Investing Links of Interest – April 9, 2013
Bill Hardison at dshort.com recently presented the nominal level of margin debt compared to the S&P 500. It’s just another sign of the market being in the danger zone.
What this chart is showing is that, despite the lack of participation in the rally that you hear about, account holders are acting so bullish that they have a near — record amount of margin debt. The actual record debt level (3.9% higher than now) occurred at the end of July 2007, about two months prior to the actual market peak. Margin debt in the year 2000, while not nearly as high as it is today, was a fast ramp to its peak level which happened in the same month that the S&P topped.
Source: Advisor Perspectives
John Hussman believes the bear is ready to strike and has a nice chart exhibiting the diminishing value of the Fed’s QE policy.
For my part, I continue to expect the U.S. economy to join a global recession that is already in progress in much of the developed world (assuming a U.S. recession has not already started, which we can’t rule out, but would require knowledge of eventual data revisions to confirm). Suffice it to say that the realistic case for a sustained economic expansion here remains terribly thin.
Source: Hussman Funds
Bill Moyers interviewed Sheila Bair, now head of the Systemic Risk Council, regarding the big financial institutions and the systemic risks they are willing to expose the world economy to in pursuit of personal gain and their fight against regulation.
Bair, “I was not surprised, but appalled by the way they [JP Morgan Chase] were manipulating their models that are supposed to be able to determine the way risk is involved in various trading positions.”