Margin debt is at a record and investor credit balances are deeply negative. There just isn’t much cash sitting behind this market if things start to wobble.
That doesn’t mean stocks have to roll over tomorrow, but it does mean the downside can get messy once selling starts, because forced de-risking and margin calls can turn a normal pullback into something more mechanical.
Add in the fact that leveraged ETFs now have roughly $150B in assets and just took in another $6B last month, and it’s pretty clear people have been pressing harder into the rally rather than the shaky macro backdrop and economic uncertainty (inflation rising, gas prices rising, no end in sight for Iran war, etc).
If any crack in the AI thesis driving the momentum surfaces, things could unwind fast.
https://i.redd.it/bfz0qpvbub1h1.jpeg
Posted by Zipski577
3 Comments
Whats margin rates these days? Considering the gains, seems like everyone’s analysis is just to pump the market forever and let inflation eat the value of the debt.
I haven’t double checked but even if true that’s just one component. M2 money supply is super strong. This administration is not going to stop printing until after November.
Doom and gloom!