Markets Are At All-Time Highs… But Liquidity Says Trouble Ahead w/ Michael Howell

Summary

Michael Howell explains that global liquidity growth is slowing as the real economy absorbs funds, while the Fed and Treasury have quietly injected ~$600B to stabilize markets. He sees late-cycle signals like a bearish yield curve flattening and rising inflation, and recommends positioning for a turbulence regime by favoring commodities and cash over equities. He details how Chinese PBOC liquidity drives gold and expects gold to resume its uptrend when injections restart.

• Global liquidity growth is decelerating as real-economy demand for funds increases.
• Fed and Treasury injected ~$600B through reserve management and repo operations.
• Treasury buybacks are used to suppress bond market volatility (MOVE index).
• China's PBOC liquidity injections have paused, causing a near-term air pocket in gold.
• Gold is expected to rise again when PBOC restarts liquidity injections.
• Late-cycle dynamics favor commodities and cash over equities.
• Equity investors are advised to monitor the MOVE index for bond volatility warnings.
• Fed likely to tighten within 12 months due to rising inflation pressures.