In a research note, National Bank Financial Inc. points out one possible sign that confidence in the bull market in stocks might be weakening.

“Until recently, investors’ optimism regarding capital markets prospects was very high,” it says. “Indeed, the margin debt on securities accounts reported by NYSE member organizations has hit a record $285.6 billion, breaking the previous record of $278.5 billion registered in March 2000 (Nasdaq’s peak).”

The U.S. stock markets’ valuation is much more reasonable this time around, it stresses (15.7x trailing earnings) than in March 2000 (28.3x). “However, we cannot exclude that some U.S. brokers could [experience some stress tests] in coming months if this correction turns out to be a real bear market on the backdrop of a possible U.S. recession later on this year.” NBF puts that probability at 40%.

“Is the bull market over?” it asks. “Considering that credit default swaps on major New York investments firms’ bonds are surging, it seems that some investors have increased the probability of such an outcome.”

Indeed, it notes that the cost of protecting US$10 million in debt of Wall Street major brokers has swelled since late December to hit a 19-month high. “After Wall Street major firms made a lot of money by securitizing mortgages and underwriting exotic products, bondholders are expressing concern about the sustainability of their business models,” it suggests.