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Deutsche Bank Hopes "Not All Margin Calls Come At Once In Case Of A Sell-Off" | Zero Hedge
Since the records started in the late 1950s, we observe margin debt tracked by the New York Stock Exchange (NYSE) rose to an all-time high in April this year. Most interestingly, margin debt follows the pattern of exponential growth when equity markets surpass previous record historic levels and peaks ahead of the the equity market, i.e. 1/2 month ahead during the new technologies market around 1999/2000 and 3 months ahead during the Great/Global Financial Crisis (GFC) around 2007/2008. As it is difficult to identify such an absolute peak, we find it useful to look at more sensitive measures, i.e. month-on-month changes. It seems as if a threshold >10% in the m-o-m change delivers meaningful signals when the sequence starts. In this way, it is most alarming to see that the first signal lit up in January this year. Market analysts track margin-debt activity as an indication of investors' appetite for speculative trading. But a potential pitfall for those trading on margin is a sharp decline in stock prices, which can expose investors to margin calls, requiring them to post additional collateral or having their brokers sell their securities. That's why high levels of margin debt can be worrisome a wave of margin calls triggered by a sharp market correction could exacerbate the selling pressure on stocks, making matters worse. Consequently, high margin debts show the effect of over-leveraging and mispricing of risk in our financial system.
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When will the Fed stop thowing money around...................Is the real question..................
Who knows.
Can we define "crash" here? Are you talking about a 10% correction, a 20% bear market, or a 1929/2008 type dealie?
I don't think that is politically possible.November 2014: If the GOP loses the House, investor confidence will evaporate.
Next election. They fleeced big time when Barry just got into office, but won't do anything until Barry is out of office.
The laws of gravity come to mind. What goes up, must come down. This rising market is overbought and one day big money is going to want payday. When?
-Geaux
LOL. And all you nervous nellies predicted utter collapse if President Obama was re-elected. Didn't happen, won't happen.
Trying to determine how far out to buy puts.
If there was a a republican president I can guarantee it would be a cycle of every 4 years.
Well we're over two years since QE ended... so much for this theory.Didn't Bernanke say he was going to Taper off the $85 billion QE by $10B a month? That would put the crash at around September, because the only thing keeping the market this high is Federal Reserve cash. When that is gone what would keep the market going?
True instead of a stock market collapse we experienced we had a collapse of fulltime employmentWell we're over two years since QE ended... so much for this theory.Didn't Bernanke say he was going to Taper off the $85 billion QE by $10B a month? That would put the crash at around September, because the only thing keeping the market this high is Federal Reserve cash. When that is gone what would keep the market going?
No, the market did the retrace I had been talking about, from a high in May 18, 2015 of 18,298 down to 16,285 Aug 26, and repeated down to 5,973 on Feb 12, 2016. That was two 2,000 point drops in less than a year.Well we're over two years since QE ended... so much for this theory.Didn't Bernanke say he was going to Taper off the $85 billion QE by $10B a month? That would put the crash at around September, because the only thing keeping the market this high is Federal Reserve cash. When that is gone what would keep the market going?
QE ended in 2014, you predicted a "crash" as a result. The market has always gone up and down, it seems a bit of a stretch to attribute dips happening over a year later as a direct result, especially since they recovered (as market dips always have) and you questioned what could fuel the stock market without QE. Clearly the stock market can go up without QE.No, the market did the retrace I had been talking about, from a high in May 18, 2015 of 18,298 down to 16,285 Aug 26, and repeated down to 5,973 on Feb 12, 2016. That was two 2,000 point drops in less than a year.
Dow Jones - 10 Year Daily Chart
It could be that the market has been Up for the last 8 or 9 months due to the construction bubble.QE ended in 2014, you predicted a "crash" as a result. The market has always gone up and down, it seems a bit of a stretch to attribute dips happening over a year later as a direct result, especially since they recovered (as market dips always have) and you questioned what could fuel the stock market without QE. Clearly the stock market can go up without QE.No, the market did the retrace I had been talking about, from a high in May 18, 2015 of 18,298 down to 16,285 Aug 26, and repeated down to 5,973 on Feb 12, 2016. That was two 2,000 point drops in less than a year.
Dow Jones - 10 Year Daily Chart
We do? What is your definition of the word "collapse"?True instead of a stock market collapse we experienced we had a collapse of fulltime employment
The average wage for millions of new coffee pumpers? $9.00/hour.We do? What is your definition of the word "collapse"?True instead of a stock market collapse we experienced we had a collapse of fulltime employment
First off I agree 100%, eventually the market will have a more severe downturn. Not something like an 11% correction that JimBowie is calling a "collapse" 'but a real bear market with over 20% drop.It could be that the market has been Up for the last 8 or 9 months due to the construction bubble.
The bubble WILL burst eventually but no one ever wants to believe it.
No one Credit Officer or Mortgage Broker I know sees anything but good times ahead.First off I agree 100%, eventually the market will have a more severe downturn. Not something like an 11% correction that JimBowie is calling a "collapse" 'but a real bear market with over 20% drop.It could be that the market has been Up for the last 8 or 9 months due to the construction bubble.
The bubble WILL burst eventually but no one ever wants to believe it.
However it doesn't seem useful to sit in here randomly attributing the current bull market to whatever pops into our heads while claiming that someday it'll go back down. I know construction has an outsized influence on the US economy (compared to market cap of companies directly in construction) but looking at the companies driving the stock market expansion do you really think that can be attributed to construction?
If you're implying new jobs are only low wage part time jobs, BLS data doesn't agree.The average wage for millions of new coffee pumpers? $9.00/hour.
Would YOU like to serve food?
Anecdotes of opinions of mortgage brokers is hardly a good gauge of the economy.No one Credit Officer or Mortgage Broker I know sees anything but good times ahead.
Of course I remind them that that's how they felt before Sep 2008.
If you're implying new jobs are only low wage part time jobs, BLS data doesn't agree.The average wage for millions of new coffee pumpers? $9.00/hour.
Would YOU like to serve food?
People working part time for economic reasons (the ones who want to work full time but can't find a FT job) has been falling steadily since the great recession.
While real wages have been stagnant for much of the last decade they have been rising lately, if new jobs had significantly lower wages one would expect to see wages falling sharply.
