🔴US margin debt is sending a warning signal that has preceded every major bear market in recent history:
Margin debt rose +$112 billion last month, to a record $1.4 trillion, more than DOUBLING since 2023.
YoY growth in margin debt is up to ~55%, the highest since the 2021 peak.
As a percentage of S&P 500 market capitalization, net debit balances in NYSE margin accounts are up to ~1.5%, materially exceeding the 2000 Dot-Com Bubble levels.
In other words, accounting for the market cap increase, margin debt has grown even faster.
This same signal peaked in March 2000, just months before the Dot-Com collapse, and in July 2007, just 3 months before the S&P 500 topped out ahead of the Financial Crisis.
It also peaked in 2021, ahead of a sharp correction later in 2022.
The signal has never been wrong. The timing always has.
Margin debt rose +$112 billion last month, to a record $1.4 trillion, more than DOUBLING since 2023.
YoY growth in margin debt is up to ~55%, the highest since the 2021 peak.
As a percentage of S&P 500 market capitalization, net debit balances in NYSE margin accounts are up to ~1.5%, materially exceeding the 2000 Dot-Com Bubble levels.
In other words, accounting for the market cap increase, margin debt has grown even faster.
This same signal peaked in March 2000, just months before the Dot-Com collapse, and in July 2007, just 3 months before the S&P 500 topped out ahead of the Financial Crisis.
It also peaked in 2021, ahead of a sharp correction later in 2022.
The signal has never been wrong. The timing always has.