The Collapse in Global Liquidity

Published on
10 October, 2018
Topic
Emerging markets, Liquidity, Equities
Duration
25 minutes
Asset class
Bonds/Rates/Credit

The Collapse in Global Liquidity

Featuring Michael Howell

Global liquidity is falling at the fastest pace since the great financial crisis, according to Michael Howell of CrossBorder Capital. Amid flat yield curves, collapsing emerging market equities, and weak gold and commodities prices, Howell also details the decline global risk appetite, which he believes is poised to spread to U.S. markets. Filmed on October 10, 2018 in London.

Published on
10 October, 2018
Topic
Emerging markets, Liquidity, Equities
Duration
25 minutes
Asset class
Bonds/Rates/Credit
Rating
38
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Comments

  • CN

    Christian N.

    16 10 2018 13:18

    8       0

    Please add voice over to your questions. I have seen many viewers suggest this. I assume, that like myself, many viewers are actually listeners.

  • DH

    Dean H.

    14 10 2018 10:13

    1       0

    What I would give to work for and learn from this man.

  • AS

    Andrew S.

    13 10 2018 19:29

    4       0

    Excellent interview. Agree 100% with his view of the yuan and what China is trying to accomplish. IMO that is the backdrop to pretty much everything that is happening in macro economics and geo-politics.

    Would very much like to hear Michael comment on China and Russia's relentless purchases of gold and how that plays into what China is attempting to accomplish.

  • PG

    Philippe G.

    13 10 2018 17:19

    2       0

    Excellent. Many related topics covered in ~25 minutes. Love videos like this!

  • ER

    Ernesto R.

    13 10 2018 15:04

    4       0

    Great interview, I loved the concept of volatility starting in forex, migrating into fixed income, and ending into equity mkts. Exactly what we have been witnessing over the last 6months. Bring him periodically back...great mind!

  • F

    Floyd .

    11 10 2018 21:50

    0       0

    Good background information but I am always wary of someone that prefaces a great long-term outlook or trade ie. china,japan emerging markets with but watch out for the next six months.

  • MS

    Matt S.

    11 10 2018 20:12

    2       0

    I wish the "Japan stock market as proxy" idea could have been expanded on... seems like the only way non-institutional traders can trade this! (if so desired)

  • HH

    Hall H.

    11 10 2018 13:15

    1       2

    Smart guy! Too hard to understand.

  • NG

    Nick G.

    11 10 2018 11:16

    11       0

    This was a much more seminal interview than the one with Stan D. That was interesting and amusing. This one attempts to actually teach people the spread relationships that one learnt when trading at Salis, which was head and shoulders above everyone else put together in the prop trading field. There is a sequence to volatility transmissions and it all happens via the yield curve. The whole market is a series of butterfly relationships. Thank you, Mike. Happen to agree with you 100%. Probably the most important interview ever done here.
    Doubt people will agree with me, but that is a good thing.

  • DY

    Damian Y.

    11 10 2018 05:07

    3       1

    So China want to do seigniorage, which is printing a $100 bill and paying 25cents for the printing cost so they make $99.75.
    What a great way to expand an economy, like what could go wrong with that?

  • DR

    David R.

    11 10 2018 01:47

    5       1

    Good one and nice length too. I agree, the divergence amongst international equity markets for 2018 is likely to close in part by US markets correcting. Until the gutless Fed pumps up the sickly economic patient with another shot of QE steroids. Will it work again? Greg Walden said nope, that it'll crash the dollar and create a moonshot for gold. We'll see.

  • RM

    Robert M.

    10 10 2018 23:22

    4       0

    His global liquidity charts are always zoomed out 40 years, without vertical lines showing annual dates, and without any asset series. Never says what the composition of GL is, even in broad terms. Frustrating.

  • MN

    Maverick N.

    10 10 2018 22:12

    7       0

    Original. Excellently articulated. We should get Mike to keep coming every six months or so!

  • AG

    Adam G.

    10 10 2018 21:06

    5       0

    This is a remarkable piece of thinking....watch and profit

  • MC

    Minum C.

    10 10 2018 18:25

    3       0

    Some really good insight into the long-term consequences of shifting monetary policy in China. I liked this a lot.

  • NH

    Neil H.

    10 10 2018 17:24

    5       0

    Very well thought out and articulated

  • cr

    cc r.

    10 10 2018 17:13

    2       0

    How can there be a money shoot-out between the USD and RMB if the belt & road fail? Didn't Pakistan went to the IMF and get dollar loan to fend off Chinese debt invasion?

  • AR

    Abishek R.

    10 10 2018 16:12

    1       0

    Can somebody please tell me how I can track the "Merrill Lynch Open Volatility Move Index" ? Cannot seem to find it on tradingview.

  • VC

    Vince C.

    10 10 2018 14:26

    6       0

    Really enjoyed Michael Howell's thinking and approach to the topics. Some new things learnt and some things I'd already come to the conclusion of although spoken here much more concisely than I could have.

  • SZ

    SALEH Z.

    10 10 2018 13:07

    5       0

    Pretty good. Just a few things he could have clarified
    1. What is he using to calculate global liquidity? Seems pretty arbitrary since there is no specific index to my knowledge and it’s likely not as simple as just the bid offer spreads in liquid asset classes like SPX and the USD pairs
    2. History suggests yield curve flattening occurs when the economy hits peak velocity and stocks have done extremely well. But the slow down is usually 12-18 months away not imminent.
    3. On the yen and japan - perhaps I misunderstood - the yen is a pro cyclical ccy now yet the BOJ is monetising the debt? Didn’t make sense....

  • sw

    shaun w.

    10 10 2018 12:44

    2       0

    What does Michael mean (in a time range of years) by short term, medium term and long term?

  • MT

    Mike T.

    10 10 2018 10:02

    6       0

    over an above the factors the speaker refers to affecting Liquidity, as a generalization there needs to be a concerted effort to educate particularly European politicians and regulators that having multiple HFT Market Makers competing for order flow from Brokerages is highly desirable. It is particularly important for retail traders that orders are NOT routinely routed to 'The Exchange' . Only the US seem to have embraced the benefits to everyone of enhanced liquidity from active HFT Market Makers. Personally if I see a spread wider than $0.50 I steer clear. Using SPY as a bench mark, during regular hours your Broker should be showing spreads of a penny wide and no more. Ask your Broker where your orders are routed to, what Market Makers they use and if unable to get an answer consider changing.

  • SF

    Simon F.

    10 10 2018 09:48

    27       0

    Incredibly coherent and well argued thesis based on decades of academic and real world experience. This is the kind of incisive contribution that puts an ocean of clear water between RV and the others. Is he right? We will see. What we do see now is a thesis that we can compare with others espoused elsewhere in RV, and make up our own minds. Terrific stuff guys!