I like Michael but hes wrong here, we will bottom after a flash crash. All the symptoms are there. Collateral shortage, 0 DTE creating dangerous air pockets in the stock market. We don't get outta this without an event 🫡
@@marieb5251I bet his "delusion" has made him more money in the last month than you've earned in your whole life. Watch him on Forward Guidance this week. Some very valuable insights.
I don't mind listening to well considered views that are backed up by a strong set of facts but there is literally nothing backing up what he's said, not even a good argument.
Michael is the only guest that knows what has been going on since March 2009 apparently. Cause we have it going on again since Oct 2022 and everyone can't seem to figure out what is going on.
I'd like to give you feedback in general. Since I watch many broadcasts like yourself, there is something different in yours. For most of the others, mostly the questions are cliché, but in yours it is obvious that there is thinking in every question based on the context, which makes your broadcasts higher and considerably more valuable than the others. Congrats Adam!
"100% conviction" of liquidity cycle bottom... Meanwhile, banks are more and more tentative to give out loans, VCs tight with their funds... Rates highest in years for banks. I guess I don't see how these reconcile. But I do appreciate questioning my beliefs. One thing I guess I'd like to know, is HOW he knew [presumably in October] that was the liquidity bottom was in fact in October? Like, given his indicators, knowledge, views, conviction, what led them to BUY in Oct 2022 or even Nov 2022 -- or some other timeframe... WHEN did they buy and WHAT signaled that. I have a much better handle on selling "tops" but I very much struggle buying bottoms... I tend to be mostly cautious ergo, buying early is tough, selling at top (or a little early) is easier.
You’re right. And the bottom, if you can be confident, is the more consequential side of the trade. I believe he has a liquidity indicator on his website, though I don’t know what data is used to construct that value. Since no one knows the size of the eurodollar market and activities of the shadow banking sector - it must be statistical estimates or proxy variables.
Adam has a lot of great guests on Wealthion but I think Michael Howell has the most interesting 'alternative' view on markets - very rigorous in its analysis and thought-provoking. I've seen MH on several channels now and am reading his book but it was especially interesting to see him on Wealthion as his take on things is somewhat different to a lot of Adam's guests - I hope Adam runs Michael's views by RIA, New Harbor or other guests as their perspective on Michael's liquidity thesis will be very interesting.
" I've got a PHD in Economics and Macro is useless" Absolute statements like this get my radar up. ......in other words, Believe me I know because I was able to stay in school for 15 years.
Love the liquidity argument. But according to his chart liquidity ramped higher in 2007 bottoming in 2006. Equity markets were crushed over the next 2 years. Why such the divergence?
Reductionism, his theory is powerful, but it reduces explanation down to one factor: liquidity. Your answer is probably another factor that acts as an intervening variable.
@@Rnankn When you have the Fed effectively set rates at 0 and do QE forever. That's your factor. Except it's not real and will eventually destroy the dollar, but no one can say exactly when.
Does Michael answer on the question of debt serviceability make sense? He said inflation of 7% pa half the debt in real terms. But Japan had long been in deflation, not inflation. He also mentioned at the end that the US was the only country that can provide finance to the world. But China actually funded lot of global infrastructure via the belt and road initiatives. In short, he showed global liquidity had been a key factor for the financial market. But he didn't have good answers on the sustainability of further liquidity, and why the trough of US liquidity is behind us.
Don't know what to think of Michael Howell's views. I agree with some of the comments criticizing him. However, he did correctly call last October's bottom, and said the market would rise, and things have turned out exactly as he predicted.
👍Thanks Adam, an insight into any 'intelligent bull-case' lends variety to Wealthion's usually cautious commentary (though I see more stagflation ahead, myself). Also, as Lance Roberts points out -- in today's mad markets, liquidity trumps all and has to flow somewhere. 👍
Another great interview. Good info. On a personal basis I'd like to ask a question Adam. You are looking tired. Are you possibly overworking, trying to do 5-6 major interviews per week? Hope things are well with you and that you are taking care of yourself!
Liquidity cycles are past tense because we don't have massive inflows to individual accounts (covid) and government spending. With the Fed raising rates, don't we now have more risk to credit which is another complication to excess liquidity. I am not sure his timing matters... we have moved form one crisis area to another.
What about QT? My impression is that rates have topped out but global liquidity is being tightened by QT on a monthly basis. The central banks imply that this is a 3-4 year policy objective.
QT isn't happening as planned and is basically flat. It probably will be impossible to implement but hope I'm wrong. Japan has never been able to reduce their balance sheet and the US has only made feeble attempts that are reversed almost immediately. IMO the odds are the balance sheet will go up not down the next 3-4 years. Hope I'm wrong...
@@bobkrogh1670 That implies persistent stagflation with inflationary expectations leading to disruptive relative price changes. That has political implications and we can't predict what stupid things the politicians will do in response. Yes, hope we're wrong - the global economy needs a real asset price correction or else price discovery becomes a daily fiction and fundamentals mean less and less.
@@MichaelHarrington17 Agreed and I'm a fundamental investor. Been a hard 10 years and have spent too much time on the sidelines. Never thought the fed's liquidity cycles would last a decade. Also, underestimated the power of liquidity. It feels like the end of 2007 and expect asset prices will come back to realistic values in the next year but being wrong is now my new norm.
Adam, this is an excellent interview. Really refreshing and thought-provoking to see this “divergent” perspective, as you put it. The focus on liquidity and collateral is key. As is the differentiation between the real economy and the financial markets and the interplay between these.
