As we noted here, October 2013 NYSE margin debt stood at a new record high of $412.5b (up from $401.2b in September) and exceeded the prior high from April of $384.4b and net investor worth dropped to a record low. However, as BofAML notes, NYSE margin debt and the S&P 500 have +0.76 correlation using a 48-month (4-year) correlation as of October 2013. This is the highest correlation in our data history back to 1964. A positive correlation means that margin debt and the S&P 500 tend to move together; which as they helpfully note means - as long as the market rises, margin debt is not a risk. Better keep BTFATHing, it's the patriotic thing to do.


Maybe margin debt can go higher now than in 2000 or 2007 because the interest rate is sooooo loooow now that it takes forever to scare the begeebees out of leveraged traders. 12/3/13