Markets and $6.0bn inflows push ETP assets to new all time high
Data in this report is as of Fri, Mar 08

Market and Net Cash Flows Review

Markets moved higher during last week. The US (S&P 500) rose by 2.17%; while, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) rose by 1.84% and 1.26%, respectively. Moving on to other asset classes, the 10Y US Treasury Yield rose by 20 bps last week. In the meantime, the DB Liquid Commodity Index was up by 1.15%. Similarly, the WTI Crude Oil, Gold and Silver prices moved higher by 1.40%, 0.16% and 1.36%, respectively; while the Agriculture sector (DB Diversified Agriculture Index) end flat for the week. Last but not least, Volatility (VIX) dropped by 18.03% during the same period.

The total US ETP flows from all products registered $6.04bn (+0.4% of AUM) of inflows during last week vs. $2.67bn (+0.2%) of inflows the previous week, setting the YTD weekly flows average at +$4.0bn (+$44.31bn YTD in total cash flows).

As you read that headline this morning, let's not forget Bernanke is STILL pumping $85 Billion a month (forever) into stocks that you OWE, but don't OWN. I also reflect on what was the unemployment rate, GDP, national debt, your home value and tax rate at the previous all time high in 2007? Oh well, lets go with the flow. MBA Mortgage rate was a phenomenal beat at 14.8% from the previous -3.8%. ISM Services was another beat at 56.0. ADP Unemployment of 198K had a big "beat" of expectations of 150K but was down from the previous 215K. Nevertheless, the story is "beat expectations". Factory orders came in at -2.0% - a horrific number, but it's a "beat" of the expected -2.2% and a huge drop from the previous 1.3%. I don't have the TV on in my office, but I suspect it can be spun and blamed on the snow. The Fed's Beige book is due out at 2:00. Undoubtedly is will be a magnificent report. No sense in weakening the proof of the punchbowl. We breezed through the "Sequester Armageddon" unscathed better than the Mayan end-of-the-world.

Lets get to the tables...

February flows of $10.6bn ensured the strongest 2-month start on record for Equities

Sources: BlackRock Investment Institute, Bloomberg.

FOR ACCREDITED INVESTORS ONLY IN CANADA AND PROFESSIONAL INVESTORS IN OTHER REGIONS.

Gold has staggered around the battlefield like a dazed, wounded soldier in the Currency War. Previous reliable correlations seem to be disoriented as central banks feverishly print money in a race to devalue their currencies. The most reliable of these correlations has been against the US Dollar. It was simple - when the Dollar dropped, Gold went up and vise versa when the Dollar rose.

To understand Gold's market relationship we have to look back into history. Because this is a market relationship analysis, we'll minimize Gold's longer history of jewelry and finery. In a historical perspective, Gold's major role was as a sound backing for currency (primarily, the US Dollar). This is what gave the Dollar its value and stability as a world currency. This didn't mean the the US couldn't print money in deflationary times, however, it had to add to the gold reserves in equal measure. Printing money was obviously (and intentionally) inflationary, but the requirement to add more gold to the reserves to back it, thus raised the price of gold, was where Gold got it's identity as "The Inflation Hedge".