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>
Global Liquidity Cycle hit a low in September 2022. It has been rising slowly since and looks set to hit a peak around 2026. Risk assets should get greater support</li>
<li>Yet the large 'carry' on government bonds and the recent sell-off persuades us to allocate towards fixed income for the first time in two years</li>
<li>There are risks. With coupon issuance is set to soar, Central Banks will be increasingly asked to finance monetary inflation
</li>
</ul>



Global Liquidity Cycle hit a low in September 2022. It has been rising slowly since and looks set to hit a peak around 2026. Risk assets should get greater support
Yet the large 'carry' on government bonds and the recent sell-off persuades us to allocate towards fixed income for the first time in two years
There are risks. With coupon issuance is set to soar, Central Banks will be increasingly asked to finance monetary inflation



Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

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Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

Macroeconomics

<ul>
<li>The Fed stuck with its intention to cut rates three times this year while penciling in one rate cut less for 2025 and 2026.</li>
<li>The key takeaway was that Powell is really keen on maintaining ample liquidity instead of what he calls abundant liquidity now. </li>
<li>Stocks, Gold, and Bitcoin love ample liquidity, especially when it becomes abundant again when the economy heads south.</li>
</ul>


The Fed stuck with its intention to cut rates three times this year while penciling in one rate cut less for 2025 and 2026.
The key takeaway was that Powell is really keen on maintaining ample liquidity instead of what he calls abundant liquidity now. 
Stocks, Gold, and Bitcoin love ample liquidity, especially when it becomes abundant again when the economy heads south.


March FOMC Meeting Conclusion: Powell Likes His Balance Sheet ‘BIG!

<ul>
<li>The main driver of asset prices looks set to stall, albeit temporarily. Global Liquidity is at a new all-time peak, but it is flat-lining</li>
<li>Global Liquidity compromised by a stumbling US Fed as it copes with the errant RRP and TGA, and by an erratic People's Bank of China. Q2 could prove tricky</li>
<li>Look to diversify elsewhere. Commodity markets are on the move. But strong economies do not always have strong financial markets</li>
</ul>


The main driver of asset prices looks set to stall, albeit temporarily. Global Liquidity is at a new all-time peak, but it is flat-lining
Global Liquidity compromised by a stumbling US Fed as it copes with the errant RRP and TGA, and by an erratic People's Bank of China. Q2 could prove tricky
Look to diversify elsewhere. Commodity markets are on the move. But strong economies do not always have strong financial markets


What Really Matters Is Global Liquidity...But It Looks Set to Zag Before It Zigs Higher

<ul>
<li>Risk asset markets are driven by rising Global Liquidity and falling inflation. Low inflation in 2024 will be sufficient to justify a significant change in direction by the US Fed</li>
<li>Cyclical analysis points to a further sizeable improvement in Global Liquidity conditions over the next 12-18 months</li>
<li>Investment regime is heading towards its next phase of Calmwhich favors equities and sees steeper yield curves  ahead</li>
</ul>


Risk asset markets are driven by rising Global Liquidity and falling inflation. Low inflation in 2024 will be sufficient to justify a significant change in direction by the US Fed
Cyclical analysis points to a further sizeable improvement in Global Liquidity conditions over the next 12-18 months
Investment regime is heading towards its next phase of Calmwhich favors equities and sees steeper yield curves  ahead


The US Fed May Find It Hard NOT to Cut Rates in 2024

<ul>
<li>Three events have changed investors' mood: US Quarterly Refunding (QRA), Fed FOMC Statement and H4.1 Release, and a downbeat October ISM Print</li>
<li>Most important by far is the QFA. This effectively 'added' a net US$80 billion of liquidity to US markets. It confirm 'fact' that QT effectively dead
</li>
<li>Risk still remain in our view. These events underscore a flat market in risk assets. Equity bull market still requires positive Central Bank liquidity injections and a stable bond market</li>
</ul>


Three events have changed investors' mood: US Quarterly Refunding (QRA), Fed FOMC Statement and H4.1 Release, and a downbeat October ISM Print
Most important by far is the QFA. This effectively 'added' a net US$80 billion of liquidity to US markets. It confirm 'fact' that QT effectively dead

Risk still remain in our view. These events underscore a flat market in risk assets. Equity bull market still requires positive Central Bank liquidity injections and a stable bond market


United States

The MSCI World Index is a free-float weighted equity index. It was developed with a base value of 100 as of December 31, 1969. MXWO includes developed world markets, and does not include emerging markets. MXWD includes both emerging and developed markets.

MSCI World Index (MXWO INDEX)

Global Liquidity: Looking Towards 2024

The upbeat narrative continues. Worth re-exploring why Global Liquidity, which has been the main driver of markets in recent years, is set to...

Michael J. Howell

March FOMC Meeting Conclusion: Powell Likes His Balance Sheet ‘BIG!

Even though the new Federal Reserve 'Dot Plot' looks marginally hawkish, Powell's strong emphasis on ample liquidity made markets cheer!

Jeroen Blokland

What Really Matters Is Global Liquidity...But It Looks Set to Zag Before It Zigs Higher

Global Liquidity the main driver of asset performance is set to zag lower before it zigs higher. Be aware of this temporary setback. Look to...

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The US Fed May Find It Hard NOT to Cut Rates in 2024

The beckoning US Election Year is likely to focus investor both on economic prospects and on the real potential for an easing of Fed policy. We...

Michael J. Howell

QT Dead...Risk On Again?

Risk asset markets are racing ahead. Is the bull back? We argue that not much has changed, except that QT (quantitative tightening) is effectively...

Michael J. Howell