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>Latest FOMC meeting sounded 'surprising' dovish, but this is less surprising if we consider the US Fed is only six months away from a probable policy pivot
</li>
<li>Evidence seems to confirm the US and World economies are already in recession. This will get worse because a major Global Liquidity shock has already been delivered </li>
<li>This looks like a bear market rally. Bears have two down-legs, split by an often vicious spike.  Effects of a bigger recession on 2H, 2022 profits needs to be discounted</li>
</ul>


Latest FOMC meeting sounded 'surprising' dovish, but this is less surprising if we consider the US Fed is only six months away from a probable policy pivot

Evidence seems to confirm the US and World economies are already in recession. This will get worse because a major Global Liquidity shock has already been delivered 
This looks like a bear market rally. Bears have two down-legs, split by an often vicious spike.  Effects of a bigger recession on 2H, 2022 profits needs to be discounted


Is The US Fed Tightening Into A Big Recession?

<ul>
<li>Global Liquidity Index (GLI) tests a low 29.5 (range 0-100). World economy now in recession </li>
<li>World Central Bank Liquidity even weaker at index of 15.9, with US Fed Liquidity at index 41.6, trailing other policy-makers notably ECB . More squeeze ahead</li>
<li>Risk exposure of investors  still too high at index 19.1 (range -50 to +50)  given upcoming recession</li>
</ul>


Global Liquidity Index (GLI) tests a low 29.5 (range 0-100). World economy now in recession 
World Central Bank Liquidity even weaker at index of 15.9, with US Fed Liquidity at index 41.6, trailing other policy-makers notably ECB . More squeeze ahead
Risk exposure of investors  still too high at index 19.1 (range -50 to +50)  given upcoming recession


<ul>
<li>Bear market results from sharp monetary squeeze as Central Bank liquidity withdrawn, led by Fed. More pain to come. Recession is here 
</li>
<li>
 US Federal Reserve is driving markets lower and USD up. QT has officially started, but Fed has in fact been secretly tightening liquidity for months</li>
<li>Effective Fed balance sheet likely to contract by US$2 trillion under QT plans, but policy error could easily force a bigger US$3 trillion correction. Wall Street at risk. 
</li>
</ul>


Bear market results from sharp monetary squeeze as Central Bank liquidity withdrawn, led by Fed. More pain to come. Recession is here 


 US Federal Reserve is driving markets lower and USD up. QT has officially started, but Fed has in fact been secretly tightening liquidity for months
Effective Fed balance sheet likely to contract by US$2 trillion under QT plans, but policy error could easily force a bigger US$3 trillion correction. Wall Street at risk. 



Recession Is Here! SPX(S&P500) Still Set to Test 3200.Last Week’s US Fed Move Makes This More Likely

<ul>
<li>
 Chinese economy skidding badly, buffeted by C-19 lockdowns and strong US dollar. Domestic economic weakness alongside strong dollar are two critical facts. </li>
<li>
US dollar has been weaponized and pointed towards the Chinese Yuan. Growing pressure on Yuan to devalue </li>
<li>
US policy is to drive Fed balance sheet lower and US dollar higher, forcing credit funders back to the US unit</li>
</ul>



 Chinese economy skidding badly, buffeted by C-19 lockdowns and strong US dollar. Domestic economic weakness alongside strong dollar are two critical facts. 

US dollar has been weaponized and pointed towards the Chinese Yuan. Growing pressure on Yuan to devalue 

US policy is to drive Fed balance sheet lower and US dollar higher, forcing credit funders back to the US unit


Yuan Devaluation (CNY): China At A Turning Point?

<ul>
<li>World Stock Markets are being battered by weak US Fed Liquidity and by weakening World economic activity 
</li>
<li>
Central Bank tightness increasing driven by US Fed who are slated to drain US$2 trillion from markets </li>
<li>
Chinese economy struggling under C-19 lockdowns and tight People's Bank (PBoC)</li>
</ul>


World Stock Markets are being battered by weak US Fed Liquidity and by weakening World economic activity 


Central Bank tightness increasing driven by US Fed who are slated to drain US$2 trillion from markets 

Chinese economy struggling under C-19 lockdowns and tight People's Bank (PBoC)


What’s Driving The Bear Market ... Lower?

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)

Is The US Fed Tightening Into A Big Recession?

Having been late in tightening the US Fed now risks been out-of-step in easing. July FOMC acknowledged this risk with surprisingly dovish comments,...

Michael J. Howell

A Bigger Crash?!

A bigger squeeze is coming. The US Fed intends to take US$2.5 trillion from its balance sheet, equivalent to a 4-5% point hike in Fed Funds. Expect...

Michael J. Howell

Recession Is Here! SPX(S&P500) Still Set to Test 3200.Last Week’s US Fed Move Makes This More Likely

World recession Is here. SPX(S&P500) set to test index 3200.Last week’s US Fed move makes this more likely. They pulled another US$105 billion from...

Michael J. Howell

Yuan Devaluation (CNY): China At A Turning Point?

Domestic economic weakness plus strong US dollar expose China's fragile position. C-19 lockdowns have hard-hit the economy, but PBoC being forced...

Michael J. Howell

What’s Driving The Bear Market ... Lower?

World Stock Markets being battered by weak US Fed Liquidity and by weakening World economic activity. Latest data suggest we are going lower......

Michael J. Howell