Monetary Matters with Jack Farley The Liquidity Divergence Between East and West | Michael Howell on Deteriorating Federal Liquidity While People’s Bank of China (PBOC) Injects Stimulus and Pumps Gold
116 snips
Oct 26, 2025 Michael Howell, founder of Global Liquidity Indexes and author of Capital Wars, shares insights on alarming global liquidity trends. He highlights the weakening Federal Reserve liquidity, contrasting it with China's PBOC injecting over 7 trillion yuan into the market. Howell warns about a looming divergence between East and West, forecasting potential market struggles ahead. He also discusses the rising role of gold in China’s monetary strategy and its implications for future financial landscapes, urging listeners to prepare for a turbulent 2026.
AI Snips
Chapters
Books
Transcript
Episode notes
Global Liquidity Drives Asset Markets
- Global liquidity indexes track flows from over 90 financial systems and lead asset markets.
- Michael Howell says liquidity has recently been deteriorating, driven by US tensions in repo markets.
Fed Liquidity Matters More Than Headline QE
- Fed liquidity isolates the liquidity-creating line items within the Fed balance sheet.
- Howell warns Fed liquidity is now genuinely falling and causing repo market tensions.
Top-Slice Risk As Cycle Peaks
- Top-slice risk exposure now: reduce tactical risk allocations as the liquidity cycle nears its peak.
- Expect markets to range with more volatility and limited upside if Fed liquidity keeps falling.
