The Exodus from U.S. Assets

Published on
March 14th, 2018
29 minutes

The Exodus from U.S. Assets

The Expert View ·
Featuring Michael Howell

Published on: March 14th, 2018 • Duration: 29 minutes

Michael Howell, managing director of liquidity specialists CrossBorder Capital, has mapped the massive capital flows escaping Europe and China that have driven U.S. assets to extreme over valuation in recent years. A reversal of this vast tide of liquidity was behind last year's weakness in the U.S. dollar and U.S. bonds. This reversal is still in its infancy. Michael expects that the U.S. dollar has further to fall and 10-year bond yields could hit 4%, with severe implications for markets around the globe.


  • CS
    Craig S.
    29 July 2019 @ 05:44
    He says key issue is to further rise in wages of workers, but then goes on to support further stimulus, implying wages must be held back as portion of GDP, leading to asset distortions, which impacts on workers, why wasn't this issue addressed? Then talks of key is building out to Central Asia. Central Asia has a population of 69 million people. Discusses commodities being invoiced in RMB? But what is the trade settled and netted in? Perhaps, Central Asia can run a net-surplus RMB position, but there are limits to Chinese commodity appetites, how will they move to having others have net-RMB surpluses (ie Chinese deficits in RMB), to enable any BRI debt repayment, or to enable an RMB currency region? A lot of what he states seems little more than desire to see a massive stimulus fed infrastructure program continue to drive commodity valuations and notions of regional growth, which leads back to smaller slices of GDP going to domestic workers of higher stimulus, feeding external infrastructure spending, to feed resources to Heavy Industry SOE.
  • BP
    Byron P.
    5 August 2018 @ 11:21
    Has the trade ALL WRONG. BE CAREFUL.
    • DR
      David R.
      16 August 2018 @ 10:22
      Probably early. Anyone who could read a chart knew the dollar was going to dead cat bounce, but now that's almost over. Watch the protacted reversal next over these coming months. Outflows from US will gather pace and dollar will tumble again.
  • BS
    Brian S.
    12 April 2018 @ 18:13
    Good interview. I agree with the music comments. I like that you use music to identify when text comes up and or graphics. Just tone it down. Also, I liked most of what this guy said...until he talked positively about infrastructure spending. Sigh, another Keynesian! Keep up the good work, but see if you can find fewer Keynesians!
  • AF
    Aidan F.
    10 April 2018 @ 10:00
    no mention of war
  • JD
    John D.
    9 April 2018 @ 05:35
    I know there is a transcript, but subtitles would also be appreciated so I can look at the video and the words that are said at the same time.
  • WM
    Will M.
    17 March 2018 @ 15:25
    Good video indeed. Michael makes some very well connected points. The music editing is becoming a little overpowering. The sound editor seem to want to get catchy music into these videos probably betraying their generation. This is a financial education and ideas channel not a pathway to the music editing industry. Lets tone down the "catchy" drama inducing soundtracks and fade them into the background at much lower volume levels. This is beginning to really annoy me.
    • PW
      Phil W.
      17 March 2018 @ 23:06
      very much agree WM. Great video but tone down the music
    • DH
      Dale H.
      19 March 2018 @ 05:14
    • GL
      G L.
      20 March 2018 @ 18:40
      Music is OK, but just perhaps a bit loud relative to the speaker volume. Gives the listener a bit of a shock at each section. Other than that, content and topics covered excellent as always!
    • TM
      The-First-James M.
      24 March 2018 @ 23:53
      Speaking as a Thrash Metal appreciator, I like the music. I agree it should be toned down though as not everybody likes Rock riffs.
  • RM
    Ritwik M.
    22 March 2018 @ 21:47
    Comments,nqvdljd QdkbfbfuThe bfqsfuoqebflqefoqeubfoqubduqgdgduoqwjoqwojqgdwgdbdvdwoqygdwqndpiwqdowyqnduwqndndoqywndbdpiqwndwqeqwd Ouqvdqwvdihqvdouqvdouwqdvoqwd Ouaevdvdogrrvoyqwvrpyqwfrqoqjwdvoqwdoqjndnndqw
  • RM
    Ritwik M.
    22 March 2018 @ 21:45
    • RM
      Ritwik M.
