Stock Market Lazes Happily on a Powerful Time Bomb, and the Fed Begins to Worry

Pointing at ‘excesses,’ ‘distortions,’ and ‘imbalances.’
Margin debt in the stock market hit another record, $561 billion at the end of October, up 16% from a year ago, the New York Stock Exchange reported on Tuesday. Margin debt and the stock market move together. And even on an inflation-adjusted basis, the surge has been breath-taking.
This chart shows margin debt (red line, left scale) and the S&P 500 (blue line, right scale), both adjusted for inflation to tune out the effects of the dwindling value of the dollar over the decades (chart by Advisor Perspectives):

This post was published at Wolf Street on Nov 29, 2017.