Rising Liquidity To Power Markets Higher Through 2025? | Michael Howell

I'm I've been upbeat um pretty much all year I mean we think the the cycle bottom in October of 22 uh it's expanding we've got the wind behind us and I think that wind is going to last um probably until late 2025 so you know our view is this is definitely an up an up cycle and it's an Up Cycle certainly for financial markets right now and ultimately the real economy will start to get feel the effect positive effects of [Music] that welcome to thoughtful money I'm its founder and your host Adam tager 2023 a year nearly everyone expected a recession has instead seen impressive economic growth and the markets power to all-time highs how did this happen especially as the Federal Reserve kept interest rates above 5% while conducting quantitative tightening in a word liquidity liquidity steadily Rose throughout 2023 and like an incoming ocean tide Rose all boats how why and where is it coming from and if it's such a key driver of asset prices where is it headed from here to find out we're going to have a very important conversation today with Michael how founder and CEO of crossb capital Michael thanks so much for coming on the program today all the way from London yeah hi Adam great to be here well great to have you on here and and Michael um I'm so glad to have you here today because I have been mentioning your name and almost every one of the past interviews I've done on this channel in the past few weeks um it just does seem that uh maybe perhaps we can throw all the other macro indicators uh out the window and just focus on liquidity and that's going to tell us where markets are going um I know that this is you know a saw that that youve probably been been playing for a long time and maybe folks are just beginning to really wake up to this um but uh you know I want to get into the weeds of this with you but we're in this quote unquote tightening regime you know where most of the world's central banks have been hiking interest rates and conducting quantitative tightening so most people have been thinking that we've been draining the pond of liquidity when quite actually it may be indeed the opposite and that might actually explain why the recession never showed up and and why stocks did so well this year um so I want to get into all of this with you and obviously where is it headed next if we can though just as a jumping off point use the the broad question I like to ask everybody at the beginning of these discussions what's your current assessment of the global economy in financial markets I think broadly positive Adam I mean I'm I've been upbeat um pretty much all year I mean we think the the cycle bottom in October of 22 uh it's expanding we've got the wind behind us and I think that wind is going to last um probably until late 2025 so you know our view is this is definitely an up an upcycle and it's an upcycle certainly for financial markets right now and ultimately the real economy will start to get feel the effect positive effects of that may not be for a few months but I think it's coming okay um great I can't wait to dig into this with you for so many reasons but a big one being Michael just just for full disclosure that is quite different than almost all the guests I've had on this program I would say I've had folks on a spectrum from the very bearish like recession next year 40% decline in in the S&P um to uh folks that kind of think of recession uh we deserve to have one they're just not seeing it in the data yet but they they're keeping a close eye on it and maybe at some point it might come you're really sort of seem to be saying M we're we're in a bull cycle here and one that could probably last the next two years um all right well then let's let's just start right in the the heart of this discussion is is that because of your outlook for liquidity do you see liquidity sort of continuing to rise and to your point keep a wind at the back of of the economy and the markets for the next two years I think that that's part of the reason I mean I think that there's there's a number of sort of uh maybe starting points in this in this discussion I mean the first thing to say is that you know understanding the flow of money in the world economy is really one of the critical factors that one needs to have for any assessment whether it's for financial markets or for the world real economy uh you know I started my career at the US Investment Bank Salomon Brothers Salomon brothers made its name particularly in the uh in the 1980s and 1990s as an institution that understood money flows uh it was the world's biggest fixed income uh investor or Trader and it needed to understand uh you know sources of liquidity what central banks were doing and how that money propagated itself through the system and I've sort of if you like uh you know carried that on or maybe uh made that more of an international Dimension uh it was originally sort of thought up by Henry calman the head of research as a as a Us tool largely a Us tool but you need to think about this in a global context so that's pretty much what crossb capital has been doing so I think that one one thing to say is money flows are very important I think the other thing to say is that you know there's a there's a number of other points that one can add here I mean one is that economists have been trying to predict the next Leman moment uh every year for the last what 12 13 years now and it's never come I don't think there is a Leman moment out there I think that that was a a very much a one-off factor but there could be Financial crises of different uh you know different strengths or different meters that that could occur but what we need to do is to understand the liquidity background to try and get a gauge of those and that's one of the things that we do now in that context think about what financial markets are doing if you pick up an economic textbook it tells you that the financial sector is there to raise new money for capital investment now I think that's an old story I think that doesn't happen very much anymore because there isn't a great deal of capex going on in the mature advanced economies a lot of it clearly is going on in China but that may be a different a different case what we spend most of our time doing and what financial markets are doing almost every second you know 247 is basically trying to refinance existing debt we have got a huge mountain of debt out there I mean eyering amounts $350 trillion plus according to the international monetary fund on last count and the point about debt is that debt needs to be refinanced and this is the point that we keep trying to hammer home if you've got that amount of debt uh with an average life of that debt of say five years that means you've got to roll $77 trillion of debt every year and that is a is a challenge now in order to roll the debt what you need is balance sheet capacity and balance sheet capacity particularly among uh Financial intermediaries is basically what we call liquidity that's our definition of liquidity it's a gross balance sheet concept now contrast that notion of the capacity of capital in the system with a traditional notion that what you need to look at is the cost of capital well if we were in a world where Capital spending was dominant I'd come quietly and say well okay interest rates are important but since debt financing is the Paramount issue you've got to look at the capacity of capital other words liquidity in the system every financial crisis you can think of in the last 20 or 30 years has been a refinancing crisis and it's required the Federal Reserve or central banks to come back in and liquidity and it's as simple as that and looking forward nothing has really changed so in other words what you've got is a very different world that has meant uh as a coroller that the polarity of the financial system has changed so a lot of the old relationships don't kind of work so if you come back to what economists have been saying and how economists look at the world we don't use we never use would never use macroeconomics to forecast the stock market or asset prices okay because asset markets a leading indicators they discount the future you use the asset market performance to predict the economy not the other way around if you try and do it you know in Reverse you get into a terrible muddle so basically what we're we're saying here is you've got to try and understand Financial flows within the system and that's principally what we do why is it that the world real economy has been more robust uh maybe you know this year than many economists predicted I think there's a number of reasons one of the main reasons which may have you know only a small amount to do with liquidity is that fiscal spend in the US is actually so strong there's a huge fiscal expansion going on which is lifting the US economy liquidity has played a role because it's lifting asset markets and there's been a positive wealth effect that's uh you know embrace the consumer and you might argue as well that China has been uh putting a lot of money back into its uh economy in the last certainly the last 6 months which is starting to lift activity there so I think there are a number of factors that are liquidity related but I think a lot of the reason uh for a strong World economy uh in many ways comes back to this very very general U us fiscal fiscal SS okay um so if I heard you right it's sort of like what used to be the tail that the dog wagged is now uh the tail wags the dog here which is they used to say look you know the economy and how it operates will dictate sort of what the stock markets do you're you're now saying it's really the assets side of things that will drive the economy right I think that's that's very fair absolutely but I would say an actual fact that it's been a a misguided view to say that uh you use the economy to forecast the stock market I understand that a lot of economies do that but I just think that's simply wrong okay so you're basically telling people look you know if you're following that old model you might need to consider replacing it um when you talk about balance sheet capacity um I I assume you mean you know the ability of balance sheets to take on more debt as as we're going through this continu continuous debt refinancing wave correct do you mean corporate balance sheets or do you mean central bank balance sheets well I'm actually thinking of the balance sheet of the financial sector of credit providers and that uh those balance sheets of banks Shadow Banks Etc are largely governed uh by what the central banks do not not exclusively but the central banks play a big role and the two things really to look at uh as we've tried to articulate in our writings number one is the size of the central bank balance sheet that's important although I I'm going to correct myself here and say actually what you really want to look at because this is going to be important when analyzing the FED is not simply the size of the balance sheet but actually more importantly the liquidity generating parts of the balance sheet which is a subtle but important twist and the second thing to look at is the extent to which that liquidity can be leveraged in the system okay and that can come through what's called collateral which is if you like the backing for loans but one of the things you need to look at as well is the multiplier that that liquidity has in terms of broader uh the broader aggregate picture for Global liquidity and that in many ways is related to the degree of volatility in the bond markets and that this is a very wonkish point I don't want to labor it too much but effectively what you would say is that since we've got central banks that are generally expanding their balance sheets now let me say again expanding their balance sheet because everyone thinks they're Contracting but they're starting to expand their balance sheets and you've got as well a multiplier uh on that that balance sheet expansion which is starting to expand as well you've got this double whammy which is coming in which is forcing Global liquidity higher and that is one of the reasons that stock markets have been strong this year um you know generally around the world but particularly in the US what's more if you drill down into asset PR price performance and I can you know tick a few boxes here and say look consider for example uh the fact the S&P is up consider the fact that it's being led by technology stocks consider the fact that corporate uh corporate debt has been a pretty decent performer this year um consider the fact that basically certainly in the first half year bond duration was a bad idea and that commodity