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S-t-r-e-t-c-h-e-d!

Tyler Durden's picture





 

Things in the 'economy' must be good - investors are nearing their most levered long to US equities ever. As Sean Corrigan notes, Net Margin (defined as NYSE Margin Debt minus Mutual Fund Liquid Assets) is within a hair of its all-time record high and relative to the March 2000 peak in the Wilshire 5000 (broadest US equity market cap), we are rapidly approaching 'peak' exuberance levels. Indicatively this should make sense since the market is at all time highs, but it is so because of central banks, not because of individual investors. So why would the investors themselves be just as stretched as the global central banks, and how does this leverage upon leverage unwind in the end?

 

 

Source: Diapason Commodities

 


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Thu, 05/02/2013 - 13:37 | Link to Comment vmromk
vmromk's picture

Stretched ?

Bernanke and his fellow criminal cohorts at the "fed" should be stretched on a medieval rack until they are ripped to shreds.

Thu, 05/02/2013 - 13:44 | Link to Comment Divided States ...
Divided States of America's picture

Not as stretched as the fuckin grin on LORD BLANKFIEND's greedy face..doesnt CNBShit have anything better to show than watching this Jbag criminal explain why he is doing God's fuckin work for everyone's good sake????

Thu, 05/02/2013 - 13:54 | Link to Comment Headbanger
Headbanger's picture

It's the advertisers who want that BS so the sheeple will buy, buy, buy their crap

Thu, 05/02/2013 - 14:05 | Link to Comment flacon
flacon's picture

So we can go higher? 

Thu, 05/02/2013 - 14:12 | Link to Comment Keynesian Mess
Keynesian Mess's picture

Best profile picture I've seen yet!

 

Thanks for the chuckle.

Thu, 05/02/2013 - 14:15 | Link to Comment Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

S-T-R-E-T-C-H-E-D   then   SNAP!

Thu, 05/02/2013 - 14:30 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

My friend from Knoxville used to spike punch with Everclear at college parties (he always let me know).  Each time, without fail, there would be about a 4x multiple of semi-conscious bodies than at a normal bash.

Leverage will (again) have the same effect once the punch bowl is empty.

Thu, 05/02/2013 - 14:47 | Link to Comment SheepDog-One
SheepDog-One's picture

Seems like the perfect time yet again to whipsaw the muppets, pull the rug out, and take them for all they've got.

Thu, 05/02/2013 - 23:20 | Link to Comment Colonel Klink
Colonel Klink's picture

How's it gonna end?  With a BANG, then a whimper from all those to lost everything, then another BANG!

Thu, 05/02/2013 - 14:49 | Link to Comment flacon
Thu, 05/02/2013 - 14:00 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

Instead of telling GS propaganda lies on CNBC, Blankfein needs to be hang upside down (to improve supply of blood to his head, so it takes longer before he passes out) with his legs bound apart and being slowly (so he feels and sees the blade work its way slowly to his heart) cleaved in half by two dudes with a massive saw -- starting from the genital area and slowly working down through his body until he dies of massive pain and blood loss.

Thu, 05/02/2013 - 14:07 | Link to Comment Rip van Wrinkle
Rip van Wrinkle's picture

Blood? Blankfein is human? Some f*ckin' chance!!

Thu, 05/02/2013 - 14:16 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

Sawing Blankfein like this and showing it on CNBC live.

http://www.medievalwarfare.info/pics/sawing.jpg

Or any one of these methoods (the only one I am not sure about is using rats, because rats might not eat another rat)

http://www.medievalwarfare.info/torture.htm

Thu, 05/02/2013 - 13:44 | Link to Comment smlbizman
smlbizman's picture

with lord and god, lloyd blankfein being interviewed are we suppossed to stand or bow or not eat meat until he is done, anyone...?

Thu, 05/02/2013 - 13:47 | Link to Comment Divided States ...
Divided States of America's picture

smallbiz, just be in awe of the half human half squid explaining how he singlehandedly fixed the financial crisis in 2008 (but not mention that the Fed made GS a bank holding company and was given billions upon billions by Timmy boy)

Thu, 05/02/2013 - 13:55 | Link to Comment mick68
mick68's picture

I'm in Canada and recently one of the biggest distribution magazines ran a 10 page article on how the bull market is just getting started, but noted the lack of buy in by average investors. The last 5 pages did nothing but try to persuade people to get into this market or be left behind. Literally, they used that teriminology.

