Bank of America Merrill Lynch
In the week ended November 1, BAML equity strategist Jill Carey says clients unloaded $2.7 billion of U.S. stocks - the fourth-largest weekly net sale in the history of the data (going back to 2008) and the largest since October 2011.
Institutional clients accounted for most of the selling, shedding $2.1 billion from their portfolios. Hedge fund clients were net buyers of stocks to the tune of $109 million, while private (retail) clients sold $116 million.
Carey calls it a "rare week of private client sales" as it was only the second time since late May that this group of clients was a net seller of U.S. equities.
Clients are fleeing cyclical stocks, which took the brunt of the selling.
In a note, Carey writes:
Big sales of large cap stocks; rare week of private client sales
Last week, during which the S&P 500 was essentially flat, BofAML clients were net sellers of $2.7bn of US stocks-the biggest net sale since Oct. 2011, and the fourth- largest in our data history (since 2008). This follows a week of more muted outflows. Net sales were led by institutional clients, whose sales were the third-largest in our data history after two weeks of net buying. Hedge funds were small net buyers after near-record sales by this group the prior week, and private clients were net sellers for only the second week since late May. Year-to-date, both private clients and hedge funds remain net buyers, while institutional clients' net sales are larger than any other year since 2008. Outflows last week were chiefly in the large cap space (the fourth- largest net sales of this size segment since '08), while mid caps also saw outflows.
Near-record sales of many cyclical sectors and Health Care
Seven of the ten GICS sectors saw net sales last week, with the largest outflows from the cyclical sectors of Tech, Financials, Discretionary and Energy. Outflows from all of these sectors plus Health Care were close to record highs, particularly Tech, where sales were the fourth-largest in our data history. Telecom, in contrast, which saw the biggest inflows by our clients last week, had its fourth-largest inflows in our data history. Industrials continues to have the longest net buying trend at five consecutive weeks, followed by the more defensive Telecom and Utilities at four weeks. No sector has seen more than two consecutive weeks of net sales. Clients continue to retain a preference for defensives over cyclicals-the former has generally seen net buying on a four-week average basis since mid August, while the latter has generally seen net selling on a four-week average basis since mid-September.
The chart below shows the flight from cyclicals in recent weeks.
Bank of America Merrill Lynch