Name: Michael Howell: AI Will Fuel Inflation, And Markets Aren’t Ready
Uploaded: 2026-06-03T20:05:59+00:00
Duration: 2585 s

Speakers

Michael Howell — Founder, CrossBorder Capital

Summary

Michael Howell warns that the global liquidity cycle is rolling over as the US economy pulls money out of financial markets and China tightens liquidity. He argues AI is inflationary in the short term, gold is driven by China, and soft commodities and oil have upside. He advises avoiding long-term Treasuries and watching crypto as a liquidity barometer.

Global liquidity momentum is slowing, with the US real economy absorbing funds from financial markets.
China's PBOC has sharply reduced liquidity injections, pressuring gold in the short term.
Howell expects China to continue buying gold long-term as collateral for the yuan, supporting prices at $4,000-5,000.
The gold-oil ratio suggests oil could rise to $200/barrel if gold stays elevated.
He recommends short to intermediate duration bonds for safety, avoiding long-term Treasuries.
TIPS are attractive as the market underestimates inflation; 2% target is fantasy.
Cryptocurrency's decline confirms the liquidity cycle rollover and serves as a warning.
Soft commodities are primed to rise amid supply shocks reminiscent of the 1970s.

Trade Ideas

Michael Howell Founder, CrossBorder Capital 21:06

Short to mid duration bonds safe

With yields likely rising across the curve, the carry on short to medium duration bonds (up to five years) provides protection against price declines, making them a reasonable holding instead of long-term bonds. He recommends moving cash to about five-year duration to avoid losing money.

Michael Howell Founder, CrossBorder Capital 21:06

Too early to buy long bonds

US long bond yields are likely to rise further due to strong nominal GDP growth (7-8%) and fiscal pressures, making long-duration Treasuries unattractive. It is too early to buy the long end of the bond market.

Michael Howell Founder, CrossBorder Capital 21:48

China underpins gold long-term

China is the primary driver of gold prices, both through retail demand (as a hedge against monetary inflation given capital controls) and government purchases to build a collateral base for the yuan. While short-term liquidity tightening by the PBOC has pressured gold, Howell expects this buying to continue long-term, supporting gold at $4,000-5,000/oz.

Michael Howell Founder, CrossBorder Capital 33:39

Gold-oil ratio suggests oil upside

The long-term gold-oil ratio has averaged 20x with strong mean reversion. If gold is underpinned at $4,000-5,000, oil should rise to $200/barrel. This is a contrarian view but worth monitoring as a potential major move.

Michael Howell Founder, CrossBorder Capital 36:28

TIPS market underestimates inflation risk

The TIPS market implies 10-year inflation of around 2.6%, but Howell believes the Fed will not achieve its 2% target and inflation will be higher, making TIPS a good hedge. He calls the 2% target 'fantasy.'

Michael Howell Founder, CrossBorder Capital 37:04

Crypto reflects liquidity downturn

Cryptocurrency prices are highly correlated with global liquidity conditions, which are rolling over. The chart shows liquidity leading crypto by 13 weeks, and recent data confirms the downside, making crypto a warning signal for further market weakness.

Michael Howell Founder, CrossBorder Capital 42:37

Soft commodities poised to move higher

Howell sees parallels to the 1970s with multiple supply shocks adding to cost pressures (e.g., Straits of Hormuz, fertilizers, helium), and believes soft commodities are primed to rise significantly as part of a broader commodity inflation.

Michael Howell: AI Will Fuel Inflation, And Markets Aren’t Ready

Summary

Trade Ideas

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