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:

Source:

*Weekly Market Recap*

*JP Morgan Asset Management – February 22nd, 2016*

[…] recovery from record lows, but still doubles prior records from 2000, 2007 & 2011 [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] recovery from record lows, but remains double prior records from 2000, 2007 & 2011 [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] from record lows, but remains far above prior records from 2000, 2007 & 2011 [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] from record lows, but remains far above prior records from 2000, 2007 & 2011 [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] from record lows, but remains far above prior records from 2000, 2007 & 2011 [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] – Net margin balances (“buying power”): +9.5% mom, +1.4% yoy @ -$179.2B debit [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] record high – Net credit (“buying power”): -7.3% mom, -62.6% yoy @ -$248.1B debit [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] record high – Net credit (“buying power”): +3.0% mom, -64.6% yoy @ -$240.7B debit [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] record high – Net credit (“buying power”): -0.9% mom, +79.6% yoy @ -$238.6B debit [See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007] […]

[…] credit (“buying power”): -7.2% mom, -55.6% yoy @ -$255.9B debit; a new 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] […]

[…] credit (“buying power”): -7.2% mom, -55.6% yoy @ -$255.9B debit; a new 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] […]

[…] credit (“buying power”): -2.9% mom, -34.6% yoy @ -$266.0B debit; a new 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] […]

[…] credit (“buying power”): -16.0% mom, -48.1% yoy @ -$269.7B debit; a new 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] […]

[…] credit (“buying power”): -16.0% mom, -48.1% yoy @ -$269.7B debit; a new 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] […]