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Illustration: Sarah Grillo/Axios

There are a growing number of signs the bull market in equities is overheating, with indicators of investor complacency and risk-seeking reaching the highest levels since 2007 and 1999.

Why it matters: Those periods of extreme euphoria were followed by market crashes.

What's happening: As of late February, investors already had levered up with a record $814 billion borrowed against their portfolios, according to Financial Industry Regulatory Authority data.

  • That's a 49% year-over-year increase, the largest since 2007.
  • The prior high was during the dot-com bubble in 1999, WSJ reports.

Watch this space: Professional money managers already have started selling.

  • Data from Bank of America show the bank's large institutional clients were net sellers of equities for the fourth straight week last week and hedge funds are starting to join them.

What they're saying: "Last week, as the S&P 500 breached 4000 and our work suggests increasing signs of equity euphoria, BofA Securities clients were net sellers of US stocks," the company's data analytics team said in a note.

  • The bank's sell-side indicator rose for the third month in a row to a 10-year high and the closest to a contrarian "Sell" signal since May 2007, analysts noted.
  • Further, BofA points out that since March 2020 the average recommended allocation to stocks has risen by more than three times the typical rate following prior bear markets.

Be smart: "Increasingly euphoric sentiment is a key reason for our neutral outlook as the cyclical rebound, vaccine, stimulus, etc. is largely priced into the market."

  • "We've found Wall Street's bullishness to be a reliable contrarian indicator."

One level deeper: The Cboe's volatility index fell another 5.3% on Wednesday to 17.16, the lowest it has been since February 2020.

  • "This low level continues to suggest complete complacency by investors – so worries over rising rates or rising inflation once again appear to be on the back burner," Kenny Polcari, managing partner at Kace Capital Advisors, says in a note.

Yes, but: Big names like JPMorgan CEO Jamie Dimon are taking the other side of that bet. In his annual letter to shareholders, Dimon argued strong consumer savings, vaccine distribution and the proposed infrastructure plan could lead to a "Goldilocks moment" for the market, replete with sustained growth and slow inflation.

Go deeper

Dimon calls on companies to be policymakers

JPMorgan CEO Jamie Dimon. (Photo: Al Drago/Bloomberg via Getty Images)

JPMorgan CEO Jamie Dimon is calling on companies to play a bigger role in the world’s problems, saying today in his annual shareholders letter that the business sector should be a “responsible community citizen."

Why it matters: Corporations are increasingly facing more pressure to take a stand on politically divisive issues.

Dan Primack, author of Pro Rata
Apr 7, 2021 - Economy & Business

JPMorgan CEO Jamie Dimon calls for "level playing field" on fintech regulations

Illustration: Aïda Amer/Axios

JPMorgan CEO Jamie Dimon today warned in his annual letter that the U.S. and European banking sectors are being surpassed in scale by shadow banks and fintech rivals.

Why it matters: Dimon, who has at least some pull in the Biden White House, is asking for a "level playing field." Or, put another way, a loosening of capital requirements on banks and/or greater regulatory oversight of fintech.

Streaming reaches new milestone

llustration: Sarah Grillo/Axios

Nielsen on Thursday introduced a new metric for measuring how many people watch streaming video and for how long.

Why it matters: Streaming is exploding, but the industry has long lacked a uniform way to measure consumption, and that has held it back from being able to integrate advertising.