TrimTabs CEO Provides Realistic View On Economy

With quotes like "as opposed to the other commentators on CNBC, i think the banks are a great short here," this is a must watch video from TrimTabs' Charles Biderman. Sphere: Related Content

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300 Million Shorts Covered In Russell 3,000 During First Half Of May

TrimTabs reporting that in the first half of May (May 1-15), short interest on the Russell 3,000 stocks dropped to 13.32 billion shares ($253 billion / 2.78% of market cap) from 13.62 billion shares ($260 billion / 2.88% of market cap) on April 30.

There was net short covering in eight of the ten major sectors with Financials and Information Technology receiving the largest short interest outflows of $2.9 billion and $2.0 billion, respectively. The only sectors with net short selling were Energy and Industrials, in which traders opened new short positions valued at $500 million and $169 million, respectively.

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TrimTabs Records Heavy Short Covering in Consumer Discretionary And IT Sectors

TrimTabs notes that in the second half of April (Apr 16-30), short interest on the Russell 3,000 stocks dropped to 13.62 billion shares ($260 billion / 2.88% of market cap) from 13.95 billion shares ($259 billion / 2.94% of market cap) on March 31.

There was net short covering in eight of the ten major sectors with Consumer Discretionary and Information Technology receiving the largest short interest outflows of $3.1 billion and $2.5 billion, respectively. The only sectors with net short selling were Health Care and Utilities, in which traders opened new short positions worth $457 million and $183 million, respectively.

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The Real Unemployment Report

TrimTabs Investment Research estimated today that the U.S. economy shed 745,000 jobs in April (20,000 more than their March job loss estimates) as wages and salaries plunged an adjusted 5.7% year-over-year. TrimTabs estimated that the economy shed a record 5 million jobs in the past 12 months.

"If job losses continue at the present rate, the unemployment rate could top 10% by summer," said TrimTabs CEO Charles Biderman.

In a research note, TrimTabs reported that income tax refunds are up 16.5% year-over-year this year, providing a short-term boost to consumption. Unfortunately for the economy, however, the support from refunds is winding down.

Moreover, TrimTabs explained that President Obama’s "Making Work Pay" tax credit is too small to help the economy over the longer term.

"The Obama tax credit will distribute $20 billion to consumers from May through July," said Biderman. "This amount is less than one-quarter of the $90 billion the Bush tax credit pumped into consumers’ pocketbooks in the same period last year."

Finally, TrimTabs reported that real-time income tax data indicates that the personal savings rate was 1.6% in March, well below the 4.2% estimated by the Bureau of Economic Analysis. Sphere: Related Content

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CalPERS Sold Out Of Over 13% Of Top Positions In Q1, Weekly Mutual Fund Outflows

As everyone is claiming that that "big" funds are rushing to throw their money into the market, it is useful to see what the largest U.S. public pension fund manager did in Q1. The result: in its top 20 positions, CalPERS sold out on average 13.85% of its holdings. Guess one would have to look elsewhere to find the source of all the "institutional" buying.


Looking at a more recent time frame, TrimTabs reports that the week ended April 22 saw a $411 million mutual fund outflow, reversing the revised inflow of $2.7 billion in the previous week.

Equity funds that invest primarily in U.S. stocks posted an outflow of $1.6 billion, versus a revised inflow of $1.9 billion in the previous week. Equity funds that invest primarily in non-U.S. stocks had an inflow of $1.2 billion, versus a revised inflow of $808 million in the previous week. In addition, bond funds had an outflow of $370 million, versus a revised inflow of $5.5 billion in the previous week, and hybrid funds had an inflow of $1.6 billion, versus a revised inflow of $624 million in the previous week.

Separately, TrimTabs reports that exchange-traded funds (ETFs) that invest in U.S. stocks posted an outflow of $1.2 billion, versus an outflow of $4.5 billion in the previous week. ETFs that invest in non-U.S. stocks had an inflow of $876 million, versus an inflow of $1.3 billion in the previous week.



So just who are these "large" institutions buying? Sphere: Related Content

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Mutual Funds Report $11.9 Billion In Inflows For Week Of April 8: Throwing Fuel Into The Rally

Trim Tabs has released its weekly mutual fund flow data: the company estimates that all equity mutual funds posted an inflow of $11.9 billion in the week ended Wednesday, April 8, versus a revised inflow of $3.0 billion in the previous week.

Equity funds that invest primarily in U.S. stocks posted an inflow of $11.1 billion, versus a revised inflow of $2.7 billion in the previous week. Equity funds that invest primarily in non-U.S. stocks had an inflow of $844 million, versus a revised inflow of $287 million in the previous week. In addition, bond funds had an inflow of $1.7 billion, versus a revised inflow of $6.8 billion in the previous week, and hybrid funds had an inflow of $361 million, versus a revised inflow of $409 million in the previous week.

Separately, TrimTabs reports that exchange-traded funds (ETFs) that invest in U.S. stocks posted an outflow of $1.4 billion for the second consecutive week. ETFs that invest in non-U.S. stocks had an inflow of $1.9 billion, versus an inflow of $502 million in the previous week.

