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>
Strong economies don't have strong financial markets. Best time for equities is when policy-makers are trying to revive sluggish economies</li>
<li>
Global Liquidity rises as economies slow, since slower real economies need less liquidity to operate and funds are shipped back into the financial sector. The cycle bottomed in October 2022
</li>
<li>Equities should be valued against inflation not bond yields. Inflation is falling and it coincides with rising Global Liquidity
</li>
</ul>



Strong economies don't have strong financial markets. Best time for equities is when policy-makers are trying to revive sluggish economies

Global Liquidity rises as economies slow, since slower real economies need less liquidity to operate and funds are shipped back into the financial sector. The cycle bottomed in October 2022

Equities should be valued against inflation not bond yields. Inflation is falling and it coincides with rising Global Liquidity



As The Economic Outlook Gets Worse, We’re Becoming More Upbeat

<ul>
<li>Daily Liquidity has tanked lower, causing bond term premia to worryingly collapse to near all-time lows</li>
<li>S&amp;P500 (SPX) likely to test 3200 because of skidding Liquidity, but may even drop below 3000 as earnings get crushed.</li>
<li>Lower term premia are already set-in-stone and have  always led to much weaker reported corporate earnings some 15 months later. US S&amp;P500 earnings could skid by over 20% in 2023  </li>
</ul>


Daily Liquidity has tanked lower, causing bond term premia to worryingly collapse to near all-time lows
S&amp;P500 (SPX) likely to test 3200 because of skidding Liquidity, but may even drop below 3000 as earnings get crushed.
Lower term premia are already set-in-stone and have  always led to much weaker reported corporate earnings some 15 months later. US S&amp;P500 earnings could skid by over 20% in 2023  


Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming

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>The Fed stuck with its intention to cut rates three times this year while penciling in one rate cut less for 2025 and 2026.</li>
<li>The key takeaway was that Powell is really keen on maintaining ample liquidity instead of what he calls abundant liquidity now. </li>
<li>Stocks, Gold, and Bitcoin love ample liquidity, especially when it becomes abundant again when the economy heads south.</li>
</ul>


The Fed stuck with its intention to cut rates three times this year while penciling in one rate cut less for 2025 and 2026.
The key takeaway was that Powell is really keen on maintaining ample liquidity instead of what he calls abundant liquidity now. 
Stocks, Gold, and Bitcoin love ample liquidity, especially when it becomes abundant again when the economy heads south.


March FOMC Meeting Conclusion: Powell Likes His Balance Sheet ‘BIG!

<ul>
<li>The main driver of asset prices looks set to stall, albeit temporarily. Global Liquidity is at a new all-time peak, but it is flat-lining</li>
<li>Global Liquidity compromised by a stumbling US Fed as it copes with the errant RRP and TGA, and by an erratic People's Bank of China. Q2 could prove tricky</li>
<li>Look to diversify elsewhere. Commodity markets are on the move. But strong economies do not always have strong financial markets</li>
</ul>


The main driver of asset prices looks set to stall, albeit temporarily. Global Liquidity is at a new all-time peak, but it is flat-lining
Global Liquidity compromised by a stumbling US Fed as it copes with the errant RRP and TGA, and by an erratic People's Bank of China. Q2 could prove tricky
Look to diversify elsewhere. Commodity markets are on the move. But strong economies do not always have strong financial markets


What Really Matters Is Global Liquidity...But It Looks Set to Zag Before It Zigs Higher

<ul>
<li>Risk asset markets are driven by rising Global Liquidity and falling inflation. Low inflation in 2024 will be sufficient to justify a significant change in direction by the US Fed</li>
<li>Cyclical analysis points to a further sizeable improvement in Global Liquidity conditions over the next 12-18 months</li>
<li>Investment regime is heading towards its next phase of Calmwhich favors equities and sees steeper yield curves  ahead</li>
</ul>


Risk asset markets are driven by rising Global Liquidity and falling inflation. Low inflation in 2024 will be sufficient to justify a significant change in direction by the US Fed
Cyclical analysis points to a further sizeable improvement in Global Liquidity conditions over the next 12-18 months
Investment regime is heading towards its next phase of Calmwhich favors equities and sees steeper yield curves  ahead


The US Fed May Find It Hard NOT to Cut Rates in 2024

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)

As The Economic Outlook Gets Worse, We’re Becoming More Upbeat

As economies weaken, so Global Liquidity tends to rise. At the same time falling inflation allows equity markets to re-rate higher.

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Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming

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March FOMC Meeting Conclusion: Powell Likes His Balance Sheet ‘BIG!

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