Howell: Speculation Ending, Turbulence Ahead, Money Moving Real Economy, & Why Fed Could Hike
Speakers
Michael Howell
— Founder, CrossBorder Capital
Summary
Michael Howell explains that liquidity is shifting from financial markets to the real economy, marking a transition from Wall Street to Main Street. He warns that the market is in a speculation phase with narrow gains and sees turbulence ahead. He recommends commodities, gold, oil, and energy stocks while advising against long-duration bonds. Howell also makes a contrarian call that the Fed will raise rates within a year.
- Liquidity rate of change is slowing, signaling a topping phase for risk assets.
- Money is moving out of financial markets into the real economy, boosting commodities.
- The yield curve is experiencing a bearish flattening, a late-cycle signal.
- Gold is a hedge against monetary inflation, not CPI, and benefits from global debt monetization.
- The gold-oil ratio points to significantly higher oil prices, potentially over $200 per barrel.
- Energy stocks are attractive as late-cycle positions given a strong economy and rising oil.
- Long-duration Treasuries are risky due to strong nominal GDP growth and potential Fed rate hikes.
- Howell expects the Federal Reserve to raise rates in the next 12 months, contrary to consensus.
Trade Ideas
Real economy shift favors commodities.
Money is moving from financial markets into the real economy, which fuels commodity demand and strengthens commodity prices. This transition supports a broad allocation to commodities as a real asset class.
Gold hedges monetary inflation.
Gold is a hedge against monetary inflation (not CPI) and benefits from ongoing global monetization of debt, especially by China. The strong nominal GDP growth and rising debt levels support higher gold prices.
Long Treasuries risky with strong economy.
Long-duration US Treasuries are unattractive because the strong economy (7-8% nominal GDP) and potential Fed rate hike could push yields higher. A 100bp rise in the 10-year would cause a 7% loss, and 30-year a ~20% loss, exceeding the coupon.
Energy stocks attractive late cycle.
Energy stocks are attractive as late-cycle positions. A strong US economy and the view that oil prices will rise (supported by the gold-oil ratio) make energy and resource stocks a good place to be.
Gold-oil ratio implies higher oil.
The gold-oil ratio historically averages 20:1. With gold at 4000-5000, that implies oil above $200/barrel. Oil looks cheap relative to gold, and rising liquidity needs from a strong economy support higher oil prices.
Up Next
This Julia LaRoche Show video, published June 02, 2026, features Michael Howell discussing DBC, GLD, TLT, XLE, WTI. 5 trade ideas extracted by AI with direction and confidence scoring.