The Flow Show: $20tn in 2020

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The Flow Show

  The Flow Show: $20tn in 2020

•  Global policy stimulus >$20tn in 2020 ($8.5tn monetary, $11.4tn fiscal)
•  US$ bear markets in 1970s & 2000s: EM, commodities, small cap, value outperformed
•  2010s: maximum liquidity, globalization, profits; 2020s maximum deficits, localization, redistribution
Scores on the Doors YTD: gold 28.3%, government bonds 7.2%, IG bonds 6.5%, cash 0.5%, HY bonds 0.1%, global equities -0.4%, US dollar -3.0%, oil -32.4%. 

Scores since March lows: oil 76.7%, equities 46.0%, HY 26.3%, gold 24.6%, IG 19.5%, government bonds 6.6%, cash 0.0%, US dollar -8.8%.
2020 in numbers: Covid-19 deaths >670k, global GDP loss $10tn, US claims >50mn, US budget deficit >40% of Q2 GDP, MOVE index all-time low, cash on sidelines $5tn, US corporates raise $2.7tn, global stock market cap crashes $30tn, then $25tn rally. 

$20tn in 2020: global policy stimulus $20tn, monetary $8.5tn, fiscal $11.4tn (doesn't include $1tn Phase IV US fiscal stimulus); 164 global rate cuts in 147 trading days (Table 1); policy & positioning key drivers of the Bull of 2020.
2020 flows: $1.1tn into cash, $164bn into IG & HY, $53bn into gold, $28bn into government bonds, $39bn out of equities.
Weekly flows: $17.2bn into bonds, $5.6bn into cash, $3.9bn into gold (2nd largest all-time), $1.9bn out of equities. 
Flows to know: 1. Cash peak: $75.9bn out of MMFs past 11 weeks after $1.2tn inflow; 2. Gold surge: $16.7bn record 6-week inflow to gold (Chart 3); 3. Credit surge: $210bn record 12-week inflow to IG, HY and EM bonds (Chart 4). 
BofA Bull & Bear Indicator: rises to 3.4 from 3.3 (Chart 1).

BofA private clients: AA is 58.7% equities, 22.0% debt, 13.0% cash; private clients have reduced cash 3 consecutive weeks (first time in 2020 - Chart 5); precious metal ETF holdings % ETF portfolio on rise (2.3%) but well below 9.3% peak of 2012 (Chart 6). 

Dollar bear markets: new highs in gold on dollar debasement theme, note two great dollar bear markets were in 1970s & 2000s, outperforming assets those decades were EM equities, commodities, small cap, and value stocks (Chart 2). 
Chart 2: Asset returns in 1970s & 2000s…decades with big US dollar decline