Fresh Liquidity Is Supporting A New Bull Market | Michael Howell
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- เผยแพร่เมื่อ 5 มิ.ย. 2024
- Michael Howell, managing director at Cross Border Capital, is the world’s leading expert on global liquidity, a key concept in finance that relates to the relative ease of financing in markets around the world.
After previously calling in 2022 that a collapse in liquidity would usher in a bad year for risk assets, Howell returns to Forward Guidance with happier tidings. Howell now argues that global liquidity conditions reached a nadir in October 2022 and since then have been rising, in part due to the People’s Bank of China (PBOC) injecting trillions of Yuan into the Chinese financial system, as well as money market funds pulling cash from the Fed’s reverse repo (RRP) facility.
Howell also shares with Forward Guidance listeners his thoughts on why the yield curve is sending a false signal, as well as on private credit creation and cross-border flows.
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Timestamps:
00:00 Introduction
01:40 Liquidity Is Rising - Why?
06:17 But What About Quantitative Tightening (QT)?
09:03 Treasury Market Liquidity & Bank Reserves
18:10 People's Bank of China Is Injecting Lots of Liquidity
25:48 Y2K Fed Comparison
30:50 Market Outlook for 2023
32:58 Curve Ad
35:12 Liquidity Outlook For Next Few Years
41:38 Inverted Yield Curve Could Be Sending False Signal
50:40 Are Rate Cuts Actually Coming?
59:40 Private Sector Liquidity & Cross-Border Flows
1:06:50 Consequences On Global Economy
1:13:01 Is Liquidity Resurgence Already Priced In?
1:17:48 "Rebound" Phase In Liquidity Cycle
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets. - บันเทิง
Michael is a brilliant guy. Please invite him monthly 🤩
YES
PLEASE DO.
People are always making these types of requests and these requests make no sense at all. These guests have better things to do than return every 30 days. Also, they won't have anything new to say in 30 days. Also, these guests need to feel interested and motivated to be on Jack's show; they won't feel interested or motivated if they are routinely appearing every 30 days finding ways to pretend that they have something new to say in order to satisfy the insecure demands of people who are fooling themselves into thinking that a routine 30 day appearance of their favorite guest is going to result in making money.
Jack, please do not try to have Michael Howell back as a monthly regular. Simply invite him back when it seems to make sense to do so. Thanks.
Quarterly or twice a year. These views aren't fast changing enough for monthly.
"Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $260K for sometime now, my major challenge is not knowing the best entry and exit strategies... I would greatly appreciate any suggestions.
@Bill I agree , I assumed I had a hang of the market at first, I gained $50k one year and I was super elated, not until I stumbled upon a portfolio-adviser whose been guiding me since the market's been sham after the pandemic, to my utmost surprise I netted a whooping $280K during this dip, that made it clear there's more to the market that we average joe's don't know..
@Tyler Jackson Yes i agree and right now the markets are going berserk right now. This is the best time to watch them, get to know them better, and strike when the opportunity presents itself. I learned that from my mentor, "CASEY ALLEN GRAY" she's seen dozens of market cycles over the past few decades, and she has a feel for how they move, why they move, and what comes next.
Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look.
yes, transportation, e-commerce among other sectors are expected to experience growth, but who knows, the market has been a basket of surprises.
Such market uncertainties are the reason I don’t base my market judgements and decisions on rumours and here-says, got the best of me 2020 and had me holding worthless position in the market, I had to revamp my entire portfolio through the aid of an advisor, before I started seeing any significant results happens in my portfolio, been using the same advisor and I’ve scaled up 750k within 2 years, whether a bullish or down market, both makes for good profit, it all depends on where you’re looking.
@@tatianastarcic True, we’re only just an information away from amassing wealth, I know a lot of folks that made fortunes from the Dotcom crash as well as the 08’ crash and I’ve been looking into similar opportunities in this present market, could this coach that guides yo help?
@@maiadazz Having a counselor is essential for portfolio diversification. My advisor is Melissa Scott Glazner who is easily searchable and has extensive knowledge of the financial markets.
Outstanding. Michael is very generous to provide these institutional insights for free. Excellent teacher.
It really was a superb episode Darius!
