For a few months in mid/late 2014 there was some concern
among those who still don't get that in this New Paranormal market the only
real buyers are central banks, that while the stock market kept on rising, and
rising, NYSE margin debt was flat, and in fact the total amount of purchases on
margin at the end of 2014 was nearly the same to those in January. Meanwhile
the S&P 500 had soared to record highs..
A few things here: first, as we explained one year ago, in a
world in which levered purchases take place via such shadow banking conduits as
repo and primary broker arrangements, margin debt has become an anachronism
from a bygone generation in which there wasn't $2.5 trillion in Fed reserves
supporting the market, and is now almost entirely meaningless.
But for those who still cling on to margin debt as
indicative of anything, the latest NYSE report should provide some comfort:
finally the long-awaited breakout in participation has arrived, and after
stagnating for over a year, investors - mostly retail - are once again
scrambling to buy stocks on margin, i.e., using debt, and as of April 30, the
amount of margin debt just hit a new all time high of $507 billion, $30 billion
more than the month before, and nearly 50% higher than the last bubble peak
reached in October 2007.
