reports
- Michael Howell
- Michael Howell
- Michael Howell
Global View Global Liquidity in 2021 Another Story - January 2021
Global Liquidity in 2021: Another Story Global Liquidity will break records in 2021, fuelled by further Central Bank QE as policy-makers accommodate continued large fiscal programmes. Yet, more-and-more liquidity is heading into real economies, and strong economies rarely have strong financial markets. This is both the warning and the opportunity in 2021.
- Michael Howell
- Michael Howell
- Michael Howell
Global View From Boom to Doom - December 2020
From Boom to Doom? There may be no obvious bubbles in World stock markets, but we are not optimistic about 2021. Not only is this the very opposite of our upbeat view of 2020, but it seemingly contradicts our on-going optimism about the real economies. However, the great watch-word of investing is that "... strong economies do not have strong financial markets". 2021 will be a major test!
- Michael Howell
Global View 2021 Outlook The Great Monetary Schism A Weaker US Dollar...
2021 Outlook: The Great Monetary Schism - A Weaker US Dollar, A Stable 'Asian Dollar' and a Rising Euro? A consensus is emerging that the US dollar will weaken in 2021. Our work agrees, but for very different reasons. Capital flows frequently drive currencies and the starting point of a large US$5½ trillion bulge from recent cross-border inflows is a shadow that looms large over the US unit. On top, we suspect that Fed policy will have to take on even more of the policy burden in 2021. Dollar w...
- Michael Howell
- Michael Howell
- Michael Howell
Global View The Debt Liquidity Spiral & The Era of Monetary Dominance ...
The Debt/Liquidity Spiral & The Era of Monetary Dominance: How Much Further Could Global Liquidity Expand in 2021? Financial markets are spinning around a fragile debt/ liquidity axis that is vulnerable to rising credit risk and higher inflation. Policy-makers can cushion credit risk but, in doing so, their liquidity injections risk creating monetary inflation. On top, the Baby Bust and the Great China Decoupling are raising the stakes by increasing cost inflation and forcing savings ratios to ...
- Michael Howell
Global View Currency Wars The Coming Digital Imperialism and Why Bitco...
Central Banks Drive The Bitcoin Boom The rapid embrace of Central Bank Digital Currency (CBDC) by policy-makers heralds the likely wider use of e-monies within five years. CBDC is developing alongside its nemesis MMT. The result could be an explosion in both the size and growth of Central Bank balance sheets. In terms of QE, we may not have seen anything yet! This risk of monetary inflation will fuel the rise of alternative stores of value, such a gold and Bitcoin. Using our previous 'fair valu...
- Michael Howell
- Michael Howell
- Michael Howell
Global View Yield Curve Control (YCC) Or Coming Term Structure Turmoil...
Yield Curve Control (YCC) Or Coming Term Structure Turmoil? The curious and eerie calm that has settled over World bond markets likely owes more to 'short gamma' investment strategies than Central Bank yield curve control (YCC). With implied volatility at record lows relative to realized volatility, this is a dangerous and unstable mix. Not only is bond volatility strongly mean-reverting, but today's rapid pace of US M2 money supply was the reason YCC ended last time.
- Michael Howell
Global View Which World Stock Markets Will Out-Perform Over The Next T...
Which World Stock Markets Will Out-Perform Over The Next Two Years? Whereas bottom-up stock market analysis focuses on earnings prospects, we look at investor behaviour and liquidity from a top-down perspective. This tells us that aggregate stock market returns are largely determined by changes in investors' risk appetite, namely their overall portfolio positioning. This knowledge could have timed a large-scale re-entry into equities in late-March 2020. Looking ahead, prospects for the next two...
- Michael Howell
Global View Capital Wars -Killing The Dollar Softly - September 2020
Capital Wars: Killing The Dollar Softly The 2014-17 'safe asset' capital surge into the US dollar has peaked and is now cooling. Added to this, the Fed's new excess inflation goal will surely encourage a still weaker US dollar, perhaps by 20-25%? By targeting their currencies and so cushioning a weaker US unit, Asian policy-makers will force adjustment on to the Euro and gold. But can the debt and deflation-prone Eurozone cope with a much stronger Euro? And, what will stronger gold (and liquidi...
- Michael Howell
- Michael Howell
- Michael Howell
Global View Danger Is the Y2K Dot-Com Bubble Being Re-blown - Septembe...
Danger?! Is the Y2K Dot-Com Bubble Being Re-blown? The short answer is 'no'. We are not saying that liquidity is unimportant. Far from it. But looking inside the standard P/E multiple shows that several other things are going on that look very different to the Y2K bubble. True, liquidity is similarly buoyant, but US equity allocations have fallen from last year and profitability is at a cyclical low. Adjusted valuations show a more benign stock market rally that can keep going.
- Michael Howell
Global View What Warren Buffett Knows About Japan - September 2020
What Warren Buffett Knows About Japan? Japanese stocks are at their cheapest level, relative to Wall Street, in almost fifty years. We base this assessment on adjusted P/E multiples that take into account periods of excess liquidity, which distorted both the Tokyo market in the early 1980s and Wall Street in the recent two decades. Whereas US equity allocations have more than doubled since 1990, allocations to Japanese stocks have flat-lined. Equally in the last two decades, US profitability ha...
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