Chart o’ the Day: JP Morgan on Margin Debt

Is there a stock bubble being fueled by margin debt?

We’ve been debating this topic for a few years now. JP Morgan Asset Management takes a look at the rate of margin debt growth versus the two recent bubble tops of 2000 and 2007. They pick up on important difference between now and then that looking at the aggregate amount of margin debt wouldn’t show you:

It’s apparent that there was a severe dislocation between the two in both March 2000 and July 2007, with margin debt growing almost 5 times faster than the equity market, indicating that investor exuberance was not linked to market fundamentals. Today’s market looks much different, with margin debt only growing 1% over 2015 and the equity market falling just 0.7%. While overall margin debt levels look elevated, the growth rate in relation to equity market movements indicates that investors are being much more prudent about margin debt and that we are not witnessing a market similar to 2000 and 2007.

and the chart:

Screen Shot 2016-02-22 at 10.45.09 AM

Source:

Weekly Market Recap
JP Morgan Asset Management – February 22nd, 2016

What's been said:

Discussions found on the web
  1. Top Newsstuffs (December 25-31) | The Buttonwood Tree commented on Dec 31

    […] credit (“buying power”): -6.4% mom, -44.9% yoy @ -$286.9B debit; another alltime low [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

  2. Top Newsstuffs (February 12-18) | The Buttonwood Tree commented on Feb 18

    […] alltime low [Previously: SPX net speculative positioning remains a bearish signal; See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007, and Margin debt/SPX ratio constant since 2007] […]

  3. Top Newsstuffs (March 12-18) | The Buttonwood Tree commented on Mar 18

    […] alltime low [Previously: SPX net speculative positioning remains a bearish signal; See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007, and Margin debt/SPX ratio constant since 2007] […]

  4. Top Newsstuffs (April 30 – May 6) | The Buttonwood Tree commented on May 06

    […] from alltime low [Previously: SPX net speculative positioning remains a bearish signal; See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007, and Margin debt/SPX ratio constant since 2007] […]

  5. Top Newsstuffs (May 28 – June 3) | The Buttonwood Tree commented on Jun 06

    […] power”): +4.1pp @ -40.9% yoy, -0.4% mom @ -$316.9B debit; up further from alltime low [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007, and Margin debt/SPX ratio constant since 2007] […]

  6. Top Newsstuffs (July 2-8) | The Buttonwood Tree commented on Jul 12

    […] power”): +4.1pp @ -40.9% yoy, -0.4% mom @ -$316.9B debit; up further from alltime low [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007, and Margin debt/SPX ratio constant since 2007] […]

  7. Top Newsstuffs (July 30 – August 12) | The Buttonwood Tree commented on Aug 12

    […] (“buying power”): -9.6pp @ -50.5% yoy, -4.7% mom @ -$331.7B debit; a new alltime low [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007, and Margin debt/SPX ratio constant since 2007] […]

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