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Thursday, March 28, 2024 10:06:21 AM
Caution: Investors Increasing Leverage In Hot Market
By: Hedgeye | March 28, 2024
Looking at the recent data points, margin debt reached $661 billion in November 2023, followed by $700 billion in December 2023, $701 billion in January 2024, and a notable increase to $742 billion in February 2024. This accelerating use of margin debt signals increasing investor leverage. Margin debt is not at the extreme levels we saw before the GFC and Covid-related crash; however, it is steadily growing and proving supportive of the market despite much higher than historical costs of leverage. Alongside growing leverage from options markets, reflected in the general downward trend in the use of margin debt, it suggests that market participants are fully involved at this point -- an interpretation matched by reported equity allocations as discussed in prior notes.
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By: Hedgeye | March 28, 2024
Looking at the recent data points, margin debt reached $661 billion in November 2023, followed by $700 billion in December 2023, $701 billion in January 2024, and a notable increase to $742 billion in February 2024. This accelerating use of margin debt signals increasing investor leverage. Margin debt is not at the extreme levels we saw before the GFC and Covid-related crash; however, it is steadily growing and proving supportive of the market despite much higher than historical costs of leverage. Alongside growing leverage from options markets, reflected in the general downward trend in the use of margin debt, it suggests that market participants are fully involved at this point -- an interpretation matched by reported equity allocations as discussed in prior notes.
Read Full Story »»»
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