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NYSE Margin Debt Plunges To Mid-2010 Levels, Still 60% Higher Than May 2009 Lows

Tyler Durden's picture




 

There was some good news for the bulls in the just released NYSE August margin debt update. Chief of these was that margin debt plunged from $306 billion to $272 billion in the past month, the lowest since the $270 billion in October 2010, which was to be expected considering the explosion in volatility of the last month. This means there are that fewer levered long positions that need liquidations/margin call collateral compliance. Another consequence of the market plunge in August was that Net Worth, or Margin Account credit balances, and Free Credit Cash accounts less Margin debt, the most direct proxy for levered beta pursuit, after hitting an all time low (negative net worth ) in May, has surged to nearly unchanged, or just ($4) billion, the most "unlevered" investors have been since June 2010. There is some bad news too however. And it is that at $272 billion in margin debt, there is still far, far more leverage in the market than at the market lows in March 2009, $99 billion or 56%  more to be specific, even as many of the economic and market indicators are back to those levels, and in some cases even before. In other words, people still refuse to believe that any market meltdown is for real. And once the margin calls start coming in, the convergence with the 666 on the SPX could come in a matter ot weeks if not days (and, courtesy of the ubiquity of HFT which can just slide the power switch to OFF nowadays, potentially hours).

 

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Thu, 09/22/2011 - 13:36 | 1697843 RunningMan
RunningMan's picture

But there is no way to know which direction the leverage is pointed up (long) or down (short). Is that right? That would matter I would expect.

Thu, 09/22/2011 - 13:38 | 1697850 junkyardjack
junkyardjack's picture

I'm holding my capital waiting for the real deals, there's still a bit too much hopium in the system.  When people finally realize that stocks ran up because everyone thought the world was fixed and projected growth in the system whereas now everywhere you look things can only get worst there's going to be a massive dump in the market.  Gold has it right, there's a massive collapse coming

Thu, 09/22/2011 - 13:48 | 1697884 Sequitur
Sequitur's picture

Agree, sitting on sidelines, I own just a couple of strong utilities right now. They pay good dividend and wouldn't you know, they're practically even on this day.

Thu, 09/22/2011 - 13:55 | 1697902 Stumpy
Stumpy's picture

Look at AWK. Its been good to me.

Thu, 09/22/2011 - 14:06 | 1697945 Sequitur
Sequitur's picture

Thanks I will. Also take a look at AT, good yield plus some good deals in the works, it has pricing power and it's going to do well the next 24 months in this market.

Thu, 09/22/2011 - 14:14 | 1697988 svc101
svc101's picture

Unfortunately, you missed the article yesterday on the manipulation of gold (www.gata.org). They have now rigged it so that GLD (and real Au) is paralleling /ES and /YM.

Thu, 09/22/2011 - 13:39 | 1697851 Caviar Emptor
Caviar Emptor's picture

Ten year note 1.75% !

Thu, 09/22/2011 - 13:41 | 1697864 GeneMarchbanks
GeneMarchbanks's picture

...and dropping

Thu, 09/22/2011 - 13:46 | 1697881 Caviar Emptor
Caviar Emptor's picture

Negative yield on the Ten would sure stump the econ profs :-)

Thu, 09/22/2011 - 14:01 | 1697919 mt paul
mt paul's picture

i wouldn't buy the ten year treasurie bond 

if it was printed on bernankes skin ..

 

tattoo the ten year

Thu, 09/22/2011 - 13:41 | 1697859 Caviar Emptor
Caviar Emptor's picture

CNBS Najarian sez buy the fear, FCX

Thu, 09/22/2011 - 13:54 | 1697896 HelluvaEngineer
HelluvaEngineer's picture

True, but maybe in about another 6 months.

Thu, 09/22/2011 - 13:47 | 1697871 Yardstick of Ci...
Yardstick of Civilization's picture

Until there is a real domestic liquidity crisis that causes selling sufficient to overwhelm even short covering, I don't see how we get back to the 666 level in the near term, though I would love to see it (and would profit from it).  Otherwise, this selloff just doesn't feel like a real panic.

