Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>A new currency regime in Asia?</li>
<li>Wildly inaccurate media reports wrongly suggest large-scale capital outflows from EM</li>
<li>Rather EM enjoying best forex reserve growth for a decade</li>
<li>
De facto Asian Currency Unit, a ‘Euro-like’ policy, allowing monetization</li>
<li>Loose US fiscal and monetary policies are more likely to spill-over into EM</li>
</ul>


A new currency regime in Asia?
Wildly inaccurate media reports wrongly suggest large-scale capital outflows from EM
Rather EM enjoying best forex reserve growth for a decade

De facto Asian Currency Unit, a ‘Euro-like’ policy, allowing monetization
Loose US fiscal and monetary policies are more likely to spill-over into EM


Could The New Asian ‘Euro’ Mean A Coming Decade of Outperformance From Emerging Markets?

<ul>
<li>There is no bubble in stock prices</li>
<li>P/Es are an inappropriate and misleading guide to assessing aggregate stock markets</li>
<li>Aggregate stock markets depend on liquidity and behavioral factors</li>
<li>
China and Emerging Markets have the most to gain from future equity investment</li>
</ul>


There is no bubble in stock prices
P/Es are an inappropriate and misleading guide to assessing aggregate stock markets
Aggregate stock markets depend on liquidity and behavioral factors

China and Emerging Markets have the most to gain from future equity investment


<ul>
<li>
Geopolitical risk analysis is much in fashion, especially in the Trump era</li>
<li>Geopolitical events prove statistically significant per se, but economically minor in their effects on markets</li>
<li>Far more important is prevailing risk positioning of investors</li>
<li>Using this analysis, 2021 will decent for stocks, but the UK looks a compelling investment, whereas Asian EM now look less interesting</li>
</ul>



Geopolitical risk analysis is much in fashion, especially in the Trump era
Geopolitical events prove statistically significant per se, but economically minor in their effects on markets
Far more important is prevailing risk positioning of investors
Using this analysis, 2021 will decent for stocks, but the UK looks a compelling investment, whereas Asian EM now look less interesting


How Important Will Be Trump’s Exit, Geopolitics and Warren Buffett to Investment Markets in 2021?

<div>• High levels of Global Liquidity and V-shaped Economic Rebound</div><div>• Economies, so far, rebounding faster than after 2008 GFC</div><div>• China has unusually not created much liquidity in 2020</div><div>• Latest evidence show acceleration in Chinese Shadow Bank lending</div>

• High levels of Global Liquidity and V-shaped Economic Rebound• Economies, so far, rebounding faster than after 2008 GFC• China has unusually not created much liquidity in 2020• Latest evidence show acceleration in Chinese Shadow Bank lending

A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

In our October 1 Int’l Compass we highlighted our belief that the lows were in place for this recent correction and that, combined with mostly healthy market dynamics, a bullish outlook is appropriate if the MSCI ACWI (ACWI-US) is above $77 support and, if the MSCI EM (EEM-US) is above $42.30 support. These indexes and market dynamics have only improved since October 1. As a result, our outlook remains bullish and we continue to believe that the path of least resistance is higher for global equities. Below we summarize the basis for our bullish outlook. Open the attached file to read our complete International Strategy document, and to find links to detailed comments and recommendations for each of our 12 Sectors.

In our October 1 Int’l Compass we highlighted our belief that the lows were in place for this recent correction and that, combined with mostly healthy market dynamics, a bullish outlook is appropriate if the MSCI ACWI (ACWI-US) is above $77 support and, if the MSCI EM (EEM-US) is above $42.30 support. These indexes and market dynamics have only improved since October 1. As a result, our outlook remains bullish and we continue to believe that the path of least resistance is higher for global equities. Below we summarize the basis for our bullish outlook. Open the attached file to read our complete International Strategy document, and to find links to detailed comments and recommendations for each of our 12 Sectors.

Global Equity Strategy: Bullish Outlook Intact

China

The MSCI Em (Emerging Markets) Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

MSCI Emerging Markets Index (MXEF INDEX)

Could The New Asian ‘Euro’ Mean A Coming Decade of Outperformance From Emerging Markets?

Asian cross-currency volatility is at its all-time low. A de facto Euro-like unit is forming. This could be hugely bullish for Emerging Markets

Michael J. Howell

Is This The Greatest Bubble of All Time?

P/Es are a misleading and wrong way to value aggregate stock markets. What works at the individual security level does not work well in aggregate....

Michael J. Howell

How Important Will Be Trump’s Exit, Geopolitics and Warren Buffett to Investment Markets in 2021?

Geopolitics are a popular background narrative to markets, but they make little difference to returns. What really matters is the portfolio...

Michael J. Howell

A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?

By easing restrictions on shadow bank lending China is boosting liquidity. Shadow bank credit is accelerating rapidly once again. This will boost...

Michael J. Howell

Global Equity Strategy: Bullish Outlook Intact

Read our complete International Strategy document to find detailed comments and recommendations for each of our 12 Sectors.

Vermilion Research