Preparing For 2027 Inflection in Global Liquidity | Michael Howell’s Bull Case For Bonds and Tepid View of Liquidity-Sensitive Assets

Bitcoin

Across the shows: 18 speakers in other episodes, 13 bullish and 5 bearish calls, past 30 days

• Michael Howell · CrossBorder Capital / GL IndexesBearish

  Bitcoin is the most liquidity-sensitive asset; its peak and collapse followed the liquidity cycle top.

  Howell's statistical work finds Bitcoin is the most liquidity-sensitive asset. Bitcoin peaked shortly after his liquidity cycle peaked, followed by a sudden collapse. It is now stabilising, which he cannot fully explain. He suggests it may be responding to the recent upward flick in Fed liquidity, but he is not sure that will continue and stays open-minded. The implication is that Bitcoin remains exposed to the coming liquidity turn.

  “Bitcoin is an excellent barometer of liquidity. ... we confirm that Bitcoin is the most liquidity sensitive asset on the planet.”at 1:11:20

• Michael Howell · CrossBorder Capital / GL IndexesBearish

  Bitcoin likely retests $70,000; holding that level could mark the start of a base.

  Using the channel drawn on his Bitcoin chart, Howell expects Bitcoin to fall back to test 70,000. He treats Bitcoin as a barometer of the liquidity cycle: if the 70,000 level holds, that may be the beginning of a base and suggests a liftoff in liquidity is nearer than not. He says missing the first part of a rally doesn't matter, since liquidity leads asset markets by around six months.

  “So I would envision that you see Bitcoin coming down to test the 70,000 level on this chart. That would be my expectation, okay, where the channels are drawn. ... If it holds that level, I think that may be the beginnings of base”at 1:13:02

• Michael Howell · CrossBorder Capital / GL IndexesBullish

  Bitcoin's next up-cycle should be significant as policymakers print money to manage refinancing.

  Howell argues policymakers will have to abandon restraint because of the large refinancing needs in the system, and will ultimately need to print money in large size. That makes Bitcoin a monetary inflation hedge. He cites its historical liquidity elasticity of roughly 45–50% for a 10% move in liquidity, far above gold's roughly 15%, and says growing institutionalisation may lower its volatility enough to justify a bigger portfolio weight. He holds both Bitcoin and gold, weighted by volatility.

  “I think in Bitcoin is going to be significant because it's gonna... All policymakers are gonna throw the towel in. They're gonna have to. ... And they've got to print money in some large size ultimately to get through this process, and that is gonna happen.”at 1:13:31

US Treasuries & yields

• Michael Howell · CrossBorder Capital / GL Indexes

  Investors should favour longer-duration government bonds as liquidity turns down and turbulence sets in.

  Howell's liquidity data show the market moving into a turbulence phase where liquidity gets crimped further and making money is harder. In that setting he says investors want more defensiveness and in particular longer-duration government bonds. He concedes this runs against many press headlines about bond selloffs, but says the data support it. The argument rests on the liquidity cycle turn and the late-cycle pattern of defensive equity outperformance.

  “you really want more defensiveness and particularly a longer duration government bonds, which kind of flies in the face of many press headlines over the recent month.”at 2:13

• Michael Howell · CrossBorder Capital / GL Indexes

  Treasury's shift to more bill issuance acts as liquidity stimulus, with bill share heading toward 30%.

  Howell calls the Treasury's heavier bill issuance 'Treasury QE'. Changing the debt mix toward shorter maturities raises private-sector assets relative to average duration, which he treats as a liquidity impulse. Bills were about 23% of federal debt and he expects that to rise toward 30%. A five-percentage-point rise in the bill share is equivalent to about $3 trillion of net liquidity stimulus. He says this money goes into the real economy rather than financial markets. He also reads the Treasury's buybacks as a tool to reduce bond volatility rather than to lower yields, and says Treasury QE now drives the real economy and strong nominal GDP growth.

  “bills, treasury bills, very short dated government federal debt account for about 23% of total federal debt outstanding. I think that's gonna be pushed up to 30.”at 27:49

• Michael Howell · CrossBorder Capital / GL Indexes

  Yield curve flattening reflects falling term premium and safe-asset demand, not fiscal fears.

