Investor leverage has nearly DOUBLED over the last 2 years. This marks a similar pace to the rise seen following the 2020 pandemic. As a % of GDP, margin debt now sits just below the 2021 peak. Needless to say, risk appetite is arguably at its strongest level ever.

Everyone wants a piece of the AI Revolution. US households’ allocation to equities has hit a record 52%. This now surpasses the 2000 peak of 48% by 4 percentage points. The percentage is also TWICE as high as at the 2008 low. Americans are piling into the stock market.

This week, 5 TIMES levered ETFs were announced for the first time. These ETFs will be on everything from Nvidia to crypto. This means if Nvidia were to go down -10% in a day, the leveraged ETF would go down -50%. If approved by the SEC, these ETFs will go live in 2026.

Clearly, leveraged debt has skyrocketed to unprecedented levels. But, what does it mean? In our view, the surge in leverage debt reflects just how strong momentum is right now. But, it will also come with what we believe will be a more turbulent path higher for risky assets.

A clear instance of this occurred in crypto on October 10th. Crypto saw its largest liquidation event in history with 1.6 million traders liquidated in 24 hours. Over $19 billion worth of leveraged crypto positions were liquidated in 24 hours, 9 times the previous record.

And, it spreads even beyond simple leverage. Total US options volume reached a record 108 million contracts on Friday. Total CALL options volume hit 61 million contracts, an all-time high. Investors are looking to take on outsized exposure to markets in any way possible.

That said, while there is a risk-on mania, we do NOT think the top is near. Why not? If you take a look at a lot of the large tech names fueling this rally, they are getting CHEAPER as they go up. The forward EV/EBIT multiple on Nvidia has fallen to 27.5, the same as Walmart.

Meanwhile, investors are searching for any source of yield to protect their spending power. As the Fed cuts rates into stagflation and US deficit spending exceeds $300 BILLION in some months, the US Dollar is declining. We believe nominal asset prices must rise as a result.

We believe the current surge in margin debt and leverage is simply a reflection of sentiment. However, we also caution investors against the risks of using leverage. As we saw on October 10th, improper usage of leverage can crush you. Exercise caution when investing on debt.

Sentiment is the ultimate driver of price, and it's STRONG right now. The macroeconomy is shifting and stocks, commodities, bonds, and crypto are investable. Want to receive our premium analysis? Subscribe to access our premium analysis below: http://thekobeissiletter.com/s...

This can all be traced back to poor fiscal and monetary policy and AI. US M2 Money Supply is now growing at a +5.1% annualized rate of change. The system is broken and the AI Revolution is in full swing. Follow us @KobeissiLetter for real time analysis as this develops.

@KobeissiLetter I believe it is more intuitive to look at margin debt in terms of total currency in circulation

@georgezii_ We are in a currency confidence crisis.

@KobeissiLetter Leverage is writing the tape. $1.13T margin debt + record call volume + 5× ETF filings = reflexive bull. • Flywheel: low RV → CTAs/retail buy calls → dealers long-gamma → dips vanish → vol compresses → more leverage. • Fragility: one shock (tariff decision, UST

@KobeissiLetter Past margin peaks = crashes 📉 Oct 2021: SPY -22% May 2018: -9% $1.13T record debt NOW + 5x levered ETFs = extreme risk amplification History says caution 🚨 📊

@KobeissiLetter It’s means more degens will get liquidated if the market crashes

@KobeissiLetter Margin debt spikes like this usually signal liquidity excess rather than confidence. It’s leverage chasing returns, not capital formation.

@KobeissiLetter So this has been building up for like 17 years yet it became a problem NOW??? C'mon bros. Someone's making shit up.

@KobeissiLetter Leverage on leverage on leverage. What could possibly go wrong? 💣📈

@KobeissiLetter TLDR: YOLO

@KobeissiLetter @grok is it bullish for crypto ?

@KobeissiLetter Did you know US margin debt hit $1.13T in Sept 2025, echoing pre-2008 levels? With 5x ETFs incoming, could this fuel a tech boom or bust? What's your take on the risk? #StockMarket #TechStocks

@KobeissiLetter It remains below 2021 peak as %

@KobeissiLetter Your thread is everybody's favorite! #TopUnroll https://threadreaderapp.com/th... 🙏🏼@savvyswami for 🥇unroll

@KobeissiLetter They never learn. Every peak in margin debt precedes a fall. Every high-leverage cycle ends the same: A euphoric crowd, a sudden rug, and a sobering return to gravity. $67 billion added in one month… While 5x levered ETFs are quietly proposed. This isn’t optimism. It’s

@KobeissiLetter This chart is a **fire alarm**, not a fun fact — and you’re right to pair it with the silver/banking stress conversation. Margin debt at **$1.13 trillion** is not just a record — it’s a *pattern repeating before every major collapse.* Here’s what this actually means 👇 --- ##

@KobeissiLetter

@KobeissiLetter 5x ETF’s 😂😵‍💫🎰🤦🏼‍♂️ And people think we are not in the roaring 20’s…. Take a look around. Just buy calls you degens.

@KobeissiLetter Your point about looking at margin debt relative to GDP and also market cap is important to put in context. Not as bad as the absolute levels make it seem but still excessive. Unfortunately, there’s probably more to go which created risks down the road because volatility and

@KobeissiLetter The ghost of 1929 is here...boo.

@KobeissiLetter The absolute amount of margin debt is meaningless. You need to measure it as a percentage of market cap.

@KobeissiLetter Funny up until July of 2021 all of that margin (borrowing) got utilized by banks, Hedgefunds and day traders cashing in. Then retail investors finally got a seat at the table and were able to participate in markets and use the same products….. now it’s game on and “smart money”

@KobeissiLetter 67 billion in one month is nuts. 5x levered ETFs on top of record margin is asking for a wipeout event. Every past peak in margin debt lined up with major corrections. $SPY could get ugly if this unwinds

@KobeissiLetter 5x leverage?! I think I’ll steal clear of those unless I want to gamble in the short term.

@KobeissiLetter 5x ETFs are going to blow up a lot of retail accounts at the first sign of weakness.

@KobeissiLetter Soaring margin debt and the push for ultra-leveraged ETFs could supercharge short-term market rallies—but also amplify volatility, creating a tinderbox where a single shock might trigger cascading liquidations and unprecedented losses.