I'm betting that as large investors gradually sell their treasuries into Operation Twist, they will reinvest their proceeds in the equity markets, which will give equities a boost, though not as pronounced as QE 2.  The equity markets are just whining today because there is no LSAP component to what the Fed delivered yesterday.

Thu, 09/22/2011 - 13:49 | 1697886 RealitiveMind
RealitiveMind's picture

Rational evaluation . . . . but hard to ignore what's behind the curtain.

 

What is behind the curtain, any one care to add to the list?

1. Cloward-Piven

 

Thu, 09/22/2011 - 14:11 | 1697971 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

Let them eat cake.

Thu, 09/22/2011 - 13:45 | 1697877 Caviar Emptor
Caviar Emptor's picture

Taking proposition bets on 666 breach 

Thu, 09/22/2011 - 13:46 | 1697879 Sequitur
Sequitur's picture

All of this is healthy. I like this crash. Waiting on the sidelines with lots of cash, going to buy solid dividend payers once we hit DOW 7000.

Glad I sold out of some of my gold with profits. That may be the wrong-term move, but I said deflation and put my money where my mouth was by selling.

Thu, 09/22/2011 - 13:50 | 1697883 Caviar Emptor
Caviar Emptor's picture

Sounds like a solid plan without a sovereign default or two along the way. Keep yer fingers crossed

That is to say provided the .gov reopens after closing. Lotsa Luck!

Thu, 09/22/2011 - 14:02 | 1697928 Clorox Cowboy
Clorox Cowboy's picture

At least you're honest about it.  Deflation has a shot...IF central bankers start sitting on their hands.  My bet has always been inflation, but we'll see...

Thu, 09/22/2011 - 13:50 | 1697888 Huckleberry Finn
Huckleberry Finn's picture

Don't laugh at an amateur, but I stumbled on ZH a few months ago after trying to find an alternative to the news from an obvious lame MSM. I have found an addiction to ZH, but I am entering health field(if there is one in the future) and no very little about finance. I have already learned quite a bit from ZH, but I was wondering if anyone had any suggestions on a book that teaches the basis of finance so that some articles would not seem like a foreign language

Thu, 09/22/2011 - 13:52 | 1697892 Dangertime
Dangertime's picture

Start with "War Cycles, Peace Cycles" by Richard Kelly Hoskins.

Thu, 09/22/2011 - 13:55 | 1697903 Huckleberry Finn
Huckleberry Finn's picture

Thanks

Thu, 09/22/2011 - 14:03 | 1697930 RealitiveMind
RealitiveMind's picture

I don't know Huck, you might save your gratitude until you have read it.  It would not be my first choice.  Can you articulate your knowledge of finance at this point?  It would be helpful.

Thu, 09/22/2011 - 14:14 | 1697983 Huckleberry Finn
Huckleberry Finn's picture

I know more than the average person. I understand the basic structure of our financial system, but when it comes to terms like puts, tech support, etc I am looking for explanation. Something to teach more of the trading aspect something like you would learn in your first or second semester of finance.

Thu, 09/22/2011 - 14:28 | 1698060 Dangertime
Dangertime's picture

War Cycles Peace Cycles is a book more about economic fundamentals that is easy to read.  But the message will tell you a lot on which sectors to invest in at what times in history.

 

It is actually one of the best books that helped me to go into gold during the tech crash.

 

If you are looking for technical information on trading, I would just suggest to read everything you can on the subject.  Perhaps start with investopedia.com.

Thu, 09/22/2011 - 13:55 | 1697900 Sequitur
Sequitur's picture

There will always be a future in health care. Follow the demographics, people getting older, you'll be all right.

Now, as for the bullshit part of medicine, not so much, this is coming to an end, because there is no more money. And you will quickly find out there is a lot of bullshit in medicine, any honest doctor will tell you so. Bullshit meaning: doing exepnsive, invasive procedures and operations on people 70+ years old, so that the physician's practicing group or hospital can bill bill bill Medicare, Medicaid, or the underwriter. Keeping people 90+ years old alive on treatments costing $100k a month. This is rampant in the healthcare system, and more docs are starting to speak out about it.

