The Market Bubble is Worsening | Watch THIS.

hey everyone we kevin here in this video

we're going to talk about the bubble

the market a bubble that keeps blowing

and blowing and blowing

we're going to go into it and a danger

that is forming i'm going to tell you

exactly where

i'm looking at this and it's kind of

bugging me a little bit because it's not

acting the way i suspected it would and

i always like to point out when i'm

wrong because you learn the most when

you're wrong so let's talk about that in

just a moment because

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let's talk about this one little thing

okay here's the thing so

this is bugging me a little bit but

y'all know what margin debt is right

look it's it's debt against securities

so if you have a hundred thousand

dollars a tesla stock and you take out

margin of thirty thousand dollars you're

30

in debt right and the reason i like

looking at margin debt is specifically

because of what happened before

2 000 yes the stock market bubble

the internet bubble of the dot com era

the year 2000. take a look at this this

is a little scary so

if you jump on over here this is the

year of 1997. and what you're going to

see is margin debt

fluctuated between around 103 billion

dollars to 131 billion dollars

and then over here in 1998 margin debt

fluctuated upwards closer to 150 billion

dollars

then margin debt fluctuated up to about

200

billion dollars across 200 billion and

by the end

by the beginning of 2020 we got to 241

billion

dollars uh and at the beginning of the

year

in 2000 we were around 260 billion 284

300 again and when the dot-com era

started coming to an end we started

having

a collapse in stock market prices we

actually started seeing

stock market margin debt rapidly

decelerate look at this

from march to december margin debt went

from about

300 billion to around 210 billion

and if we look at the dow jones for

example we could do it with the s p

500 but honestly it doesn't matter so

much go over

to the year 2000 you get to

this incredible run up leading into

roughly around 2000 but between 2000

and 2003 you actually have the dao

lose money look at that you were down

about 28

from the beginning uh or or around the

end of 1999 to about

march of 2003 let's go ahead and try

that with the

s p 500 because you know it's it's not

always up like markets

markets can trade sideways for a while

take a look at this

you take uh the beginning uh or about

end of 1999 and you take that out about

three years look at that you get a

negative 41 return

in the stock market over a three year

period it's a long time right but

nonetheless long time

had you been just buying index funds you

would have lost almost half

of your money just buying the s p 500

during that three year time frame

it's a lot and so what you really saw is

in 2000 you really started seeing margin

debt evaporate

in 2001 you went instead of being all in

the 200 almost 300 billion dollar margin

range

look at this you went to back to 198

back to 183 back to 150 over here

and in 2002 it was under 150 for the

majority of the year

and it wasn't really until 2003 when

prices started picking up again

that margin actually started going up

again

obviously then margin goes up margin

goes up

up look at that we're almost back to 300

billion now we're over 300 billion in

margin debt

oh oh wait but then 2008 comes around

and we go from almost

400 billion to oh oh no

no back to low 200s look at this after

september especially

you know insane liquidations happened

here because look at this you went from

245 billion

to 210 billion in like three months

that's

crazy uh yeah and really

you got 2009 brought you back into the

199 ish range

and in uh and then we gotta get all the

way i gotta scroll all the way up here

because they measure two different

things these charts

so then you get all the way to where we

have the comparable

time frame here we go uh we get back to

2010 and you slowly start seeing margin

rise again

you're somewhere here 263 billion slowly

starts going up to 300 billion right

coming out of the big market crash but

now we're printing money like crazy

quantitative easing like crazy rates are

cheaper than they've ever been so in

2011 you blow it up to 360.

then you're bobbing around the lower

threes in 2012. still had some

reverberations of bad market juju

in 2012 2013 you blow up margin debt as

the real estate market finally starts

taking off around

april and may which this is not real

estate debt this is stock debt

but they can still be correlated since

investors often own both assets

but anyway towards the end of 2013

you're almost knocking on the door

500 billion in margin debt 14 you get to

500 billion

then in 2016 you're also still around

500 billion

2017 you get to 600 billion dollars

2018 you're like 665 billion fluctuating

around there

2019 back into the high 500s

you had a slow down here since uh

remember at the end

of 2018 and look at this plummet i mean

you went from august of 18

652 billion to 554 at the end of 18.