      22 March 2018 @ 21:46
  • JL
    Jim L.
    20 March 2018 @ 03:50
    These videos are getting WAY too overproduced. Content is a LOT more important than editing, flashy post-production look etc the MUSIC is so annoying thanks for the interview though!
    • DR
      Daniel R.
      21 March 2018 @ 18:05
      As a long time subscriber, sure I was (and am) here for the content - but production and editing has improved the overall experience, as well as making the product more commercially viable. And if you love RVTV, you want its market to grow - it could never survive on the original few thousand subs and the minority like us. Basically I'm delighted they've managed to keep the quality high, content diverse and relevant, and speed up the production flow so that interviews are more current while also adding polish to the product and branding. Bravo!
    • DR
      Daniel R.
      21 March 2018 @ 18:10
      but yeah - if I'd nitpick - 80s glamrock guitar riffs every few mins is a bit much for me (and others clearly). But overall I support adding production polish to the great content.
  • MM
    Michael M.
    20 March 2018 @ 10:52
    music = annoying
  • DC
    D C.
    20 March 2018 @ 08:04
    I got it now....the production guy is trying to be like Tarantino with the whole "Kill Bill" theme. Please give it up already.
  • JL
    Jim L.
    20 March 2018 @ 03:50
    These videos are getting WAY too overproduced. Content is a LOT more important than editing, flashy post-production look etc the MUSIC is so annoying thanks for the interview though!
  • DR
    Daren R.
    14 March 2018 @ 20:02
    Mike's expertise on analysing capital flows, given the unprecedented QE reversal just started, is entering a meaningful sweet spot and so a privilege to hear his views now. If $3T leaves USD who buys these + new US Tsy bonds to be issued given lower Trump taxes + those being sold or not replaced from unwind of QE, by FED ? Other guru in this space highlighting US Private sector ownership of US Tsy near all time highs and so a 'Crowding Out' threat. Seems we have both the 6m real narrow and the 12m fat broad money focused monetarists both worried now given sharper slowing growth trends and levels implying a sharp down shift in growth & inflation. So higher real rates , a growth shock and a run on dollar or sharply higher US rates -time to calibrate that risk pronto!
    • JC
      John C.
      19 March 2018 @ 18:13
      Nobody buys (or trades apparently) JGBs and they still have negative rates so I guess my question is why can't the Fed do something like that for years to come? I know eventually it all blows up and we have a debt jubilee of some sort but seriously the Fed will let rates spiral out of control and concurrently sink the housing, equity and bond markets? I know they are not ominipotent but if Japan is the 'playbook' I think rates could be lower for much longer, especially given the fact that the US consumer is so overindebted and can't keep pushing economic growth. Maybe the tax cuts help awhile but I just don'ts see overall inflation in the near future (sure eventually it will blow everything up but we're years away from that I think).
  • DL
    Dan L.
    14 March 2018 @ 20:57
    Good interview except for the "We need some sort of spending program" ... No. We don't need anymore spending programs followed by taxes, followed by debt, followed by more spending programs... give it a break.
    • JC
      John C.
      19 March 2018 @ 18:10
      Amen to that preach on Brotha!
  • DH
    Dale H.
    19 March 2018 @ 05:20
    Cut. Out. The. Music. Thanks in anticipation.
  • SD
    S D.
    18 March 2018 @ 00:28
    I really appreciate the format of this interview, with very clear and precise questions which generate really clear and precise responses, which is exactly what you want from an interviewee like this. I also really like the format used previously with written subtitles for the questions. Really effective. Well done. In general I think Realvision is really improving - for my money, anyway. I am finding good value in it.
  • WA
    WAYNE A.
    18 March 2018 @ 00:14
    Great speaker. Worst music in the world. When you tree to concentrate on the speaker and the last sentence or chart is forgotten as soon ad the stupid drum rolls. I would call what you doing sound boarding. It water boarding of the mental process of digest complex thoughts with noise not water.. The last screen I read fast and was never able after three views to get all of his recommendations. IMPOSSIBLE to read all the line in the time given. Respectfull, WEA
  • DT
    Dmitry T.