Thu, 09/22/2011 - 14:06 | 1697943 Huckleberry Finn
Huckleberry Finn's picture

Yeah, I agree the medical field is a mess. But can you blame doctors for the billing or the 100K procedures when medicaid pays 13 cents on the dollar? Malpractice is out of control. It's a government caused problem, and they make the doctors look like the bad guy. The truth is most elderly are nothing but a leech to society. Sounds harsh, I know.

Thu, 09/22/2011 - 14:09 | 1697954 Sequitur
Sequitur's picture

I agree with it. Search my posts, you'll see how I feel about these goddamn boomers -- they were the ones in charge as all of this debt was accumulated, housing pushed to stupid levels. Now the young are expected to fund boomers' retirement? Well F that.

It's why I haven't purchased a house -- to hell with paying some stupid boomer for a home at price levels of 5x average income.

 

Thu, 09/22/2011 - 14:15 | 1697990 RealitiveMind
RealitiveMind's picture

Wow Huck.  You sound very young and without life experience.  Are you sure the problem is the elderly?  Maybe healthcare is not the right field for you. 

Thu, 09/22/2011 - 14:38 | 1698120 Huckleberry Finn
Huckleberry Finn's picture

21. I wasn't looking at it through a moral issue rather an economical issue. I selected health care because I make the moral decision. But from a pure economical stance what benefit does a retired unproductive 80 year old provide to the economy? Seems they just collect ss, medicare, etc. I try and find some benefit because I want to, but there seems to be nothing. If you have something please educate the youth, that is why I am here. From the moral perspective would I want this person dead? Absolutely not.

Thu, 09/22/2011 - 13:57 | 1697910 mt paul
mt paul's picture

green eggs and ham..

Thu, 09/22/2011 - 14:01 | 1697918 fuu
fuu's picture

Somewhere around here is a primer/gloassary. I can't seem to find it right now though.

Thu, 09/22/2011 - 14:09 | 1697958 mayhem_korner
mayhem_korner's picture

A warm welcome, Huck.

Thu, 09/22/2011 - 14:17 | 1698002 the grateful un...
the grateful unemployed's picture

The books are currently being burned, you will deliver all currency to your local Federal Reserve charter bank where they will issue you the new script. All passports have been cancelled, unless its official government business. Your successor President will make a speech next Tuesday, the markets will be closed beginning Monday. Congress is in recess until further notice. Remember to obey any instructions you receive from a peace officer, or any duly authorized pentagon contractor.. We will be issuing a list of DOD authorized security contractor license numbers. Beginning Monday all power grid regions will have rotating blackouts to determine integrity of the security in place. Cell phones will continue to operate at the discretion of the carrier, and concurrent with the needs of local law enforcement.

This is not martial law. Remain calm.

Thu, 09/22/2011 - 13:53 | 1697894 Dangertime
Dangertime's picture

Not concerned.  This is a buying opportunity.  Especially in Copper.  FCX and TGB.

Thu, 09/22/2011 - 13:54 | 1697897 mt paul
mt paul's picture

500 pt down day

for the dow...?

 

a walrus eater

can only hope..

Thu, 09/22/2011 - 14:16 | 1697995 Dapper Dan
Dapper Dan's picture

Is there a lot of volume?

http://jackjohnsonmusic.com/music/detail/sleepthroughthestatic/

JACK JOHNSON LYRICS

"All At Once"

All at once,
The world can overwhelm me
There's almost nothin' that you could tell me
That could ease my mind

Which way will you run
When it's always all around you
And the feelin' lost and found you again
A feelin' that we have no control
Around the sun
Some say
There's gonna be the new hell
Some say
It's still too early to tell
Some say
It really ain't no myth at all

Keep askin' ourselves are we really
Strong enough
There's so many things that we got
Too proud of
We're too proud of
We're too proud of

I wanna take the preconceived
Out from underneath your feet
We could shake it off
Instead we'll plant some seeds
We'll watch em' as they grow
And with each new beat
From your heart the roots grow deeper
The branches will they reach for what
Nobody really knows
But underneath it all
Theres this heart all alone

What about is gone
And it really won't be so long
Sometimes it feels like a heart is no place to be singin' from at all

Theres a world we've never seen
Theres still hope between the dreams
The weight of it all
Could blow away with a breeze
If you're waiting on the wind
Don't forget to breathe
Cause as the darkness gets deeper
We'll be sinkin as we reach for love
At least somethin we could hold
But I'll reach to you from where time just cant go