 

Since when do the powers that be want to/need to persuade people to get into a legitimate bull market?

NEVER!! It's a FRAUD!!!

Thu, 05/02/2013 - 14:00 | Link to Comment Divided States ...
Divided States of America's picture

Dude, Larry Fuckin Fink, Warren Geezer Buffett, Jeremy Schmegal Siegel have all been doing the same on CNBShit....but we all know how much truth that comes out of those fuckers.

Thu, 05/02/2013 - 14:10 | Link to Comment philosophers bone
philosophers bone's picture

Yes, I think I know which one you are referring to - MacLeans - headline was "BUY!"   The writer and the editors should be embarassed.  Pages and pages about the bull market and how it is likely just getting started and not one peeop about quantitative easing or the Federal Reserve.  The sheeple don't have a chance....

Thu, 05/02/2013 - 14:09 | Link to Comment 101 years and c...
101 years and counting's picture

but, Pomo money is coming into stocks 4 out of every 5 days.  so, why the need for leverage?

Thu, 05/02/2013 - 14:12 | Link to Comment Divided States ...
Divided States of America's picture

They need the leverage because it is masking the massive dumping by company insiders.

Macleans eh? I dont think any smart Canadian read that shit anymore.

Thu, 05/02/2013 - 13:38 | Link to Comment swmnguy
swmnguy's picture

But, but, but...1600 S&P is within reach!  It's got to be good!

Besides, when you know you can fob off all your losses onto the Fed via buybacks and phony accounting, there's no risk, so why not lever up?

Thu, 05/02/2013 - 13:44 | Link to Comment buzzsaw99
buzzsaw99's picture

But, but, but...1600 S&P is within reach!

must... ring... bell... ugh... got it!!

Thu, 05/02/2013 - 13:46 | Link to Comment CaptainSpaulding
Thu, 05/02/2013 - 13:57 | Link to Comment machineh
machineh's picture

So are I'm Yellen' for Janet! lapel buttons.

Thu, 05/02/2013 - 13:57 | Link to Comment Dr. Engali
Dr. Engali's picture

I'm in the market for a dow 4000 hat.

Thu, 05/02/2013 - 13:39 | Link to Comment Jason T
Jason T's picture

get to work Mr. Chairmen.. we're all loaded up to our gills.  

shit it's gonna end badly.  

Thu, 05/02/2013 - 13:40 | Link to Comment maskone909
maskone909's picture

Tyler loves South Park!  classic episode

Thu, 05/02/2013 - 13:47 | Link to Comment Captain Benny
Captain Benny's picture

Rookie Mistake - Inferring affection through reference.

If a "Tyler" loves South Park, he'll say so.  Simply referencing pop culture should never be misinterpreted as affection.

Thu, 05/02/2013 - 13:58 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Tyler simply references South Park!  classic episode

Thu, 05/02/2013 - 13:40 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

In response to the last question : very quickly.

Thu, 05/02/2013 - 13:41 | Link to Comment Captain Benny
Captain Benny's picture

"Need MOAR buyers!!!!"

Thu, 05/02/2013 - 13:49 | Link to Comment Jonas Parker
Jonas Parker's picture

 

"Need MOAR suckers!!!!"

 

There, I fixed it for you...

Thu, 05/02/2013 - 13:41 | Link to Comment buzzsaw99
buzzsaw99's picture

Where's that dumbass who was talking about market cap?

Thu, 05/02/2013 - 13:41 | Link to Comment mattdubz86
mattdubz86's picture

But but but but were in a new secular bull market, all is well.

Thu, 05/02/2013 - 13:45 | Link to Comment Jonas Parker
Jonas Parker's picture

Famous words prior to October, 1929 - "This time it's different!"

Thu, 05/02/2013 - 13:51 | Link to Comment Dr. Engali
Dr. Engali's picture

Look at this fucking police state we live in! A 16 year old girl gets two felony charges for doing a science project in school. Not only that but the idiots publish her fucking address. What a bunch of cock suckers.

 

http://www.theledger.com/article/20130423/NEWS/304235005

Thu, 05/02/2013 - 14:03 | Link to Comment Shell Game
Shell Game's picture

Long watcher cams, Short school Volcano projects.

 

/s  fucking fucked up...

Thu, 05/02/2013 - 13:50 | Link to Comment logicalman
logicalman's picture

Leverage on leverage can only end one way.

I'm just amazed at the can kicking abilities of TPTB.