  Howell says US domestic liquidity has tended to lead changes in the Treasury yield curve slope by about nine months, and the curve has been flattening since the start of this year. The five-ten spread's flattening is mostly from falling term premium. Term premium is also declining or flat across Germany, the US and China, and only the French OAT market, which carries fiscal concern, is elevated and not worsening. He says declining term premium signals rising demand for safe assets. He argues the media story that yields are rising because of fiscal fragility or fears about Bessent or Trump is wrong. If inflation were the main worry the curve would steepen, but it is flattening. Yields are driven mainly by nominal GDP and rate expectations.

  “Now the hit scratching point is that if you've got declining term premium, which is what I argue is going on, and not just in The US, but increasingly worldwide, that tells us there is an increasing demand for safety of safe assets in the system.”at 33:33

• Michael Howell · CrossBorder Capital / GL Indexes

  Ten-year Treasury fair value is about 5.5–6%, with yields driven by rate expectations rather than term premium.

  Howell argues bond yields are driven by rate expectations, not the term premium. US nominal GDP and the risk-adjusted policy rate have tracked closely since the 1951 Treasury-Fed Accord, and that relationship points toward about 6%. Growth is the fastest since the mid-1980s, lifted partly by fiscal deficits and AI capex. His own term-premium calculation is about negative 50bp, which puts fair value at 5.5–6%, roughly where the 10-year already trades.

  “that the term premium on the US treasury mark is about negative 50 basis points. So if you add that to that, you're looking at a target rate of somewhere between five and a half and six for the ten year treasury, which is pretty much where it's got to.”at 38:28

• Michael Howell · CrossBorder Capital / GL Indexes

  Longer-duration government bonds are the only decent asset in the coming turbulence phase; he is adding duration.

  Howell says bond behaviour is normal for the cycle and that yields have returned above their long-run average after the anomalously low 2020–21 rates, which his five-thousand-year rate history shows never happened before. He expects some attenuation of yields, though not COVID-style drops. As the market moves into turbulence, he says longer-duration government debt is the only asset class that looks decent on his traffic-light framework, and his firm is starting to lengthen bond positioning.

  “But where we are now is we're back above the long term average just. And so it's actually worth thinking about putting bonds in your portfolio for the first time in a long, long time.”at 41:43

• Michael Howell · CrossBorder Capital / GL Indexes

  Treasury buybacks aim to cut Treasury market volatility, not to cap yields; more bills are being issued.

  Howell argues Treasury Secretary Bessent is not trying to move yields with a $6bn buyback programme against a roughly $40tn market. Treasury volatility matters because it changes the collateral multiplier, which is how efficiently collateral can be leveraged, and volatility compresses liquidity. Treasury is therefore using buybacks, focused on off-the-run issues, plus more bills (less volatile than coupons) to minimise volatility. He notes buyback announcements tend to rise when the MOVE index spikes, which he takes as evidence of this linkage.

  “So that's not the issue. I think what he can control is volatility.”at 55:58

• Michael Howell · CrossBorder Capital / GL Indexes

  Favours long-term government debt over commodities as refinancing pressures push policymakers to add liquidity.

  After saying he wouldn't own commodities for the next six months, Howell says he would think much more about government debt. His reasoning is the large refinancing burden ahead: historically, when such burdens arrive, policymakers push liquidity into the system. That should support government bonds, even though he expects some pain in the next few months and says policymakers may misjudge.

  “And I would be thinking much more of government debt.”at 1:26:03

US rates & the Fed

• Michael Howell · CrossBorder Capital / GL Indexes

  Central banks are reluctant to tighten, and debt levels make aggressive tightening very dangerous.

  Howell says central banks do not want to tighten and are pulled into it kicking and screaming by markets. Austerity is not the watchword, and they aim to keep the plates spinning. He cites Henry Kaufman's description of a Fed that does not want to tighten. He argues that the amount of debt outstanding makes it very dangerous for policymakers to even consider tightening aggressively again.

  “I think all the evidence tells us that central banks don't want to tighten. I mean, they're very, very reluctant.”at 14:07

• Michael Howell · CrossBorder Capital / GL Indexes

  The Fed is actively managing money-market liquidity around a roughly $3 trillion reserve target to avoid repo stress.

  Howell says the Fed's reserve management purchases, which he calls QE by another name, restored bank reserves after repo spreads blew out around late 2025 along with trade fails in bond markets. He says the Fed targets roughly $3 trillion in bank reserves. Over the last nine months, weekly deviations from that target fell from about $300 billion on average over four years to under $90 billion. He reads this as a deliberate attempt to keep money markets stable and an ample reserve regime, which he calls a managed framework.