The current US financial system has devolved into a shell game. It's a shame. It was created to facilitate commerce. Now it's an end to itself not benefiting society AT ALL. This interview may be accurate, but it sounds like a much better case for precious metals & currency debasement than for stocks n bonds
But as we can see the government is weaponized so they can easily confiscate your metals or even your house. This is why laws, rules, and constitutions are important. I believe they have crossed the line and for some reason US citizens are still accepting of their leaderships money laundering and nefarious conduct in all things. They even do all of it above board now.
At around 12:20, how can he say that QT is happening but the banks are adding liquidity? Reserves are up (so that money isn't being lent out I would think) but he says that's good for liquidity. Also, what "steeping" is he referring to on the yield curve? It's inverted now. I agree that the asset markets will bottom at some point, but his semantics on liquidity sound contradictory.
Please, make one of your shows to educate us about money market funds: what are they, why is everybody buying them, are they safe, how and where to buy them. Thank you!!!
Do you believe there are enough banks that are that offsides and poorly managed to collapse the system? I would bet the answer to that is a big no. The banks big enough to matter are highly regulated since 2008.
As alway, a really interesting interview. He seems to be detached from main street and focused just on finance. He could very well be right but I'm not prepared to give up my perma bear mindset. Now, six months from now and his prognositications pan out. I'd be prepared to change and even buy his book.
Slide 9 of the CrossBorderCapital presentation shows that US domestic liquidity and yield curve inversion bottomed in 2000/2001 and 2006/2007 prior to both recession market bottoms. Doesn't that slide contradict Michael's analysis in this video?
Have to disagree with a lot of this to be honest. Still good to hear opposite view. I was surprised to not hear Adam press him on this liquidity theory. QT, Japan moving ycc control point so they don’t have to print, more interest rate increases, senior loan officer report to contracting bank credit extensions … I could keep going. By inference I think he is wrong about the makret cycle, you will never get market bottom until unemployment has moved up, that’s what compelled central bank to re-liquidate.
The liquidity cycle bottomed in October 2022, leading to an emergent bull market in various asset classes. 6:23: 📈 The worst of the recession is likely behind us, and the liquidity cycle has bottomed, leading to potential tailwinds for the economy. 12:29: 📈 Liquidity is returning to the financial system, driven by central banks and other factors. 18:31: 💰 The current financial system is fragile due to a large amount of debt, but China's financial system is relatively robust. Liquidity is more important than interest rates in the market. The global liquidity cycle suggests that liquidity will increase by the end of 2025. 24:49: 💰 The central banks will have to start buying American debt due to economic problems in Europe and Japan, with China potentially reducing its willingness to buy US debt. 31:06: 📈 The liquidity cycle is turning and markets will be significantly re-rated if inflation continues to decrease. 38:01: 📉 The global economy is facing concerns of recession, but the worst may be behind us as there could be an inflection point around mid-year. 41:44: 💰 The central focus of central banks is to preserve the integrity of the financial system by maintaining the integrity of debt and equity markets. 47:06: 💰 Global liquidity is a key driver of asset market returns and wealth worldwide. 53:24: 📈 The trajectory is headed towards positive, corroborating the point that it is a good time to re-enter the market when others are fearful. Recap by Tammy AI
IT's all about liquidity but what happens if all the liquidity eventually enriches 1 person who winds up with 170 trillion dollars and nobody else has anything - reductio ad absurdum. But isn't that where we're heading. Somewhere along the way the system breaks.
Japanification of Western economies- well said! In Japan supermarket cashier, car park attendants, street cleaners I see where really old people and that was 7 years ago. I don't see why not we're going the same way.
I've covered my shorts and deploying cash into any market weakness. Buying against the bears based on record bearish sentiment and improving liquidity. I would add the Ukraine war spending and reord stock buyback announcements as liquidity contributors. Very informative and rooted in reality. Markets rise with pessisism and crash into euphoria.
Personally I am not sure about the record bearish sentiment. Some hedge funds do have large short positions but the fear-greed index is in the greed range and inflows into the markets by individual investors is at unusually high levels.. The VIX have been exceptionally quiet. To me it's the "quiet before the storm". But we shall see in the fall if "liquidity problems" hit the markets.
Just read the comments here, everyone is bearish. COT (commitment of traders) at very high bearish readings. Apple just announced a $90 Billion stock buyback plan.
@@russellmaniamusic I agree with you. Most retail traders (including all of the doomers who love Wealthion) are on the bearish side of the boat expecting a highly publicized recession that never comes. Perfect set up for a short squeeze leaving them all behind as the market makes new highs
When this group flips bullish I will be looking for shorts and taking down longs. Harry Dent just posted another bearish rant, a great contrary indicator.
I disagree with this guy's conclusions, but I listened all the way to the end and do admit he makes a few solid contrarian points. Right now the liquidity cycle is being pumped from China and Japan. Can that continue? Maybe. I still think areas like EU and USA suffer a relatively nasty recession before the liquidity spigots really get opened up
This was a very interesting perspective with a lot of charts to support the argument. However, we have hardly seen the "blood on the streets" and panic usually associated with an important bottom. At first, I was puzzled by MH's assertion that the liquidity cycle low was in October last year because interest rates have risen since then. Then I realised that real rates (rates minus inflation) had continued to fall. I am not sold on his argument though given the extraordinary valuation of the stock market. If central bankers continue quantitative easing and governments continue to spend without attempt to balance budgets, it is possible. He makes no reference to people, as if everything they do is conditional on liquidity. Liquidity is actually conditional on the willingness of people to spend without concern, to take on risk in the share market, to hire more workers, to invest or to lend. That takes confidence and I believe that is waning. The fall in the share market last year indicated that. I doubt it is over.
