Thin at the Margins
Earlier in May it was noted many places that margin debt had been on the rise in a big way. Pragmatic Capitalist had this to say on May 9th:
As we noted earlier this year, margin debt has tended to correlate fairly closely with the direction of the equity market. And according to the latest data from the NYSE, margin debt continues to move higher. In an effort to ride the coattails of the Fed and QE2′s “can’t lose” environment, investors have dipped into their borrowings to buy equities.There was a chart from Gluskin Sheff:
So what should happen when speculative excess gets out of hand and people are getting a little crazy running in the markets? If you answered increase margin costs to reign in the party, you would be right as it pertains to silver. When we are talking stocks the best answer is to lower margin costs, well it's just the right thing to do:
And Scene: CME LOWERS ES, SP, YM Margins, Despite An INCREASE In Realized Vol
I will say that I am sure this is 100% normal. Fun times indeed.
Have a good night.