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>
Global Liquidity cycle is rising and set to hit a peak sometime around late-2025. This is bullish for risk assets</li>
<li>The timing of the recovery from October 2022 aligns with past cycles, but its scale is far less. Things need to speed up.</li>
<li>The US Fed has been a key culprit in keeping liquidity conditions too tight for too long. 2024 will see a significant ease from US policy-makers</li>
</ul>



Global Liquidity cycle is rising and set to hit a peak sometime around late-2025. This is bullish for risk assets
The timing of the recovery from October 2022 aligns with past cycles, but its scale is far less. Things need to speed up.
The US Fed has been a key culprit in keeping liquidity conditions too tight for too long. 2024 will see a significant ease from US policy-makers


Thinking About, Thinking About Central Banks ... And Liquidity

<ul>
<li>US policy makers signal the peak in Fed Funds rates and to imply rates cut cuts as soon as March 2024</li>
<li>
Fed Liquidity has risen by a whopping US$534 billion or 16.6% since the start of 2023</li>
<li>These moves are consistent with our long held view that the Global Liquidity cycle bottomed in October 2022 and is expanding towards a new peak in 2025.</li>
</ul>


US policy makers signal the peak in Fed Funds rates and to imply rates cut cuts as soon as March 2024

Fed Liquidity has risen by a whopping US$534 billion or 16.6% since the start of 2023
These moves are consistent with our long held view that the Global Liquidity cycle bottomed in October 2022 and is expanding towards a new peak in 2025.


Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

Build Well-Diversified Multi-Asset Portfolios

True Insights

Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

Macroeconomics

<ul>
<li>China is providing massive amounts of liquidity to finally solve its ongoing real estate recession. At a time when liquidity in other parts of the world is also rising.</li>
<li>The UK economy has not grown in the past nine months, and France is saying ‘au revoir’ to its manufacturing sector.</li>
<li>Our Fear &amp; Frenzy Sentiment Index has never been so deep in Frenzy territory. Yet, the other key sentiment indicator - 200-day moving averages - looks prettier every day.</li>
</ul>


China is providing massive amounts of liquidity to finally solve its ongoing real estate recession. At a time when liquidity in other parts of the world is also rising.
The UK economy has not grown in the past nine months, and France is saying ‘au revoir’ to its manufacturing sector.
Our Fear &amp; Frenzy Sentiment Index has never been so deep in Frenzy territory. Yet, the other key sentiment indicator - 200-day moving averages - looks prettier every day.


The Weekly Market Monitor – China Caves, Liquidity Flows, and There's Jay Powell!

<ul>
<li>We have lifted the weight of Developed and Emerging Market Equities to Neutral and raise Bitcoin to Overweight.</li>
<li>The catalyst for these portfolio decisions is the Federal Reserve, which strengthened the dominant market driver being the combination of Federal Reserve rate cuts, a soft landing, and ample liquidity.</li>
<li>Bitcoin is also one of the beneficiaries of growing worries about the speed of debt accumulation. In addition, the impact of US spot Bitcoin ETFs may drive Bitcoin’s price higher.</li>
</ul>


We have lifted the weight of Developed and Emerging Market Equities to Neutral and raise Bitcoin to Overweight.
The catalyst for these portfolio decisions is the Federal Reserve, which strengthened the dominant market driver being the combination of Federal Reserve rate cuts, a soft landing, and ample liquidity.
Bitcoin is also one of the beneficiaries of growing worries about the speed of debt accumulation. In addition, the impact of US spot Bitcoin ETFs may drive Bitcoin’s price higher.


Portfolio Changes – Fed Exuberance = Equities Neutral, Long Bitcoin

<ul>
<li>In the past four months or so, stock prices haven’t done all that much. The MSCI World Index measured stands 1.5% higher than at the beginning of July.</li>
<li>However, cash has performed just as well as equities, or even slightly better in the case of the MSCI World Index, with much lower risk.</li>
<li>If we were to compare the Sharpe ratios (return divided by realized volatility) of stocks and cash over the past months, the gap between the two categories would be huge.</li>
</ul>


In the past four months or so, stock prices haven’t done all that much. The MSCI World Index measured stands 1.5% higher than at the beginning of July.
However, cash has performed just as well as equities, or even slightly better in the case of the MSCI World Index, with much lower risk.
If we were to compare the Sharpe ratios (return divided by realized volatility) of stocks and cash over the past months, the gap between the two categories would be huge.


Investing Is About Return and Risk – Update 34027

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)

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The Weekly Market Monitor – China Caves, Liquidity Flows, and There's Jay Powell!

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Portfolio Changes – Fed Exuberance = Equities Neutral, Long Bitcoin

Powell gave investors everything they wanted. We raise the weight of equities and 'front-run' the Bitcoin halving while also adding to gold.

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Investing Is About Return and Risk – Update 34027

The Weekly Market Monitor keeps you updated on the week’s most important charts and developments in financial markets. Investments highlighted:...

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