    17 March 2018 @ 11:03
    I wonder if people like Michael Howell ever analyse capital flows from book entry perspective. Somehow his analyses misses the point that for every currency and asset exchange two parties have to be present. So what he really talks about is the impact such constant exchanges make on prices and direction of their movement. By the way, since 2010 we had 150+ bp round trips in US10 a number of times while equity markets slowly moved up. More so, $ can leave the system only when taken in the form of banknotes. Other than that all $ balances are kept with banks (does not matter where they are located) who settle payments via correspondent account with US banks, who ultimately clear via the FED. So trillions will not leave US, but in the process of multiple of exchanges, central bank actions, portfolio adjustments will lead to new price levels. Maybe that will result in 10 year bond yields at 4%, but no one really knows it at present...
  • JW
    James W.
    16 March 2018 @ 02:35
    There is some excellent content here, but as the previous commenter noted, it is once again marred by being larded with loud, jarring, hype-ish noise. Could you please start formatting for thoughtful, intelligent adults, and drop this? You're ruining the service IMO.
    • JW
      Joel W.
      16 March 2018 @ 20:59
      I agree with James W. This video is better than some others from an audio normalization perspective, but the choice of interlude music is rather jarring. We are not attending a sporting event here; my life savings being at risk via my investment decisions makes the content quite exciting enough for me, thanks. Come to think of it, something gentle and soothing for the interludes would be rather welcome....
  • DC
    D C.
    16 March 2018 @ 02:04
    Definitely a pleasure to listen to a well-versed and seemingly logical investor. Interesting analogy between Soviet's attempt to go from capital to consumer spending control with China's expressed intentions. Also, be curious to see if Strong Dolllar Kudlow is going to have any real effect on USD. Now a little Meta analysis or question on RVTV...yes, music and overproduction is annoying at times, but a minor consideration compared to the vetting or representation of interviewee experts. Went to check out Mr. Howell's performance record over the past 10-11 years at his website Crossborder Capital. I was expecting (as I do with all these luminaries) eye-popping, index-beating numbers sustained over the years. Sure, not everyone will be a Druckenmiller or other water-walking traders with annualized returns of 20-25% over 30 years, but you would expect a sustainable alpha track record over some period. Long story short...the theory put into practice by Mr. Howell is less than stellar as his main fund- a global tactical asset allocation where he is able to employ his brand of research has underperformed the MSCI World from 2005- 2016 annualized at 1.7% (1.25% fees and 20% above index high wm) vs 3.3% (MSCI World Index) Ideally, everyone that speaks has their track record published beside their names...imagine that on CNBC?? Their programming would be 10% of the time if that transparency was met. Anyway, I clearly hold RV to a higher standard, otherwise why would I have signed up. As much as I may agree with Mr. Howell on his themes and think he is a lucid researcher, it obviously takes away from how much I can buy into his liquidity theory or more so the application of it in the real trading world. Or the corollary, should we just buy into the fairly efficient market model?
    • AC
      Andrew C.
      16 March 2018 @ 10:17
      I concur..... I love this, and it should be the opening line on CNBC as well. 'Don't tell me what you "think", just tell me what's in your portfolio' N.N. Taleb; Skin in the Game.
    • DR
      David R.
      16 March 2018 @ 18:02
      Good work, Sherlock. I'm not really a dollar bull but neither too bearish as that time was a year ago. Like his point tho that the PBOC is the MOST important central bank in the world. So true, by miles & miles. The PBOC alone caused the 2015-16 slowdown and turnaround after 1Q2016. The Fed is very, very secondary, as Chinese trade dwarfs US trade nowadays. China is the engine of the world, and pulling exceedingly far ahead with every passing year. He's spot-on there. Also, it's absolutely certain that China is destined to become the financial capitol of the world within 10-15 years, with US and Europe reduced to local bit player roles that are globally irrelevant. As the PWOC report says, Europe will be only 9% of the global economy in 2030, and the China will be 3X bigger than the US economy. Add in the other eastern half of Asia and that'll be the great majority of the world economic activity right there. Oh, PWOC also says India overtakes US economically too.
  • TL
    Tom L.
    16 March 2018 @ 13:57
    ugh transcript please
  • VA
    Val A.