  “In the last nine months, those average fluctuations have fallen significantly to under 90,000,000,000.”at 19:23

• Michael Howell · CrossBorder Capital / GL Indexes

  The Fed will grow its balance sheet, not shrink it; it will be bigger by 2030 than today.

  Howell argues that a rising debt stock requires a growing central bank balance sheet, so a radically smaller Fed balance sheet is fanciful. He accepts a smaller Fed footprint in markets is possible, with less forward guidance. But debt management needs balance-sheet capacity to move in size. The last attempt at shrinkage in Q4 2025 caused a sell-off in repo markets. He expects the Fed's task force to recommend accumulation, with QE buried under another acronym.

  “my view is they're gonna be accumulating securities, not selling them. I mean, the balance sheet will be bigger by 2030 than it is now.”at 59:52

• Michael Howell · CrossBorder Capital / GL Indexes

  Warsh's Fed is tightening, but at a much slower and gentler pace than Powell's 2021–22 hikes.

  Howell says the Fed may need to tighten again, at least in the dimension of higher Fed funds, if economic momentum continues. He reads the tightening as drip-fed, judged by the two-year Treasury leading SOFA and fed funds, and much gentler than the short, sharp burst under Powell in 2021–22. He sees the Fed as reluctant to tighten and focused on Treasury market stability. He also notes Warsh's utterances are more Greenspan-like, and that Warsh was put in mainly to keep rates near where they were.

  “if you look at what the Fed under Kevin [Warsh] is doing, it may be tightening, but it's doing it at a much slower pace.”at 1:10:14

• Michael Howell · CrossBorder Capital / GL Indexes

  The liquidity cycle should inflect in the second half of 2027, possibly sooner than that.

  Howell has long penciled in the second half of 2027 for an inflection in the liquidity cycle, which is what the normal cycle tempo implies. He says the inflection may come sooner given recent developments: the Fed is tightening gently but the seeds of a slower economy are already being sown for next year. The bond market gets there first, and that is what it is signalling now.

  “I always penciled in the second half of 2027 for an inflection in the liquidity cycle, and that's what the normal tempo would say. But it may well be that this occurs sooner given these developments.”at 1:10:56

• Michael Howell · CrossBorder Capital / GL Indexes

  Recent Fed liquidity increase may not persist, as slower 2027 growth could curb the need for aggressive easing.

  Howell is open-minded about the recent upturn in Fed liquidity but is not fully sure it will continue. He thinks the economy will slow in 2027, which could mean the Fed does not need to become much more aggressive. He is open to that outcome, and the hedging in his view reduces its strength.

  “Now I'm not a 100% sure that's gonna continue, but I'm open minded. And I am open minded not least because I would venture that in '27, the economy slows down, and therefore, the need for a much more aggressive fed may be mitigated.”at 1:12:05

• Michael Howell · CrossBorder Capital / GL Indexes

  Global liquidity cycle likely bottoms in second half 2027, possibly earlier, with no 2023-style plunge expected.

  Howell says the liquidity sine wave typically bottoms in the second half of 2027, and he thinks that could come forward, with the first signs of bottoming possibly already visible. He expects the global liquidity index to fall again but does not see a case yet for a significant plunge like the 2023 tightening. Cycles don't usually move straight up: the system will chop around mid-levels, and volatility may persist before a push up in the first half of next year.

  “what the sine wave is telling you is that you would get typically a bottom in that liquidity cycle sometime in the second half of twenty twenty seven. ... I think that could be brought forward a bit”at 1:21:01

US stock market outlook

• Michael Howell · CrossBorder Capital / GL Indexes

  Global liquidity cycle peaked in late 2025 and is slowing, so late-cycle equity returns are poor quality.

  Howell measures liquidity as the growth of money flowing through financial markets, not its level. That growth peaked in late 2025 after about three years of expansion, so liquidity has inflected down. He calls the market backdrop late-cycle: you can still make money, but volatility is high and return quality is poor. He points to the Russell 2000 looking like it is in a bear market and to defensive sectors such as healthcare and energy outperforming. He sees the market moving into a turbulence phase where liquidity is squeezed further and defensiveness matters more.

  “I think the broad picture is that the liquidity cycle is going down. ... It peaked in late twenty twenty five, and that was after an upward run of pretty much three years.”at 0:53

• Michael Howell · CrossBorder Capital / GL Indexes

  Asset markets may be swinging from an everything bubble toward an everything bust, on a roughly 16-year cycle.