markets have been uh you know very lackluster through this year all those features are features of the early part of the liquidity cycle so everything that you're seeing in the markets the markets are screaming at us that this is a liquidity cycle inflection that is turning up there's nothing unusual about this cycle at all nothing unusual about this cycle at all okay so you're not you're not surprised at all about what's going on here I really want to walk have you walk people through what you see couple quick questions just to get out of my head to make sure that I can follow you from here um one is you said and people used to think that interest rates really mattered but they really don't that much and and help me understand that um in a world where uh you're You're Expecting balance sheets to basically be able to take on more debt but the debt is a lot more expensive now than it was two years ago well I I'll give you two examples I'm not saying that interest rates are completely unimportant but I'm saying that they they're much diminished in their importance if you consider a home mortgage okay you're a a mortgagee you've got a a home mortgage coming up for Renewal you've got to roll that mortgage and you know maybe it's coming up to its term of 20 years but you want to roll it on for another five or 10 years what's critical for you as a mortgagee is whether you can get the roll on that debt not so much what the interest rate is if you can't get the role you're homeless right and the same with corporations if they can't get the role on their debt they default so the role is particularly important so in a world there's lots of debt refinancing required you need that you need need that role it's more important than the interest rate that you pay now clearly I'll come quietly and say well if you're charging 20 30% interest that clearly is a a bogey to jump as well but the plain fact is in the current levels of interest rates it's the role that's more important than the level of rates just to be clear because it's it's it's an existential Choice it's I pay more for the debt or I die so I'll do everything I can to pay more for the debt yeah exactly that that's that's the point you you don't want to be homeless it focuses the mind but this is just an example um you know to try and extrapolate the the other point to make is that you know people will say okay what we're doing in terms of valuing stocks or value Investments is to use a discount factor which is an interest rate okay well okay I I understand the math of that that's that's clear the point is that if you look at the long-term track record there is not a close relationship between interest rates and the value of the stock market or more particularly the valuation of the stock market and I challenge anyone that disagrees to go go back and look at the wonderful data set that Robert Schiller has on his website where he looks at uh going back to I think it's 1870 or whatever in US data uh data on the price earnings multiple of Wall Street and interest rates uh is there a correlation it's very very weak now why is that the reason I would argue is there are not that many people either historically or now who are doing the Arbitrage between bonds and stocks okay now let me give you two examples first of all let's think of the of the Bri British example Pension funds where Pension funds in the UK are more mature than in the US 10 years ago more than 50% of pension fund assets were in stocks okay and the rest were predominantly in fixed income what you've got now is 14% in stocks and the vast amount in fixed income securities so in other words what I'm saying is the ability to do the Arbitrage is not there between stocks and bonds is much diminished okay the second thing is think of the US with uh 401K plans if I'm correct um um using some of the data that comes from the very good data that comes from Mike Green is that something like 85% of uh 401K plans are now Target life funds okay which are not doing an asset allocation and this is basically saying there's there's not an Arbitrage between stocks and bonds therefore what works what works is the inflation rate look at the inflation rate the underlying inflation rate as your discount factor and the stock market is very very closely related inversely to inflation now what have you had this year you've had three things principally going on certainly in the first half year you've had bond yields going up right that should be negative for stocks but you've also countering that had Global liquidity rising and US liquidity rising and inflation falling sharply it's the latter two factors that are driven the stock market the fact that inflation has come down and the fact that Global liquidity gone up that's what markets are at risk assets depend on low inflation and lots of liquidity all right and sorry just to interject make sure I heard you right um sounds like you said because I I started my career in investment banking on Wall Street I remember doing tons of discount rates you weighted average cost of capital um and as your your your discount rate increases your valuation decreases right your npv decreases you're saying and a big part of creating the the discount rate in the traditional models is you start with the risk-free rate which basically you're pulling from the US 10year you know as as a benchmark for that um you're saying instead of looking at at interest rates for the the discount rate we should be looking at the inflation rate so the we've had disinflation and pretty pretty extreme disinflation you know from 9% to 3% over the past year um so as that has gone down if you use that as the discount rate then your npv should be going up pretty dramatically which does support what the markets have done you're nodding as I'm saying this so I'm following you correctly correct absolutely 100% correct that that that's right in other words what we're really debating is what is the appropriate discount factor and it certainly isn't the 10-year bond and to suggest that that's a risk-free instrument after what's happened in the last two years is I think fanciful H okay um that's super interesting um Let me let me just ask you this last thing on interest rates and I know you've got some charts we want to get to and I'm I'm I'm going to let you just run as much as you want to in explaining this to everybody but let me let me share one image with you here um which uh it's a chart of the FED funds rate um this particular one's been put together by David Rosenberg but you know you can pull this from almost anywhere um and it shows that for the past you know 30 years 40 years with the major recessions we've had they've pretty much all been preceded by a pretty substantial rise in interest rates you know we hang out for a little bit and then uh we start going into um recession and largely that's you know the the central banks are scrambling to to start cutting rates there um and usually there's a pretty big Market downdraft associated with each of those recessions there so for I think I understand the logic that you're saying of of why you think that there's actually a bull cycle ahead from here but it would kind of mean that things are different this time um explain either how I'm reading this chart wrong or why it is different this time well I think the the there's a number of factors I mean one is that this is simply one indicator it isn't necessarily uh what's driving recessions I mean I I could equally show you oil prices on that chart and there's been a spike in oil prices ahead of every recession um there's what you're seeing now is collapsing oil prices so that would actually suggest we're going to see a strong economy next year if that's correct so I think it depends on the indicator you look at I'm not saying that interest rates are uh are not important uh all I'm saying is that they're not the critical Factor uh that they were and the longer you go back in time the more important interest rates were because they're actually affecting Capital spending decisions but given the fact that you've got uh not that great amount of capital spending going on in the advanced economies now because their mature economies lots of excess capacity um secondly you've got debt where the maturity wall is probably at least two to three years out and so corporations don't need to come to the market to raise to raise money right now uh they probably got their funding okay you know I would venture the interest rates are not having the impact that they once did so it's really as straightforward as that so I would be extremely surprised if you got a recession in the US you may get a Slowdown but you know as I recall this this looks to me very much like the sort of period in the early '90s in the US where you got what we called rolling recessions in different sectors the entire economy never fell into into the ditch so to speak uh and that interestingly was in the wake of the savings alone crisis and you might say this one is in the wake of the regional banking crisis so it's not dissimilar okay um and I don't want to put words in your mouth so correct correct this statement but um we've had a lot of people on this channel and just being honest I I've I've pared this a lot um who have been concerned about the lag effect from the you know sort of extreme rapidity by which the central banks uh raised interest rates the cost of debt has gone up um and I understand what you've said where hey they just don't matter as much as they used to in terms of their impact on the economy and financial assets but there's been you know this there's been a lot of people saying look that the lag effect uh it's still going to matter and maybe it's getting delayed for a whole bunch of reasons including Rising liquidity I kind of get the vibe from you that you don't think it's going to really um matter that much like it it may Express itself in these kind of rolling recessions you're talking about but you're you're not expecting if if if if we do stay higher for longer for a while you you don't really expect kind of like a Wheels come off the economy uh result because of the lag effect not really no I think that you know we we should I mean if you look at the lags I mean there may be various reasons why lags are extended but we're not really seeing I don't think any great evidence of recession coming I mean there's clearly been a cyclical slowing and I'd be incorrect as just there hasn't but I think equally you can you can uh you can cite examples of us activity picking up I mean it was only only a week or so ago that I think the chairman of of the LA Port Authority was actually citing uh increasing volumes and I think that I mean I'm not going to misquote him but I think he was saying that you know volumes are up 20% on a year ago now that would suggest that there's some inflection going on actually I mean we can see that in other portal authorities look at what's happening in Singapore as well and in China and that may be part of this sort of ramping up of the Chinese economy again so I think a lot of these things are consistent I'm not saying there won't be a Slowdown what I'm saying is I don't think there's going to be a deep recession uh evidence something else which is looking at the numbers that the the Federal Reserve puts the once the New York fed I think it may be now the Dallas fed they've taken the the data over um which is basically looking at weekly us activity rates they produce an index uh for the last 2 or 3 weeks that's been accelerating again so you know it strikes me that the evidence is very mixed but I don't think you're getting a recession you may be getting a slower economy for sure but you know from all accounts the Federal Reserve is now turning around and arguably it wants to tr boost uh the economy through next year by rate Cuts okay so and I'm asking a lot of these questions just to differentiate your position from from a lot of the other folks who've had on here so I kind of take from you saying yeah the plane might lose a little bit of altitude still from here but I don't think you expect a landing like it's basically basally you know these net positive Capital flows and what will eventually kick in and and win on on the net basis and the plane will actually start getting altitude again over that is my view okay great to hear that so last question on this and then I'm I'm going to let you get to whatever chart you have to sort of explain how you track liquidity where you see it right now where you see it going which is when you talk about balance sheet capacity [Music] um is there a limit to that or a point at which you get diminishing returns um can can the balance sheets of the banking and