Always great to hear varying views!! I don’t agree with his views, but I could be the wrong one here. My money is on a downturn in next 6-9 months. Then a upswing pretty decent! So not sure, maybe he is looking at a longer view avg for his bull view? Time always tells the tale!! Thanks for the interview
28:50: The irony he mentions Druckenmiller for a bullish bent in what he views BECAUSE Druckenmiller HIMSELF is VERY BEARISH [heavy probability] for the current markets. VERY confused as he's been in his entire career and is in the "hard landing camp"...
When you have the dollar down trending, the 10 year bond yield trending down, while corporate bond buying is up trending (HYG, LQD), and the stock market going up as well, liquidity is in full production. a.k.a QE since October 2022. Michael is a breath of fresh air. He gets it, it's all about liquidity nothing else. Printing, printing, printing.
Maybe I missed it but what does he attribute the huge jump on liquidity in October to? Did he say it was China and Japan easing? If not, what is driving that? Also that is WILD that Japan’s debt servicing costs take up 25% if their tax revenue when rates are so low. What would they do if there was significant inflation? I don’t think they’re a good comparison to us because they have very restricted immigration + low organic birth rate. Our birth rate is not high, but we have a lot of immigrants coming in every year. Feels like that will make low inflation harder to maintain
I really like hearing these opposing arguments to the collapse of the world.. he makes a very solid argument About liquidity.. obviously the big anchor will be inflation and stagflation (which is what happened to Japan).. so if what he says is even remotely accurate things are really going to suck for anyone who isn’t rich with access to capital..
Agree. There is very little chance of de-dollarization. The British pound and US$ reflect the stable institutional foundations of those two societies. China cannot offer these foundations unless there was a regime change toward an open society and democracy.
This is true. The lag effect of consistent rate rises hasn't fully bitten yet. The rate rises have hurt but they haven't erroded balances significantly yet. Those who can no longer afford their mortgages haven't all been found out yet while they still have cash in the bank. They are effectively emptying people's bank accounts for as long as they can before timing a pivot correctly so as not to push too many people off the cliff. All that said, Michael Howell is correct in a lot of what he says. A lot of the salty replies in the comments are coming from those who have positioned themselves and their portfolios to expect a different outcome. Howell is right about QE returning eventually and the forced purchase of govt. debt. All that is coming 💯
Well done for getting a intelligent & rationale bull on the show Adam. Scares the sh*t out of me though as he’s flying a different way to Alf, Kantro + other guests who have pretty solid points of view
What if rates don’t go down? What if they pause and remain high? What if real rates end up and stay for an extended period positive? Asset holders have used zero value cash to inflate asset prices… only to offload assets… now sitting on cash they reenforce “cash is king” and take a real return for multiple years before re-accumulating assets… It’s the perfect rinse repeat cycle because the public cheers you every step of the way… 😂
Are credit and liquidity different things? I thought credit was liquidity and that credit was tightening. Beyond being confused about that it was good to hear a differing opinion on here than the last six months or so.
The US government always tries to cover up recessions at its onset to stop even more social fear reductions in spending habits. It is no different this time. But, we now have new generation that doesn’t understand what a recession does to their lives and will have a good shock from it. Even now they cannot afford all the things they were promised by society while the social fabric keep driving their overconsumption model creating more disparity of what they think they should have. We already see youth committing suicide and killing others because they hate their lives. Also, the boomers did a terrible job of making the next generation resistant to fear and tough times so they seem to be not able to handle the stresses of life.
7% inflation never stays stable but soon keeps rising, leading to an inflationary spiral and a flight from fiat currencies. Stopping it requires even more draconian tightening and a severe recession. The market eventually imposes these corrections because markets reflect rational expectations, not monetary fantasies.
AMAZINGLY ARTICULATE GUEST! BRAVO 👏... we need a lot more people like this to avoid being labeled a Bear echo chamber! Please bring back Tom Lee and David Hunter
@Nigel Jones Absolutely, I got in cheap and have been holding these for 5 years plus, ride them up and then down again. They're mostly all mining companies (hard tangible assets). I'm hoping they'll have their day in the sun in the coming years.
I really enjoyed this video. You asked him the hardball questions... his answers were less than stellar. Saying we will become JAPAN means DECADE OF DEFLATION... US is not going to face deflation it's simply not possible.. JAPAN is a NET PRODUCER of GOODS. US IS NOT. Demographics 20 years from now is not RELEVANT right NOW. AI + automation revolution is taking more jobs away not ADDING. Assets in US would have to FALL dramatically to become JAPAN. Yield Curve control may be possible, but that does not mean we will will become JAPAN.
Money supply is shrinking faster than anytime since the 1930s. When the supply of money shrinks, the price of most things shrink right along with it. I trust Milton Friedman over this guest.
This guy is smoking something. The market is going to drop 10-20%. No one knows exactly when, but most likely it will be within the next six months. The market will begin to recover a few months after the bottom and after the recession is already over. Of course no one usually knows when a recession is over until .months after it's already over.
I agree with most what Howell said, he put a large emphasis on China and other part of the world, they do play a part in global liquidity, no doubt. A lot liquidity pumped into Belt and Route initiative, but doesn't seem to be a economic success. China has changed a lot in the past decade, the debt to GDP is more than 2.5, demorgraphics is getting wrose, worse than USA. When China is working with US, it is very powerful system, when it is working against US, it can be destructive, particular trying to take over Taiwan and South China sea. The other thing is Brics and Gulf countries is moving liquidity away from US, so it became they and US competing on liquidity, again working against US could make it less effective. Some say could lead to conflict.
