Michael Howell: Federal Reserve Continues To Inject Liquidity Into Markets Via The Backdoor

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Jan 16, 2024

Michael Howell, CEO of CrossBorder Capital, discusses the global liquidity cycle, the Federal Reserve's injection efforts, and the correlation between liquidity, stocks, gold, and crypto. He explores the impact of liquidity on different market sectors and provides insights into future investment strategies. Howell also highlights the importance of tracking global liquidity as a leading indicator for asset prices and addresses the potential for future quantitative easing.

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Introduction

00:00 • 3min

Understanding Liquidity Beyond the Fed's Balance Sheet

02:57 • 8min

Liquidity Rising and Its Implications for Assets and Inflation

11:21 • 5min

Exploring Parallels Between Weimar Germany and the Current Economic Situation

16:41 • 1min

Responses to Monetary Inflation and Market Phases

18:07 • 5min

Performance of Different Sectors and Future Investment Strategy

22:57 • 23min

Global Liquidity: The Key Indicator for Asset Prices

45:51 • 29min

Exploring Views on Risk Assets and Global Liquidity

01:14:24 • 3min

Michaell Howell, CEO of CrossBorder Capital, returns to Forward Guidance to update viewers on his outlook on global liquidity. Howell notes that further evidence supports his long-held view that liquidity bottomed in October 2022, and he explains why he expects liquidity to strengthen further into 2024, making for a favorable environment for liquidity-sensitive assets such as stocks, gold, and crypto. Filmed on January 11, 2024.

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Timestamps:

(00:00) Introduction

(00:57) Howell: Liquidity Conditions Continue To Strengthen From Their Lows In The Early Fall of 2022

(12:26) Implications For Stocks, Gold, and Crypto

(22:50) Industry Sectors At This Stage In The Liquidity Cycle

(24:37) The Bond Market Is Being Distorted By The Federal Reserve

(30:07) Term Premia And Convexity In Fixed-Income

(37:07) Bank Term Funding Program and Draining of Fed's Reverse Repo (RRP) Facility

(40:11) Drivers Of Fed Liquidity In 2024 and Beyond

(45:50) The Economic Cycle Is Different Than The Liquidity Cycle

(50:51) Is Demand For Refinancing (and Liquidity) Lower Because U.S. Corporates & Households Have Such Long-Duration Liabilities?

(54:35) China and The People's Bank of China (PBOC)

(01:06:56) Howell's View On Interest Rates

(01:09:08) Non-Central Bank Sources of Liquidity

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.