Fund Ouflows

It's the financial sector, dummy.

At least that's the take in Europe, according ti. Financial Times story, "European fund outflows near $100 billion."

Redemptions from European equity funds have approached $100bn as investors race out of an asset class rattled by the uncertain health of the continent’s financial sector.

Funds invested in European stocks suffered $1.9bn of withdrawals in the week to September 28, the 34th consecutive week of outflows, according to fund flows tracked by EPFR. The exodus since mid-February has reached $95bn, the data show.

Anxiety about the European banking system, which has culminated in a rise inshort interest in Deutsche Bank, has persisted from the year’s start and weighed on the region’s nascent recovery.

The European Central Bank has unleashed a wave of stimulus in a bid to rekindle growth and inflation but has been unable to assuage investor concerns. Flight from European stocks has been accelerated by a struggling Italian financial sector as well as the UK’s Brexit vote, which is seen as a weight on economic activity throughout the bloc.

Deutsche Bank was thrust to the fore after a report said German officials were drawing up contingency plans in the event it is unable to tap financial markets to meet regulatory requirements resulting from a US fine. The bank has emphasised its strong financial position, but that has not stopped some hedge funds from pulling part of their business from the German group.

“Deutsche Bank’s travails kept mutual fund investors on their toes during the final week of September,” said Cameron Brandt, director of research for EPFR. “Sentiment towards Europe took hits from the setting of a date for Italy’s constitutional referendum and the possibility of higher oil prices sapping regional consumer confidence.”

There's that term we keep mentioning, confidence. Confidence is taking a beating on nearly every front these days and from where we view it the prospects for meaningful changes without some major pain are slim and none. Keep your eye on the globalization freaks. They have their best interests at heart, not yours.