non-banking system with the help of the central banks whatnot can they do this infinitely or or is there a point at which you literally just get debt saturation or exhaustion or they just can't keep manufacturing short-term Prosperity by taking on more debt well I think that's an extremely good point uh I I don't fully know the answer to that uh what I would say is unquestionably politicians uh policy makers are kicking the can down the road because that's the only viable solution that we can think of in the near term and they will do that all the time that that is Playbook you know bullet number one yeah but you know you look at and I I can show you a chart a little bit later that if you look at the the estimates that are put out by uh a combination of the Congressional budget office which is obviously a bipartisan body uh and the international monetary fund on US debt to GDP ratios what you're seeing is that on their joint numbers uh 250% debt GDP ratio is tested uh around 2050 now given the fact that we're just above 100% or so now this is public debt uh that's a way to go now the last economy the last major economy that got into that I mean let's say Western economy because Japan's clearly been there but the last Western economy you've seen in history that got to those levels was Britain uh in the interwar and subsequent postwar periods and that high degree of public debt GDP was not a great background for the British economy uh there are a whole lot of troubles that emerged and I think the thing that concerns me is that that level of public debt to GDP will have a lot of uh untoward effects on the underlying level of the US economy and I think you know equally if you come back to this whole question about uh the Integrity of the regional banks in the US the regional banks are integral to the performance the long run performance the long run productivity performance of the American economy and the longer that you screw down the regional Banks uh with an inverted yield curve the more you're going to damage the long-term growth trend of the US economy it's not the cycle here that is the important thing is the long-term Trend I'm a little bit more optimistic about the cycle because I think fiscal policy is a lot if you like lifting the economy upwards uh at the moment but the long-term Trend the government sector can't do much about apart from getting out of the way but they can't do it's all about the private sector and the private sector depends particularly on Regional banks in the US for ending if you start to hammer down those Regional banks for any longer uh it's going to damage the long-term productivity formance of the US economy which is why I believe that the Federal Reserve is very well advised and I think they're going to do that try and steepen the yield curve in 2024 that's why they need to get rates down okay um that's really interesting and again I don't want to I don't want to mischaracterize you here but what I kind of hear you're saying is like I'm going to make you a doctor for a second uh you feel like you can get the patient out of the hospital bed and walking around again um you know with some some I don't know adrenaline defibrillators whatever um you can get them back into a decent state of health in the short period of time but you're still worried about their underlying chronic condition and it's still maybe terminal right is is that a decent analogy yeah I think that's right I would not go as far as say if it's terminal for the US economy I think as we sort of characterize it more Loosely is that you know the the us may be the cleanest shirt in the laundry but you know it's in the laundry a lot of others are in much worse shape than America but nonetheless there is an issue that needs to be faced and that is that these these debt levels are not healthy uh that's for sure yeah and I I I again don't want to put words in your mouth but I've seen the uh the chart that you're talking about um the CBO chart where you just see the the debt kind of going exponential from here in their projections and those are government projections right and um and one of the worries that I have from it is just government doesn't have a track record of projecting in other words it it it tends to be more optimistic than what usually plays out so would you be taking the under on that 250 bet oh I absolutely I think that it's going to be potentially is worse than that um but I think that you know the thing you've got to start thinking about in in in the same thought pattern is that debt demands liquidity and liquidity if you like facilitates more debt so there's a sort of vicious spiral between these two factors and if you've got a rising debt to GDP ratio you've also got a rising liquidity to GDP ratio now that's what you know the the the other issue that we're talking about here is that debt may be damaging the Integrity of the American economy but liquidity is having a wholesale effect on financial markets and it requires a major change in asset allocation and I would venture you know why should you be holding government bonds or any form of bonds in the medium term if you're facing a serious monetary inflation what you've got to start thinking about is monetary inflation Hedges and that's really the the what's at at the heart of this okay monetary inflation Hedges are at the heart of this okay so I'm writing that down to revisit with you at the end of this discussion which is once we fully understand liquidity what do you do about it that sounds like probably step number one yeah absolutely absolutely okay all right well look I've asked most of my questions to sort of set the stage here um I know you've got some charts um we can go any direction you like but I guess one question just might be be sort of like where is liquidity right now how do you measure it do you have some charts that sort of show where we are how do you calculate it like what inputs go into it I've seen different charts sort of measuring inflation we don't seem to have you know a standard inflation chart I kind of wish we did given how important it is I mean I I think like the Wall Street Journal should probably just have that chart on the front page every day just like the S&P I think absolutely good point very good point let me let me share some slides and then I'll I will try and answer these question question directly so this chart hopefully that you can see in front of you is uh if you like the the the the main spring of our work which is looking at the global liquidity index or the global liquidity cycle and what this chart is basically illustrating is in Black the flow of uh money through world financial markets now what we think about is uh in terms of liquidity is not these monetary Aggregates like M1 or M2 or whatever I mean I've you know said many times before there sort of very outdated measures that are really uh gauging uh the deposit liabilities of us High Street Banks uh they're not really meaningful in a world where you've got Global money Global liquidity uh and you've got Shadow Banks and other forms of borrowing apart from uh uh deposits uh or other forms of funding apart from deposits you need to make a a much much wider or broader assessment of what what liquidity is and this is money that is flowing through world financial markets and the black line is an index it ranges between 0 and 100 um the dotted line you see on top of that is a sine wave um based on aoro analysis for those of you that are mathematical that we basically put over the top uh in year 2000 so approximately 25 years ago so what we were doing then was using the data set from 1970 to 20 to fit that sine wave to the black line and we've run it on consistently without you know alteration uh thereafter so what you see is what you get and what it traces out are average 65 month cycles and that seems to be the repeating cycle uh of global equility why that is I I don't know for sure uh I've got various theories as to why you get there but uh none of them are particularly you know uh outstanding if you like or or uh uh true explanation so it's a combination of things but what you can see particularly if you look recently is the global liquidity cycle uh hit a low point about 2018 2019 rocketed upwards through the covid crisis as you saw central banks injecting lots and lots and lots of liquidity uh it then started to crash as central banks reverse course and it hit a low Point around October of 2023 and it's picked up thereafter now there is no question uh and I'd be incorrect to say this that liquidity is currently low it's not high but it is ex expanding and it will likely not certainly but likely Trace out that path as uh articulated by the dotted line there and it will Peak around uh late 2025 if we're correct now to answer your question about what goes into that and maybe some of the ingredients I'm going to flick back in this slide deck to try and show an earlier chart uh which hopefully will illustrate what I mean by uh by this so this is the pool of global liquidity as we Define it uh shown on this chart uh it basically illustrates that Global liquidity is a a pool of $170 trillion do or thereabouts it is a measure of the capacity of capital um not the cost of capital and it really matters as we say when debt needs to be rolled over uh and for the record it's about 1 and 3/4 times size of world GDP now what is it we're actually doing here this slide is is defining what we mean by liquidity uh the text is probably self-evident but broadly in summary we're we're calibrating Central Bank interventions into markets bank and Shadow Bank credit advances the cash flow of Corporations um collateral based wholesale and repo Market activity which is know fairly wonkish idea but I mean that's it's very important in the modern Financial economy and net crossb flows and essentially the liquidity measure we look at is really a wholesale measure uh that as I say at the bottom more or less uh starts where conventional definitions of money end so this is the important thing that we that we tend to monitor that's the liquidity cycle again in if you like microcosm since 19 uh 1990 and what it is illustrating is that the peaks of the liquidity cycle coincide as the annotations suggest with asset price booms and the low points tend to see banking crises so what you've got is uh the low Point uh in the last two dips uh were the US repo Market tensions in uh the summer of 1919 uh sorry 2019 and the US Regional banking uh problems that occurred around the spring of this year and that's quite consistent with what you would typically find during low points in the cycle now if we move on somewhat actually s sorry can you go back to that for one second I will yeah yeah um there's two things I want to note about this um one is obviously this Maps really well to what we've seen in asset prices over the past couple years right which is as liquidity started declining that basically was was 2022 right that's why we had such a bad year in the markets and and in um uh stock markets and bond markets I guess even if we go before then you see the huge rise in liquidity you know following the pandemic and all the responses and that's what brought asset prices up to all-time highs um and then you know the bottom there us Regional Bank crisis there that that is I'm I'm guessing that bottomed around October you tell me if that's wrong the Regional Bank yeah the cycle actually bottomed October but the banking crisis was uh February March yeah because it took a little time for the shock wave to to head on over there right um and and now it's going up and and based on your previous chart of the sine wave the sine wave if this follows the sine wave you know it goes back up pretty substantially from here for the next year and a half two years that's why you think Mark you know Financial assets are going to run into 2025 I totally get that uh so that's Point number one which is the at least in in our recent living history this chart is very explanative um secondly when you show that we have sort of banking crisis uh at the bottoms of these things this may also go to your point of you know interest rates maybe don't matter as much as liquidity where you know folks have been talking about uh well we you know all the discussion when the FED started raising interest rates was at what rate does the economy break right and uh everybody was worried that the central banks were going to quote unquote break something by having higher interest rates your chart seems to show maybe there's some correlation between liquidity in in rates but really what matters here is it's it's a decline in liquidity that breaks things and that's what we if we're worried about things breaking