Juggling Dynamite

When happy go lucky CNBC personalities start bantering about the risk, you know the suicidal leverage and anemic trading volumes must be outright freakish…

Big moves in a handful of stocks provided traders with a worrying signal—an “ultra-high” level of leverage in the stock market. “People must be three or four times normal leverage,” Cashin said. “We’ve seen margin accounts go up. We knew the hedge funds were playing. But to see extreme moves like that on nonspecific news tells me there’s a lot of leverage out there. … If we start to get a protracted move, it could get very volatile.” Here is a direct video link.

For some historical reference on just how ‘bat-shit-crazy’ current leverage levels are today, here’s the updated chart again since 1995. But gee…300%+ leverage worked out so well the past couple of peaks, what’s to fear this time, right?

In the Federal Open Market Committee’s June meeting, the Fed decided that it would likely look to end its asset purchasing program (known as quantitative easing, or QE) with a $15 billion reduction in monthly purchases in October, according to the meeting minutes released on Wednesday. The markets took the news in stride, and stocks actually closed higher on the day.

But Peter Boockvar, chief market analyst at The Lindsey Group, told CNBC’s “Futures Now” that equity investors are making a huge mistake. Here is a direct video link.

As unshorn sheep run blind with speculative shepherds, US treasuries are continuing to float quietly higher on a steady in-flow of investment capital focused on preservation now and coming opportunities ahead…Today back flirting with a 2.50% yield, the 2.30 to 2.50 band is critical support marked below. If yields manage to break below 2.30 once more, the bond market will have called the QE bluff and made the next decisive statement in favor of slowing growth and price deflation for risk assets. Let the big dog eat.