u/Spade_of_Trades

VOO & Chill?

US margin debt dropped -$85 billion in July, to $1.42 trillion, the largest monthly decline on record.

This also marks the first monthly decrease since March.

By comparison, the 2nd-biggest monthly drop was recorded in January 2022 at -$80 billion, just as the bear market started.

This all follows a +$198 billion jump in margin debt in May and June, the largest 2-month increase on record.

Despite this record decline, margin debt has still surged +$518 billion, or +58%, since the start of 2025.

Levered investors were crushed last month.

President Trump has instructed top administration envoys to halt their conversations with Iran, per CNN. White House officials have reportedly communicated to political allies that they are shifting their strategy, going from “hammer Iran ASAP” to “strangle them” over time. Today marks day 171 of the Iran War.

Hedge funds purchased US equities in every trading session last week.

In total, this marked their 2nd-largest weekly purchase over the last 12 months.

Single stocks accounted for ~70% of the total, driven primarily by long equity purchases and, to a lesser extent, short covering.

Information technology and communication services saw the strongest demand, with 8 of 11 sectors recording purchases.

Meanwhile, macro products, such as index futures and ETFs, accounted for ~30% of total demand, with short positions in US-listed ETFs reduced for the 6th consecutive week.

Hedge funds are doubling down on US equities.

Leopold Aschenbrenner's Situational Awareness loss of $35 Billion is officially the largest hedge fund loss EVER.

This officially surpassed the 2021 collapse of Bill Hwang's Archegos Capital.

Markets are bracing for a more volatile period ahead:

S&P 500 options are pricing a daily implied move of ~0.75% on August 27th, the day after Nvidia, $NVDA, reports its quarterly earnings.

The following day, August 28th, carries a ~0.70% implied move in the index as the Jackson Hole symposium begins, making them the two most anticipated volatility events of the month.

By comparison, typical daily implied moves on non-event days this week are just ~0.40-0.50%.

At the same time, options positioning flipped from long to short gamma in early August, a dynamic that tends to amplify market swings once volatility picks up.

Meanwhile, the volatility index, $VIX, finished last week at 14.3 points, the lowest level since December 2025.

More volatility is likely ahead of us.