we should then be looking maybe much more at liquidity than interest rates correct that's what we've been arguing for a long long time yeah it also the lessons you know I learned when I was at Salon brothers that it's liquidity that really matters okay I I just wanted to to hammer on that because your chart is a good visualization of the points that you were making earlier on and you know as I say don't don't take my word for It Go and read the writings of Henry calman who was the doen of this whole flow of funds analysis particularly in the US economy I mean Henry has written extensively and with great Authority about the risks of financial crisis in the American economy I mean his books I'm sure are still very much in print they're definitely worth reading all right great great great point and uh I interrupted you so I'll let you go on here um but but one question I do want to ask you after we go through all this is why are more people not beating the drum Michael I mean you make it sound s so self-evident and you've got a lot of great supporting visuals here why are why does liquidity come up so infrequently in these macro discussions well I think that that's that's not I mean I think there are two reasons to or two two things to say I mean one is there there are people out there who look at liquidity I mean we in many cases certainly wearing my Salomon Brothers hat probably pioneered did um you know several decades ago go um but there are other people that find liquidity important I think you can find uh people for example I mean dangerous talk here but in the crypto space who certainly believe that liquidity is the important factor to watch this may be a new generation of investors but they seem to have CAU on the fact that it's very important uh but then if you come back to teaching and you this is the whole question about why people have the views they do is that economics or traditional economics is not it doesn't teach teach this type of stuff it teaches traditional textbook stuff where what really matters in the uh in the markets is the rate of interest um you know Ian I'm sure as you would ATT test I mean your experiences that people look at interest rates I I understand all that but it isn't necessarily the most important thing yeah I'm just shocked and you I'm not super shocked that maybe the mainstream Financial media you know is sort of stuck in the past but you know I talk to a lot of people that are in the whatever you want to call the space the alternative Financial media space fin twit what whatever where I I like to think people are a little bit more open-minded and data driven and yeah we'll talk about liquidity from time to time but but very few make it the heart of their case and very few will pull up a visual and say this is how I'm measuring it and this is where we are I I'm just surprised because hearing you talk here it just sort of sounds like hey this should be the thing you start with and end with and talk a lot about in the middle and and I just I interview a lot of people you know per week the point you raise here are are are raised relatively infrequently I'm just going to say so it just surprises me but I think if you go back and look to if you went back to the 19 late 60s 1970s and you talked about what's driving inflation uh and suddenly Milton Freedman appears and says it's all about money there was a period of 10 15 20 years where money was the only thing that then became important in understanding inflation but that derailed traditional economic analysis but now since then economic analysis this has fought its way back uh you know into the curriculum but you could see that there are fashions and I'm not saying that liquidity is going to remain in fashion forever but it's certainly important right now I mean I always think you've got to you've got to pay attention to what liquidity is saying I've interrupted you I'll let you going but let you go uh but I I feel like I should name this this video when we release it something like it's all about liquidity stupid or something like that because it just seems so so Paramount from from what you're saying here but anyways I'll I'll let you continue so what I was I'm going to go on to a slide just uh in a second which hopefully explains what you were uh you were um um doing with your narrative earlier this is looking at the global liquidity cycle in uh this is the Puritan's 2000 again uh with uh in Orange with returns on all assets overlaid on top and liquidity extrapolated out to 20 the end of 2025 now there are two things I'll say about that first the definition of all wealth includes all residential real estate worldwide uh which I get data from the bis database uh bank for international settlements that is I look at all Bond Bond uh Market investment products all equities worldwide um all liquid asset products uh in other words money market funds or whatever precious metals um crypto currencies all added together into a total portfolio which comes to about 500 in excess of 500 trillion and that basically is shown as the black line in terms of its average uh average annual increases the orange line is global liquidity now in a sense it's a fairly um um unfair chart because if I ran it back uh from 1970 onwards you would find a very good correlation between uh Global equility and all wealth uh as reported here but it wouldn't quite as be as tight as what we see here and actually the correlation has tightened as the years have advanced so in other words for the last 10 years that correlation has been remarkably tight like we've never seen before uh but there we are and the extrapolation in the future has a curious dog leg in it um where it looks like it's going down U sort of sharply that's really a base effect that's mathematical or arithmetic uh it's not because liquidity is set to fall it's because the growth rate which we show here is dipping back because it was a surge a year ago so don't read anything into that think about the underlying Trend which is saying that liquidity is likely expanding at about 8 to 10% so that's the sort of returns that you could expect so that answers hopefully the question about um you know the correlation of liquidity and asset classes there is a very tight correlation now if I go back to the Chart I was I was going to uh try and explain this is a heat map of what central banks are doing there are about 80 central banks on that chart uh there is no um you know there's nothing about the size or importance this is just a a collective of all central banks so the the Federal Reserve has you know exactly the same uh Square as the the orze square as the bank of Marias for example so it's equal weighted yeah it's it's equal weighted but it gives an impression of the numbers of central banks that are easing or tightening green is green for go or easing and red is red for stop or tightening and as the Hues change uh as we move through the chart from Red towards orange towards yellow towards green uh there is more easing coming on so you can see maximum tightness was about the summer of 2022 and we're basically progressively moving towards that more benign period And that's pretty much what we you know is how we read things going forward now the other thing to say is while I'm on this chart this is what is happening in the American economy or with the Federal Reserve and you know this is how we understand what the FED is doing we're looking at the balance sheet anyone can do this okay uh we devised this aggregate which we called fed liquidity that came from my you know days at Salomon Brothers but looking at the FED but effectively what the orange line is is measuring fed liquidity um fed liquidity is basically the liquidity injections that fed actions uh mean for the money markets how much money the Federal Reserve through its interactions uh effectively get put into the money markets and that's orange the red line is the overall size of the balance sheet now there's absolutely no question the balance sheet has fallen in the last 12 months uh there is absolutely no question that the Federal Reserve has engageed what it calls QT by allowing treasuries to roll off the balance sheet that is unequivocal but the fact is uh besides that underneath that uh the amount of liquidity uh they've injected into money markets has risen by 177% since the beginning of the year uh which is something like about5 to 600 billion US and you can see the two points I mark on the graph first of all for the British guilt crisis in September which I think was a wakeup call for policy makers everywhere of how bad things had got uh or could get and the US Regional banking crisis and credit s first Boston failure uh in March February March of 2023 when there was a noticeable pickup in liquidity liquidity conditions have expanded thereafter if we are correct in assessing that the latest fed the fomc meeting is signaling that rates will be cut U through next year I would venture number one that it would be unlikely that they continue their QT policy at the same rate or even at all which means there's more liquidity still going into the market and secondly the reverse repo tranch or program held at the on the Federal Reserve balance sheet which is technically a withdrawal of liquidity from the markets will be run down aggressively as money market funds basically switch from the fed's uh overnight account into treasury bills which are basically term uh you know term instruments not overnight uh and they will pay a more attractive interest rate uh than overnight so I think that that will happen and those are liquidity boosts and so you're going to see more liquidity going into the system but the fact is whichever way cut this fed liquidity has gone up uh even though headlines says they've done Q QT but what's that's just such an important point to underline because I think the vast majority of people that follow Wall Street and the markets are thinking that liquidity has been going down in the US at least based upon you know the fed's quote unquote tightening regime but um but it's not you know for for your data here and I'm sorry you might have missed this but if you could just reiterate it what exactly is the Fed doing that is increasing liquidity here since the beginning of 2023 I'm guessing the btfp helped you we saw that huge Spike there uh right around the the banking crisis what else have they been doing well it's been factors like I mean whether one attributes that directly to the Federal Reserve or whether one says it's Janet Yellen um you know operating VI the treasury general account I mean I think those are sort of moot points but at the end of the day you know if if the if the argument which is some people put this argument that actually it's not the FED it's the treasury who's doing this but you know that opens up a whole can of worms because the Federal Reserve is supposedly independent so uh the treasury shouldn't be affecting things in that way but the fact is that the Federal Reserve oversees the amount of liquidity that goes into money markets that's its job and therefore it uh it needs to you know control its liquidity injections it could be it's one of the factors that's been very important uh as you say has been the bank term funding program another fact Factor has been the rundown of the of the reverse repo account on the fed's balance sheet which was basically money that was uh that was if you like siloed on the F fed balance sheet paying interest to the money market funds when there was an absence of treasury bills in the system now treasury bills are coming through in Spades what you're seeing is a significant draw down of that of that account um and you've also got the treasury general account which has fluctuated admittedly it did go down but it's now come up again to about 700 billion but the these are sort of uh you know uh a side factors but generally the balance sheet or the liquidity inducing part has gone up the other thing which has helped as well is the Federal Reserve is making losses on its Bond portfolio because it's basically receiving less interest than it's paying out and as it pays out more than it receives that's actually liquidity that's going into the markets okay super interesting there okay great that's really helpful it just of helps us understand the individual components that are driving that increase there and what this chart here is doing is just like taking a reference cycle which is looking at what the Federal Reserve did in the 97 to 2003 period using our own uh in-house liquidity index of the Federal Reserve which is the black dotted line so that's the reference cycle uh beginning in um 1997 ending in 2003 and we've overlaid on top the current cycle