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By Charles Biderman

As we start the second half of January, this is a particularly good time to check out what real time data on flows and income has been telling us about the first half of this month. What has caught the attention of the media and markets is that a huge amount of money has gone into stocks since the beginning of the new year. TrimTabs Investment Research says that an amazing $39 billion has been invested in US and Global equity mutual as well exchange traded funds during the first ten trading days of January.

Compare that $39 billion ten day flood of cash with the entire month of January, 2012 when less than half of that amount, or $18 billion, flowed into equity funds. Let us not also forget that January 2012 was a very good month for stocks. The S&P 500 rose more than 4%.

What's particularly amazing is that $11 billion flowed into US equity mutual funds for the first ten trading days of this month, compared with a $2 billion outflow in January 2012. Moreover, that current inflow if it lasts will be the first month inflow since February 2011.

To me the most important question right now is where is this money coming from and how much more is there to flow into stocks?

My answer is that most of the new money is probably already invested. And the bulk of that new money came from three pots. The first and smallest is usual year end inflows. A bigger pool came from sale of stocks prior to this year-end to avoid 2013′s higher taxes. An additional source of cash also resulted from front running of bonus income and other income into December, 2012 to avoid the tax hikes.

Based upon our site table of US Individual Taxable Income, which is being revised today with data as of Friday, January 12, I estimate that at least $100 billion in extra income was recognized in late 2012. And that is the source of new cash for investments so far this year. As I have previously reported in these videos, Q4 2012 income was up $60 billion as a result of the front running of bonuses and the like and about $40 billion came from sale of stock and other assets before year end.

Our real time income data is currently still being distorted by the front running of the 2013 tax hikes. Income tax payments were still up by almost double digits the first few days of this January. However, over the last four days we have begun to see a slowdown in income tax collections.

To repeat what I said at year-end, the front running of what would have been 2013 income into the fourth quarter of last year will make 2012 year end look better. But that lack of income this quarter will make the economy look worse than it would have starting now. So, if we subtract about $60 billion in income that would have occurred in the first quarter of this year and about $50 billion in higher taxes, that should wipe out any gain in income this year over last year.

Moreover, lower take home pay has to translate into slower economic activity, and therefore lower sales and income for public companies. What you really need to keep in mind is that the rest of the financial world looks backward for its data and does not look at real time the way we do. Therefore most of Wall Street predicts the future based upon past trends. That unrealistic way of predicting future trends could keep stock prices up this month before they begin to fall next month if my prediction of slowing economic growth starting now is accurate.