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, the main driver of World asset markets, is heading much lower. Bear market is here</li>
<li>
Recession coming: some economies may even already be in recession </li>
<li>
Investor exposure to stocks too high and out-of-line with deteriorating economies</li>
</ul>



 Global Liquidity, the main driver of World asset markets, is heading much lower. Bear market is here

Recession coming: some economies may even already be in recession 

Investor exposure to stocks too high and out-of-line with deteriorating economies


<ul>
<li>Ukraine is a major negative for the World, but is may be eclipsed by China and Oil? </li>
<li>China shows no signs of easing her policy and every sign of maintaining a tight monetary stance. Stability is the watchword.</li>
<li>But don’t forget higher oil prices. US$130/ bbl oil could smash Global Liquidity lower by up to 30%. This isn’t bullish!</li>
</ul>


Ukraine is a major negative for the World, but is may be eclipsed by China and Oil? 
China shows no signs of easing her policy and every sign of maintaining a tight monetary stance. Stability is the watchword.
But don’t forget higher oil prices. US$130/ bbl oil could smash Global Liquidity lower by up to 30%. This isn’t bullish!


Two Things Matter Far More To The World Economy Than The Ukraine Conflict

<ul>
<li>Global Liquidity is already falling from 2021 peaks. Not set to bottom until late-2023</li>
<li>Central Bank tightening is reinforcing this decline. More to come</li>
<li>Ukraine Crisis will not deflect the downtrend. More likely reinforces it</li>
</ul>


Global Liquidity is already falling from 2021 peaks. Not set to bottom until late-2023
Central Bank tightening is reinforcing this decline. More to come
Ukraine Crisis will not deflect the downtrend. More likely reinforces it


The Real Issue For Investors Is Less Russia And More About Skidding Global Liquidity

<ul>
<li>Negative #1: World economy fading fast. Shipping weak, Recession on horizon</li>
<li>Negative #2: World Central Banks and US Fed more hawkish</li>
<li>Negative #3: decisive move in Chinese economic policy towards 'stability' not growth</li>
</ul>


Negative #1: World economy fading fast. Shipping weak, Recession on horizon
Negative #2: World Central Banks and US Fed more hawkish
Negative #3: decisive move in Chinese economic policy towards 'stability' not growth


<ul>
<li>People’s Bank (PBoC) continues to pull liquidity out of Chinese money markets </li>
<li>Broader index of Chinese monetary conditions set to fall into ‘tight’ regime</li>
<li>Warns of sharper fall in World economy and weaker commodity prices</li>
</ul>


People’s Bank (PBoC) continues to pull liquidity out of Chinese money markets 
Broader index of Chinese monetary conditions set to fall into ‘tight’ regime
Warns of sharper fall in World economy and weaker commodity prices


What Will China’s On-Going Liquidity Squeeze Mean For World Markets in 2022?

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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