  Howell tracks the ratio of debt to liquidity for major advanced economies. Around 2x is an equilibrium, values well above it have preceded refinancing crises, and values well below it have produced asset bubbles. He says the recent period was a huge asset bubble driven by ample liquidity. Fitting a sine wave to the ratio gives a roughly 16-year cycle. He calls this maybe slightly heroic, but says it fits the data well, and that the market may be swinging from an everything bubble to an everything bust. The ratio is currently below the dotted line, so the refinancing-tension zone is not yet reached.

  “maybe what we're swinging from is the everything bubble towards the everything bust.”at 11:44

• Michael Howell · CrossBorder Capital / GL Indexes

  Equity indexes are held up by late, strong EPS growth that may be cracking; he has pared back equities.

  Howell says PE multiples are falling in line with falling liquidity and rising yields, which is normal. What is unusual is that EPS growth is strong and arriving late in the cycle, in larger size, and that is what has kept indexes up. He expects the economy to cool into 2027, which he sees as a warning for equities. Breadth is weak beneath the surface: healthcare, energy and consumer staples are leading momentum, the Russell 2000 is weak and tech is mixed. His firm has pared back equities during the speculation phase.

  “What is unusual is the strength and the lateness in earnings per share growth, which are coming through much later in the cycle and arguably in bigger size. And that's what's causing equity indexes to hold up. So that may be, as I argue, that may be cracking now.”at 1:07:12

• Michael Howell · CrossBorder Capital / GL Indexes

  Stocks depend on the liquidity cycle and only reach early-cycle phases by mid-next year, so tepid.

  Howell is more bullish on Bitcoin and gold than on stocks because he sees equities as more a function of the (mid-)liquidity cycle. At best, markets reach early-cycle phases by the middle of next year, which is when Bitcoin and gold tend to move. Equities do best in the calm phase, which follows a rebound phase lasting roughly nine to twelve months. In the rebound, he advises caution on beta because of uncertainty about the cycle position.

  “I'm more bullish on Bitcoin and gold than I am on stocks because I think stocks are much more a factor of of the liquidity cycle or maybe the mid liquidity cycle.”at 1:18:53

AI infrastructure & data centers

• Michael Howell · CrossBorder Capital / GL Indexes

  AI data center buildout is a cyclical capital-intensive boom, not a long-term trend, as the fiber-optic bust showed.

  Howell argues every capital-intensive industry is cyclical in the end, and most AI proponents wrongly treat the buildout as a secular trend. He cites the fiber-optic cable boom of about twenty years ago, which was seen as huge but proved very cyclical, with some leading companies in Chapter 11 within five years. He sees the same warning for AI infrastructure. He also says AI build-out is a consumer of liquidity, not a producer of it, and transformative tech booms have typically ended in recessions or financial crises.

  “every capital intensive industry is basically cyclical at the end of the day.”at 3:18

• Michael Howell · CrossBorder Capital / GL Indexes

  AI buildout financing needs near $1 trillion a year, and markets now fund most of it, not cash flow.

  Howell says financing demands for the AI buildout are close to a trillion dollars both this year and next. Twelve to eighteen months earlier the expected split was roughly 80% funded from cash flow and 20% from markets. That has flipped to about 20% cash flow and about 80% from markets. He points to a debt load that is clearly big and an equity financing wave close behind it. He asks whether markets have the capacity to absorb this new demand alongside refinancing needs.

  “the sort of numbers that are being crunched for the debt is basically eye watering. We're talking at maybe not quite at a trillion dollars, but we're getting pretty close to a trillion dollars both this year and next year”at 4:00

• Michael Howell · CrossBorder Capital / GL Indexes

  AI capex has driven about a third of recent US growth, but higher rates may compromise the boom.

  Howell says growth is being pulled up by fiscal spending, big deficits and AI capex. AI capex has been largely responsible for about a third of US growth over the last few years. But these factors also increase financing demands. Later he says the AI capex boom may be compromised by higher rates itself, which, together with waning fiscal stimulus, could help produce a slower economy and an easing in 2027.

  “the AI CapEx spend, which has been largely responsible for about a third of that growth over the last few years.”at 37:49

• Michael Howell · CrossBorder Capital / GL Indexes

  Hyperscaler debt needs near $1 trillion a year for two years, plus similar equity, strain capital markets.

  Howell says the annotated chart points to close to a trillion dollars of hyperscaler debt in each of the next two years, with similar equity funding behind it. He argues these are big demands on capital markets, which adds to the refinancing burden in the liquidity cycle.

