everybody wants that to be true, it doesn’t seem to be true, and this has to figure in because you could be the biggest bond guy in the world and you can see all the flows, but in the end the real key is the inflows and that’s what we’re not seeing there. Back to you. 

Well put, rick. Very well put on a week where we’re watching flows carefully, thanks a lot. 

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