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Keeping it Simple with Simplify Asset Management
Keeping it Simple | Ep. 46: With a Liquid Howell, She Cried More, More, More
Mar 10, 2025
Michael Howell, a global macro expert and founder of Cross Border Capital, shares his insights on liquidity in financial markets. He tackles the difference between market and funding liquidity and their impact on asset volatility, especially during crises. Howell explores the proposed Mar-a Accord and its potential to reshape the U.S. economy, emphasizing gold's significance amid financial unrest. He also discusses the challenges of capital allocation, debt management, and the vital role of demographic trends in shaping economic cycles.
01:00:41
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Quick takeaways
- Liquidity is critical for asset performance, especially for long-duration assets like tech stocks, highlighting its role in financial stability.
- Despite apparent monetary tightening, hidden stimulus remains in the U.S. economy, complicating the relationship between fiscal policy and market liquidity.
Deep dives
Understanding Liquidity in Financial Markets
Liquidity can be categorized into market liquidity and funding liquidity, where the former refers to how easily assets can be bought or sold in current prices, and the latter is concerned with the flow of cash and credit in the financial system. The concept of liquidity is connected deeply with duration; the shorter the duration of an asset, the higher its liquidity. Moreover, funding liquidity is a broader measure reflecting the overall cash and credit flowing through global markets, which greatly influences asset performance, particularly long-duration assets like technology stocks and Bitcoin. As liquidity increases, it typically leads to better performance in these assets, showcasing the essential role of liquidity in financial stability and growth.
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Discover
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