Felt like a lecture. Really informative.
The maket trend can turn around very quickly. In fact, the indexes often switch from a bear market to a bull market when the news is at its worst and the mood of investrs is at its lowest point. I read an article of people that grossed profts up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?
The stock market rally is still in force, but the major indexes, sectors and especially leading stocks are prone to reversals. I recommend you seek the guidance a broker or financial advisor.
I agree, having a brokerage advisor for inveesting is genius! Not long ago amidst the pandemic crash in March 2020, I was really having inveesting nightmare prior touching base with a advisor. In a nutshell, i've accrued over $550k with the help of my advisor from an initial $120k investment thus far.
@@selenajack2036 that's impressive!, I could really use the expertise of this advisors , my portfolio has been down bad....who’s the person guiding you
@@evitasmith6218 Personally I work with Eleanor Annette Eckhaus a registered Investment advisor. Quite renowned, search her name to get in touch.
Grant Williams and Michael Howell are some of the best guests you can have. Experience, expertise, intelligence and sound analysis.
Michael gets bitcoin though. Grant took a victory lap on bitcoin when FTX showed the scam-nature of crypto. 🤦♂️
Michael Howell's book the Capital Wars is the best book I have ever read about liquidity. This time he demonstrated that his model of liquidity was powerful enough to capture the inflection point.
This is really eye-opening stuff: government virtue-signalling at its best. Fresh new thinking here. Michael is brilliant and very humble. A delight to listen to.
The reason we need to raise rates is because there is already excess liquidity that is fueling the inflation. If "fresh liquidity" is coming to support a bull market, it will have to come from foreign central banks selling US treasuries by the hundreds of billions every month. That will force the Fed to raise interest rates, not reduce it, or pause raising it.
Frist time listened to Michael Howell - amazing insights. Bring this guy back on!
Jeff Snider and Michael Howell together for an interview would be a banger. Would love to hear a constructive debate between these two brilliant minds.
So liquidity just bubbles up and oozes through the floor boards. It's magic. We must have more liquiidity else asset prices might reflect their intrinsic value and the whole game wouild collapse.
That’s the thing. If we are entering another growth cycle before inflation is truly subdued the whole world will end up like Japan.. I think he has valid arguments and solid data but I’m not sold on the soft landing yet. There’s plenty of offsetting data showing we are still in big trouble.
The fresh cut looking good Jack!
This episode was nothing short of superb. Golden nugget of information after golden nugget. Cheers!
If what he says is true the foreseeable future is going to suck for everybody. It’ll be a whipsaw global economy. Liquidity and inflation chasing
each other around the globe.
What’s the end game for a
system like that?
BY FAAAAR YOUR BEST GUEST. BY FAR. VERY FAR. THANK YOU.
Wonderful to see Blockworks Macro present a changing view as markets evolve and not stick to only one side of the story as seen on other youtube channels that tend to go perma. Great work, wonderful video, keep it up.
Simply the best macro interview I've heard on forward guidance and perhaps ever. Thank you very much.
It really was superb. One of the best I've heard too.
Awesome information, as always! Really enjoy your podcasts!!
This is the best video on global liquidity and its impact on financial markets. A must-watch for all investors.
It's very interesting to compare the views of Michael Howell and Jeff Snider on liquidity and central banking.
Exactly, Jeff is actually arguing against that alleged liquidity flood from china. Two convincing vioces.
What do they disagree on?
@@tonyb313 yield curve inversion. Jeff is seemingly reading it as likely to indicate a bad outcome and recession, and is expecting a hard landing.
Quite an excellent conversation. This is so central to everything going on in the global economy & and the financial markets.
Thanks Jack. Great listen. 👌
When grey haired man tells you to buy crypto, you buy crypto. Incredibly interesting interview and amazing guest. Thank you so much Jack!
Michael Howell, Russell Napier and Richard Werner are the lenses of macro understanding that know how to focus on the bigger picture. Mike Green and Eric Basmajian also has great clarity in how to analyse the big picture. Both Mike Green and Howell have also looked at the speculation of dollar weaponisation last year.
This is brilliant analysis, agree with other comments this is one of the best interviews and presentations on macro going round. Well done all round, thanks so much.
