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>QE4 on-going: World Central Banks' balance sheets rising 5% annualised clip</li>
<li>US Federal Reserve balance sheet besting all-comers with a whopping near-23% growth rate</li>
<li>This liquidity surge is bond negative, but positive for risk assets: Risk-On</li>
<li>There could be favorable liquidity spill-overs for Emerging Markets and China in 2020</li>
</ul>


QE4 on-going: World Central Banks' balance sheets rising 5% annualised clip
US Federal Reserve balance sheet besting all-comers with a whopping near-23% growth rate
This liquidity surge is bond negative, but positive for risk assets: Risk-On
There could be favorable liquidity spill-overs for Emerging Markets and China in 2020


Did You Know? US Fed’s Balance Sheet Expanding At 23% Annualised Clip

<ul>
<li>This is a Risk-on market</li>
<li>
US dollar weakness could finally persuade the many risk-adverse investors to move risk-on</li>
<li>US dollar weakness depends to a great extent on cross-border capital flows
</li>
<li>Latest October (preliminary) data confirm that net capital inflows into the US peaked in August 2019
</li>
</ul>


This is a Risk-on market

US dollar weakness could finally persuade the many risk-adverse investors to move risk-on
US dollar weakness depends to a great extent on cross-border capital flows

Latest October (preliminary) data confirm that net capital inflows into the US peaked in August 2019



Are Capital Flows Into The US Dollar Peaking?

Macroeconomics

<ul>
<li>Global Liquidity has turned sharply higher</li>
<li>US Fed and ECB are driving a new QE4 (quantitative easing)</li>
<li>Bullish for risk assets, such as gold and DM equities</li>
<li>World economy likely close to an upward turning point</li>
<li>China is lagging. No evidence yet that PBoC is easing</li>
</ul>


Global Liquidity has turned sharply higher
US Fed and ECB are driving a new QE4 (quantitative easing)
Bullish for risk assets, such as gold and DM equities
World economy likely close to an upward turning point
China is lagging. No evidence yet that PBoC is easing


<ul>
<li>US Fed announces QE4 in all but name</li>
<li>Decision to expand balance sheet by US$60 billion/ month via repos</li>
<li>Balance sheet will have to grow by at least another US$300-500 billion, ie circa 20%</li>
<li>This is a major warning for bonds. Previous QEs saw 100-150bp added to yields</li>
</ul>


US Fed announces QE4 in all but name
Decision to expand balance sheet by US$60 billion/ month via repos
Balance sheet will have to grow by at least another US$300-500 billion, ie circa 20%
This is a major warning for bonds. Previous QEs saw 100-150bp added to yields


The Fed Throws in the Powell (Err Towel) ... QE4 Is Here!

<ul>
<li>FOMC cuts rates 25bp in September and hints at more QE</li>
<li>Policy-makers appear willing to do more, but dissent growing inside Fed</li>
<li>Recent repo rate spikes do not portend another 2007/08, but they are a warning</li>
<li>Fed (and other Central Banks) need to massively expand their balance sheets</li>
</ul>


FOMC cuts rates 25bp in September and hints at more QE
Policy-makers appear willing to do more, but dissent growing inside Fed
Recent repo rate spikes do not portend another 2007/08, but they are a warning
Fed (and other Central Banks) need to massively expand their balance sheets


Another Financial Crisis? The US Repo’s Big Reverberations

United States

MSCI Inc. provides investment decision support tools to investment institutions worldwide. The Company produces indices and risk and return portfolio analytics for use in managing investment portfolios.

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MSCI Inc (MSCI US)

Did You Know? US Fed’s Balance Sheet Expanding At 23% Annualised Clip

QE4 on-going: World Central Banks' balance sheets rising 5% annualised clip US Federal Reserve balance sheet besting all-comers with a whopping...

Michael J. Howell

Are Capital Flows Into The US Dollar Peaking?

This is a Risk-on market US dollar weakness could finally persuade the many risk-adverse investors to move risk-on US dollar weakness depends to...

Michael J. Howell

Global Liquidity Surges

Global Liquidity has turned sharply higher US Fed and ECB are driving a new QE4 (quantitative easing) Bullish for risk assets, such as gold and DM...

Michael J. Howell

The Fed Throws in the Powell (Err Towel) ... QE4 Is Here!

US Fed announces QE4 in all but name Decision to expand balance sheet by US$60 billion/ month via repos Balance sheet will have to grow by at...

Michael J. Howell

Another Financial Crisis? The US Repo’s Big Reverberations

FOMC cuts rates 25bp in September and hints at more QE Policy-makers appear willing to do more, but dissent growing inside Fed Recent repo rate...

Michael J. Howell

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