Margin Debt At Dangerous Highs

The recent surge in margin debt growth is the strongest in over 25 years, eclipsing even the spike seen previous to the top of the internet bubble in 2000, which provides additional evidence of the speculative mania that has gripped equity markets.

It may not be coincidental that the two other sharp increases on the chart above, in 2000 and 2007, preceded significant market pullbacks.

Stock markets continue to reflect a consensus view of a strong “V” shaped economic recovery and a quick transition to a post-pandemic world.

Our inclination is to question consensus views, which we will do in the upcoming April issue. We will assess the evidence for economic growth, inflation, and interest rate trends in addition to updates on major global markets and our investment positions.

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