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Levered Beta Uber Alles: NYSE Borse Margin Debt Jumps To Three Year Highs, Investor Net Worth Remains At Record Lows

Tyler Durden's picture




 

As we have been saying for over a year, the levered beta rally, and nothing but the levered beta rally (also known as the "if there is career risk involved then you must go all in" rally) continues to be the only trade in the stock market. For today's confirmation we go to the just released April margin debt data from the NYSE which confirms that in April, despite the turbulence of March, investors actually levered up even more, bringing total margin debt to another 3 year high, and at $320 billion (a $5 billion increase from March), and the highest since the $334.9 billion in February of 2008, just before Bear Stearns became the first bank to keel over and die. And it still has a way to go: the all time high was hit in July 2007, when it was $381 billion. What does not have a way to go, is Investor Net Worth expressed as Margin debt less Free Credit Cash and Credit Balances in Margin Accounts: this stayed flat M/M at essentially the lowest level ever of just under ($75) billion. Bottom line: for another month virtually nobody wants or dares to take profit on existing positions. We can only hope all those hundreds of billions in margin dollars succeed to exit at the same time in an orderly fashion when the inevitable unwind finally does occur.

 

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Wed, 05/25/2011 - 13:39 | 1309658 Dolemite
Dolemite's picture

Silver and oil and stocks (oh my)

http://deadcatbouncing.blogspot.com/

Wed, 05/25/2011 - 13:46 | 1309675 silberblick
silberblick's picture

Hilarity ueber alles ....

Click below to see a graphic illustration of bankster's dirty hierarchy of needs:

http://thesilvergoldhedge.blogspot.com/2011/05/banksters-dirty-hierarchy...

Wed, 05/25/2011 - 13:44 | 1309665 Cleanclog
Cleanclog's picture

More leverage, more debt.  Echo reverberates yet again the same problem that was never solved in the past three years.  

Gundlach had fascinating numbers on his predicted "echo" of subprime credit problems redux and inadequate capital of TBTF banks.  Severity problems impressive. http://bit.ly/ktGFUH

Wed, 05/25/2011 - 13:44 | 1309667 mayhem_korner
mayhem_korner's picture

GIGANTIC game of chicken...

Wed, 05/25/2011 - 13:43 | 1309676 Dr. Richard Head
Dr. Richard Head's picture

So what on earth would actually cause an unwind?  Seriously, is there any reason for the unwind to start and scare the bejesus out of the TV viewing public?

Margin calls perhaps? 

Any ideas?  Please advise.

Wed, 05/25/2011 - 13:48 | 1309693 Don Quixotic
Don Quixotic's picture

The first big seller of the indexes. The possible reasons for the first big sale are so many, why even speculate...

Wed, 05/25/2011 - 13:53 | 1309697 buzzsaw99
buzzsaw99's picture

Margin calls will happen when it is beneficial to the bankstas and not before.

Wed, 05/25/2011 - 14:06 | 1309742 SheepDog-One
SheepDog-One's picture

Nuclear exchange?

Wed, 05/25/2011 - 14:09 | 1309760 monkeys.pick.bottoms
monkeys.pick.bottoms's picture

"what on earth would actually cause an unwind?"

How about an investor panic because QE is delayed? Does that make any sense?

Wed, 05/25/2011 - 14:15 | 1309767 Dr. Richard Head
Dr. Richard Head's picture

Indeed as this rally already has QE3 factored in.  A good scare to get the plebes to agree on QE3.  So sometime around Jul 4th while CLOWNgress on recess.  Gotcha.

Wed, 05/25/2011 - 15:56 | 1310166 Thomas
Thomas's picture

You don't need a proximate cause; it just starts selling off.

Wed, 05/25/2011 - 13:50 | 1309687 Don Quixotic
Don Quixotic's picture

Tick. Tock. Tick. Tock. [And everyone is just staring at the wires, not knowing which one to cut.]

