Forward Guidance Why Cross-Border Flows Matter More Than Rate Cuts | Capital Flows
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Nov 19, 2025 
Felix Jauvin, a researcher focused on macro and cross-border capital flows, discusses the intricate dynamics of today's financial landscape. He explains how credit growth and geopolitical shifts are currently shaping liquidity more than the Federal Reserve's actions. Felix emphasizes the resilient state of household balance sheets, why recession risks remain low, and emerging trends in auto-loan stress. He also delves into cross-border capital flows and their impact on U.S. assets, alongside insights into the contrasting roles of gold and Bitcoin in today's economy.
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Credit-Led Rally Explained
- Credit growth and falling real rates drove the strong market rally from April through summer by pushing capital further out the risk curve.
- Corporate bond issuance and market acceptance of higher-risk balance sheets signaled aggressive liquidity into equities.
Pick Spots, Not Broad Bets
- Go neutral on equities when real rates rise and positioning risk increases, then re-evaluate for buying dips.
- Pick specific longs and shorts rather than broad bets during higher dispersion periods.
Quantify Credit Via Company Balance Sheets
- Measure credit creation by tracking corporate balance-sheet moves: issuance, debt relative to cash flow, and maturity dynamics.
- Watch market acceptance of this shifted risk via factor performance (e.g., floating-rate debt vs. quality names).