Brilliant episode, Michael is the GOAT!
So the Fed is increasing liquidity in the face of "sticky" inflation?
PBOC and BoJ are the ones printing, but I'm sure swap lines are hard at play
Great coo on getting Michael Howell on, Jack. He is excellent value as always.
Excellent interview, one of most informative podcasts ever. On my second listen now!
So interesting how guys like Jeff Snider completely and methodically debunk the Chinese credit impulse with a raft of detailed statistical data. Actually nets out to a lower overall number than last year
I could listen to michael all day fantastic.
Thanks for this master class.
At the beginning of every financial crisis we always get idiots like this telling people to buy at the peak.😒😒
This was excellent! Thank you Jack.
What a fantastic explanation of liquidity. Is that chart-deck available somewhere? I'd love to study it a bit closer.
All the bulls appreciate this episode. Although they don't understand the current markets.
Micheal Howell‘s analysis of liquidity conditions addresses the most fundamental monetary element determining the (global) economy. But IMO he seriously underestimates the actual and structural problems of the Chinese economy, which easily can counter any efforts of the PBoC and economic planners in China to effectively stimulate the economy, and without effectively stimulating the economy increasing liquidity leads to nothing. Or - to put it differently: an imminent debt crisis always will cancel any liquidity cycle
Japan is probably the poster child for the rest of us. A stagnant economy indefinitely. I also don’t understand how he brushes off inflation so easily. I like hearing an opposition view though
@@ThetaBurnVictim very much agreed. Up from a certain debt level and - even worse - an accompanying far too much extended Central Bank Balance sheet liquidity cycles will increasingly become less consequential
@@dankurth4232 hence the flight to gold as fiat gets trashed. As Michael says government fixed income is getting trashed as fiat gets diluted into piss
@@jayearl3591 Agreed! But after you have purchased it, it will become tricky to keep your Gold
Excellent analysis.
Gracias
Thank you for sharing these helpful tips!
Astonishingly great!
Absolutely amazing session !!!
This is excellent. A lot to chew on.
Why would term premia be negative due to demand for collateral (for the 10Y Treasury). The 2Y Treasury is also good collateral…
Also, is the Fed Fund Rate Expectation (or average over 10 years) really 5%, surely it’s less…
Kind of bold to say that the US banking system is rock solid when no one has any idea what's going on in shadow banking and these same banks are among the biggest players in the shadow banking market. So no one knows the size of their shadow books, the amount of leverage they're employing, or the quality of the debt they own. What could go wrong?
Economic investigator Frank G Melbourne Australia 🇦🇺 still watching this very informative content cheers Frank
Amazing interview! Thanks
Thank you so much!
high value content! Thank you! Why is Michaels book so expensive? :(
Love the haircut! In all seriousness, great episode
One question. What can we do with that flood of liquidity (banking accounting tokens)in real economy and asset markets?
Great interview
Best guest by far.. can’t get enough
Be wary of anyone who says they are 100% sure about something 2 years out.
Great perspective, different from mainstream.
It’s great to see Michael back, especially in view that he considers the Italian (MacroAlf) rude. Perhaps you can organise a debate , the Fed Guy can mediate. Love your work Jack
Good one thanks
I never understood why people differentiate between money printing from commercial bank and liquidity provided by the fed ?
Both kind of money are inflationary in their own rights.
Really informative and this confirmed a lot of my own outlines going forward as well. Pretty typical of the market to do the exact opposite thing to what everyone is pricing for and positioning for, lol. I think if we see a breakout on the S&P and RUT and such soon, then the sheer number of shorts and vol plays that get caught holding the bag could well fuel a good melt-up.
One of your best guests, please invite him more often
Awesome interview.
Thanks guys
Best guest i've seen so far
Superb thank you
Good interview 👍
Excelllent, for the next one pls interview Ian Harnett for an equally well articulated and direct opposite pov :-)
I have a problem with the notion of Bitcoin as a barometer. The evidence says Bitcoin was manipulated up through wash trading and other chicanery. The second he says it does what gold used to do but better I've already mentally checked out.
Aside from PBoC actions, i do wonder if recent upturn in the GLI also reflected a positive valuation effect arising from converting a nation's money supply using a weaker USD? If so, that reduces the influence of policy actions of global CBs on the GLI.
