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>Sharp pick-up in ‘safe’ asset demands</li>
<li>Global Liquidity peaked late-2020</li>
<li>World GDP growth looks likely to have peaked in May, with big drop in China</li>
<li>June FOMC appears to justify tapering, which de facto has begun</li>
<li>Yield curves now flattening</li>
</ul>


Sharp pick-up in ‘safe’ asset demands
Global Liquidity peaked late-2020
World GDP growth looks likely to have peaked in May, with big drop in China
June FOMC appears to justify tapering, which de facto has begun
Yield curves now flattening


Global Liquidity Support Has Shrunk … Risk Assets Looking Vulnerable

<ul>
<li>Daily economic surprise indexes warn of sharp Chinese economic slowdown</li>
<li>This aligns with falling rates across Chinese yield structure</li>
<li>Moves unrelated to accommodative PBoC monetary policy</li>
<li>Chinese yields could fall another 50-100bp which is bullish for US Treasuries</li>
</ul>


Daily economic surprise indexes warn of sharp Chinese economic slowdown
This aligns with falling rates across Chinese yield structure
Moves unrelated to accommodative PBoC monetary policy
Chinese yields could fall another 50-100bp which is bullish for US Treasuries


<ul>
<li>Latest data show large withdrawals of US Liquidity thru May by the US Fed</li>
<li>This may be technical, but it echoes concerns expressed at the last FOMC</li>
<li>A taper may be coming. This could trigger another tantrum</li>
<li>Longer-term Fed must operate a ‘put’ and expand its balance sheet at close to 10% per annum to support debt roll-overs and fiscal spending plans</li>
</ul>


Latest data show large withdrawals of US Liquidity thru May by the US Fed
This may be technical, but it echoes concerns expressed at the last FOMC
A taper may be coming. This could trigger another tantrum
Longer-term Fed must operate a ‘put’ and expand its balance sheet at close to 10% per annum to support debt roll-overs and fiscal spending plans


Global QE: Is The US Fed About to Tighten?

<ul>
<li>V-shaped World economic rebound well-underway</li>
<li>Risk of policy-makers overstimulating</li>
<li>Financial stability a greater risk than faster high street inflation</li>
<li>Liquidity cycle more cyclical than ever</li>
<li>US dollar vulnerable to further falls</li>
<li>House prices likely to see bigger gains</li>
<li>Policy-makers will have to address these two imbalances</li>
</ul>


V-shaped World economic rebound well-underway
Risk of policy-makers overstimulating
Financial stability a greater risk than faster high street inflation
Liquidity cycle more cyclical than ever
US dollar vulnerable to further falls
House prices likely to see bigger gains
Policy-makers will have to address these two imbalances


Taper Talk – Will The Global Liquidity Boom End With A Whimper Or A Bang?

<ul>
<li>
No evidence that China’s People's Bank (PBoC) is tightening policy</li>
<li>
Liquidity conditions still look above average</li>
<li>China’s huge size means that Chinese Liquidity matters to the World</li>
<li>High and rising commodity prices suggest Chinese economy is expanding</li>
<li>
Cyclicals still favoured for investment</li>
</ul>



No evidence that China’s People's Bank (PBoC) is tightening policy

Liquidity conditions still look above average
China’s huge size means that Chinese Liquidity matters to the World
High and rising commodity prices suggest Chinese economy is expanding

Cyclicals still favoured for investment


Chinese Monetary Policy – Is China Really, Really Tightening??

United States

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MSCI World Index (MXWO INDEX)

Global Liquidity Support Has Shrunk … Risk Assets Looking Vulnerable

Falling Global Liquidity, notably in the US, and skidding World economic activity, notably in China, suggest that the climate for risk assets is...

Michael J. Howell

China's Economy: Chips Or Cracks?

Daily economic surprise indexes show sharply lower Chinese economic momentum in early June. This should lead to 50-100bp cuts in rates along the...

Michael J. Howell

Global QE: Is The US Fed About to Tighten?

Do latest liquidity data thru May and recent statements from FOMC point to a change in direction of US Federal Reserve policy towards tightness?

Michael J. Howell

Taper Talk – Will The Global Liquidity Boom End With A Whimper Or A Bang?

Global Liquidity really matters for asset prices. It is starting to inflect. Taper talk is rising. High Street inflation may not be the threat:...

Michael J. Howell

Chinese Monetary Policy – Is China Really, Really Tightening??

Despite the warning cries from many analysts we find no compelling evidence that China's People's Bank is tightening monetary policy. Rather...

Michael J. Howell