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>The post-Jackson Hole period has seen renewed tightening policies by the World's major Central Banks, led by the US Fed</li>
<li>World Central Bank Liquidity is skidding at an annualised clip of minus 30%. This squeeze is coinciding with weakening corporate profits</li>
<li>Risk asset markets (eg SPX) typically lag liquidity by several months. They have two legs down, often separated by a brief rally of circa 20%. The second leg-down measures 15-20%</li>
</ul>


The post-Jackson Hole period has seen renewed tightening policies by the World's major Central Banks, led by the US Fed
World Central Bank Liquidity is skidding at an annualised clip of minus 30%. This squeeze is coinciding with weakening corporate profits
Risk asset markets (eg SPX) typically lag liquidity by several months. They have two legs down, often separated by a brief rally of circa 20%. The second leg-down measures 15-20%


Second Leg Down: 5% Points More on Fed Funds! Central Banks Turn Up the Heat

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>In last week's Compass (Aug. 23) we discussed the increasing odds for a deeper pullback in the broad market indexes.</li>
<li>This was due to 5-week uptrend breaks on the SPX, NDX, and Russell 2000, the Fed tightening, and with Treasury yields, the U.S. dollar (DXY), and commodities (DJP) inflecting higher.</li>
<li>The market remains in pullback mode; the SPX, NDX, and Russell 2000 are all approaching 50-day MA support, the first big area of interest on this pullback.</li>
</ul>


In last week's Compass (Aug. 23) we discussed the increasing odds for a deeper pullback in the broad market indexes.
This was due to 5-week uptrend breaks on the SPX, NDX, and Russell 2000, the Fed tightening, and with Treasury yields, the U.S. dollar (DXY), and commodities (DJP) inflecting higher.
The market remains in pullback mode; the SPX, NDX, and Russell 2000 are all approaching 50-day MA support, the first big area of interest on this pullback.


Headwinds Persist, Including Rising DXY, 10-Yr Treasury Yield, & Commodities; Buying Staples, Solar

House of Market Insights, Market Radar

Market Radar

House of Market Insights

Quick market updates and lot of ideas for your investments from a multi-asset portfolio manager working for a family office.

Quick Market Updates

<ul><li>The S&amp;P 500 had a great reaction in the second part of July and the first half of August, but now he's showing weak again.</li><li>The last high is perfectly aligned with a down-sloping trendline.</li><li>On the other side there is an interesting support close to 3,800. Is the index going to test that level again?</li></ul>

The S&amp;P 500 had a great reaction in the second part of July and the first half of August, but now he's showing weak again.The last high is perfectly aligned with a down-sloping trendline.On the other side there is an interesting support close to 3,800. Is the index going to test that level again?

<ul>
<li>After a substantial rally, the S&amp;P500 was unable to break above its 200-day MA and market indexes have violated steep 5-week uptrends; we view this pullback as a critical test.</li>
<li>This is where we see if prior breakout levels/important moving averages hold and market indexes make a higher low, or if this was nothing more than a bear market rally.</li>
<li>Barring a Fed pivot, and with Treasury yields and the DXY inflecting higher (and potentially commodities, too), it increases the odds for a deeper pullback in the broad market indexes.</li>
</ul>


After a substantial rally, the S&amp;P500 was unable to break above its 200-day MA and market indexes have violated steep 5-week uptrends; we view this pullback as a critical test.
This is where we see if prior breakout levels/important moving averages hold and market indexes make a higher low, or if this was nothing more than a bear market rally.
Barring a Fed pivot, and with Treasury yields and the DXY inflecting higher (and potentially commodities, too), it increases the odds for a deeper pullback in the broad market indexes.


Don't Fight the Fed; Pullback Underway as Rising DXY and 10-Yr Treasury Yield Back to Being Headwind

<ul>
<li>Fed unlikely to ease policy rates quickly. Even with recession and rates on ‘hold’, QT (quantitative tightening) policy will probably continue</li>
<li>US dollar liquidity already skidding badly. QT could reduce Fed Balance Sheet by one-third</li>
<li>QT has highly non-linear effects on financial stability. A crisis could be brewing?</li>
</ul>


Fed unlikely to ease policy rates quickly. Even with recession and rates on ‘hold’, QT (quantitative tightening) policy will probably continue
US dollar liquidity already skidding badly. QT could reduce Fed Balance Sheet by one-third
QT has highly non-linear effects on financial stability. A crisis could be brewing?


United States

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

S&P 500 INDEX (SPX INDEX)

Second Leg Down: 5% Points More on Fed Funds! Central Banks Turn Up the Heat

post-Jackson Hole the World's Central Banks have stepped-up tightening. Liquidity is skidding at an annualized 30% clip. QT policies in the US add...

Michael J. Howell

Headwinds Persist, Including Rising DXY, 10-Yr Treasury Yield, & Commodities; Buying Staples, Solar

We still see the market as being in pullback mode; the $SPX, $QQQ $NDX, and $IWM $RUT are all testing 50-day MA support, the first big area of...

Vermilion Research

Charts to Watch #7

The last high is perfectly aligned with a down-sloping trendline. On the other side there is an interesting support close to 3,800. Is the index...

Market Radar

Don't Fight the Fed; Pullback Underway as Rising DXY and 10-Yr Treasury Yield Back to Being Headwind

$SPX $QQQ $IWM Pullback Underway as Rising $DXY and 10-Yr Treasury Yield Back to Being Headwind; Commodities $DJP $BCOM Attempting to Break Out....

Vermilion Research

Major Fed Policy Error Ahead!?

Fed’s upcoming Jackson Hole may ignore the bigger threat to financial stability from persistent and potentially accelerating QT. We remain risk-off...

Michael J. Howell