Monday, October 28, 2013

On NYSE margin debt

Dear goldbug newsletter writer who has been warning everyone about the record high NYSE margin debt:

Here are four articles that your smarter readers have already seen.

Reformed Borker (Bork Bork Bork!) - margin debt, another bogeyman slain. He notes it's this year's favourite among the doomers, like the Baltic Dry was in 2010 and look how predictive of an imminent crash that was.

Philosophical Economics - margin debt. He uses historical charts and past headlines to show how silly the fixation with margin debt has been in the past. Basically, it fails the backtest.

Michael Shaoul - NYSE margin debt update. He notes that total interest burden of total outstanding debt is less than a third of what it was in 2007, so based on fundamentals there's no problem.

Ritholtz - NYSE margin debt at record high. He points out margin debt goes up as markets go up. Again, nothing to see here since Shaoul notes this debt is easier to carry than last time because of lower debt servicing cost.

Now go explain to your subscribers how you've been wrong because you were mistakenly getting your macro picture from ZeroHedge.

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