All-time highs: Leverage on Wall Street breaks records and replicates the speculative bubble from two decades ago

The pressure on the US financial markets continues to intensify. Recent records reveal a significant increase in the margin types used by investors, with total margin debt reaching unprecedented figures in November.

Numbers that raise alarm

In the past month, trading margin debt in the US market grew by an additional $30 billion, consolidating at $1.21 trillion. This expansion represents the seventh consecutive increase, demonstrating an accelerated and sustained trend toward higher levels of speculative borrowing.

The outlook over the last seven months is even more concerning: margin debt skyrocketed by $364 billion, a 43% increase in just half a year. When adjusted for inflation, the year-over-year growth reaches 32%, confirming that the phenomenon exceeds mere nominal fluctuations.

Comparison with the speculative era

What truly alarms analysts is the historical comparison. The ratio of margin debt to M2 money supply has jumped to 5.5%, surpassing for the first time in over two decades the level that characterized the dot-com bubble of 2000.

Different types of margin — from intraday trading to medium-term positions — show similar patterns of accelerated growth, indicating that leverage is not concentrated in a specific segment but is systemic across the entire industry.

Market implications

The current context suggests that leverage in US investment has reached extremely dangerous territories. Historically, these highs have preceded severe corrections in the markets, which is why risk managers and regulators are beginning to sound the alarm.