FameEX Hot Topics | Michael Howell Anticipates Ongoing Growth in Global Liquidity Boosting Stocks, Gold, and Crypto Markets

Michael Howell, a veteran in global finance and the CEO of Crossborder Capital, a London-based firm managing assets over $1 billion, has recently offered his insights on the current economic environment. With a background in key roles at Baring Securities and Solomon Brothers, Howell has established himself as an expert in analyzing global liquidity trends and their effects on various markets. In his latest appearance on Forward Guidance, he presented a liquidity-focused view, countering the mainstream narrative of monetary tightening. He highlighted a noticeable increase in liquidity that could positively impact stocks, gold, and cryptocurrencies.

Howell's critical observation revolves around the Federal Reserve's subtle yet significant actions to inject liquidity into the market, which stands in contrast to the prevailing perception of monetary tightening. He pointed out that despite a reduction in the Fed’s balance sheet in the previous year, there was actually an increase in Fed liquidity, estimated between 12 to 15%. This situation is part of a larger global trend, where central banks engage in what Howell termed as shadow quantitative easing and shadow yield curve control.

He identified significant factors contributing to this rise in liquidity, such as the draining of the Reverse Repo (RRP) facility and the Bank Term Funding Program (BTFP). Howell anticipates continued unlocking of central bank liquidity, particularly once the RRP is fully drained, and suggests the possibility of renewing the BTFP.

Another aspect Howell explored is the U.S. Treasury’s strategic decision to shorten the maturity of its debt issuance. This move has effectively lessened the private sector's need to absorb government debt, notably aiding the banking sector in managing its overexposure to duration risk.

Howell believes these developments may signal a shift from a rebound to a more stable phase in financial markets. He noted that during such stable phases, sectors like finance and high-beta securities, including cryptocurrencies, usually perform well.

On the subject of cryptocurrency, Howell highlighted its potential as a hedge against monetary inflation, particularly appealing to the younger generation. This preference coincides with the increasing interest of younger investors in digital assets. Howell posited that cryptocurrencies might surpass gold as the preferred investment vehicle for this demographic, especially in a climate of monetary inflation. Howell's insights offer a distinct viewpoint on the relationship between global liquidity movements and investment choices, especially relevant in the rapidly evolving field of digital assets.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.