    14 March 2018 @ 11:30
    Hate this format with questions on the screen, I’m not always looking at the screen, many times I’m listening to the audio.
    • NF
      N. F.
      14 March 2018 @ 14:25
      The full-screen video controls are annoying too - I use multiple screens and when I have an RV video full-screen in one, and work in the same browser in another screen, the video controls frequently fade in and out over the video even though I'm not mousing over that screen. There are issues with both accessibility and usability in these videos and the player.
    • PP
      Patrick P.
      14 March 2018 @ 16:42
      I hate to sound condescending.... this is not a podcast ....It is called Real being the key word.
    • SS
      Sam S.
      14 March 2018 @ 21:22
      Not sure I understand why so many thumbs up regarding these comments. Sounds (pun intended) like hardware issues and not content issues. I turn off everything else to listen to the guest speaker (another pun). I pay to play in the RV TV arena, so that is in fact what I do.
    • DS
      David S.
      14 March 2018 @ 22:05
      It is not difficult to have the question read as it is displayed on the screen. It would be more user friendly. Reading the question is not a big deal. DLS
    • AL
      Alex L.
      14 March 2018 @ 23:52
      Agreed, if they are going to put out the effort to release an audio-only version, it only makes sense to make it a comparable product in its own right. I wouldn't even mind if they had a computerized voice read back the questions!
    • VA
      Val A.
      15 March 2018 @ 00:12
      All the new design is great just don’t do it at expense of usability, RV v1’s usability was better
    • VA
      Val A.
      15 March 2018 @ 00:15
      To clarify I’m not downloading the audio, I have the iPhone propped up somewhere and using cordless headphones, and it’s hard to keep up when a pause happens and I realize a question was displayed.
    • TE
      Tito E.
      15 March 2018 @ 00:51
      Agree Val
    • NI
      Nate I.
      15 March 2018 @ 02:55
      Totally agree and the asinine music blaring at 20 dB more than the interview sound track was both useless and extremely annoying. I really wanted to hear what this guy had to say, but the damn music was so distracting it totally ruined what could have otherwise been an excellent interview.
    • JL
      J L.
      15 March 2018 @ 05:23
      just not the kind of music one wants to hear when concentrating, I wonder why the insistence on overcomplicating the editing
    • NF
      N. F.
      15 March 2018 @ 14:11
      Sam S. it has nothing to do with hardware issues. It's about the browser events that the video controls respond to. They should only fade-in on mouseover, not any kind of focus event. RV would benefit from more cross-browser and cross-platform usability testing.
    • JW
      James W.
      16 March 2018 @ 02:39
      As Nate noticed, they've become addicted to this loud, trashy hype. Maybe they will start to listen and show some respect for the intelligence of their audience.
  • NI
    Nate I.
    16 March 2018 @ 01:32
    Was RV so busy adding the annoying and useless music that the little Steven Spielberg wanna-be who ruined this interview forgot to include the MP3 download and a transcript?
    • JW
      James W.
      16 March 2018 @ 02:37
      Completely agree. Somehow they think the loud, jarring noise creates excitement, as if we are here to watch a sporting event or some television trash. They won't stop this. It's making the platform a consistant annoyance.
  • RR
    Rex R.
    16 March 2018 @ 01:59
    I like a fast speaker who is wise. However, some carnival barkers speak so quickly -- to attempt to shade/hide the fundamentals -- thus 3 card Monty reasoning. The "flow analysis" model has some wisdom-- but it is vastly subservient to the timing issues which relate/dominate this "flow" analysis/reasoning. --- Perhaps these failures are why his "house" of Salomon Brothers is no longer in existence.
  • JL
    Jesús L.
    15 March 2018 @ 20:53
    there is no transcript anymore?
  • ns
    niall s.
    15 March 2018 @ 19:22
    I liked the bit where he said he'd been wrong before.
  • VP
    Vincent P.
    15 March 2018 @ 16:15
    Ditto that! Bring on some more! Excellent!
  • DC
    David C.
    15 March 2018 @ 12:26
    Outstanding. This is why I subscribe. Get this guy back regularly,
  • TE
    Tito E.
    15 March 2018 @ 10:32
    Great information density here!
  • PJ
    Peter J.