guess what happened in this time frame

folks yeah

the market crashed like the end of 2018

people don't like talking about the end

of 2018 that much

i mean relative when you have any of

this zoomed out it doesn't matter so

much but look at this

from august 18 to about december 18

the market lost ah it was about 20 it's

hard to pull it here but we had about a

twenty percent selloff in the s p

nowhere near as bad as that three year

period at the beginning of the 2000s but

you still had a good

20 s p selloff but it's something to pay

attention to

every time we see the margin debt size

down substantially

it usually is coming from this high

level that it's never really been at

before

and then going to a low level in a crash

as people get wiped out right

we literally saw that in 2000 went from

a high level we've never been at before

to a low level saw that in 2008

saw it a little bit at the end of 2018

and look at this we saw it again here in

2020.

look in february 2020 we go from 545

billion

down to 479 in march very very short and

deep kind of recession

and so we quickly bounced back but what

did congress do then

print print print print money like crazy

by the end of 2020 we're at 778 billion

dollars in margin debt

never been at these levels before and

literally every month this year we've

been adding new levels

we're at 847 billion dollars in margin

debt right now

now i thought back in february that

because we started seeing a slow down in

the rate

of growth in margin debt like over here

from 722 to 778 this is a seven percent

increase in margin which is crazy

uh and i thought because this rate was

slowing from 813 billion

from january this is only a 1.8 percent

increase right here

i thought oh that's it this is the

market slowing down and we're going to

potentially see another sell-off in the

market

now we did see a sell-off in parts of

the market like tech

and we saw a sell-off in some consumer

discretionaries online or biotech

but folks the debt bubble continues to

go

and it's not slowing down sure over here

it only grew 1.8 percent over here to

here it grew like 1.8 percent

but guess what it accelerated in april

it went to

3 growth over here in april and i'm

thinking to myself

oh my gosh like despite all of this in

the stock market

people are more and more okay with

taking on more and more

debt and i think that's the last thing

we really ought to be doing right now is

more and more debt

that's that's everything we've got going

on right now it's crazy

and so part of me is a little bit

concerned that okay we got to pay

attention to this

because every time margin debt has hit

new crazy highs before

we've had some kind of correction now

sometimes it's taken

years to get that i mean we bobbed

around the 500s the 600s for quite a

while

but margin debt is going to hit a

trillion

dollars soon that's pretty incredible

and it just makes you wonder

if we keep growing at three percent well

do this three percent uh on 847

times three percent times three percent

again uh so if you had three percent

month over month growth for the next two

months

folks we would be at about 900 billion

dollars

and it doesn't take much longer after

you hit 900 to hit a trillion

let's do it uh so if in two months we

could hit so by

july we could hit 900 billion we could

literally

break over a trillion dollars in margin

debt

by october and we've like literally the

past decade

we've been averaging maybe around 500

billion

so by october at this pace we could

literally be double our long run average

of debt in the market

and it just makes you wonder this debt

doesn't even include

a crypto debt is there a potential for

the rey dalio style great deleveraging

to come

now the next time we get an update on

this will be about two weeks

into june but i want to pay specific

attention to this

because i really think debt levels in

our markets are

getting out of hand now i know a lot

more money is floating around but still

and also

because rates are so low people have

more and more debt and makes you wonder

if in 2023 the fed does start bumping

rates

that's a lot of money that is now paying

a higher interest rate

and so it's definitely something that to

me feels uh

slightly concerning something that i

really want to pay attention to more

and i'd like to see this number actually

healthily trend down

or stabilize i do not want to see this

number rocket

because if this number rockets and

starts growing at five six eight percent

again

i think it's there's a real risk we

might be setting up for another um

pop in the margin debt bubble kind of

like 2000

and 2008 or what we briefly saw at the

end of 2018 which was short but pretty

painful too

so watching this margin debt number

continue to skyrocket

not good continuing to go up bad

growing slowly and steadily better

you know number going down probably

needed

so anyway something i'm watching off

it's just one of many many statistics

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