When is this recorded?
What a brilliant and calm guy
Dang, what happen to unemployment go up, economy go down then stocks go down.
Mind-blowing views. Great questions Jack-- you really hung in there with real time thinking.
Liquidity Cycles every with a frequency of 6-7 years. Why? waves hands... *magic*
just a privilege to listen in
Good stuff
21:30 crypto a measure of excess liquidity?
So higher for longer on rates trnslates to a new bull market?
I think he’s basically saying England scared the shit out of all the central bankers and now “China and Japan go Brrrrrr” and the rest of the world is slowly (behind the scenes) following.
Yep, as long as companies can refinance. If rates are getting cut it's because the system has broken due to a liquidity crisis
How is central bank liquidity affecting the markets and asset price??????
Nice cut jack
didnt hear how long the Rebound-Calm-Speculation-Turbulence cycle takes. I guess it all depends.
Bomb questions thx
Jack, you look 10x cooler and more badass with that haircut and goatee. Rocking it.
🎯💯
Solid.
This guy is great.
Amazing answers to wtf is going on right now
What about the forces that are sucking out liquidity? For starts there are many of us who have been pulling most of our investments out of the stock, long-term bonds, and other securities/investments markets and into short-term sovereign debt instruments due to the central bank short-term funds rates being so much more attractive now? The 1 year US Treasuries now yielding 4.93% its negatively impacting the Sharpe Ratios of ALL investment models. for the last 8 months of 2020 every single day the 1 year US Treasuries were yielding under 0.20%. As the US government continues to accelerate its rate of deficits growth and organizations/families everywhere face interest rate resets as their current debt issues mature and need to be rolled over we'll see this sucking out of liquidity pick up even more.
What does this mean for inflation?
He glossed over inflation pretty quickly but if what he says is true stagflation seems the likely outcome. We should all look to japan so see how the next decade is going to go.
Look at Russell Napiers NZZ articles from just over a year ago. Inflation will run hotter than long term rates and stocks yield slightly more in infrastructure sectors... Eg semis and the CHIPS act. High debt to GDP means one has to print out of this because rates can't go up. As Michael implies this is because debt has to be refinanced, and this rates can't go up like they did in the 70s
Definitely one of the top 5 people listen to.
Haircut suits you Jack.
What is liquidity going to do when you have to borrow it at 5 % rates and higher ???? If all these liquidity was put to use bond yields wouldn’t be rising would they a? Am i missing something ?
Emerging markets must surely see positive growth from China and declining dollar.
It's difficult for me to grasp an idea that you could have biggest equity bubble ever, Fed hikes iterest rates at the fastest pace to almost 5% and nothing happens 🤔. Instead we got bear market that lasted 8-9 months, which couldn't even erase Covid parabolic rally and except tech stocks things are almost back to ATH in just 4 months 🤔
That would be devastating to the bears, but it ain't over till it's over, as the saying goes
Michael doesn’t miss
3:43 thats an interesting chart, but it has absolutely no correlation with equities
ok should have waited for 27:30
and how can inflation come down if the Chinese, according to him, print up the commodity index again???
I am so confused.
This poses questions such as: is China going to start buying Europe's sovereign debt...?
1:43 - "Liquidity cylce tends to have a frequency of around about six to seven years"- so what? This is the "normal" business cycle. Is Michale Howell stating that just a new business cycle has begun?
sharp cut
but you need to rerecorder the curve ad, ruins the emersion
Liquidity/values going to payment system infrastructure **not** speculation. ["DLT"!]
The stock market has been a really tough one this past year, but I watched an interview on CNBC where the anchor kept mentioning "FLORENCE YAGODA ". This prompted me to get in touch with her, and from August 2022 till now we have been working together, and I can now boast of $540,000 in my trading portfolio.
That's right, getting in touch with a consultant during the pandemic was how I was able to scale through the crazy stock downtrend.
That's massive. Can you please connect me with your personal broker, I would love to work with her
Like I said earlier , her name is FLORENCE YAGODA and you can reach her via her website.
Just run a search on her name, and you would see all you need.
Thanks for the info . Found her website and it really impressive