of where the Federal Reserve has been operating since 2019 and you can see it's pretty much uh uh uh you know the same path except for the last four or five months where the FED has gone off track and I think it needs to catch up and I think that's what uh J pal and co uh pretty much indicated at the last fomc they need to get on with a job they need to get rates down they need to get the yield curve steeper and they need to get more liquidity pushed into the economy and I think this is where the cycle is they they've been you know if you look at the inflation data on the way that we look at it at least I think they've been remarkably successful and arguably they've done a better job than vulka did in the early 1970s and I I rest that statement on the fact that you know if you look at the Persistence of inflation through the pricing structure it's actually disappeared at a much faster rate this cycle than it did um in the early 1980s uh under vulka so I think they've done a very good job in terms of get inflation down I don't think there is a serious uh long-term inflation problem in the American or any other economy worldwide can I ask a question related to that um could that be uh and perhaps kudos to Pal on the team to kind of manage the whole thing but could could that be the difference between the 70s is is we had a a real Supply shock this time right where we had Supply chains that just froze up you know for a period of time where you couldn't get product that push price is high because of the scarcity but that has largely been mended now and so huge part of the inflationary issue wasn't wasn't even monetary I mean it was once the central banks and the the the um fiscal side got involved but it wasn't it wasn't 100% of the inflation issue and a good chunk of it was due to these supply issues that are now gone exactly correct exactly yeah okay and if you contrast if you want a sort of interesting thought exercise compare what America or Europe did with what China did and if you look at what happened through the covid crisis that was a negative Supply shock what America and Europe did was to boost demand so if you look at the implications of that through simple Supply demand analysis prices must go up which they did okay if you look at what China did what China did through that Supply shock is actually Titan policy for other reasons because the Yuan currency was under great pressure and what you'd have expected there was actually an output adjustment downwards so the economy should have slowed marketly with some deflation and that's exactly what you've had been between the two continents interesting not not for this discussion but I'd love to kind of analyze for you you know if we could go back in time uh what if anything you would have done differently in that situation but but that's pulling us off of of liquidity so let's let you finish your slides yeah so anyway this is what the fed's got to do and I'm going to uh this this by the way is a chart which is saying which central banks or are central banks easing this is just a metric which shows the amount of liquidity That central banks are issuing in their markets in Orange uh this is weighted by size and the dotted black line is the percentage of central banks that are now running easier policies so onethird of central banks worldwide now so that's counting everything of this sort of 8090 uh Central Bank sample that we monitor are actually currently easing policies um and that's the thing to the cycle is turning is turned up that that is the key thing now what I sorry was was that chart an equal weighted chart that says 30% eing or or is that dotted line is equally weighted the orange line is size weighted okay so it is important to note that that um size weighted or Market weighted if you will uh liquidity is is is increasing across the globe here correct correct now what I'm going to do is move on to this analysis which is basically how we see the world going in the future and this is looking at the global liquidity cycle this is our standard asset allocation framework which is looking at liquidity as that ore cycle we split that into four Reg reges that we call generically turbulence rebound Cal and speculation the the red line is the economic or risk cycle which tends to lag that and the red spludge on there the Red Dot is inflections in yield curves this is what you'd expect slightly after the inflection in the liquidity cycle the yield curve inflates uh then so in other words the bond market is the First Financial Market really to respond and then you start to get U uh the economy responding afterwards this is why liquidity and markets lead the real economy so you never forecast financial markets from the economy rather vice versa now if we move on to what you'd expect to see at this stage of the cycle consider this slide Adam what it shows is on the leftand side asset classes and on the right hand side industry groups the red the red green uh Amber uh bodges there splodges are traffic lights thinking them that way and we are in the First Column of each block in rebound that's what we call this phase of the investment cycle liquidity inflecting upwards early stages so in rebound what you'd have expected and this by the way is based on historic experience this is not what we're seeing currently necessarily it's what history tells you always happens in a rebound you want to take your risk Amber so you can take a bit of risk you got to be careful proceed with caution you want to be overweight equities and credits you want to be underweight Commodities and bond duration that's what the cycle should tell you this year was all about and I would argue that's more or less what we've seen on the right hand side if you're in rebound you should be overweight cyclicals overweight technology and underweight defensive stocks and that's more or less been correct okay as we move on transition to calm you want to be more risk on you want to have keep your equities pair your credits a little bit start to build up Commodities instead but don't take any bond duration and then in stocks industry groups you want to keep with cyclicals keep with technology start to move into financials and start to build up positions in energy but remain underweight defensives now if we're correct and I say if there's always a health warning with these uh with these analyses but if we're correct you should start to to see financials beginning to outperform and energy stocks getting a bid and commodity markets beginning to lift off if this is correct and that's what we're looking for for that consistency uh within the framework now a piece of evidence and I'm going to move on to um a chart a little bit later here so this chart is actually this same data which you saw earlier for the global liquidity cycle which has actually been um narrowed down to the US in Orange so it's this us component and the black line is the average US yield curve now this is without dancing on the head of a pin and saying is this the 210 spread the 3mon 10year is it the 5year 10-year this is the average US yield curve which in the literature is called the intensity uh of the term structure and this basically shows that liquidity has been Advanced by 9 months and it is leading the slope of the yield curve so what we'd expect is as liquidity cycle picks up the yield curve begins to steepen and that's exactly what we think is going on right now now if you hold that thought and you consider that J pal and Co colleagues will want to get the front end of the term structure I.E policy rates down by probably the market is now expecting 100 basis points or so next year and the yield curve steepens the Outlook for the long end of the market is not going to be that favorable and therefore we still think holding bond duration is not a great idea in this environment where liquidity is expanding again but we may be unusual in that regard but hey that's uh that's the nature of things all right and there's actually a lot of where Bon yelds are headed is one of the more debated issues I would say of the folks that I've had on this program I I'd almost kind of put it 50/50 some say it's great time to go long duration some say it's not definitely put you in the not camp um but you're not certainly alone in there right and what I want to do right now is just to focus on the longer term and I want to show you um a couple of charts which hopefully will uh explain this backdrop this chart here is looking at a very wonkish concept that I'm not going to go into in great detail but it's a component of bond markets which is very very important to understand which is like the risk premium on bonds or actually as it's called the term Premier because it basically applies to the term structure the far end of the term structure it's what affects bond market returns and that is the black line and the higher that black line the more yield premium that you're going to start to uh bake into the bond markets so in other words if that black line goes up it's not good news for a bond holder okay uh because it saying interest rates are going up at the long end and the orange line is a measure of the the amount of collateral if you like that is being supplied uh into the markets by the US authorities in other words coupon issuant uh and what we've subtracted from this is the normal buying of foreign investors um of US debt and that in itself may be problematic but nonetheless the orange line is a marker to say this is the likely supply of coupon debt in the markets and this is a growth rate as you see on the right hand slide now the bottom line here is that coupon Supply treasury bond issuance is going up at a faster clip and that is going to be pushing interest rates up the long end of the market and that is what we have uh argued is likely to cause monetary inflation and here is why okay this is the long-term picture of effective supply of collateral in Black taken from the Congressional budget office forecast which in itself may be conservative the or line is the same CBO estimates of what the Federal Reserve would take up of that coupon Supply so I've called it net liquidity injection into the markets that's what it is but there is a very clear Divergence between those two lines I think that is impossible I think the Federal Reserve has to keep up its buying Pace because there won't be many other buyers and they will seek to try and keep interest rates Low by buying as much long-dated debt as they can uh or if you like I'm not going to say cheating but you know what I mean by manipulating the markets through excessive Bill issuance which is what's going on now um that is important and what it means is that the hurdle you got to jump in the US which is the chart that I foreshadowed earlier on is this one this is not our data it's data that comes from the IMF and the Congressional budget office and it shows in Orange the debt GDP ratio prospectively of the US economy out to 2050 okay it tests 200 50% the red dotted line is Britain over the same period from 1800 or just thereafter uh right through until uh again uh 2050 but the British data is not quite as extensive but it does show very neatly the fact that in the the 1930s 40s 50s and 60s the British economy the time when its economy started to seriously underperform the rest of the world had a very very high debt to GDP ratio that debt GDP ratio was progressively brought down by high inflation and it was brought down again by Thatcher's government uh restraining government spending but the fact is that Britain's very bad economic performance coincided with high public debt to GDP it's not a good sign what this chart is saying is there's a challenge for the US how does the US afford this high amount of debt to GDP and the answer basically means they've got to start creating liquidity this chart here is saying his history tells us that the ratio between debt and liquidity for the advanced economies worldwide is nearly constant at 250% so in other words for every uh $25 you have in debt you need $10 of liquidity it's that straightforward and that means that liquidity has to start increasing uh as well now the convenient point is that if you look at our projections of the Federal Reserve balance sheet what that shows is the Fed balance sheet has to start ramping up significantly to start taking on some of this debt and that is the source of liquidity that the system is getting the orange bars are the Congressional budget office figures the gray bars are our estimates assuming defense spending which goes up to 5% of GDP and a halt to QT the current QT because rate Cuts start to get put in and that uh shows how much the FED balance sheet can expand and if you think the