With regional banks blowing up and unable to extend more credit, we are going to receive less liquidity not more. Central banks doing more QE is unlikely from here. Political reasoning, credibility, rebound in inflation and loss of reserve currency status will prohibit QE from here. What you need is a major deflationary event for QE to happen. So all of these risky assets needing liquidity may be cut in half if this man is wrong and QE doesn't restart as soon as possible. Longer term fiat is toast, but we need to he patient for one more large dip.
Agreed. Global Liquidity Cycles? Or Global Credit Cycle. Failing debt wipes out liquidity. New Debt creates liquidity. But the Economic Confidence Model has the global credit cycle peaking in 2025. If that’s the top then it’s at the end of your chart. Looking at charts of other currencies confirms the dollar milkshake as governments around the world print. Gold chart is actually bottoming against bitcoin.
Correction Global Credit cycle ending in 2024 which maps 2025 as a top in liquidity. Then inflation worldwide as countries print. It’s already in the charts.
Thanks Adam, a bull. So I've in last few days reallocated some to gold, I have a crapload in 20yr. bonds. But on technicals, if 500 goes over 4175 and varifies I'm all in all bull case. If hits and bounces down, I'll make money to
Adam, You have a massive future as a financial journalist. You could be the Tucker Carlson of the financial world, while I think the big networks like to control the narrative, I wonder if they are sensible enough to see the value in you. I see the future and yours is very bright. Regards, Kev
Hopefully he would decline any offer. The mans on track to get to 500k subscribers this year, and he controls everything about what he's putting out, who he has on. Why would you give that up! He comes across as a genuine guy, without trying to bias the output with his own narrative (clearly a bearish one). Getting stuck on a network tv would be a shameful waste .
@@iq_inf I don’t disagree with you. I like to think that the future of big money journalists are independent where we can get a true no holds barred conversation about facts from 2 sides to an argument instead of an agenda based discussion. Hopefully the big money for Adam will be in TH-cam or some other medium that promotes independent thought. I see a third player of independents rising and Adam, Tucker and Russel Brand will all be able to find the once to operate. I think there is something bigger than TH-cam in the future. A one stop shop of true independent journalists.
Scene: two men arguing on the street (one of them Mr. Howell... not to be confused with the character from Gilligan's Island) "That mountain looming over our village has never exploded. It may be smoking, but it's the best darn mountain of any other villages' mountains in our region. Who's spreading rumors that a bulge is growing up there and the increasing frequency of earthquakes are any indicator of danger. Just keep baking bread and selling it to your neighbors. Here look at this chart of no activity over the last decade. It's all about magmatic liquidity at the base of the pyramid if it were inverted." Um. Nope! I appreciate the alternative perspective. But, I used to live near Mt. St. Helens.
He uses the metaphor "... we can see central banks beginning to take their foot off the brake pedal ...". I think a better metaphor might be "... we can see central banks reducing from full throttle (pedal to the metal) to quarter throttle ..."
Interesting view. A couple points … 1. The stock market tends to bottom after Fed capitulation, not before. 2. Your liquidity cycles are not accurate within a short timeframe. The bottom of liquidity and stocks could easily be Q3 2023 or Q1 2024 and still fit your chart perfectly. 3. Usually the leaders in the previous cycle become laggards in the new one.
I truly appreciate listening to views that vary from my own. I believe a micro and macro economic autophagy needs to occur prior to injecting efforts to stabilize the economy.
Adam it seems you had very bearish, doom and gloom guests lately. Michael,s view seem to surprised you and I felt you didn’t know how to respond to him
Please bring him back in six months.
Lol, the delusion will still be there in 6 months.
@@marieb5251 Yeah he should have a WHOLE lot more time by then.
I see what you are doing here 😈
I like Michael but hes wrong here, we will bottom after a flash crash. All the symptoms are there. Collateral shortage, 0 DTE creating dangerous air pockets in the stock market. We don't get outta this without an event 🫡
@@marieb5251I bet his "delusion" has made him more money in the last month than you've earned in your whole life.
Watch him on Forward Guidance this week. Some very valuable insights.
I love that you host guests with a wide range of perspectives. No group think here
He needs a New Crack Pipe since he doesn't have in reality. Lol
I don't mind listening to well considered views that are backed up by a strong set of facts but there is literally nothing backing up what he's said, not even a good argument.
95% of guests are BEARS!!!
Yeh. No Bitcoin shilling bs here.
@@vm-bz1cd More like 99%
Adam word of advice these guys r professional salesmen like the dealers in car lots don't ever forget this go on n roll into the stock mkt
Michael is the only guest that knows what has been going on since March 2009 apparently. Cause we have it going on again since Oct 2022 and everyone can't seem to figure out what is going on.
I'd like to give you feedback in general. Since I watch many broadcasts like yourself, there is something different in yours. For most of the others, mostly the questions are cliché, but in yours it is obvious that there is thinking in every question based on the context, which makes your broadcasts higher and considerably more valuable than the others. Congrats Adam!
"100% conviction" of liquidity cycle bottom...
Meanwhile, banks are more and more tentative to give out loans, VCs tight with their funds... Rates highest in years for banks.
I guess I don't see how these reconcile. But I do appreciate questioning my beliefs.
One thing I guess I'd like to know, is HOW he knew [presumably in October] that was the liquidity bottom was in fact in October? Like, given his indicators, knowledge, views, conviction, what led them to BUY in Oct 2022 or even Nov 2022 -- or some other timeframe... WHEN did they buy and WHAT signaled that.
I have a much better handle on selling "tops" but I very much struggle buying bottoms... I tend to be mostly cautious ergo, buying early is tough, selling at top (or a little early) is easier.