What about is gone
And it really wont be so long
Sometimes it feels like a heart is no place to be singin' from at all

Thu, 09/22/2011 - 13:57 | 1697909 bigDaddy
bigDaddy's picture

Got to take a look at the y/y level of margin debt. Currently only 13% above last year. Get worried when it is up over 60% (got close in Feb at +40%, prior was June '07). Get excited margin debt is down 20% vs. year ago (last time was beginning Oct '08 to Nov '09). Still in no man's land, but getting better. Debt has been declining steadily since April '11 peak - down over 18%.

Thu, 09/22/2011 - 13:57 | 1697912 John McCloy
John McCloy's picture

They want that QE Crack Ben...Make a move and the Dow gets it !!

Thu, 09/22/2011 - 14:00 | 1697917 Edward Fiatski
Edward Fiatski's picture

They might get it, in October, if the bubbles pop by another 15-20%.

Thu, 09/22/2011 - 14:52 | 1698191 John McCloy
John McCloy's picture

Yeah agreed..at least another 10% down likely 15%. 

Thu, 09/22/2011 - 13:58 | 1697913 kito
kito's picture

tylers headline sounds very msmish..."still 60% higher than 2009 lows"!! ;)

Thu, 09/22/2011 - 13:59 | 1697915 Sequitur
Sequitur's picture

I'd remain on the sidelines until we have a much bigger drop. Those margin calls haven't come in yet. Eurozone pin hasn't even been pulled on the grenade. But it's coming.

When this thing blows, it's going to be spectacular. And we're going to have solid companies priced at the opportunity of our lifetimes. Fucking LOVE it.

Also, sold my GS and NFLX shorts way too early. I'm a horrible short termer on the downside, as I had major winning positions but let them go for too cheap (made some, could have made a lot more).

Thu, 09/22/2011 - 14:05 | 1697922 fdisk
fdisk's picture

"In other words, people still refuse to believe that any market meltdown is for real." Too late to talk about meltdown, time to load up, while monkeys are selling.

Punks are probing 1120 now..

S&P yield more than 30 years treasuries, that was only
couple of times in history

Thu, 09/22/2011 - 14:03 | 1697932 bania
bania's picture

donkey kong and/or deer... will we see either today?

Thu, 09/22/2011 - 14:05 | 1697939 mayhem_korner
mayhem_korner's picture

Are we imploding?

Thu, 09/22/2011 - 14:05 | 1697941 Motorhead
Motorhead's picture

I don't get CNBC here.  How are those monkeys taking all this?  Oh, wait, it must be due to the weather...somewhere.

Thu, 09/22/2011 - 14:08 | 1697953 RealitiveMind
RealitiveMind's picture

Sorry, can't help you.  Mute button permanently activated.

Thu, 09/22/2011 - 14:08 | 1697946 bob_dabolina
bob_dabolina's picture

How come you never hear the peak oil maniacs on days like this? Oil is down 7% and it's crickets from that group

Thu, 09/22/2011 - 14:07 | 1697948 Moneyswirth
Moneyswirth's picture

people still refuse to believe that any market meltdown is for real. And once the margin calls start coming in, the convergence with the 666 on the SPX could come in a matter ot weeks if not days 

 

Lovely.

My humble, yet sophisticated, forecast for what awaits the markets over the next few months here:

http://www.youtube.com/watch?v=-o2gzNVab9w

Thu, 09/22/2011 - 14:13 | 1697952 TruthInSunshine
TruthInSunshine's picture

We need to see Apple sell off very hard, along with many transports (China may be the catalyst for this) and financials getting cut way down from here (with many going to zero or being delisted), along with some investment banker/hedge fund manager/broker suicides or murders, before anything remotely resembling a bottom is nearing.

I am not trying to be callous as a point of sarcasm, but it's actually true that these things historically typically take place before sustainable bottoms are put in (all of these things, including the suicides and murders, took place in 2008 and 2009).

I'd say we're at least 6-8 months away.

