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Institutional investors have been net sellers of stocks for the most of the past year or so.. Since late June, this trend increased, with the 4 week average flirting with sales of 1 billion dollars. On the other hand, retail investors have been net buyers since early June, temporarily reaching levels last see two years ago.

Is the so called “smart” money fleeing and dumping stocks on the less smart money? If this is the case, we could see stocks falling and this is usually accompanied with a rally of the US dollar and the Japanese yen.

This graph, posted by John P. Hussman on twitter account shows the trends using data from Bank of America. US stock indices have hit new highs recently, despite this trend. Stocks have also risen despite a big downwards revision of US growth in Q1, lowered expectations for Q2 and less optimism for the full year.

So, are company profits rising despite the lack of growth and thanks to better productivity? No. Zero revenue growth means that earnings multiplies are on the rise.

So if lower growth prospects are unable to stop the rally, what could do that?

It is impossible to mark a bottom or a top. But it is easier to estimate the impact that a falling stock market will have on currencies: a bear market goes hand in hand with a stronger dollar and a stronger Japanese yen, which are considered “safe haven” currencies.

Japan has a debt to GDP ratio of over 200% (yes, worse than Greece) and the US economy might be in a better shape than some other developed economies, but isn’t really enjoying strong growth and isn’t the locomotive of global growth.

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