You’re right. And the bottom, if you can be confident, is the more consequential side of the trade. I believe he has a liquidity indicator on his website, though I don’t know what data is used to construct that value. Since no one knows the size of the eurodollar market and activities of the shadow banking sector - it must be statistical estimates or proxy variables.
Just please bring this guy back in six months. 🙂
Adam has a lot of great guests on Wealthion but I think Michael Howell has the most interesting 'alternative' view on markets - very rigorous in its analysis and thought-provoking. I've seen MH on several channels now and am reading his book but it was especially interesting to see him on Wealthion as his take on things is somewhat different to a lot of Adam's guests - I hope Adam runs Michael's views by RIA, New Harbor or other guests as their perspective on Michael's liquidity thesis will be very interesting.
" I've got a PHD in Economics and Macro is useless" Absolute statements like this get my radar up. ......in other words, Believe me I know because I was able to stay in school for 15 years.
I'm not a professional but my "gut feeling" says that I've to be careful because this is the "calm before a storm"
Love the liquidity argument. But according to his chart liquidity ramped higher in 2007 bottoming in 2006. Equity markets were crushed over the next 2 years. Why such the divergence?
QE started back in 2008. That is why.
@@eccentricccc And the recent uptick in the markets is the market expecting QE and rate cuts once the Fed finishes blowing things up.
Reductionism, his theory is powerful, but it reduces explanation down to one factor: liquidity. Your answer is probably another factor that acts as an intervening variable.
@@Rnankn When you have the Fed effectively set rates at 0 and do QE forever. That's your factor. Except it's not real and will eventually destroy the dollar, but no one can say exactly when.
@@Rnankn liquidity itself is a term that has no direction or outcome...
Does Michael answer on the question of debt serviceability make sense? He said inflation of 7% pa half the debt in real terms. But Japan had long been in deflation, not inflation.
He also mentioned at the end that the US was the only country that can provide finance to the world. But China actually funded lot of global infrastructure via the belt and road initiatives.
In short, he showed global liquidity had been a key factor for the financial market. But he didn't have good answers on the sustainability of further liquidity, and why the trough of US liquidity is behind us.
Don't know what to think of Michael Howell's views. I agree with some of the comments criticizing him. However, he did correctly call last October's bottom, and said the market would rise, and things have turned out exactly as he predicted.
What a fantastic video. Thank you!
Fantastic interview!
Got a real education there!
Thank you for having Michael on
👍Thanks Adam, an insight into any 'intelligent bull-case' lends variety to Wealthion's usually cautious commentary (though I see more stagflation ahead, myself). Also, as Lance Roberts points out -- in today's mad markets, liquidity trumps all and has to flow somewhere. 👍
Another great interview. Good info. On a personal basis I'd like to ask a question Adam. You are looking tired. Are you possibly overworking, trying to do 5-6 major interviews per week? Hope things are well with you and that you are taking care of yourself!
Liquidity cycles are past tense because we don't have massive inflows to individual accounts (covid) and government spending. With the Fed raising rates, don't we now have more risk to credit which is another complication to excess liquidity. I am not sure his timing matters... we have moved form one crisis area to another.
finally, an educated guest
What about QT? My impression is that rates have topped out but global liquidity is being tightened by QT on a monthly basis. The central banks imply that this is a 3-4 year policy objective.
QT isn't happening as planned and is basically flat. It probably will be impossible to implement but hope I'm wrong. Japan has never been able to reduce their balance sheet and the US has only made feeble attempts that are reversed almost immediately. IMO the odds are the balance sheet will go up not down the next 3-4 years. Hope I'm wrong...
@@bobkrogh1670 That implies persistent stagflation with inflationary expectations leading to disruptive relative price changes. That has political implications and we can't predict what stupid things the politicians will do in response. Yes, hope we're wrong - the global economy needs a real asset price correction or else price discovery becomes a daily fiction and fundamentals mean less and less.
@@MichaelHarrington17 Agreed and I'm a fundamental investor. Been a hard 10 years and have spent too much time on the sidelines. Never thought the fed's liquidity cycles would last a decade. Also, underestimated the power of liquidity. It feels like the end of 2007 and expect asset prices will come back to realistic values in the next year but being wrong is now my new norm.
Adam, this is an excellent interview. Really refreshing and thought-provoking to see this “divergent” perspective, as you put it.
The focus on liquidity and collateral is key. As is the differentiation between the real economy and the financial markets and the interplay between these.
great discussion. underrated guest according to all of the negative comments!
Great interview. I am always impressed with Michael’s wealth of knowledge and his analysis. Great job Adam
The current US financial system has devolved into a shell game. It's a shame. It was created to facilitate commerce. Now it's an end to itself not benefiting society AT ALL. This interview may be accurate, but it sounds like a much better case for precious metals & currency debasement than for stocks n bonds
But as we can see the government is weaponized so they can easily confiscate your metals or even your house. This is why laws, rules, and constitutions are important. I believe they have crossed the line and for some reason US citizens are still accepting of their leaderships money laundering and nefarious conduct in all things. They even do all of it above board now.
@@JRRob3wn can you give a hint in what is your porfolio invested ? Thx
@@pedroabreu1754 treasuries Not beating inflation but 5.5% and can sleep at night
@@owenawesome3663 technically that is beating inflation given it's now 4.9%
Ha, this guy is The King Kong of bulls 🐂 l 😮😂
So refreshing to see a bull on this programme! I wish he had more charts!!