Wed, 05/25/2011 - 13:52 | 1309696 bbq on whitehou...
bbq on whitehouse lawn's picture

Keep raising the price until you get a bid.

Wed, 05/25/2011 - 13:53 | 1309707 cowdiddly
cowdiddly's picture

The E-trade baby is putting his baby bottle and dirty diapers up as collateral

Wed, 05/25/2011 - 14:06 | 1309741 Dr. Richard Head
Dr. Richard Head's picture

Collateralized Poop Obligations?

I am teaching my diapered daughter to tell us that she has a Bernanke in her diaper instead of poop.

I will post a YouTube of it soon.

Wed, 05/25/2011 - 14:21 | 1309792 buzzsaw99
buzzsaw99's picture

outstanding

Wed, 05/25/2011 - 13:57 | 1309712 Dr. Engali
Dr. Engali's picture

Lever it up baby. Balls to the walls! This never ends badly.

Wed, 05/25/2011 - 14:08 | 1309751 monopoly
monopoly's picture

"We can only hope all those hundreds of billions in margin dollars succeed to exit at the same time in an orderly fashion when the inevitable unwind finally does occur".

Tyler, you are simply amazing in your wit and sarcasm. lolol.

TY!

Wed, 05/25/2011 - 14:15 | 1309765 user2011
user2011's picture

I don't get it...   individual investors are borrowing as much as they could.  The market is close to the highest in 3 years.  Yet the net worth of the investors are lowest ?   So, that means those investors are losing their ass while the market is up ?

Wed, 05/25/2011 - 14:18 | 1309789 mynhair
mynhair's picture

net, not gross

It's not just for basketbrawl anymore.

Wed, 05/25/2011 - 14:20 | 1309793 buzzsaw99
buzzsaw99's picture

go out on a limb, hear some cracking, then go out further.

Wed, 05/25/2011 - 16:07 | 1310192 DosZap
DosZap's picture

A tad off topic, but( I am sure some have seen it here),the average American was asked if they could come up with $2,000 cash, within(I think 30 days).

Better than 45% said NO WAY,24%-7% said pretty sure, and the rest said no problem.

 

May be off a percentage of two, but that was the jist of the survey.

Think about that for a second.

$2,000.00 lousy dollars.

Mind boggling.

Wed, 05/25/2011 - 14:22 | 1309804 mynhair
mynhair's picture

Breakout to 1324 imminent.....

Wed, 05/25/2011 - 14:27 | 1309819 qussl3
qussl3's picture

Its almost comical now lol.

CNBS isnt even attempting to justify the magic market.

 

Wed, 05/25/2011 - 14:34 | 1309847 6 String
6 String's picture

Here's the thing, since everyone knows the market isn't really allowed to fall and stay low for anything length of time--the permament Benranke put--then no one is afraid to own it, leveraged. In fact, leveraging up on commodities, but not so much you'll get a margin call, is a sure way to beat hyperinflation.

We know that kind of protection will be allowed, physical?

 

Wed, 05/25/2011 - 14:43 | 1309862 mynhair
mynhair's picture

...or not.  Dam, wanted TZA at 36.55

Wed, 05/25/2011 - 16:01 | 1310174 slewie the pi-rat
slewie the pi-rat's picture

can't afford not to, rilly;  chips, please!

Wed, 05/25/2011 - 17:42 | 1310515 g3h
g3h's picture

We don't know if these margins are long or short, do we?

Wed, 05/25/2011 - 19:05 | 1310821 sellstop
sellstop's picture

There have been several serious voices on CNBC giving warnings about the stock market lately. I have been somewhat shocked.

Kaminsky, last week seemed visibly upset at the continued bullishness, and flat out told the audience "you need to get out of this market".

My take on the volume lately is that the serious sellers are running out of buying volume.

If any one is manipulating markets, it would be those running up the price to cause the shorts to cover and provide some bids to hit. I get the feeling that the bottom picking is over, all of the cash has been invested, and it is just a matter of time before the downslide commences. I will continue to manage my risk, of course....

gh

 

 

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