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
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Oct 29, 2025 Michael Howell, founder of Global Liquidity Indexes and author of Capital Wars, shares critical insights on global liquidity trends. He highlights a concerning decline in U.S. Federal Reserve liquidity due to intense repo market pressures while China pumps over 7 trillion Yuan into its economy, drastically impacting gold prices. Howell warns of a growing East-West financial divide and predicts that 2026 may not be kind to financial assets. He also discusses debt-likelihood ratios and advises core allocations to inflation hedges, including Bitcoin.
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High-Frequency Global Liquidity Nowcasts
- Michael Howell measures global liquidity by aggregating high-frequency data from over 90 financial systems and screening for data integrity.
- Daily nowcasts using AI reveal liquidity pulses that lead asset classes by months and flag turning points early.
Fed Is Leading The Liquidity Pullback
- Howell identifies the Federal Reserve as the primary driver of recent global liquidity contraction via repo tensions and declining Fed liquidity.
- He warns the Fed won't restore liquidity unless a major crisis forces action, increasing financial market risk.
Top-Slice Risk Ahead Of Cycle Peak
- Top-slice your tactical risk exposure as the liquidity cycle nears its peak and markets may flatline with more volatility.
- Maintain a core allocation to monetary-inflation hedges and trim speculative exposure now.
