Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

CrossBorder Capital an investment advisory firm specialising in macro-investing. Founded in 1996 with an international client base, CrossBorder focuses on monitoring and understanding global liquidity and capital flows. Our proprietary databases (available to clients) cover 80 countries in depth from 1980 onwards. We take a systematic quantitative methodology that uses this data with AI models to predict financial market movements. The efficacy of our data has been independently verified, and we have an associated but separate asset management division.

Cross-Asset Liquidity Strategist

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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.


Macroeconomics

We conclude five points about Global Liquidity in 2018:<ul><li> Global Liquidity will expand by around US$5 trillion net in 2018. This is still a positive rise, but it is one-third of the 2017 pace. 2017 proved a spectacular year for inflows</li><li>Threats of US Fed and ECB Reverse QE or ‘quantitative squeezing’ will be offset by net expansion of Central Bank balance sheets in EM and Japan</li><li>Reverse QE by Central Banks is not helpful, but cross-border flows pose by far the bigger threat for asset markets this year</li><li>China (27% share) is the most important economy for Global Liquidity, both directly and indirectly through its impact on the Emerging Market flows</li><li>At a 66% share of liquidity flows, the US dollar (with its surrogates) remains de facto the most important currency Worldwide. But if the Chinese Yuan is included based on China’s economic importance, it would immediately take a 26% point market share away from the US dollar. Gold would soar in price?</li></ul>

We conclude five points about Global Liquidity in 2018: Global Liquidity will expand by around US$5 trillion net in 2018. This is still a positive rise, but it is one-third of the 2017 pace. 2017 proved a spectacular year for inflowsThreats of US Fed and ECB Reverse QE or ‘quantitative squeezing’ will be offset by net expansion of Central Bank balance sheets in EM and JapanReverse QE by Central Banks is not helpful, but cross-border flows pose by far the bigger threat for asset markets this yearChina (27% share) is the most important economy for Global Liquidity, both directly and indirectly through its impact on the Emerging Market flowsAt a 66% share of liquidity flows, the US dollar (with its surrogates) remains de facto the most important currency Worldwide. But if the Chinese Yuan is included based on China’s economic importance, it would immediately take a 26% point market share away from the US dollar. Gold would soar in price?

MSCI AC Asia ex Japan Index (MXASJ INDEX)

'Quantitative Squeezing': Prospects for Global Liquidity in 2018