Margin Debt Continues To Climb

CalibratedConfidence's picture

The NYSE released October margin debt data and to nobody's surprise total margin debt rests at $317 billion, the highest since April 2011 ($320 billion), leaving inquiring minds to ask just how much purchasing is being done on margin (Free Credit less Total Margin Debt)?  The answer is $43.9 billion, the highest since June of 2011 ($45.9 billion).  The level of investor net worth has only been postive 4 times since September 2009, the same month Bernanke claimed the recession was "technically" over, lagging 3 months behind ZH's number 1 fan Dennis Kneale.  When the Fiscal Cliff goes unresolved and headline reading algo's rip orders off a neverending stream of rehashed articles, margin calls will accelerate heavily and usually stable assets like Gold and Silver are likely to experience volatility as investors computer programs liquidate in a mad-faced fashion.  Rogue traders with unauthorized postions, off book loses, and fat fingers beware.

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Clowns on Acid's picture

Just asking...but why do you call it "debt"? It is free money for the banks......

Your article should say "Free money climbs".

HD's picture

For the record - I couldn't stand Dennis Kneale long before it was cool - or there was even a Zero Hedge.  The day Jeff Macke lost it on air I actually clapped my hands to applaud the man...

MeelionDollerBogus's picture

Ya. I actually made sure to tell him on twitter that despite his apparent melt-down he was the only one on air NOT lying. And that is something to be proud of.

gmak's picture

How about overlaying the margin debt with the SPX?  that would certainly be relevant, no?

GoldbugVariation's picture

Quinvarius is wrong. If you are a hedge fund or professional trader, you can take either a long or a short position on margin. Whether you are long or short has nothing - or almost nothing - to do with the amount of margin required.

swabeyjw's picture

Would not a margin call have occurred prior to a negative net worth within a margin account. The way I read the NYSE data, in a MF global pooling, it would take a 1/3 drop in the price of products(stocks) that are in the margin accounts to end up at a negative networth.... MF global to all.

Quinvarius's picture

You sell short on margin.

swissaustrian's picture

On time for the fiscal cliff dump.