  “You're looking at close to a trillion dollars of hyperscaler debt in each of the next two years, and you've got similar equity funding coming behind it. So... And these are big demands on markets.”at 1:27:56

Credit markets

• Michael Howell · CrossBorder Capital / GL Indexes

  A debt maturity wall of existing debt rolling over at higher rates strains financial market refinancing capacity.

  Howell says COVID-era policy pushed rates near zero or below and encouraged borrowers to term out debt. That debt is now returning to the system to be refinanced at much higher rates over the next few years. His chart shows annual refinancing needs for advanced economies, with 2026 to 2030 bars rising to offset the low years of 2022 to 2024. He stresses this is existing debt being rolled, not new debt. Financial markets are now mainly refinancing systems, so the growing debt burden is a strain on their capacity.

  “financial markets are no longer purely new capital raising mechanisms. They're predominantly mechanisms for rolling over existing debt. They're refinancing systems.”at 5:36

• Michael Howell · CrossBorder Capital / GL Indexes

  Credit is feeling slower liquidity; he is a net seller now and would buy if yields rise further.

  Howell says credit is starting to feel the icy winds of slower liquidity. He shows junk-versus-high-yield spreads and corporate spreads against five-year Treasuries, and both look stretched. His firm is not in credit and remains a net seller. It may pick up credit during the turbulence phase if yields move up appreciably, but it is not there yet.

  “So we are not in credit right now. We think that credit may be worth picking up as we move through this turbulence phase if yields start to move up appreciably more. So we'd be looking to buy, but we're certainly not there yet. We're more a net seller of the credit space still.”at 1:05:10

US growth & recession risk

• Michael Howell · CrossBorder Capital / GL Indexes

  A strong real economy is crowding liquidity out of financial markets, consistent with a late-cycle phase.

  Howell says money is either in the real economy or in financial markets. When the liquidity cycle falls, money in the real economy rises, so a strong real economy is pulling money out of financial markets. He says the falling liquidity is not caused mainly by the Fed tightening. Instead, the real economy is heating up in recent weeks. His world liquidity data show liquidity and the world business cycle out of step, with strong liquidity often coinciding with recession or weak growth. The current pattern fits a late-cycle period in which the real economy picks up as financial liquidity falls.

  “often when that liquidity cycle goes down, the money that's in the real economy is going up. So money is being crowded out or sucked out of financial markets by a strong real economy.”at 29:55

• Michael Howell · CrossBorder Capital / GL Indexes

  Liquidity signals point to a sharp growth inflection in 2027 after a near-term surge; recession risk has risen.

  Howell's composite of a strong dollar, higher oil and rising bond volatility, z-scored, tracks the business cycle. It shows growth surging now and then an inflection in 2027. Fiscal stimulus is probably waning, and the AI capex boom may be compromised by higher rates. He says he is not calling a recession, but the probability has increased and he expects a noticeable slowdown in growth, with the Fed tightening only gently.

  “Now if that's correct, what we're seeing is a surge in economic growth now, and that will be the black lines already probably moving a lot higher. But then you start to see an inflection in quite a vicious one in 2027.”at 48:46

Commodities (broad)

• Michael Howell · CrossBorder Capital / GL Indexes

  Commodities should not perform well in turbulence, so he is paring back commodity positions after a strong year.

  Howell says his firm was very positive on commodities this year, and the commodity rally tracked the world business cycle and strong real-economy growth, so it made more money there than it missed by cutting equities. He now expects the economy to cool and the market to move into turbulence, a regime where commodities should not perform well. His firm is therefore beginning to pare down commodities. He suggests comparing commodity markets with TLT as a gauge of the regime.

  “and beginning to pare down commodities. I mean, commodities shouldn't perform well if this is turbulence.”at 1:08:44

• Michael Howell · CrossBorder Capital / GL Indexes

  Avoid commodities for the next six months; they're pulling back, though long-term real-asset bullish.

  Howell is still very bullish on commodities over the long term, expecting a world where real-asset investment is strong. Over the next six months, though, he doesn't expect that, and he says commodities are pulling back, so he wouldn't be exposed to them at this point in the liquidity cycle.

  “the trouble is that for the next six months, I don't think that's gonna be the case. So I wouldn't be exposed to commodities here. I think they're pulling back.”at 1:25:47

US dollar

• Michael Howell · CrossBorder Capital / GL Indexes

  A trend-higher trade-weighted dollar, alongside oil and bond volatility, signals a slowdown ahead.

  Howell shows the trade-weighted dollar, which has been trending higher and may be hitting the top of its trend. He combines a stronger dollar, higher oil and higher bond volatility into a z-score. That composite fits the business cycle, and he reads it as a signal that growth is set to slow into 2027.

