From "Everything Bubble" To "Everything Bust"? Michael Howell on Liquidity In 2025 & Beyond
Monetary Matters with Jack Farley
Deep Dive
Why does Michael Howell expect the liquidity cycle to peak in late 2025 or early 2026?
The liquidity cycle is expected to peak due to a combination of factors, including the slowing momentum of liquidity from the US Federal Reserve and Treasury, the maturity wall of debt from the COVID-19 emergency needing refinancing, and the challenges posed by the Chinese economy and bond market.
What are the three main sources of global liquidity according to Michael Howell?
The three main sources of global liquidity are central bank liquidity, private sector liquidity, and cross-border liquidity.
How has the US Federal Reserve's liquidity impact been described by Michael Howell?
The Federal Reserve's liquidity impact has been described as 'not QEQE' and 'not yield curve control, yield curve control,' which have been hidden forms of stimulus adding up to several trillion dollars.
What is the significance of the Chinese bond market according to Michael Howell?
The Chinese bond market is considered the most important in the world due to China's large economic footprint and its integration with global trade. Its instability can have a significant impact on global liquidity and economic conditions.
What does Michael Howell suggest about the future of Bitcoin?
Michael Howell suggests that Bitcoin should be bought on dips as it is a global inflation hedge and a monetary hedge against uncertainty and monetization. He believes it will continue to rise in the long term.
Why does Michael Howell believe the US dollar is strong?
The US dollar is strong due to a combination of factors, including capital inflows into US assets, the Federal Reserve's loose policies, and the Treasury's funding strategies, which have created a strong dollar exceptionalism.
What is the 'debt maturity wall' that Michael Howell mentions?
The 'debt maturity wall' refers to the significant amount of debt that was taken on during the COVID-19 emergency and is now coming due for refinancing, which will require a large amount of liquidity.
How does Michael Howell view the current phase of the market cycle?
Michael Howell views the current phase as the calm phase of the market cycle, but he warns that the market is nearing the end of this phase and could move into turbulence if liquidity momentum slows or other risks materialize.
What role does the People's Bank of China play in global liquidity according to Michael Howell?
The People's Bank of China plays a critical role in global liquidity due to its large economic footprint. Its liquidity injections can significantly impact the tempo of the global economy, and its actions are closely watched for signs of easing or tightening.
What does Michael Howell predict for the US stock market in 2025?
Michael Howell predicts that the US stock market could still be higher by the end of 2025, but it will be a challenging year with increased risks. He is less convinced of a positive outcome compared to earlier years.
- Liquidity expected to increase in 2025 but momentum is slowing
- Cautious optimism, advises 'enjoy the party, but dance near the door'
- Risks are picking up
Shownotes Transcript