NYSE Margin Debt At Highest Since July Means Threat Of Margin Calls High

Tyler Durden's picture

As so often happens, every time there is a ramp in the stock market, especially one which is not accompanied by retail buying, those who are buying, are forced to do so on increasingly more margin, as there is only so much cash in the market without booking actual profits. Sure enough, as of the end of February, margin debt was $289 billion, the highest since July 2011, while Net Free Credit (Free Credit Cash plus Credit balances in margin accounts less Margin Debt) of negative $33 billion (meaning investors have negative net worth) was the lowest also since July. What does this mean? Simply said, that if the cross asset rout continues, which means bonds yesterday, and stocks and commodities today, the margin calls will once again resume, as they used to in the fall of 2011, leading to a toxic liquidation spiral, pushing prices even lower. So in keeping with the times, and sticking heads in the sand, watch out for that 3pm call from your repo desk. Best idea would be to just let it go through to voicemail.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mr Lennon Hendrix's picture

Global margin call, bitchez!

mayhem_korner's picture



Ben doesn't provide the promised liquidity, so the traders make their own by liquidating what they can (esp. Au).  Nasty little quid pro quo.

dwdollar's picture

I hope to see "deer in headlights" soon.

LawsofPhysics's picture

Still think much of today's action is simply strong dollar, people running to cash (albeit short term).  Watch the soveign bond auctions.

Hansel's picture

AAPL is the cheapest it's ever been since YESTERDAY.  BNOBPOF (buy now or be priced out forever)

Village Smithy's picture

Yeah, my brother-in-law thought that about the house he bought in 2007.

Quinvarius's picture

Not doing any fundamental analysis, all I can say about AAPL's chart is that nothing goes straight up and stays up...except the US money supply.

Nid's picture

And how's that Short Interest looking?

Different this time???

Dr. Engali's picture

I wonder who will blow up this time.

Village Smithy's picture

That's the problem when everything is ramped up for the same reason, free money. When the party's over there is nowhere to hide and everyone wants out of everything, all at once. At least until there is some more free money.


navy62802's picture

It's almost gold-buying time again! Woohoo!

GoldenGal's picture

So is Gold doomed?????????????

navy62802's picture

By "gold" do you mean the global economy? If so, then yes.

apberusdisvet's picture

Final shearing of the sheeple coming in 5...4...3...2.....!  All orchestrated and planned.  Must.........happen........before........Obama's.............illegal alien status................is.....................fully....................exposed.

GoldenGal's picture

And what planet is Obama from, really?

LongSoupLine's picture

Greed+Stupidity=Margin Use

JohnKozac's picture

S&P will drop back to 1,200 Faber said last week....maybe so...maybe so....

my puppy for prez's picture

Is this what could be called a "crack" that could break open, and how does this relate to the "health" of the derivitives mkt?  Could margin calls trigger an implosion of the derivitives mkt?

Quinvarius's picture

I would bet on a 250 trillion bailout before I bet on the derivatives market failing. 

ekm's picture

Any idea who made BAC go 100% higher in 11 weeks from DEC 2011, and of course on Margin?

I'd say Merryll Lynch.

monopoly's picture

Good day to raise confetti. And, few here if any, ever buy on margin. That is death.

SillySalesmanQuestion's picture

Go get some liquidity now you maniacal, leveraged, trading bitchez...and none of that funny money from Ben and the FED. Noooo....iPads don't qualify either...

q99x2's picture

Jump banker jump. Save yourself the humility.

Let the show begin.

Waterfallsparkles's picture

That is what I think has propelled this market.  As the value of the Stocks went up the Marginablity of the Stocks went up.  The Funds then used this increased Margin to Buy more and more Stocks.  But, if Stocks drop this will cause a huge cascade in the value of the Stocks on their Balance Sheet and the Marginablilty of those Stocks.  Hense a huge cascading Sell Off as Margin Calls come in.

YesWeKahn's picture

Unfortunately, shorts can't help this time. They've been out.

markalpha's picture

The market needs to go down so the FED can justify QEIII or a continuation of Twist. There was no way they could turn on the printers with Crude at 105, DOW 13,300, Europe Stabilizing, and improving employment data.

Did anyone else notice that as soon as the fed said the economy was improving suddenly all of the economic data started missing?

jcaz's picture

Feh- margin is also up because tools like me are short,  which is also in that number....

Still,  I do love the sound of a margin call on some of this over-pumped garbage......