At around 12:20, how can he say that QT is happening but the banks are adding liquidity? Reserves are up (so that money isn't being lent out I would think) but he says that's good for liquidity. Also, what "steeping" is he referring to on the yield curve? It's inverted now. I agree that the asset markets will bottom at some point, but his semantics on liquidity sound contradictory.
Thank you. Nice to hear a brighter side a I just began semi retirement
Wealthion 🥇
Please, make one of your shows to educate us about money market funds: what are they, why is everybody buying them, are they safe, how and where to buy them. Thank you!!!
Not for sure what this guy's talking about. The everything bubble is about to explode, this is almost exact remake of 2008/2010 but on steroids.
And in the mean while another bank went under... Hmmm...
Do you believe there are enough banks that are that offsides and poorly managed to collapse the system? I would bet the answer to that is a big no. The banks big enough to matter are highly regulated since 2008.
As alway, a really interesting interview. He seems to be detached from main street and focused just on finance. He could very well be right but I'm not prepared to give up my perma bear mindset. Now, six months from now and his prognositications pan out. I'd be prepared to change and even buy his book.
Adam you are in over your head on this one!
Really great interview. So helpful.
Slide 9 of the CrossBorderCapital presentation shows that US domestic liquidity and yield curve inversion bottomed in 2000/2001 and 2006/2007 prior to both recession market bottoms. Doesn't that slide contradict Michael's analysis in this video?
Australia just hiked. Regional banks seeing trouble. Credit crunch more likely.
Australia's rate hike was profoundly inadequate. Their real interest rate is still deeply negative. That is loose money.
Have to disagree with a lot of this to be honest. Still good to hear opposite view. I was surprised to not hear Adam press him on this liquidity theory. QT, Japan moving ycc control point so they don’t have to print, more interest rate increases, senior loan officer report to contracting bank credit extensions … I could keep going. By inference I think he is wrong about the makret cycle, you will never get market bottom until unemployment has moved up, that’s what compelled central bank to re-liquidate.
The way he sits says everything
The liquidity cycle bottomed in October 2022, leading to an emergent bull market in various asset classes.
6:23: 📈 The worst of the recession is likely behind us, and the liquidity cycle has bottomed, leading to potential tailwinds for the economy.
12:29: 📈 Liquidity is returning to the financial system, driven by central banks and other factors.
18:31: 💰 The current financial system is fragile due to a large amount of debt, but China's financial system is relatively robust. Liquidity is more important than interest rates in the market. The global liquidity cycle suggests that liquidity will increase by the end of 2025.
24:49: 💰 The central banks will have to start buying American debt due to economic problems in Europe and Japan, with China potentially reducing its willingness to buy US debt.
31:06: 📈 The liquidity cycle is turning and markets will be significantly re-rated if inflation continues to decrease.
38:01: 📉 The global economy is facing concerns of recession, but the worst may be behind us as there could be an inflection point around mid-year.
41:44: 💰 The central focus of central banks is to preserve the integrity of the financial system by maintaining the integrity of debt and equity markets.
47:06: 💰 Global liquidity is a key driver of asset market returns and wealth worldwide.
53:24: 📈 The trajectory is headed towards positive, corroborating the point that it is a good time to re-enter the market when others are fearful.
Recap by Tammy AI
This guest nailed it.
No loans no liquidity. Let’s see what happens with banks first.
IT's all about liquidity but what happens if all the liquidity eventually enriches 1 person who winds up with 170 trillion dollars and nobody else has anything - reductio ad absurdum. But isn't that where we're heading. Somewhere along the way the system breaks.
Good to hear a different view...........thanks
Japanification of Western economies- well said! In Japan supermarket cashier, car park attendants, street cleaners I see where really old people and that was 7 years ago. I don't see why not we're going the same way.
Thank you Adam, a really good and well informed interviewee; provided tons of examples to back his ides.
Michael is a Minotaur. Half man, half bull
I've covered my shorts and deploying cash into any market weakness. Buying against the bears based on record bearish sentiment and improving liquidity. I would add the Ukraine war spending and reord stock buyback announcements as liquidity contributors. Very informative and rooted in reality. Markets rise with pessisism and crash into euphoria.
Personally I am not sure about the record bearish sentiment. Some hedge funds do have large short positions but the fear-greed index is in the greed range and inflows into the markets by individual investors is at unusually high levels.. The VIX have been exceptionally quiet. To me it's the "quiet before the storm". But we shall see in the fall if "liquidity problems" hit the markets.
@@mikescandiffio119 Agreed and what an odd post. Record bearish sentiment?
Just read the comments here, everyone is bearish. COT (commitment of traders) at very high bearish readings. Apple just announced a $90 Billion stock buyback plan.
@@russellmaniamusic I agree with you. Most retail traders (including all of the doomers who love Wealthion) are on the bearish side of the boat expecting a highly publicized recession that never comes. Perfect set up for a short squeeze leaving them all behind as the market makes new highs
When this group flips bullish I will be looking for shorts and taking down longs. Harry Dent just posted another bearish rant, a great contrary indicator.
Great interview
Not surprised to see that everyone lives in their own bubble
noticed the chart at 49:38, it was the wealth that plunge first that dragged liquidity down during GFC
I disagree with this guy's conclusions, but I listened all the way to the end and do admit he makes a few solid contrarian points. Right now the liquidity cycle is being pumped from China and Japan. Can that continue? Maybe. I still think areas like EU and USA suffer a relatively nasty recession before the liquidity spigots really get opened up
Love,love love,love this channel. Thanks adam
Would love to hear Stephanie question him/his arguments from her perspective of what’s happening.