Thu, 05/02/2013 - 13:52 | Link to Comment Dr. Engali
Dr. Engali's picture

"Leverage on leverage can only end one way"

 

With moar leverage?

Thu, 05/02/2013 - 13:54 | Link to Comment prains
prains's picture

except when the rock you're trying to move gets bigger and the stick over the fulcrum gets thinner. snap

Thu, 05/02/2013 - 13:55 | Link to Comment The Dancer
The Dancer's picture

Doc, Name calling never accomplished anything...talking the talk is easy...walking the walk...now that's something!

Thu, 05/02/2013 - 13:56 | Link to Comment venturen
venturen's picture

What me worry....nah!

Thu, 05/02/2013 - 13:56 | Link to Comment polo007
polo007's picture

According to Canaccord Genuity:

http://fs1.hidemyass.com/download/oiJmn/l0dnjl73ag6ihmioaubg7u3a46

HURRY UP AND WAIT

We have been anticipating a correction over recent weeks, and we see no reason to change that view. Our reasons for expecting a pause in the upside remain tactical in nature because the fundamentals that have driven the rally since the 2009 low continue to be in place. We expect a correction because (1) the equity market is near-term overbought and somewhat extended above its 200-day moving average, and (2) the current move higher is the second longest without a 5% correction since the 2009 low. A 5% correction from the recent peak of would bring the SPX very close to our 1500 near-term correction target. As you all know, we believe the intermediate-term fundamental, historical and tactical framework command buying the equity market on any correction – especially one that is +/- 5%. Our 2013 target remains 1760, which assumes a 16 multiple on $110 EPS for the SPX.

Definition of insanity. Before we convince you there could be a 5% correction, we need to convince you the backdrop remains so favorable for domestic equities that any weakness should be used as an opportunity to add exposure. Remember that corrections are only natural, normal and healthy until they actually happen. The definition of insanity is doing the same thing over and over, but expecting a different result. The fundamental drivers of the equity market have not changed throughout this entire cycle, yet many continue to find reasons they won’t work. Those favorable drivers have been:

1. Low core inflation (Figure 1),

2. Historically accommodative monetary policy as seen in the real Fed Funds rate (Figure 2),

3. Improving money availability and steep yield curve (Figure 3),

4. Slow but positive economic activity,

5. Directionally positive EPS and upward trend in valuation levels.

Investing is not an academic study. Is it a cause for concern that the Fed is artificially keeping rates lower than where they should be? Not based on the past four years. Continued deceleration in core inflation is giving the Fed cover to keep rates abnormally low, which improves the availability of money that leads to positive growth for the economy and therefore corporate America. The very smart-sounding counter to these factors are weak domestic economic and employment growth, a meaningful slowdown in growth in China, and the recessionary environment in the Eurozone. These factors are real, and over the past few years they have caused corrections, but have not been the ultimate driver of stocks – the guys printing the money have. We try not to get wrapped up in whether that is right or wrong because it just is what it is – practically positive for domestic equities.

Thu, 05/02/2013 - 13:57 | Link to Comment venturen
venturen's picture

Stretched Valuations show confidence in the recovery....MOAR!

Thu, 05/02/2013 - 13:58 | Link to Comment Chippewa Partners
Chippewa Partners's picture

Blankfein ........paying homage to Draghi is like Corzine paying homage to Madoff.

Thu, 05/02/2013 - 13:59 | Link to Comment ziggy59
ziggy59's picture

Even the best, most elastic rubberbands when stretched to their limit, will snap

Thu, 05/02/2013 - 14:00 | Link to Comment firstdivision
firstdivision's picture

Less than 2 points bitches.  Let's all join in the equity fun. 

Thu, 05/02/2013 - 14:00 | Link to Comment sbenard
sbenard's picture

Dr. John Hussman recently made this same observation in his weekly market commentary. He further noted that record high margin debt is a leading indicator of a market top, because when the inevitable collapse occurs, leveraged investors will be forced to sell, either willingly, or unwillingly, as margins calls wreak their havoc on bubble-driven markets.

Thu, 05/02/2013 - 14:03 | Link to Comment ebworthen
ebworthen's picture

Has to be close to time for them the crash the mother fucker again.

It all depends on how much "leverage" they want to rake from Mom and Pop this time around.

Free money from the FED and Treasury, muppet slaying, incresed costs and fees for everything - pretty good run for Wall Street and Washington since 2008.  Bonuses, bribes, and bubbles.