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$11.2 Billion Redeemed Last Week By Equity Mutual Funds

TrimTabs is out with the latest mutual fund flows for the week ended April 1. The research company estimates that the past week saw $11.2 billion in outflows among the equity mutual fund community, which doesn't jive too well with all the rampant speculation about vanilla money running head over heels to throw their money into the rally. TrimTabs estimates the prior week inflow to $1.7 billion, implying a new swing of over $12.5 billion WoW.

Equity funds that invest primarily in U.S. stocks posted an outflow of $8.5 billion, versus a revised inflow of $2.3 billion in the previous week. Equity funds that invest primarily in non-U.S. stocks had an outflow of $2.8 billion, versus a revised outflow of $557 million in the previous week. In addition, bond funds had an inflow of $2.9 billion, versus a revised inflow of $7.1 billion in the previous week, and hybrid funds had an inflow of $810 million, versus a revised inflow of $451 million in the previous week.

Separately, TrimTabs reports that exchange-traded funds (ETFs) that invest in U.S. stocks posted an outflow of $1.4 billion, versus an outflow of $5.0 billion in the previous week. ETFs that invest in non-U.S. stocks had an inflow of $502 million, versus an inflow of $1.6 billion in the previous week.

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The Economy Is Contracting A Lot More Rapidly Than The Government Is Reporting, Per TrimTabs

TrimTabs is out with their most recent employment data, which compares to the earlier ADP report, that the market forgot about after the first 30 minutes of trading. According to TrimTabs "the U.S. economy lost 700,000 to 750,000 jobs in March as wages and salaries plunged 4.5% year-over-year. TrimTabs estimated that the economy shed 4.3 million jobs in the past 12 months, the largest annual job loss since 1970."

"Job losses have been accelerating in recent months," said Charles Biderman, CEO of TrimTabs. "Investors who think the economy is bottoming out are going to get quite a shock this spring." TrimTabs uses daily income tax withholdings into the U.S. Treasury to estimate changes in employment. According to TrimTabs, the country lost 2.1 million jobs in the past three months and 3.4 million jobs in the past six months.

Much more interestingly, TrimTabs estimates that Joe Schmoe's conviction that the market has bottomed is translating into returns to good ole spending behavior and savings rates are in fact lower than reported, meaning the as savings rates inevitably run up, the pain for the economy will just get so much worse.

TrimTabs reported that the personal savings rate in February was much lower than the 4.2% reported by the Bureau of Economic Analysis. "Real-time income tax data indicates that personal income is plummeting and that the savings rate was no more than 0.9% in February," said Biderman. "The only reason the savings rate was positive was that income tax refunds were up sharply relative to last year."

And to add to the gloom and doom, which Zero Hedge does not disagree with, TrimTabs concludes: "The key macroeconomic and liquidity indicators TrimTabs tracks show no sign of a bottom for the economy. The economy is still contracting a lot more rapidly than the government is reporting."

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Early March Saw Largest Increase In Short Interest In 9 Months

According to data from TrimTabs, the first half of March (March 2- March 13) saw $15.78 billion in new short positions opened in the Russell 3000, resulting in aggregate short interest of 14.28 billion shares or a total of $227 billion in short positions (2.92% of Russell 3000 market cap) at March 13, from 12.84 billion shares or $203 billion on February 27. This has been the largest increase in short interest since June 2008. It is not surprising the that most sectors were financials and information technology as new bears were jumping on existing downside rallies and also expressing a bearish opinion to previously resilient sectors. 

As fast short money entered the easy short trade in droves during the first half of March, it has seen major pain and its unwind has swept additional incremental shorts to cover. The next relevant datapoint will be the short interest released in two weeks which will demonstrate just how critical the short squeeze has been in the recent market upside. 

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$12.5 Billion Inflows Week Ending March 18

According to TrimTabs, equity funds that invest primarily in U.S. stocks posted an inflow of $12.0 billion, versus a revised outflow of $14.3 billion in the previous week. Equity funds that invest primarily in non-U.S. stocks had an inflow of $459 million, versus a revised outflow of $7.7 billion in the previous week. In addition, bond funds had an outflow of $274 million, versus a revised inflow of $901 million in the previous week, and hybrid funds had an outflow of $82 million, versus a revised outflow of $2.8 billion in the previous.

Last of the stragglers trying to catch the tip of the sucker rally?

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$8.8 Billion Redeemed Week Ending March 11

I am not quite sure why TrimTabs' week ends on a Wednesday but lately few things surprise me. Regardless, the latest cash tracking data out of the company indicates that $8.8 billion was redeemed out of all equity mutual funds versus a revised outflow of $19.7 billion in the prior week, which by simple addition means that over $28 billion was redeemed in the past two weeks. The only inflow in the week occurred into US equity ETFs, while all other categories saw cash departures. Which means that either the market cheerleaders on CNBC are on drugs every time they pronounce how all the cash on the sidelines is just pouring into markets, or TrimTabs is using a congressional committee to "determine facts." Oue money is with the former, which again would imply the current rally is merely an exercise in short triggered stop losses.

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