However, if this is a repeat of a 1929 to 1937 type pattern, it's going to be a decade-ish before any retail investors want to even hear the words "stocks" or "stock market," in which case any meaningful bottom won't be found for years (the whole once bitten, twice shy; twice or 3x bitten, f*ck stocks! thing).

Thu, 09/22/2011 - 14:14 | 1697982 fdisk
fdisk's picture

"(China may be the catalyst for this)" F& NO!

China was trying to cool off Economy for many month in the row,

so they finally got some and it's in line with expectation..

Talking about China slow down while it's growing 9%? Gimme a

break, slowdown my a$$.

Thu, 09/22/2011 - 14:17 | 1697999 TruthInSunshine
TruthInSunshine's picture

Data released on China indicated contraction in certain segments of their economy is already near or actually taking place, and that assumes that the official data doesn't have an upside bias skew.

With what is happening now in the U.S. and Europe (and Japan and Korea, for that matter), if you don't think there's going to be a further very adverse impact on Chinese economic activity, I think you're naive.

Thu, 09/22/2011 - 14:25 | 1698042 fdisk
fdisk's picture

yeah lot of negative sh*t included ZH and it's slowly baked
into the Markets already. What else you want to announce?
What we don't know already?

Thu, 09/22/2011 - 14:28 | 1698056 TruthInSunshine
TruthInSunshine's picture

It's not baked into the markets.

The markets have been literally ignoring what you claim is already baked in for about 20 months now, as they have been mainlining Hopium and sovereign deficit-derived dollars (especially Bernank, Paulson & Geithner Juice).

The equity markets have a lot more catching up with reality to do.

A lot more.

Thu, 09/22/2011 - 14:31 | 1698066 fdisk
fdisk's picture

yeah, yeah, let's see tomorrow..

f*cking short monkey running for cover already..

Thu, 09/22/2011 - 16:07 | 1698621 slewie the pi-rat
slewie the pi-rat's picture

hey, T_I_S!

"suicides or murders"???

anybody remember amy winehouse?  or is 2 months too long w/ all this other "important stuff" going down all the time?  newZcorp?

L0L!!!  if i were you, i'd re-set my "clock" to amy winehouse's death, as i tried to explain directly after it "'appened":  she put rupert murdoch's criminal conglomerate, scotland yard, and everybody up to & most surely including royalty in front of a runaway train of unfathomable "counterparty RISK"...and unfortunately died shortly afterward!

the cause of death had been delayed till 10.26.11, for some reason or other...

...no illegal drugs...rumors upon rumors...alcohol withrawal?...prescription meds?...something "accidental?...no note?...

...well, at least she wasn't found w/ her handz tied behind her back and hanging from a brand new men's 66.6" leather belt bought from harrod's on her credit card while she was in germany, with a note that she couldn't face "reality" anymore and a "goodbye cruel world" toilet scene by another hand, and declared an obvious suicide, eh?

...but the "investigating" gendarmes did manage to declare it a "non-suspicious" scene, but the coronor, said fuk you, BiChez, as follows from this "tabloid competition" to the mudoch "empire"  (paste from  Amy Winehouse Cause of Death Not Disclosed After Autopsy - The Hollywood Reporter...emphases by slewie):

In British postmortem cases where a sudden death is deemed not suspicious and the Coroner believes that no inquest is necessary, he or she can order a Section 19 Post Mortem under the terms of the 1988 Coroner's Act in Britain...

A Section 20 postmortem, as Winehouse had, however, implies that the Coroner believes "there is reasonable cause to suspect that a person has died a violent or unnatural death or in any other way which would require an inquest," according to guidelines. It suggests that the authorities are mounting a more lengthy and serious investigation into the circumstances around Winehouse's death, although the Coroner also reported that at the scene had been investigated by police and "determined non-suspicious."

so, in another month or so and after who-knows-what TPTB doodoo around the Coronor & his/her family, we can look forward to the "official" declaration that she just made an innocent mistake, b/c even her family thinks she seemed "out of it" the day before, of course, and accidentally overdosed on pills which were prescription, even tho the original bottle from the pharmacy had been somehow "misplaced" by her after her death and the one they 'found' doesn't match the #'s from the "chemists" records, said chemist having been cited before for not keeping proper records for the goobermint, of course...

