{"id":11431,"date":"2026-07-18T17:29:53","date_gmt":"2026-07-18T17:29:53","guid":{"rendered":"https:\/\/stock999.top\/?p=11431"},"modified":"2026-07-18T17:29:53","modified_gmt":"2026-07-18T17:29:53","slug":"a-massive-margin-call-and-push-button-liquidity-torched-stocks-but-theyre-poised-to-rebound","status":"publish","type":"post","link":"https:\/\/stock999.top\/?p=11431","title":{"rendered":"A massive margin call and ‘push-button liquidity’ torched stocks, but they’re poised to rebound"},"content":{"rendered":"

<\/p>\n

Stocks have taken a beating recently as investors dump one-time darlings of the AI trade, but they will rebound, according to Fundstrat Global Advisors cofounder\u00a0Tom Lee, who has a strong recent track record of market forecasts.<\/p>\n

Chip stocks in particular have been leading the decline, which left the S&P 500 down 1.6% for the week and the Nasdaq off 2.9%. The latest catalyst was the release of a Chinese AI model that cast doubt on hyperscalers\u2019 gargantuan spending plans.<\/p>\n

In an interview on CNBC on Friday, Lee argued that the companies selling off are at the center of \u201cone of the most important strategic initiatives\u201d for the U.S., namely AI, and they still have years of runway ahead.<\/p>\n

The market pullback is actually healthy because it reduces speculation ahead of upcoming earnings reports from the AI sector, he added.<\/p>\n

\u201cI would still stick with those,\u201d Lee said. \u201cI think those names are going to bounce later this year. So I don\u2019t think that the trade is over.\u201d<\/p>\n

But he acknowledged that the ubiquity of leverage in the market today is fueling more volatility, calling zero-day trading options and leveraged funds \u201cpush-button liquidity for everybody.\u201d<\/p>\n

In fact, margin debt is up 54% annually, marking the sixth biggest surge in the last 60 years, Lee estimated. After the other five top increases, the market similarly consolidated.<\/p>\n

That dynamic was evident in South Korea, which has experienced a nationwide stock-trading mania as chipmakers SK Hynix and Samsung ride the AI wave.<\/p>\n

Frenzied demand for more ways to capture upside from those stocks gave rise to leveraged ETFs that further stoked the country\u2019s market rally. <\/p>\n

But the Korean stock boom has gone bust in recent weeks. The once-soaring Kospi index has plunged 27% after a hitting a record high last month, putting it well into bear market territory.<\/p>\n

As a result, 1.2 million brokerage accounts had a margin call, representing as much as 10% of Korea\u2019s accounts, according to Lee. As traders are forced to sell holdings to cover margin debt, a massive correction followed.<\/p>\n

That\u2019s sending ripples across global markets, which have been especially sensitive to moves to bellwether stocks in the AI trade.<\/p>\n

For example, SK Hynix\u2019s comments last month that it planned to slow down its AI memory business sparked the Kospi\u2019s\u00a0fifth worst daily plunge and dragged down indexes around the world. <\/p>\n

But compared to the Kospi 27% crash, the S&P 500\u2019s 2% dip from its recent high and the Nasdaq\u2019s 6% slide look like speed bumps. And Lee sees that as a positive sign.<\/p>\n

\u201cThat\u2019s why a rolling correction that what we\u2019re seeing now is super healthy because it\u2019s not the whole market coming down,\u201d he explained. \u201cIt\u2019s just pockets of it, and people have ballast like owning the Mag 7 or the software stocks.\u201d\u00a0<\/p>\n

Still, bond investors, who are less swayed by market fads than stock investors are, have also lost enthusiasm for the AI boom.<\/p>\n

As hyperscalers spend hundreds of billions of dollars a year to build data centers and other infrastructure, they are increasingly issuing debt.<\/p>\n

But bond investors are showing signs that demand is waning. Torsten Slok, chief economists at\u00a0Apollo\u00a0Global, pointed out in a note on Wednesday\u00a0hyperscalers\u2019\u00a0cover ratio\u2014investor orders per every dollar of bonds\u2014has plunged.<\/p>\n

It was nearly 5x in February 2026 but tumbled to below 2x in July, \u201csuggesting investors may need wider spreads to absorb additional hyperscaler supply,\u201d he warned. By contrast, the ratio for investment grade bonds overall only slipped by about half a point in that span.<\/p>\n

The dollar bond market, the world\u2019s largest, has become so saturated that tech giants have been issuing debt in other currencies. As a result, issuers will likely have to provide more attractive terms, meaning their borrowing costs will rise.<\/p>\n

AI-related debt must also compete against the flood of debt coming from the Treasury Department as the federal deficit continues to deepen and is on track to hit $2 trillion this fiscal year.<\/p>\n

\u201cThe current hyperscaler widening is a byproduct of the high-grade investor community trying to rationally price in an accelerating pace of issuance,\u201d JPMorgan strategists wrote in a note on Tuesday.<\/p>\n

#massive #margin #call #pushbutton #liquidity #torched #stocks #theyre #poised #rebound<\/p>\n","protected":false},"excerpt":{"rendered":"

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