Central Perk: 25 dec. 2010

sâmbătă, 25 decembrie 2010

Mish's Global Economic Trend Analysis

Margin Debt Soars to Highest Levels Since September 2008

Posted: 25 Dec 2010 09:09 AM PST

Margin debt is one measure of the amount of optimism or pessimism in the stock market. Rising margin debt generally correlates to a rising stock market. Margin use has soared to the highest level since September 2008.

Margin Debt vs. S&P 500

click on chart for sharper image

Margin Debt Data is from NYSE Factbook Securities Credit

ZeroHedge discussed margin debt in NYSE October Margin Debt Jumps To Highest Since Lehman Failure As Investor Net Worth Is At Lowest Since April Highs

It is not just the stock market that is at the highest levels since Lehman. Probably just as importantly, NYSE margin debt has surged to $269 billion, an increase of $13 billion from the prior month, and the highest since September 2008 when it was at $299 billion.

We are confident that NYSE cash in November will be at the lowest level of the year, not to mention December, as hedge funds leveraged everything they could, in some cases hitting as much as 3-4x gross leverage, in pursuit of beta, now that unleveraged alpha strategies have ceased to work. Which means that with retail stubbornly missing from the picture, the only beneficiaries of the HFT and Fed facilitated melt up are the 1000 or so hedge funds, where average net worth is in the 6 digits, that will be profitable this year.

Moreover, mutual fund cash levels have been near record lows since September, and topping it off, a respected friend tells me NYSE cash levels are negative $35 billion.

Collectively, this sounds like "all in" to me, and then some. However, just as in 2007, no one knows for sure when excessive optimism gets punished, historically it always is.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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President Obama and the First Lady wish families across the country a “Merry Christmas” and encourage everyone to support the troops and their families this holiday season. Visit www.serve.gov to find ideas for what you can do to help our servicemen and women and their families.

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Holidays at the White House: The White House celebrates Simple Gifts this holiday season. You're invited to tour the Christmas decorations, watch behind-the-scenes videos, share a Season's Greetings message with the troops and more.

Tracking Santa: The Department of Energy's Los Alamos lab uses state of the art technology to track Santa Claus as he circles the globe.

West Wing Week Video: “AKA Santa Claus” -- walk step by step with the President as he signs the repeal of “Don’t Ask Don’t Tell,” reads to kids for the Holidays, and receives the Census report.

5 Achievements: As the President said, it’s been the most productive post-election period we’ve seen in decades. Here are five post-election achievements you should know about.

White House Staff: It Gets Better Video: Inspired by President Obama’s It Gets Better video, several LGBT White House staffers decided to add their voices to the project.

“'Out of Many, We Are One”: The President signs the repeal of “Don’t Ask Don’t Tell” -- the right thing to do for our military, and the right thing to do for our country.

The President’s Press Conference: As this session of Congress draws to a close, the President reflects on the flurry of productivity for the American people during the final stretch.

Behind-the-Scenes Video: A day of service with President Obama and the Los Angeles Lakers.

White House White Board Video: HHS Secretary Sebelius explains how a new rule helps states review and crack down on unjustified premium hikes and protect consumers.

My American Story: Americans step up to be a part of the solution – watch the video, then visit Serve.gov to find a volunteer opportunity that’s right for you.

CAPTA: President Obama signs the reauthorization of the Child Abuse Prevention and Treatment Act (CAPTA) – critical legislation to prevent child abuse and domestic violence.

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