...or something equally cogent and rational, as in most "authoritative inquiries" into crapola that gets "taken off the front page and easily forgotten" like an "obviously disturbed" young woman, very successful who was never listed as being one of murdoch's conspiracy's "targets", of course....

trust me?

Thu, 09/22/2011 - 14:12 | 1697974 fdisk
fdisk's picture

What's really melting down it's SILVER down $4/oz in 1 day?
It use to cost 4$/oz. Not buying here, I'll take it under $20,
if not? thanks, keep it.

Thu, 09/22/2011 - 14:12 | 1697976 dcb
dcb's picture

14:00 stick save just saw someone selling sds,

Thu, 09/22/2011 - 14:13 | 1697980 Moneyswirth
Moneyswirth's picture

SP just broke the August post-downgrade lows.

LOOK OUT BELOW

Thu, 09/22/2011 - 14:16 | 1697996 fdisk
fdisk's picture

NO, It doesn't that low was 1103.09, look out above

shorts..

Thu, 09/22/2011 - 14:38 | 1698122 CvlDobd
CvlDobd's picture

So the USD, DAX, TNX, TYX, JJC, EFA, EEM are all wrong and the August SP 500 lows are right? I'm not saying you're wrong but the peripheral markets don't seem to agree with you.

Thu, 09/22/2011 - 14:31 | 1698073 dcb
dcb's picture

look who's wrong!!!

Thu, 09/22/2011 - 14:43 | 1698148 dcb
dcb's picture

the other thing I notice is that it rally seems that gaps at this level get filled. so that's what I expect.

Thu, 09/22/2011 - 14:14 | 1697987 dcb
dcb's picture

hey somebody is getting credit from the banks

Thu, 09/22/2011 - 14:22 | 1698029 Boston
Boston's picture

Looking at the chart, we're back to August 2007 "turn".

Uh-oh.....

Thu, 09/22/2011 - 14:25 | 1698046 TruthBeforeAll
TruthBeforeAll's picture

Burn Baby Burn, Dow Jones Inferno

Thu, 09/22/2011 - 14:26 | 1698051 Dingleberry
Dingleberry's picture

SEE WHAT HAPPENS WHEN UNCLE BEN DOESN'T GIVE THE MARKETS WHAT IT DEMANDS????  I thought the Fed would come out and do QE3 to prevent this meltdown (albeit temporarily). Maybe Ben isn't an actual slave to the market after all??? For the record, I am still betting on QE3. Not that I want to see it. It's just that Ben has no choice. Europe needs some swap lines, too.

Thu, 09/22/2011 - 14:32 | 1698075 TruthInSunshine
TruthInSunshine's picture

Diminishing, marginal returns are a bitch.

QE3, even if implemented, won't stop the train crash that The Bernank should have seen building a head of steam, It's temporary leviational effects will be very fleeting and would use up all remaining political and financial capital The Fed & Berankincide have, putting them in a very precarious financial and political situation.

Thu, 09/22/2011 - 16:13 | 1698654 bid the soldier...
bid the soldiers shoot's picture

Is it stopping the train wreck or putting it off as long as possible? Only the Man of Steel can stop a train wreck.

Thu, 09/22/2011 - 17:26 | 1698942 TruthBeforeAll
TruthBeforeAll's picture

Henry "Hank" Rearden?‎

Thu, 09/22/2011 - 23:46 | 1699890 bid the soldier...
bid the soldiers shoot's picture

Don't know. Does he have a red and blue spandex suit with a cape?

Thu, 09/22/2011 - 17:41 | 1698970 Anonymouse
Anonymouse's picture

Supposedly, the dive in gold (no one mentions silver in this context) is due to banks and investors selling gold and taking those profits to meet margin calls.

Do you think this is the reason?

I have plenty of PM (physical) as well as some PHYS and PSLV.

As a trading play, was thinking of some GLD (I know, I know) options.  The recent decline could be great timing, but if margin calls will drive more sales, it might be better to wait.

Any thoughts?

Thu, 09/22/2011 - 19:13 | 1699247 pappyhlace
pappyhlace's picture

only way hedgies can get even this year

churn and burn baby, this market is ridiculous
100+% daily....

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