  “Trade weighted dollar. And you can see that what the dollar has been doing... it's been trending higher, okay? It may be hitting the top of that, but we've had a stronger dollar.”at 47:19

Oil & fuels

• Michael Howell · CrossBorder Capital / GL Indexes

  Diesel prices imply crude above $160 a barrel, a level that clearly weighs on the economy.

  Howell bootstraps a crude price from diesel prices, which implies an equivalent oil price above $160 a barrel. He argues that this has been masked because the commodity gain has come mostly through product prices. He concludes the level clearly impinges on the economy, which is part of his case that a stronger dollar, higher oil and bond volatility are together signalling a slowdown.

  “the equivalent oil price looking at diesel is over $160 a barrel. That clearly impinges on the economy.”at 47:59

Central banks outside the US

• Michael Howell · CrossBorder Capital / GL Indexes

  The ECB will backstop widening euro spreads with its TPI tool; policymakers no longer want austerity or tightening.

  Howell says the ECB has been willing to backstop any significant widening in euro-system spreads, following the French fiscal turmoil. He expects it will use its TPI programme if needed, though it does not need to yet. He sees this as part of a wider pattern: central banks and policymakers in general do not want to tighten, and austerity is no longer on the table. Central banks, he argues, will act to protect bond market stability.

  “the ECB were all too willing to argue that they would be there backstopping any significant widening in spreads that were occurring in the euro system... They will use their TPI program, I'm sure, if need be.”at 52:28

US–China relations

• Michael Howell · CrossBorder Capital / GL Indexes

  The US–China capital war makes Treasury market funding integrity crucial, so recessions must be avoided.

  Howell describes a world of capital wars in which the US is struggling against China over control of financial markets and currency, with polarisation toward dollar and yuan blocs. In that struggle, disruptive financial markets and recessions are inconvenient, so the US needs to push strategic industries forward. That is why Treasury QE matters, and the integrity of Treasury market funding is crucial to the strategy.

  “we're in a world I've described as being capital wars where effectively the West or more, particularly The US, is in a struggle against China. And it's inconvenient to have a disruptive financial markets and recessions.”at 53:12

China's economy

• Michael Howell · CrossBorder Capital / GL Indexes

  China must expand liquidity to devalue its debt, using capital controls to split yuan values.

  Howell argues China's debt burden is huge and the only way to reduce it is to devalue through money printing, which he says has already started, with PBoC liquidity roughly doubled since 2022. He rejects a Japan-style two lost decades because he believes the Chinese population wants prosperity and will not accept it. He describes a dual circulation system that keeps the internal and external value of the yuan apart through capital controls, state-directed banks and large FX reserves. Tighter crypto restrictions are a way to stop money leaving China.

  “debt is a huge, huge problem for China, and they need to devalue a huge amount of their debt. And the only way they can do that is by printing money.”at 1:14:51

Gold & precious metals

• Michael Howell · CrossBorder Capital / GL Indexes

  Gold is driven by Chinese central bank liquidity, not Western debasement or Russian sanctions; he's bullish.

  PBoC liquidity has roughly doubled since 2022 and gold rose with it. Gold's peaks this year coincide with the PBoC balance sheet flatlining from around February–March, and six-week changes in PBoC liquidity track the gold price closely. He sees Chinese retail as the marginal buyer, so gold holding near 4,000 is consistent with current Chinese liquidity. Gold's liquidity elasticity is about 15% per 10% move. He expects gold to fall if Chinese liquidity drops and to be very bullish if it rises.

  “I don't believe that the gold market has been propelled by these other elements like Western debasement or the idea of sanctioning Russian gold. Think that's the issue. The real issue has been Chinese money printing domestically.”at 1:15:19

US deficit & government debt

• Michael Howell · CrossBorder Capital / GL Indexes

  Large refinancing burden will push policymakers to inject liquidity, though they may misjudge it.

  Howell says there is a big refinancing burden coming, and it is not just new debt but existing debt that has to be rolled over. Historically, when such burdens arrive, policymakers push liquidity into the system because it needs it. He warns they may overdo or underestimate it, or mess up entirely. He ties the liquidity push to the outlook for monetary inflation hedges.

  “Make no mistake that there's a big refinancing burden to come, and it may be that policymakers mess up, say never. ... when you get these big refinancing burdens, they tend to try and push liquidity into the system because the system needs it.”at 1:23:03