Forward Guidance

Liquidity Has Fallen Off A Cliff | Joseph Wang & Michael Howell

Jun 13, 2022

01:21:35

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Quick takeaways

Liquidity plays a crucial role in maintaining balance and stability in the financial system, impacting asset markets and demonstrating the consequences of changing liquidity conditions.

Understanding and quantifying liquidity is vital for investors and market participants to navigate changing market dynamics, as it influences risk assets such as stocks, crypto, and credit.

Central banks' focus on quantity, in addition to price, can exert significant influence on global liquidity, credit creation, and overall economic stability.

Deep dives

Defining Liquidity and Its Importance

The podcast episode explores the definition of liquidity and its significance in the markets. Liquidity can be broadly classified into fund liquidity (ability to finance something) and market liquidity (ability to sell something and get a fair price). Liquidity is crucial in maintaining balance and stability in the financial system, and it plays a vital role in the functioning of banks, money market funds, and similar entities. The recent impact of liquidity on markets has been evident, especially with the programs implemented by central banks. Overall, liquidity is a complex concept but holds great importance in the current market scenario.

What Is Good Liquidity? And What's Bad Liquillity?

03:29

Idzum Out a Little Bit, Joseph, Could You Speak to the Fed's Appetite to Moderate Inflation?

01:41

The Fed Cannot Stimulate Bank Lending

02:23

Introduction

5min

Global Liquidity Index

3min

Is the Cost of Capital More Important Than Rate Hikes?

4min

Central Banks Wrongly Cut Interest Rates

3min

Federal Reserve Lending Against Collateral?

6min

Is There a Risk That the Fed Will Reverse Repose?

5min

Reverse Repose

3min

Idzum Out a Little Bit, Joseph, Could You Speak to the Fed's Appetite to Moderate Inflation?

2min

Is the Fed Preferable to a Market Panic?

2min

10.

The Real Trigger for Vix, Equity Market Volatility

4min

11.

Fed Balance Sheets - Is That Really Realistic?

5min

12.

The Federal Reserve Is Just a Pupyter, Doesn't Have Any Real Power?

5min

13.

Is the Federal Reserve a Lender to Last Resort?

3min

14.

The Fed Cannot Stimulate Bank Lending

2min

15.

Bank Credit Creation Is the Big Player in Inflationary Money Creation

2min

16.

The Future Prospects of Treasuries

4min

17.

Is 18 Demographics Inflationary?

5min

18.

Is the Fed Funds Rate a Tail Risk?

5min

19.

Is the Widening of Credit Spreads Coming?

2min

20.

What Is Good Liquidity? And What's Bad Liquillity?

3min

21.

Why Is the People's Bank of China Not Stimulating?

4min

22.

Is the Chinese Economy Going to Bottom? Orarere?

2min

23.

Is There Any Hope for Non Profitable Technology Stocks?

3min

In this episode of Forward Guidance, fan favourites Michael Howell and Joseph Wang pair up to discuss the overarching theme of liquidity and the Fed. After sounding the alarm and forecasting a decline in equity markets towards the end of 2021, those predictions are now beginning to manifest in markets.

Michael walks listeners through how he tracks market liquidity as a leading indicator for equity prices. Joseph provides an in depth look at the signals driving the Fed in this environment. Both guests share their thoughts on the Powell pivot myth, volatility, signs of stagflation, QT and so much more.

This episode is jam packed with insights you can't afford to miss, but to hear them, you'll have to tune in!

Follow Joseph Wang on Twitter: https://twitter.com/FedGuy12

Follow Michel Howell on Twitter: https://twitter.com/crossbordercap

Follow Jack Farley on Twitter: https://twitter.com/JackFarley96

Follow Blockworks on Twitter https://twitter.com/Blockworks_

Subscribe To Fed Guy: https://fedguy.com/

Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter

Timestamps:

(00:00) Introduction

(00:28) What Is Liquidity?

(09:10) Declining Refinancing Capacity

(13:46) Bagehot's Rule and The Discount Window

(24:50) Is This Unprecedented?

(28:35) Is Waiting For A Powell Pivot Futile?

(30:16) The Fed And The VIX

(33:16) Inflation and Recession

(36:24) How Much QT Can The Fed Actually Do?

(39:20) Gold and Crypto

(41:17) The U.S. Dollar's Role

(45:17) The People's Bank of China

(46:43) How Much Power Does the Fed Actually Have?

(49:12) The Commercial Banking System

(53:33) Where Are Long-Duration Bond Yields Headed?

(1:02:28) Yield Curve Interpretations

(1:07:08) Is There A Problem Lurking In Credit?

(1:09:03) "Good Liquidity" vs. "Bad Liquidity"

(1:12:55) China

(1:18:10) Closing Thoughts On The Market

Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

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Forward Guidance

Liquidity Has Fallen Off A Cliff | Joseph Wang & Michael Howell

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Defining Liquidity and Its Importance

Liquidity as a Measure of Financial Sector's Financing Capacity

The Role of Quantity and Price in Monetary Policy

The Influence and Role of Central Banks in Financial System

The impact of demographics on inflation

Supply and demand dynamics in the Treasury market

What Is Good Liquidity? And What's Bad Liquillity?

Idzum Out a Little Bit, Joseph, Could You Speak to the Fed's Appetite to Moderate Inflation?

The Fed Cannot Stimulate Bank Lending

Get the Snipd
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AI-powered
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Forward Guidance

Liquidity Has Fallen Off A Cliff | Joseph Wang & Michael Howell

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Defining Liquidity and Its Importance

Liquidity as a Measure of Financial Sector's Financing Capacity

The Role of Quantity and Price in Monetary Policy

The Influence and Role of Central Banks in Financial System

The impact of demographics on inflation

Supply and demand dynamics in the Treasury market

What Is Good Liquidity? And What's Bad Liquillity?

Idzum Out a Little Bit, Joseph, Could You Speak to the Fed's Appetite to Moderate Inflation?

The Fed Cannot Stimulate Bank Lending

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