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>Volatility and stock market rollercoaster likely to return in 2022</li>
<li>Central Banks’ policies of low interest rates and an accelerated taper will destabilize financial markets</li>
<li>Expect a ‘Powell Put’ as policy-makers are forced to re-engage QE policies</li>
</ul>


Volatility and stock market rollercoaster likely to return in 2022
Central Banks’ policies of low interest rates and an accelerated taper will destabilize financial markets
Expect a ‘Powell Put’ as policy-makers are forced to re-engage QE policies


The Big Risks For 2022 .... Large Debts, Less Liquidity and Growing Indexation?

<ul>
<li>
 US Fed is ‘behind the curve’ on inflation: More importantly, the US Fed is ‘behind the crowd’ in tightening policy </li>
<li>World bond markets seem to believe there will be a sharp policy shock. We question whether the current US Fed has the fortitude to do this?</li>
<li>The 'likely' fudge will create volatility, but it should present another 'buy the dip' opportunity</li>
</ul>



 US Fed is ‘behind the curve’ on inflation: More importantly, the US Fed is ‘behind the crowd’ in tightening policy 
World bond markets seem to believe there will be a sharp policy shock. We question whether the current US Fed has the fortitude to do this?
The 'likely' fudge will create volatility, but it should present another 'buy the dip' opportunity


The US Fed Is ‘Behind The Crowd’ And Not Just Behind The Curve

<ul>
<li>Global Liquidity likely to hit US$176 trillion in 2022, or over 175% of World GDP </li>
<li>Smallest increase (+3% or US$5 trillion) since 2018. Central Bank balance sheets increase modestly to US$32.7 trillion as tapering bites</li>
<li>Faltering Liquidity will be a major headwind for risk assets in 2022</li>
</ul>


Global Liquidity likely to hit US$176 trillion in 2022, or over 175% of World GDP 
Smallest increase (+3% or US$5 trillion) since 2018. Central Bank balance sheets increase modestly to US$32.7 trillion as tapering bites
Faltering Liquidity will be a major headwind for risk assets in 2022


A Equity Sell-Off? Prospects For Global Liquidity in 2022

<ul>
<li>Re-configured US Fed is becoming more hawkish towards inflation</li>
<li>Bond market term structure warns of near-term economic troubles
</li>
<li>Expect a ‘catch up’ with faster QE taper by US Fed</li>
<li>Inflation is transitory but ‘sticky’. Disinflationary forces will ultimately reassert themselves</li>
</ul>


Re-configured US Fed is becoming more hawkish towards inflation
Bond market term structure warns of near-term economic troubles

Expect a ‘catch up’ with faster QE taper by US Fed
Inflation is transitory but ‘sticky’. Disinflationary forces will ultimately reassert themselves


Watch-Out For The Fed’s Big ‘Catch-Up’

<ul>
<li>Flattening Treasury yield curves, particularly at the back-end, are rarely bullish for risk assets. </li>
<li>When combined, as now, with a steepening front-end they warn of upcoming credit problems.  </li>
<li>Bonds are telling us that economies are breaking-down.  Low ‘real’ carry compromises the long-term outlook for bonds, but we must not ignore their warning message for 2022  </li>
</ul>


Flattening Treasury yield curves, particularly at the back-end, are rarely bullish for risk assets. 
When combined, as now, with a steepening front-end they warn of upcoming credit problems.  
Bonds are telling us that economies are breaking-down.  Low ‘real’ carry compromises the long-term outlook for bonds, but we must not ignore their warning message for 2022  


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)

The Big Risks For 2022 .... Large Debts, Less Liquidity and Growing Indexation?

Global Liquidity is slowing. This will heighten potential market volatility in 2022 and may ultimately force a bail-out by policy-makers. Investors...

Michael J. Howell

The US Fed Is ‘Behind The Crowd’ And Not Just Behind The Curve

Fed is serious 'behind the curve' on fighting inflation, but as worryingly it is also 'behind the crowd' in tightening liquidity. Expect a 'fudged'...

Michael J. Howell

A Equity Sell-Off? Prospects For Global Liquidity in 2022

This report details our estimates of Global Liquidity for 2022. Liquidity proved vital for markets in 2020 and 2021, but latest signals show it is...

Michael J. Howell

Watch-Out For The Fed’s Big ‘Catch-Up’

Inflation is a near-term political threat in the US and will trigger a more hawkish response from the US Fed. This will unsettle stock markets, but...

Michael J. Howell

A Wonkish Warning From Bonds For 2022

Equity investors are ignoring the warning message from World government bond markets for 2022. A steep front-end and flatter back-end of the term...

Michael J. Howell