Show notes
Michael Howell, CEO of CrossBorder Capital, an investment advisory firm, and author of Capital Wars, returns to The Julia La Roche Show, returns seven months after his last appearance to update his Global Liquidity call. The peak he flagged for Q3 2025 has held, and the cycle now points to a trough in 2027. Despite the Iran conflict and market volatility, Michael argues the world economy is actually holding up better than the media suggests — but that's almost the problem, because money flowing into the real economy is draining it from financial markets. He explains why the current rally is phoney, why bond term premia falling is actually a flight to safety signal not a selloff, and why we're in the Speculation phase — where economies feel strongest right before things get difficult. He walks through his full asset allocation traffic light system, the debt liquidity nexus, why the Fed and Treasury may be secretly targeting the MOVE index to protect the basis trade and collateral system, the COVID-era debt maturity wall now coming due, and why raising interest rates in today's world may actually be stimulative — not contractionary — because the government is the biggest borrower and higher rates just transfer more income to the private sector. He closes on Treasury QE replacing Fed QE and what it means for Bitcoin.
Links:
Website: http://www.crossbordercapital.com/
Twitter/X https://x.com/crossbordercap
Substack: https://capitalwars.substack.com/
Book: https://www.amazon.com/Capital-Wars-Rise-Global-Liquidity/dp/3030392902
00:00 — Introduction and welcome back Michael
01:15 — Where we are in the liquidity cycle — asset allocation clock and the five to six year cycle
05:15 — Julia asks about the phoney rally — Michael digs in
05:35 — The AI-based World GDP model — Iran far less damaging than tariffs or COVID
09:37 — All money anywhere must be somewhere — why a stronger real economy drains financial markets
13:18 — The sine wave estimated 25 years ago — peak Q3 2025, trough 2027
15:37 — Daily granular liquidity data — the downtrend confirmed
17:16 — How to stay positioned without getting whipsawed by relief rallies
18:49 — What bonds are really saying — breaking down term premia vs policy rates
22:42 — The Speculation phase — economies feel strongest right before it gets hard
23:45 — The yield curve as liquidity barometer — why steepening consensus was wrong
27:15 — The winter analogy — don't go outside in a swimsuit during winter
29:40 — The asset allocation traffic lights — what to own at each phase
33:51 — Julia asks what gets exposed when the tide goes out
34:27 — The debt liquidity nexus — 80% of transactions are refinancing, 77% of lending is collateral based
36:53 — The MOVE index — why bond volatility governs the entire collateral multiplier
37:49 — Why Michael thinks the Fed and Treasury are quietly targeting the MOVE index
40:30 — What happens if they stop capping it — basis trade collapses, collateral doom loop
42:18 — The debt maturity wall — COVID debt turned out to end of decade, now coming back
48:34 — The Fed is preoccupied with the wrong tool — the world has fundamentally changed
51:00 — The Alice in Wonderland problem — raising rates today is actually stimulative
53:00 — Kevin Warsh and the balance sheet — why slashing it is impractical right now
54:23 — Treasury QE replacing Fed QE — short end issuance, monetization into real economy
57:17 — Bitcoin and crypto — Treasury QE stabilization vs the bigger falling liquidity force
01:00:02 — Final thoughts — count liquidity, get corroboration, don't rely on one club
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