Thu, 05/02/2013 - 14:01 | Link to Comment Unprepared
Unprepared's picture

Party like it's 1999+2006.

Thu, 05/02/2013 - 14:18 | Link to Comment Keynesian Mess
Keynesian Mess's picture

What about 1929?

Thu, 05/02/2013 - 14:12 | Link to Comment mademesmile
mademesmile's picture

 Using leverage hold the lever for levreage so leverage can be used...to make more leverage.

 

Lever Rage people.

Thu, 05/02/2013 - 14:15 | Link to Comment Chippewa Partners
Chippewa Partners's picture

Would love to see Greg Smith ask some real questions of Blankfein..........

Thu, 05/02/2013 - 14:19 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Couldn't be more bullish. Wondering, why all those highly indepted countries arn't selling more debt at "attractive" rates and place proceeds immediately in S&P500, Nikkei and EURO STOXX 50 ETF's. Shouldn't be difficult, all the IB's are desperately waiting for clients to pop in.

Thu, 05/02/2013 - 14:26 | Link to Comment NEOSERF
NEOSERF's picture

Bullish, based on where it is and with the Fed now behind us, we have at least til October til the elastic breaks...gotta go ask my cab-driving PHd brother in law what the hot stocks are....

Thu, 05/02/2013 - 14:29 | Link to Comment Quantum Nucleonics
Quantum Nucleonics's picture

Yawn.  Isn't this just an inflation chart???

Thu, 05/02/2013 - 14:41 | Link to Comment SheepDog-One
SheepDog-One's picture

ALL ABOARD FULLY LEVERAGED!!

Aye aye, cap'n Bernank!

Thu, 05/02/2013 - 14:56 | Link to Comment CDNX fan
CDNX fan's picture

Blue-chip broker to gold broker: "How's it going'?

Gold broker to blue-chip broker:"I got one client left and that's ME - and I'm lookin' for a new broker."

 

Bastards are having their way! Fuck 'em.

Thu, 05/02/2013 - 15:04 | Link to Comment Headbanger
Headbanger's picture

Collateral!!??  We don't need no stinking collateral!

http://www.youtube.com/watch?v=VqomZQMZQCQ

Thu, 05/02/2013 - 15:10 | Link to Comment IamtheREALmario
IamtheREALmario's picture

Yeah ... after some nice gains I put some close stops on all of my positions. Hoping that if something changes in a big way, I will get out before the tidal wave.

Thu, 05/02/2013 - 15:18 | Link to Comment The Tao
The Tao's picture

Reading that post last night about the Money Creation, it has become obvious to me that the Fed, and other CB's, MUST inject liquid into the markets as there is STILL a $11+T shortage of HQC.  Talk about the true nature of, "Don't fight the Fed."  That article shows that Fed will NEVER stop because they CANNOT stop.  I've sat for months now watching EVERY fundamental indicator say that things are getting worse, and nearly EVERY technical signal say that this market it coming down, yet it not only doesn't come down, it goes HIGHER.  It goes higher because it MUST go higher.  In 7 years there has been $11T pumped in -- as per another recent post -- yet, there is STILL an $11+T shortfall in HQC.  So does that mean ANOTHER 7 years?!?  I don't know, but the "Beach Ball" is in full effect.  EVERY dip is met with even MORE buying.  I am as BEARISH as anyone on ZH, but my god am I tired of trying to fight this unprecedented flood of liquidity -- and now we're being told that EVEN MORE might come in if things don't improve.

Thu, 05/02/2013 - 15:21 | Link to Comment wcvarones
wcvarones's picture

There's no more cash in mutual funds because

1) Active funds are being replaced by index funds and ETFs

2) What active funds remain are more benchmark sensitive than they were 10 years ago, and so are much less likely to hold significant cash.

 

So what does NYSE margin look like without subtracting off the red herring?

Thu, 05/02/2013 - 15:35 | Link to Comment polo007
polo007's picture

http://research.stlouisfed.org/fred2/series/GFDEGDQ188S

Federal Debt: Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S)

2012:Q4: 103.58438 Percent of GDP

Quarterly, Seasonally Adjusted

Updated: 2013-03-29 10:01 AM CDT

Thu, 05/02/2013 - 15:37 | Link to Comment wcvarones
wcvarones's picture

According to Bloomberg, MARGDEBT is $380 billion, or 2% of total US market cap of $18.7 trillion.

So you could pay off all the margin debt with 1 year's dividends.

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