McRocket
Gold Member
- Apr 4, 2018
- 5,031
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One Theory for the Giant Stock Rebound Is a $60 Billion Pension Frenzy
'Trying to figure out what caused the biggest single-day stock turnaround since 2010? At least one analyst attributes it to buying by pension funds that dove into equities after December’s carnage.
The S&P 500 Index posted the biggest upward reversal in eight years during Thursday’s session, rallying back from a 2.8 percent deficit. The about-face could reflect end-of-quarter adjustments by pension funds that have $60 billion of shares to buy this month, among the most ever, according to Wells Fargo’s Pravit Chintawongvanich.
Institutional investors with large holdings in stocks and bonds use the end-of-quarter period to balance out holdings, adding to losers and cutting on winners. This time, they went big on U.S. large and small caps, adding $35 billion and $21 billion to indexes that are set to post the worst month since 2009. Money got pulled from fixed income that’s outperformed stocks, he said.
“While the $60 billion rebalance is historically large, its effect is probably exacerbated by the low market liquidity conditions,” Chintawongvanich said in a note to clients. “A given dollar to buy or sell is moving the market more than it normally would.”'
Bloomberg - Are you a robot?
This 'Trump rally' was nothing of the kind.
BTW - A similar thing happened on Thursday and Friday...but they had less and less effect on the markets.
'Trying to figure out what caused the biggest single-day stock turnaround since 2010? At least one analyst attributes it to buying by pension funds that dove into equities after December’s carnage.
The S&P 500 Index posted the biggest upward reversal in eight years during Thursday’s session, rallying back from a 2.8 percent deficit. The about-face could reflect end-of-quarter adjustments by pension funds that have $60 billion of shares to buy this month, among the most ever, according to Wells Fargo’s Pravit Chintawongvanich.
Institutional investors with large holdings in stocks and bonds use the end-of-quarter period to balance out holdings, adding to losers and cutting on winners. This time, they went big on U.S. large and small caps, adding $35 billion and $21 billion to indexes that are set to post the worst month since 2009. Money got pulled from fixed income that’s outperformed stocks, he said.
“While the $60 billion rebalance is historically large, its effect is probably exacerbated by the low market liquidity conditions,” Chintawongvanich said in a note to clients. “A given dollar to buy or sell is moving the market more than it normally would.”'
Bloomberg - Are you a robot?
This 'Trump rally' was nothing of the kind.
BTW - A similar thing happened on Thursday and Friday...but they had less and less effect on the markets.
.. 