previous Peak was about just over 8 trillion we're going to surpass that uh probably easily by 2026 so we're all you know we're firing again on all cylinders of an expanding fed balance sheet don't say that won't happen because the Congressional budget office itself uh the bipartisan body has also got this penciled in an expanding fed balance sheet the numbers above the bars of the percentage increases but the important point is that it's not the balance sheet that matters it's fed liquidity the number within that and that's the expansion in fed liquidity that we that we reckon is coming and those double digigit rates of expansion uh are effectively a monetary inflation that is underway I'm not hitting on the US because as I said before the US is the cleanest shirt in the laundry okay others are in worse shape uh but this is what's happening I think the dollar as a paper currency will outperform the Euro and other paper units but it may not outperform monetary Hedges dedicated monetary Hedges which I come on to if you don't think our numbers are correct take the CBO numbers in orange or take a halfway house but the numbers still look very very worrying whichever one you take now if you I'm going to move on here I'm going to skip through China I'm skip through the dollar and I'm going to come to this uh this chart here this is looking at the correlation between the price of gold and Global liquidity Global liquidity is an orange and the black line is the growth rate in the price of gold over a 3mon span and liquidity has been Advanced here for those of people that are statisticians or wonkish in that regard there is a statistical analysis at the bottom called a Granger causality test which looks whe it decides whether um gold is the leading indicator of liquidity or liquidity is the leading indicator of gold and it can stand unequivocally to say that over six-month span liquidity drives gold higher and that's what it's basically saying gold is a brilliant monetary inflation hedge gold is not a High Street inflation hedge it is a monetary inflation hedge the subtle difference is that High Street prices Embrace both monetary inflation the devaluation of paper money and costs like higher or lower old prices or productivity gains or taxes or whatever okay that's not what we're talking about we're talking about monetary inflation devaluation of paper money by central banks and that is what gold is the most brilliant hedge at this is the long-term picture uh going back to 1975 the orange line is the stock of gold added to that crypto and I've said let's consider for a moment that things like Bitcoin are also monetary inflation Hedges and add the market capitalization of crypto to that of the market capitalization of gold and chart it as the orange line the black line is our measure of global liquidity extrapolated to the end of 2025 uh and you can see whether that's a decent or not relationship uh essentially they're moving in the same Trend and I think it's a fairly decent guide uh if you think monetary inflation is picking up then the gold price is going to go up and Bitcoin is going to go up and some people uh you know I've even died myself sight tongue in cheap called Bitcoin exponential gold because it's very very sensitive to liquidity for the record the dotted line at the bottom is US CPI inflation since 1995 gold has gone up five times Global liquidity has gone up five times and US consumer prices have gone up two times so gold is a monetary inflation hedge not necessarily A High Street inflation hedge it may be better than a High Street inflation who knows but that's the story and that's why we think if you look forward more liquidity is coming it's coming cyclically because the Federal Reserve is going to start easing in the next few months it's going to add to liquidity it's coming because in the medium term it's the only way out of this debt problem you've got to start monetizing the debt and that's that's the reality all right what's so interesting about this is um uh again it explains the price action of gold and um and Bitcoin uh over 2022 right where we had CPI you know jump up to 9% and yet gold was pretty flat for the year so folks were pretty disappointed who had bought gold in anticipation of high inflation because they're like oh my goodness we got you know super high inflation now and Gold's not really going anywhere and of course Bitcoin you know got walloped throughout 2022 but if you look at it in terms of liquidity well liquidity was decreasing in that year right and now that liquidity is back on the upturn Bitcoin is more than doubled right and gold is at all-time highs now or has touched alltime highs so um so again yeah that correlation you're talking about we're we've definitely seen that script play out in the past 12 months I agree so 24 months yeah yeah so that that's the the story is that you know next year should be a decent year and you know as we as as you know we say look look at how markets operate I mean basically if the uh you know if the business Outlook goes from Gastly to just bad you make most of your money in markets traditionally uh and if the market environment goes from excellent to just good that's when you lose most money and I think if you look at where we are on the on the Spectrum we're probably moving from what was ghastly partly in the time of covid uh to what maybe people would argue is now just bad economically but that's actually when you make a lot of money and you lose your money when it goes from excellent to just good and I think we're a long long way from being excellent we're probably still in the bad phase so that suggests to me that cyclewise this is not a bad time to be investing it sounds like you think it's a really good time to be investing so um so let's talk about that for a second because there's kind of two two things that we' we've talked about here one is um you know you're saying look there's a secular uh Trend going here of of of higher liquidity um over the next you know couple decades right and there you're saying that's going to be hand inand with monetary inflation um for the reasons you just mentioned and so you need to dedicated monetary Hedges so you put gold in that it sounds like you put Bitcoin in that as well um then there's kind of the cycle like you're talking about and and I believe that's back to your your stoplight slide that you showed us right um so uh remind me of the four phases of the stoplight there's well we think of four four phases of the cycle which is basically uh rebound what we then call calm speculation and then turbulence those are the those are the four phases that we tend to think okay so so we're in rebound right now which is where you said that's where you tend to make your most your biggest gains where you go from Gastly to pretty good um so obviously for folks that are that that are watching and folks if you're listening on a podcast and you didn't see that chart you've got to find your way to the YouTube channel to see that chart because it's it's I think it's super important to understand what Michael thinks is going to happen um you know he basically shows you okay these are the the the different asset classes and and sectors you want to be in given where we are right now in rebound um how do you help people think about this in other words you laid out in your stoplight chart hey if you want to play the rebound these are the these These are the ways to think about positioning you had Commodities on that chart which were read in the rebound I'm going to assume gold and Bitcoin might be a little bit different than your average commodity uh for the reasons for the lens that you look through um but is like this one of the great times to be in Golden Bitcoin or are you saying you should have that in your portfolio as sort of a long-term position to whether you know the next couple decades oh I think that I think cyclically uh gold is getting a bid now and so is Bitcoin I think for the reasons the liquidity site is turning up but I think that my argument for holding both those assets in portfolios is a long-term argument because I think we're going to get more monetary inflation now let me just emphasize more monetary inflation doesn't necessarily mean that High Street prices will be going up fast I mean it's logical to assume they will but it's not necessarily the case because it you've got to into the equation what's happening to costs and if you get massive cost deflation and that could arise because for example China devalues the REM andb significantly or oil prices collapse uh or there's a productivity Miracle or something like that uh all those factors could actually Dent Consumer Price inflation uh irrespective of what monetary inflation is doing so I think you've got to differentiate the two but I'm arguing here is that gold and Bitcoin are protections against the monetary authorities worldwide devaluing credit money or paper money and that that's really the point you've got to have it in portfolios because that has to be the name of the game and I think if you reflect on where we are in the uh political cycle the uh the covid crisis was the first ever crisis that we faced where spending was not funded by tax increases or increasing debt it was funded by basically printing money and that's I think a heads up ask the question whether it be Biden or whether it be Trump uh in 2024 is either of those going to raise taxes I think highly unlikely uh and you can say exactly the same for Europe if you start to uh if you're a politician and you your uh Manifesto says I'm going to raise taxes uh just forget it uh no one's in that game so effectively they're going to kick the can down the road which means more monetization whatever they may say now okay um God we're going to have to leave it there Michael I'm just looking at the time here we we've gone more than 10 minutes over the hour um so I failed in trying to keep this to a respectful time frame for you uh and even just their last your last point there I feel like I could talk with you for another hour or two um on on that question plus a whole number of questions I've written down here that we just can't get to today but Michael this has been wonderful um love to invite you back on the program anytime you want to come on but but but if I can kind of publicly commit you here when you think we are um moving from rebound to come love to have you come back on here just so folks folks know hey it's it's time to switch from you know one set of stop lights to to another set um really important question for folks that have really enjoyed this discussion maybe this is the first time they're being exposed to your work and Michael I'm sure you made the vast majority of the uh viewers here today really think in a way they they haven't been thinking of late um and so anyways if those folks want to follow you in your work where should they go well if you want to read up on on what we do uh from a more theoretical point of view there was a book I wrote about three or four years ago called Capital Wars that's published by palgrave uh and it's available on on Amazon uh I mean hopefully these days at a discount so that that's one Avenue the um second thing is that we have a substack with the same name which is called Capital Wars which is uh written up probably at least twice a week containing data and analyses and our website is uh crossb capital.com the Twitter handle is at crossb cap so that's the array of uh you know of of channels that you can tune in fantastic and Michael when I edit this I will put up overlays to each of those assets um folks I'll also put links in the description below too so you can get oneclick access to them um and folks if if you too would like to see Michael come back when he's got an update for us um please encourage him to do so by hitting the like button then clicking on the red subscribe button below as well as that little bell icon right next to it um Michael this has been great um concluding question for you this is something that I've been asking um uh a lot a number of my guests recently and folks have really been enjoying it you've taken us through a a just a really fascinating mental exercise here on the financial side of things and and told us how you think people should consider positioning given your financial Outlook putting money aside for a second is there a non-financial investment that you would encourage people to consider making in their lives when when that you think is is either you know create a lot of value for you or just in kind of looking at the world thinking oh if people do more of this it'd be a better place for them yeah I mean interesting point point to ponder Adam I I'd say I