It was interesting that out today Janet Yellen is doing her best to talk down the fact that the Federal Reserve policies are pushing up asset prices accross the board. However, if there is one way to tell that Fed has managed to induce a speculative stock market rally is to look at what is happening to investor based leverage growth…which is exploding and can be directly linked to the ebb and flow of Quantitative Easing.
Only two other times in the past 21 years have you seen margin debt rising so quickly and both of those were leading into the manic phases of bull market runs.
In just ONE month the level of margin debt has jumped by $20.7 Billion which is a 129% annual increase. That has happened before, of course, the only problem was the consequences when the speculative mania came to an end.