This was a very interesting perspective with a lot of charts to support the argument. However, we have hardly seen the "blood on the streets" and panic usually associated with an important bottom. At first, I was puzzled by MH's assertion that the liquidity cycle low was in October last year because interest rates have risen since then. Then I realised that real rates (rates minus inflation) had continued to fall. I am not sold on his argument though given the extraordinary valuation of the stock market. If central bankers continue quantitative easing and governments continue to spend without attempt to balance budgets, it is possible. He makes no reference to people, as if everything they do is conditional on liquidity. Liquidity is actually conditional on the willingness of people to spend without concern, to take on risk in the share market, to hire more workers, to invest or to lend. That takes confidence and I believe that is waning. The fall in the share market last year indicated that. I doubt it is over.
Always great to hear varying views!! I don’t agree with his views, but I could be the wrong one here. My money is on a downturn in next 6-9 months. Then a upswing pretty decent! So not sure, maybe he is looking at a longer view avg for his bull view? Time always tells the tale!! Thanks for the interview
28:50: The irony he mentions Druckenmiller for a bullish bent in what he views BECAUSE Druckenmiller HIMSELF is VERY BEARISH [heavy probability] for the current markets. VERY confused as he's been in his entire career and is in the "hard landing camp"...
Great show. Michael is one of the best.
The bull argument is "an asteroid is going to hit the earth...so construction will boom cause we'll have to rebuild"
"Wow what great news!"
Great guest again you really have made Wealthion a place the best financial minds of our times want to come to be interviewed
This man knows his stuff. Great guest.
When you have the dollar down trending, the 10 year bond yield trending down, while corporate bond buying is up trending (HYG, LQD), and the stock market going up as well, liquidity is in full production. a.k.a QE since October 2022. Michael is a breath of fresh air. He gets it, it's all about liquidity nothing else. Printing, printing, printing.
Maybe I missed it but what does he attribute the huge jump on liquidity in October to? Did he say it was China and Japan easing? If not, what is driving that?
Also that is WILD that Japan’s debt servicing costs take up 25% if their tax revenue when rates are so low. What would they do if there was significant inflation? I don’t think they’re a good comparison to us because they have very restricted immigration + low organic birth rate. Our birth rate is not high, but we have a lot of immigrants coming in every year. Feels like that will make low inflation harder to maintain
Really good interview. Loved his book Capital Wars.
Money printing isn't long term bullish
Awesome to get alternative views. Notice that his case is still bullish for gold!
I really like hearing these opposing arguments to the collapse of the world.. he makes a very solid argument
About liquidity.. obviously the big anchor will be inflation and stagflation (which is what happened to Japan).. so if what he says is even remotely accurate things are really going to suck for anyone who isn’t rich with access to capital..
Agree. There is very little chance of de-dollarization. The British pound and US$ reflect the stable institutional foundations of those two societies. China cannot offer these foundations unless there was a regime change toward an open society and democracy.
The stress is from the Lenders not Borrowers - missing a key word YET
This is true. The lag effect of consistent rate rises hasn't fully bitten yet. The rate rises have hurt but they haven't erroded balances significantly yet. Those who can no longer afford their mortgages haven't all been found out yet while they still have cash in the bank.
They are effectively emptying people's bank accounts for as long as they can before timing a pivot correctly so as not to push too many people off the cliff.
All that said, Michael Howell is correct in a lot of what he says. A lot of the salty replies in the comments are coming from those who have positioned themselves and their portfolios to expect a different outcome.
Howell is right about QE returning eventually and the forced purchase of govt. debt. All that is coming 💯
Well done for getting a intelligent & rationale bull on the show Adam. Scares the sh*t out of me though as he’s flying a different way to Alf, Kantro + other guests who have pretty solid points of view
What if rates don’t go down? What if they pause and remain high? What if real rates end up and stay for an extended period positive?
Asset holders have used zero value cash to inflate asset prices… only to offload assets… now sitting on cash they reenforce “cash is king” and take a real return for multiple years before re-accumulating assets…
It’s the perfect rinse repeat cycle because the public cheers you every step of the way… 😂
Howell is way too confident with his thesis. He must have a crystal ball 🔮
Are credit and liquidity different things? I thought credit was liquidity and that credit was tightening. Beyond being confused about that it was good to hear a differing opinion on here than the last six months or so.
Excellent interview
Very nice and informative interview
Do Banks under pressure losen or tighten their credit creation?
"We've been in recession for more than six months."
I would have said more than a year, but this is correct also.
The US government always tries to cover up recessions at its onset to stop even more social fear reductions in spending habits. It is no different this time. But, we now have new generation that doesn’t understand what a recession does to their lives and will have a good shock from it. Even now they cannot afford all the things they were promised by society while the social fabric keep driving their overconsumption model creating more disparity of what they think they should have. We already see youth committing suicide and killing others because they hate their lives. Also, the boomers did a terrible job of making the next generation resistant to fear and tough times so they seem to be not able to handle the stresses of life.
7% inflation never stays stable but soon keeps rising, leading to an inflationary spiral and a flight from fiat currencies. Stopping it requires even more draconian tightening and a severe recession. The market eventually imposes these corrections because markets reflect rational expectations, not monetary fantasies.
Thanks for the video
AMAZINGLY ARTICULATE GUEST! BRAVO 👏... we need a lot more people like this to avoid being labeled a Bear echo chamber! Please bring back Tom Lee and David Hunter
He has a good point. Alot of the stocks I hold are down more than 50% from their peak.
So are you keeping hold of these?
@Nigel Jones Absolutely, I got in cheap and have been holding these for 5 years plus, ride them up and then down again. They're mostly all mining companies (hard tangible assets). I'm hoping they'll have their day in the sun in the coming years.