mean not number one must be invest in your health I think that's that's the most important investment anyone can make I think invest time in books and particularly history books I wouldn't waste time with economics books I'd look at history books uh economic history books because that's going to tell you an awful lot about uh what has happened in the past and I think if you want both a uh uh an investment that make make you money an investment that will actually help your your sanity invest in art because even if the price of art goes down you can still enjoy some great great pictures so I think I'd look I'd look in those areas all right great fantastic answer uh well thank you so much Michael like I said you're welcome back on the program anytime it's been absolutely wonderful thank you that's great thank you much enjoyed it Adam thank you all right well now's the time with a program where we bring in the lead Partners from new Harbor Financial one of the endorsed Financial advisory firms by thoughtful money to react to What Michael just said there and also give us any update they think is germine to what's going on uh in the markets over the past week I'm joined as usual by John loer and Mike Preston guys thanks so much for joining um let's see uh Mike why don't we start with you this time uh you know in some ways pretty mind-blowing you know what we just talked about with Michael which was sort of like look you know liquidity is the thing and everything else is is secondary or a distant tertiary factor and we just got to look at where liquidity is heading and and that really is going to tell the tale and in Michael's Outlook liquidity is going to keep Rising for the reable future so even though stocks have partied hard into the end of 2023 here he expects 2024 to be a pretty good year at least until the liquidity situation changes so curious to get your take uh and also guys as as we talk here would love to get a sense for how if at all you take the liquidity situation into your portfolio allocation decisions there at new Harbor well thank you I mean liquidity is important Michael talked a lot about liquidity obviously and he's he's pretty bullish and and I certainly like his optimism you know when when he answered your first question what his Viewpoint was on the global economy and markets he said he's broadly positive an upbeat and um you know i' I would say that we are probably too in the very near term but we have overriding concerns that um you know it's certainly about valuations and other things that keep us very cautious and maybe that's a curse of looking at the data or looking at the data that we look at versus the data that Michael looks at but Michael talks about the global liquidity index and he presents a lot of different charts that are pretty compelling right um there was one chart that he showed that it showed that the the global liquidity index bottomed in October of 2022 you know and it's been moving higher since and it's it's certainly hard to argue that the market hasn't been moving higher um what I don't understand and perhaps I just need to do a little more reading and research on this is exactly how is the how is the index constructed you how is liquidity measured it's it's not easy you know he talked about a number of different things about liquidity increasing because of the reversal of the bank term financing program and um or or the roll out of that and the reversal of the you know the repo program or starting to unwind that it's it's it's difficult to understand the details of the data and again it's probably my own um ignorance of how the in the index is constructed but I want to know exactly how is that measured and there there's some empirical evidence that shows that liquidity itself in a vacuum doesn't really doesn't doesn't really push up markets um so you know the FED has been easing or was easing in the the past bare markets you know in the after the the housing market breakdown in 2008 2009 and also during you the the tech bust but the markets continue to go down even with more liquidity and more easing so you know overall I think that we agree that the technicals in the market look very strong near term now this Market has defied almost All Odds and moved in a straight line it was a record close I think nine nine or 10 record closes yesterday for the Dow um you know the S&P has been on a tear small caps and midcaps have started to join the party all of the things that we're noticing and we've been talking about every week so near term we agree that things look bullish but I don't know exactly how to use that in day-to-day action you know on the portfolio level at least for us there's a lot of other things we look at you know near-term technicals relative strength uh bullish charts but always we're really concerned about the big picture as we know at some point that matters and so my question after watching that video is okay if if liquidity continues and continues to increase you know then what what's the endgame of all of this you know because he talks about the fact that the debt has to be monetized well that's that's true he talked about the fact that um I think it was I wrote it down here somewhere $350 trillion in debt you $350 trillion in debt and 5year average maturity it's like $70 trillion a year have to be rolled over uh it's pretty crazy and so so what's the endgame of all of this and that's you know maybe we're just in a new era that we're still figuring out the rules but and this is what the FED has created you know we all have to kind of create new variables and new ways to look at things but fundamentals and the valuations are not going to be wrong long term and so we all have to think about what the endgame is here and that's what we're concerned about yeah and that's that's kind of the Crux that that was sort of the the sacred cow if you will that I think Michael was maybe you know targeting with his spear there which is maybe valuations don't really matter in this new world where uh liquidity flows really you know determine the fate of everything so um you know a couple of things so how this all ends just want to underscore what Michael had said which is you know he said look you got to get monetary inflation Hedges right and I know that you guys at new Harbor are you know gold is a core part of your portfolio uh that's definitely a big part of Michael's long-term portfolio as well he also likes Bitcoin um but but essentially for this reason right that the central banks are just going to keep monetizing and basically destroying the purchasing power of the currency um to your point Mike about like you know how do we measure this that that that to me is the most interesting part is there are all these different charts out there on the internet measuring liquidity in different ways I'd say if there was a new piece to the puzzle that Michael brought to me um was that in his definition of liquidity it really was more balance sheet capacity right it's not necessarily like Capital flowing into the market any at any given moment in time it's the ability of the system to take on more debt right um and he said there's there's still a fair amount of of ability out there and of course the FED is just taking a trillion off of its balance sheet there's no reason it couldn't turn around and had a trillion you know right back right um also as as on the corporate side as as prices continue to rise aggressively like they are well debt to equity ratios go down which give them you know legitimacy to go out and raise more debt if they want to in their capital structure so that was a really interesting um piece to the puzzle but but John I'm going to go to you now you and I were talking right before we turned the camera on here and you were talking about the transmission mechanism of liquidity um which you have to understand that like as Mike said liquidity in a vacuum it's not as simple as higher liquidity all boats rise even though often times it kind of looks that way um you have to actually have a way for that liquidity to get transmitted out into the system to do what it needs to do um and potentially um you can get into a situation where liquidity is going up but it's not really having that much of an impact that's that sort of famous pushing on a string scenario so um uh expound a little bit more on on on that and just sort of your general views on liquidity too yeah so I I I too found Michael's discussion very very informative I'm I'm really appreciative that he uh brings a deeper level of of this concept of liquidity uh because there are a proliferation of very simple um definitions that make for great charts out in the internet but are are are quite misleading you know I I can't can't tell you how many charts I saw over over earlier this year showing a chart of like M2 money supply across the world and plotting it uh on a chart with the S&P 500 and they you know over the summer there was this jaw that opened up basically implying that one or the other had to get either liquidity had to uh be injected or the S&P had to pull back and um the problem with that and I saw fabulous uh discussion I want to call it debate between Michael Howell and uh another widely respected and followed uh strategist Andy consten and I think you may uh wish to get him on your program something I think he'd be a great um uh guest for you and perhaps even a conversation with with Andy and uh Michael they're both as I understand both Solomon Brothers alumni um anyways uh they they both have critique some of those those charts you know those charts are are Rife with what we call chart crimes different you know slights of hand that oftentimes make a chart look uh correlated but but really not um but but I really appreciated this notion of of balance sheet capacity and that is a transmission mechanism and the one thing I would like to add and I I wish more than a critique of Michael's comments more of a question and maybe a follow on discussion with him our sense and we've see it in in practice all the time you you you mentioned the notion of the FED pushing on the string and really what that speaks to is um when you have a system whether it's an econom economic system a market there's this notion of binding constraints that there's something that's in short supply relative to demand for it you know the market the the economy wants more credit but there's a shortage of that credit um but there there are times where those constraints are not binding and adding more of something doesn't transmit anymore because there's already a surplus so let me give a couple examples and and that that fed pushing on the string when there's enough you know fed liquidity in the system them adding more the notion of pushing on the string is it doesn't do anything it doesn't transmit any additional benefits it just kind of Finds Its way and piles up in the economy and you might I think rightly say that's what happened in in in Spades over the last decade plus you know a massive amount of reserves John husman has has talked about this notion of a um uh liquidity pre preference curve right now that's there's about 28% of GDP in fed base reserves reverse repo and and uh credit that could be cut in and by by 75% and still uh not have a material impact on on the short-term treasury rate that that's what this this curve speaks to in other words there's way too much reserves in the system um I might point to the banking crisis earlier this year in the spring basically what happened there um Banks had way more liquidity than they they they wanted and needed yet they didn't have the demand for for loans they had plenty of balance sheet capacity to lend out money but the demands for for credit was not there so what did they do they went and bought treasury bill uh bonds long-term treasury bonds at at really low interest rates uh which is just another form of lending instead of lending to a commercial property developer or business looking to expand they lent to the US government and and boy what what a problem that turned out to be so you know I think that's a maybe a really good example of yeah there's plenty liquidity but if there's not demand for that liquidity in the system in the balance sheets and the economic engine of the system it it doesn't transmit in in the for and and the bottom line is our discipline we're very Mindful and very cognizant about big picture valuations and things like that and we'll never let our guard down about those kinds of things but we let the markets speak to us uh Michael himself said many times the commentators have it wrong they look to the economy to to lead the market and we see it the other way we look at price trends and price action as is a um at