The Liquidity Cycle Has Turned | Michael Howell on What It Means for Investors

Michael Howell of CrossBorder Capital explains why slowing global liquidity could challenge stocks even as AI earnings remain strong. His concern is a growing competition for funding: money is flowing into real-world investment just as a huge wave of existing debt needs refinancing.

With Jack Forehand and Justin Carbonneau, Howell walks through his liquidity cycle, the role of collateral and repo markets, and why he believes government bonds deserve another look. He also discusses the difference between declining liquidity growth and an outright contraction, the risks of financing the AI buildout, and how China's debt problems could shape the longer-term outlook for gold.

Topics covered:

- How Michael Howell measures global liquidity as the financial system's capacity to provide funding

- Why a strong real economy can compete with financial markets for money

- The four phases of the liquidity cycle and the shift from speculation toward turbulence

- Why bank reserves, Treasury issuance, and collateral volatility matter beyond the Fed's policy rate

- How AI earnings have given technology stocks an unusual second wind late in the cycle

- The debt maturity wall and why Michael Howell watches debt relative to liquidity

- How refinancing stress can spread through interconnected balance sheets

- The case for government bonds as liquidity tightens and economic growth slows

- Why Michael Howell distinguishes US Treasury yields from Europe's fiscal pressures

- China's debt burden, potential monetary expansion, and the implications for gold and Bitcoin

Chapters:

00:00 Michael Howell on slowing global liquidity

04:29 Why Main Street competes with Wall Street for funding

09:12 The four phases of the liquidity cycle

14:03 Repo markets, collateral, and the role of central banks

18:15 Private credit creation and Fed-Treasury coordination

22:25 Asset allocation through the liquidity cycle

29:28 AI cyclicality and comparisons with past booms

33:35 The debt maturity wall and refinancing demands

41:23 Debt-to-liquidity stress and financial system fragility

46:04 Refinancing risks and Europe's fiscal pressures

50:19 Treasury yields, nominal growth, and China's economy

55:43 The outlook for 2027, China's debt, and gold

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No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.