I really enjoyed this video. You asked him the hardball questions... his answers were less than stellar. Saying we will become JAPAN means DECADE OF DEFLATION... US is not going to face deflation it's simply not possible.. JAPAN is a NET PRODUCER of GOODS. US IS NOT. Demographics 20 years from now is not RELEVANT right NOW. AI + automation revolution is taking more jobs away not ADDING. Assets in US would have to FALL dramatically to become JAPAN. Yield Curve control may be possible, but that does not mean we will will become JAPAN.
Money supply is shrinking faster than anytime since the 1930s. When the supply of money shrinks, the price of most things shrink right along with it. I trust Milton Friedman over this guest.
This guy is smoking something. The market is going to drop 10-20%. No one knows exactly when, but most likely it will be within the next six months.
The market will begin to recover a few months after the bottom and after the recession is already over. Of course no one usually knows when a recession is over until .months after it's already over.
I agree with most what Howell said, he put a large emphasis on China and other part of the world, they do play a part in global liquidity, no doubt. A lot liquidity pumped into Belt and Route initiative, but doesn't seem to be a economic success. China has changed a lot in the past decade, the debt to GDP is more than 2.5, demorgraphics is getting wrose, worse than USA. When China is working with US, it is very powerful system, when it is working against US, it can be destructive, particular trying to take over Taiwan and South China sea.
The other thing is Brics and Gulf countries is moving liquidity away from US, so it became they and US competing on liquidity, again working against US could make it less effective. Some say could lead to conflict.
great guest!
Nice to see opposing viewpoints on this channel. Everything seems so negative most of the time.
Global liquidity leads - or creates -global wealth - but what happens as that wealth becomes concentrated in fewer and fewer hands?
With regional banks blowing up and unable to extend more credit, we are going to receive less liquidity not more.
Central banks doing more QE is unlikely from here. Political reasoning, credibility, rebound in inflation and loss of reserve currency status will prohibit QE from here.
What you need is a major deflationary event for QE to happen. So all of these risky assets needing liquidity may be cut in half if this man is wrong and QE doesn't restart as soon as possible.
Longer term fiat is toast, but we need to he patient for one more large dip.
Agreed. Global Liquidity Cycles? Or Global Credit Cycle. Failing debt wipes out liquidity. New Debt creates liquidity. But the Economic Confidence Model has the global credit cycle peaking in 2025. If that’s the top then it’s at the end of your chart. Looking at charts of other currencies confirms the dollar milkshake as governments around the world print. Gold chart is actually bottoming against bitcoin.
Correction Global Credit cycle ending in 2024 which maps 2025 as a top in liquidity. Then inflation worldwide as countries print. It’s already in the charts.
Bank # 4 going down tonight PACW… WAL is next
Thanks Adam, a bull. So I've in last few days reallocated some to gold, I have a crapload in 20yr. bonds. But on technicals, if 500 goes over 4175 and varifies I'm all in all bull case. If hits and bounces down, I'll make money to
Adam, You have a massive future as a financial journalist. You could be the Tucker Carlson of the financial world, while I think the big networks like to control the narrative, I wonder if they are sensible enough to see the value in you. I see the future and yours is very bright. Regards, Kev
Hopefully he would decline any offer. The mans on track to get to 500k subscribers this year, and he controls everything about what he's putting out, who he has on. Why would you give that up! He comes across as a genuine guy, without trying to bias the output with his own narrative (clearly a bearish one). Getting stuck on a network tv would be a shameful waste .
@@iq_inf I don’t disagree with you. I like to think that the future of big money journalists are independent where we can get a true no holds barred conversation about facts from 2 sides to an argument instead of an agenda based discussion. Hopefully the big money for Adam will be in TH-cam or some other medium that promotes independent thought. I see a third player of independents rising and Adam, Tucker and Russel Brand will all be able to find the once to operate. I think there is something bigger than TH-cam in the future. A one stop shop of true independent journalists.
Scene: two men arguing on the street (one of them Mr. Howell... not to be confused with the character from Gilligan's Island) "That mountain looming over our village has never exploded. It may be smoking, but it's the best darn mountain of any other villages' mountains in our region. Who's spreading rumors that a bulge is growing up there and the increasing frequency of earthquakes are any indicator of danger. Just keep baking bread and selling it to your neighbors. Here look at this chart of no activity over the last decade. It's all about magmatic liquidity at the base of the pyramid if it were inverted." Um. Nope! I appreciate the alternative perspective. But, I used to live near Mt. St. Helens.
Great job with this interview. Thanks Adam!
He uses the metaphor "... we can see central banks beginning to take their foot off the brake pedal ...". I think a better metaphor might be "... we can see central banks reducing from full throttle (pedal to the metal) to quarter throttle ..."
This is not an intelligent case-bull or otherwise.
Why not?
Interesting view. A couple points …
1. The stock market tends to bottom after Fed capitulation, not before.
2. Your liquidity cycles are not accurate within a short timeframe. The bottom of liquidity and stocks could easily be Q3 2023 or Q1 2024 and still fit your chart perfectly.
3. Usually the leaders in the previous cycle become laggards in the new one.
I was thinking the same thing for your point 2. He is talking about a recovery after several events which have not even taken place yet.
I truly appreciate listening to views that vary from my own. I believe a micro and macro economic autophagy needs to occur prior to injecting efforts to stabilize the economy.
What diff does liquidity make when everybody is broke?
Wha???!!! Mind blown!
Hmm not sure if I agree with anything this gentleman says.
Adam it seems you had very bearish, doom and gloom guests lately. Michael,s view seem to surprised you and I felt you didn’t know how to respond to him