    15 March 2018 @ 09:27
    Excellent presentation, lots of content that I'll need to look at again. The one topic that seems to have been missed or avoided as mentioned already is debt and (bad) credit. I was surprised that there was no mention of this especially in the context of the US and China. Surely it will have a major role in what unfolds over the next few years!
  • SR
    Steve R.
    15 March 2018 @ 07:10
    Brilliant! Fast, concise, and timely - just what I want from RV.
  • GS
    Greg S.
    15 March 2018 @ 03:21
    Debt is the problem in the U.S. not lack of spending packages. China’s GDP numbers are made up & capture all the unproductive capacity being added that will yield zero value down the road
  • GF
    Guillaume F.
    14 March 2018 @ 23:44
    Great video!
  • SP
    Steve P.
    14 March 2018 @ 23:03
    Some brilliant content - rapid fire info. that covered a wide range of global macro.and inter related concepts. Michael gives us an in depth look at what else appears to drive parts of the global monetary system besides that of the debt narrative that is now so popular. This video is worth at least a couple of re runs as it touches on so many themes. A huge thumbs up RV !!.
  • DS
    David S.
    14 March 2018 @ 22:16
    Excellent information and a great guest. I would like to see Mr. Howell interviewed by Michael Green. Mr. Green's give and take lets me have a better understanding when so much is presented on so many topics. Thank you Mr. Howell for an thoughtful interview. I hope we see you again soon. DLS
  • SS
    Sam S.
    14 March 2018 @ 21:23
    Mr. Howell speaks so effortless and confident right down to capital flows. Follow the money. Well done!
  • JE
    Jos E.
    14 March 2018 @ 20:10
    Couldn't the term premia just correct with a collapse in short term rates?
  • BP
    Brandon P.
    14 March 2018 @ 20:09
    The bell-curve explanation for positive correlation between equities/bonds in high inflation environments is fascinating. One of the best interviews in some time, get him back on this Summer/Fall to check in.
  • ss
    sid s.
    14 March 2018 @ 19:34
    did you get all that ?
  • RS
    Ryan S.
    14 March 2018 @ 18:52
  • HJ
    Harry J.
    14 March 2018 @ 14:49
    Ok this format may not be the greatest but the data derived is. Do it again. Thanks RVTV.
  • WB
    Wes B.
    14 March 2018 @ 13:45
    I think he makes a point that most Dollar bulls seems to ignore. He recognizes the massive flows that were hiding in dollar assets post GFC. USD bulls think higher rates and pro growth policies will bring flows back here in a hurry. I think he makes the point that those flows are already here and looking to leave (DXY dropping like a rock for last year proves his point). Enjoyed this. Get him back.
  • AG
    Amir G.
    14 March 2018 @ 13:16
    This one's filled with such informative contents. I've got to watch it again.
  • RS
    Ryan S.
    14 March 2018 @ 13:02
    This kind of videos are my reason to subscribe to RV
  • BT
    Brian T.
    14 March 2018 @ 12:59
    HOLY COW! THIS is the reason why RVTV rocks. This guy needs to become a regular - every 4-6 months or so. So many takeaways, will have to re-watch. You will never see a guy like this on mainstream media - they are not knowledgeable enough to interview a guy like this. There are new narratives here that I have not seen or read anywhere else. Wholly unconventional, new ideas. Every 3-5 weeks or so, I am SHOCKED by the new stuff I am learning on RVTV. Keep it up guys.... While there were a significant number of "a ha" moments, I was particularly interested in his views that the Yen is likely to align with the dollar, and the Euro diverge (higher). This has implications for gold which has historically been aligned to dollar-yen (yen up, gold up in $). Perhaps that is why the gold market seems so confused lately. For gold to move up in this context, gold and the yen must decouple. Thus we should probably be looking at gold performance against a basket of currencies, not just the dollar, to confirm a breakout (if and when it occurs). Fascinating.
  • RS
    Ryan S.
    14 March 2018 @ 12:52
  • BO
    Bob O.
    14 March 2018 @ 12:13
    WOW- 28 minutes and 55seconds of machine gun like information! good stuff, but I'm going to need a beer.
  • AP
    A P.
    14 March 2018 @ 10:42
    This kind of video is the reason why I am subscribing to RV. Thanks!