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>January 2024 another strong month for <strong>Global Liquidity</strong> which hits US$171.7 trillion</li>
<li>US Fed and China’s PBoC are in the forefront of adding liquidity</li>
<li>Global Liquidity Cycle trough in October 2022. Next peak late-2025</li>
</ul>


January 2024 another strong month for Global Liquidity which hits US$171.7 trillion
US Fed and China’s PBoC are in the forefront of adding liquidity
Global Liquidity Cycle trough in October 2022. Next peak late-2025


Where Are We In the Global Liquidity Cycle?

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.

<ul>
<li>China is injecting liquidity into the markets, but ironically, with investors sick and tired of negative returns, much of this liquidity is finding its way everywhere except China.</li>
<li>The downturn in commercial real estate is becoming a global phenomenon. A growing number of companies is grappling with bad real estate loans, leading to a sharp increase in provisions.</li>
<li>The most recent Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) reveals yet another trend that the recession is already behind us.</li>
</ul>


China is injecting liquidity into the markets, but ironically, with investors sick and tired of negative returns, much of this liquidity is finding its way everywhere except China.
The downturn in commercial real estate is becoming a global phenomenon. A growing number of companies is grappling with bad real estate loans, leading to a sharp increase in provisions.
The most recent Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) reveals yet another trend that the recession is already behind us.


The Weekly Market Monitor – How China Is Pushing Stocks Higher Except at Home

Macroeconomics

<ul>
<li>Beyond the official communiqué, Chairman Powell reiterated his dovish stance in his press conference, underscoring the Fed’s intense commitment to achieving a ‘soft landing.</li>
<li>Despite robust GDP growth, the ISM Manufacturing Index already calls for lower interest rates,</li>
<li>With Powell highlighting the current restrictive nature of rates and the likelihood of forthcoming inflation data bolstering the Fed’s confidence, rate cuts could soon be on the horizon. </li>
</ul>


Beyond the official communiqué, Chairman Powell reiterated his dovish stance in his press conference, underscoring the Fed’s intense commitment to achieving a ‘soft landing.
Despite robust GDP growth, the ISM Manufacturing Index already calls for lower interest rates,
With Powell highlighting the current restrictive nature of rates and the likelihood of forthcoming inflation data bolstering the Fed’s confidence, rate cuts could soon be on the horizon. 


Key Insight from the Federal Reserve Meeting: Soft Landing Rules!

<ul>
<li>The US economy grew much faster than expected in Q4, raising questions about whether yields will ever hurt economic momentum. The secret: fight higher interest burdens with more debt.</li>
<li>Employees of the ECB are happy to work there. We get that, Christine, but this doesn’t make you a great leader. Let’s talk again when the ECB must cut rates before Summer.</li>
<li>When it comes to Macro policies, China is just like everyone else. Whenever there is a problem, don’t solve it; just throw debt and liquidity at it. Chinese stocks are outperforming this week!</li>
</ul>


The US economy grew much faster than expected in Q4, raising questions about whether yields will ever hurt economic momentum. The secret: fight higher interest burdens with more debt.
Employees of the ECB are happy to work there. We get that, Christine, but this doesn’t make you a great leader. Let’s talk again when the ECB must cut rates before Summer.
When it comes to Macro policies, China is just like everyone else. Whenever there is a problem, don’t solve it; just throw debt and liquidity at it. Chinese stocks are outperforming this week!


The Weekly Market Monitor – Growth = Debt, China's Liquidity Wave & Earnings Not Falling off a Cliff

Thematic (Sector/Industry)

<ul>
<li>Despite the rise and rise of the Magnificent 7, clues that this has made the S&amp;P 500 Index, and hence US stocks riskier, are limited.</li>
<li>However, looking at betas against other stock market indices and other asset classes reveals that risk associated with US stocks is trending slightly higher.</li>
<li>The key takeaway from this analysis, however, is that Treasuries - showing higher volatility and less diversification benefits - ARE quickly losing their appeal within a multi-asset portfolio.</li>
</ul>


Despite the rise and rise of the Magnificent 7, clues that this has made the S&amp;P 500 Index, and hence US stocks riskier, are limited.
However, looking at betas against other stock market indices and other asset classes reveals that risk associated with US stocks is trending slightly higher.
The key takeaway from this analysis, however, is that Treasuries - showing higher volatility and less diversification benefits - ARE quickly losing their appeal within a multi-asset portfolio.


Are the Magnificent 7 a Danger to Your Portfolio?

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)

Where Are We In the Global Liquidity Cycle?

Jan 2024 saw another jump in Global Liquidity. US Fed and China PBoC leading After Oct 2022 liquidity lows, next peak slated for late-2025

Michael J. Howell

The Weekly Market Monitor – How China Is Pushing Stocks Higher Except at Home

Is this the start of another Chinese liquidity boom? Meanwhile, commercial real estate loan provisions are spreading across the globe, which is why...

Jeroen Blokland

Key Insight from the Federal Reserve Meeting: Soft Landing Rules!

While the official FOMC statement shows the Fed is in no hurry to cut rates, Powell's hunger for a soft landing means they are closer than it seems.

Jeroen Blokland

The Weekly Market Monitor – Growth = Debt, China's Liquidity Wave & Earnings Not Falling off a Cliff

Welcome to the Weekly Market Monitor, keeping you updated on last week’s most important charts and developments in financial markets.

Jeroen Blokland

Are the Magnificent 7 a Danger to Your Portfolio?

The quick answer is that the Magnificent 7 are not a significant threat to the risk-return characteristics of your portfolio. However, the case for...

Jeroen Blokland