According to Fink, the recent rally has been supported by institutional investors covering shorts. "Since Brexit, we've seen ETF flows almost at record levels ... $18 billion of inflows,"Fink said. "However, in the mutual fund area, we're continuing to see outflows."
What that tells you is retail investors are pulling out, he said. "You're seeing institutions who were short going into Brexit ... all now rushing in to recalibrate their portfolios."
Another curious fund flow: the ongoing rush into dividend plays. Fink said he's been seeing huge inflows in fixed-income products. "So you're seeing a risk-off trade, as we call it, around the world."
“If we don’t see better-than-anticipated corporate earnings I think the rally will be shortlived,” he added.
Considering that on a GAAP basis, the S&P500 is currently generating about 90 in earnings, or equivalent to a 24x P/E multiple, it is hard to see how one can justify the move "fundamentally."
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