WTFinance Liquidity Shortage Squeezing the Economy with Michael Howell
7 snips
Oct 27, 2025 
Michael Howell, Founder and Managing Director of CrossBorder Capital, offers deep insights into global liquidity cycles. He discusses how current liquidity conditions are approaching a peak, risking asset values. The conversation explores China's aggressive liquidity measures, potential backing of the yuan with gold, and the contrasting tightening in the US. Howell warns about the implications for equities linked to Fed liquidity and highlights the growing refinancing demands that could lead to market vulnerability. His main takeaway? Keep a close eye on liquidity indicators and repo markets.
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Liquidity Cycle Nearing A Peak
- Global liquidity is near a cyclical peak and could inflect downwards soon, risking a rocky ride for risk assets.
- The liquidity cycle averages five to six years and closely tracks refinancing needs driven by debt maturities.
Markets Are A Refinancing Engine
- Financial markets now primarily serve debt refinancing rather than new investment funding.
- Around 70–80% of market transactions are refinancing, making liquidity the central driver of asset cycles.
Repo Stress Signals Systemic Tension
- Repo market stress and rising SOFR spreads signal growing collateral and liquidity imbalance.
- Increasing repo spikes and standing repo facility use indicate mounting systemic tensions.