least in a shortterm sense uh a a uh predictor of you know perhaps the economy um but that's a very short term because markets are notoriously bad at predicting recessions if you look at a chart of the S&P 500 always Peaks right before a recession right um so those are some of the key takeaways I have I think I think the real critical piece and Andy conston made this point in the in the discussion I see you know you got to take that liquidity but also kind of focus on the transmission and and risk across different asset classes not just stocks we're talking about here it's bonds it's Commodities and it's the interplay between those that really matters you can't say the S&P is going to go up just because there's more more liquidity it's not quite that simple in our in our assessment okay so let's get down to the rubber meeting the road here which is I'm looking at a lot of the folks that have come on this channel recently and I'm now sort of beginning to see three sort of camps um you've got the Felix zolof and the Darius Dales on one side who say um look history shows like you just said John you know the market parties its hardest you know right up before it it has a big correction right um and Felix was on the channel uh you know he basically said he he can see the market powering higher through q1 um you know he had picked 5,000 at at this rate looks like we might get there a lot sooner than the end of q1 um but he said that's going to be a top tick uh and then for a bunch of other reasons we discussed in that interview uh he thinks that the S&P is going to have a a pretty severe correction you know he he said it could be as much as 40% you know ending 40% lower um from the high at the end of 2024 right Darius stale I think has a a somewhat similar um Outlook I don't know uh what size correction he's looking for later in the year I'm going to have him on the program in early January so we'll find out soon um but uh uh in fact I'm interviewing him just two days from now so we'll we'll know really soon um but but you know he does expect kind of like a you know a rager you know a melt up in the markets uh that gets everybody piled in and then of course there's there's the rug Pole right so so I would call that one camp the camp of the rug pole the second is um you know John husman we show his his uh forward projected returns chart on this channel a lot I was talking to Cameron Dawson the other day she has sort of a similar concern that we just might be looking at a set series of lost years ahead of us right where the mark Market kind of goes nowhere uh because valuations have been pulled in today by this exuberance that we're seeing um so that's just one where you know your projected returns look look really uh disappointing you know not terrible but but just you know you're you're you're you're losing purchasing power by not growing your wealth and then the third Camp um is guys like Howell right Michael Howell where he thinks we're in rebound right and we're going to have a great two years from here you know the economy is going to grow markets are going to keep powering how powering higher for the next two years so you've got you know these three very distinct possibilities here and very smart people who can argue for each one nobody has a crystal ball nobody knows what's going to happen for sure so how do you guys how are you guys positioning right now uh keeping in mind the potential possibilities of these these outcomes John why don't we start with you and then Mike we'll go to you because I also want to talk about gold a little bit here if we got time sure a couple quick comments on that so yeah we agree that whether we're talking about a a follow-through rally that lasts for another couple days or a couple months or even a couple years that the decade ahead is likely to look very very disappointing from a a I want to emphasize a passive Buy and Hold investment approach because what we expect is a likely scenario is we're going to get a major pullback major crash even uh and it's from those events from which uh a Bleak picture long term that exists right now becomes a very positive picture and it's all about avoiding those big declines so our our approach right now is very balanced we have um you know under we're definitely underweight stocks compared to most traditional advisors um but we're we're overweight in areas that are better valuations better relative strength so we're trying to pick the the the horses that are leading the this Char John just to be clear you guys have been adding to you've been increasing your stock exposure over Q4 right yeah meas measured way um we use hedging tools we use options in very conservative hedging ways so for example the day before um last I think last week's fed meeting we added about 10% notional uh exposure to Broad equal weight S&P index uh we did so by buying call options that essentially is the financial equivalent of of buying that index and buying a put put option A downside hedge and just what happens that uh volatility is very low right now so so that embedded insurance is very cheap so we're able to add some some exposure to to capture some follow through upside which so far has happened but we have this Line in the Sand that the market could collapse and and we you know our clients wouldn't be you know really that harmed because of the the essentially the the the embedded put option there and and um you know we we we sell call options at opportune times I'll just share a chart here right now because as as as positive as near-term indicators are I do want to make the point that we're getting very stretched on the short term this is a chart it's it's called the point and figure chart and basically what this is the S&P 500 SPX and it's it's it's what's referred to as a 10-week chart it's basically the 50-day uh moving average and and the range around that in terms of overbought oversold and basically you see right here we're about 88% 100% is is is two standard deviations um so rarely do we get this high and in fact the last several times we did you see a pullback a column of O's is a pullback and at the other end of spectrum you had for example uh September October last year very low so this is a notion of a a pendulum swing swinging back and forth and uh you know right now we're we're really at the crescendo a near-term crescendo of that pendulum so we'd not be at all all surprised to see markets pull back a little bit in fact we just did sell some call options on some of our Equity positions to bring in some premium in anticipation of a possible pullback and this is just a more broad look at the different markets and sectors you know 100 here is basically two standard deviations around the the 50-day moving average pretty pretty stretched there are some some areas like the Dow Jones um you know uh the aggregate Bond index that are are more than two standard deviations beyond the upside of of their moving average on the other hand you have the dollar for example is oversold we actually added a very modest bullish dollar position within the last week um so there's a lot of things are are forgetting evaluations for a moment a lot of things that are are bull bullish on a short-term basis but we're getting really really stretched so we're we're you know being very cautious at this point in time um but we're still holding plenty of um I think about 40 40% or so in short-term treasuries still getting uh five plus percent um yield and uh we think that's a very appropriate place to be let me make one one real important point you know if we do get a blowoff of another couple percent here may getting that or not is not what's going to dictate our client success over their life times we will not lose sight of that real fact so you know understand that we're looking to add incrementally to clients forward progress but the real game here is is being intact and managing very conservatively in light of the bigger picture uh because we want this money to be there 30 40 years for them or as long as they should live great yeah so even though there may be a few percentage points still still to be got here it's not worth the risk of stretching for it when the Market's this extended where the Snapback risk is is as high as it is right now all right and and that's you know that's why uh treasuries right now really are The Prudent Investor's best friend meaning if you get to a point where you just want to park in safety for a little bit you can finally get a good return on it and positive real return on it which as we've talked about a number of times you just haven't been able to get for much of the past decade plus right um all right Mike coming to you here feel free to add on anything that John said um as we wrap up here because we're getting tight on time um if you can just give an update on two of your um I think bigger positions uh there at new Harbor one is gold and gold has been you know it it's been back near all-time highs uh positively reacting to the doish FED uh news uh and then anything you want to say about the long Bond uh TLT trade um because we got a lot of people watching that closely especially as as bond prices sorry bond yields have been coming down and that that trade's beginning to wake back up again all right sure Adam just a first further point about um the overbought or the overb bullishness of the S&P let me just move this over here and here's a daily chart of the S&P hope you can see this Adam and um you know so we had a breakout back here this is called a breakaway Gap we became concerned about the market going on another run once it once it uh was challenging this downtrend and sure enough it's moved higher almost in a uninterrupted fashion and so but if you look down here this is the RSI the relative strength index and you know it it doesn't very often get this overbought it doesn't mean the market has to immediately turn in fact the RSI can stay overbought for a long long time but if you couple that with the fact that I think it was either yesterday or the day before we saw record inflows into spy Spy is the ETF that that essentially owns the S&P 500 it's the world's largest ETF and it saw the largest inflow in a single day the other day you know so much so that they had to create a record number of shares new shares to accommodate it so you know this is this is hasn't been a normal Market this hasn't even been a normal error that we've been living through and so it it's quite likely and possible that we do get a further blowoff here this is the daily chart you go to the weekly chart you'll see that what is this nine weeks straight up you know certainly has been a Santa Claus rally and we are challenging the old alltime high it won't be long I don't think till we go through there so you talked about the opinions that you have on your program and most of them are most of them are relatively close or at least they rhyme I think that Michael Howell was a little bit different and that he was more bullish for the intermediate term but some of your guests say we're going to spike higher than crash others say we might go straight down from here I know that we've been on the record being concerned for a long time even though we think near term we're kind of in the camp of a little higher than lower but it doesn't really matter that much nobody knows the actual path to be honest we certainly don't know we know how it's going to end because history tells us so you know evaluations are are ridiculously high you know up around 40 times margin adjusted earnings um you know on a Schiller basis Stark market cap to GDP is close to 200% you know I mean any number of you know 10 different variables you look at or off the charts and so liquidity may be a Tailwind for a while but it won't it you know it doesn't valuations won't lie forever it will matter we don't know what the catalyst is going to be and unless productivity or GDP explodes upwards to accommodate these valuations that the Market's going to come down you know you mentioned husman earlier John husman his model shows that valuations or normal valuations would be at around 16 to 1,800 on the S&P P so you know whether it dropped from here or dropped from 6,000 or 7,000 it doesn't much matter it's still a lot lower than here uh other models like gmo's model Jeremy grantham's firm show essentially flat and negative returns over the next seven years you know valuations won't matter the path is impossible to know and here we are you know we're up to 30 plus% equities um hedged uh if you include the in the money call option that we did we're mid-30s maybe so we're doing our best to to participate a little bit um but you know we won't go anywhere near Allin at these levels and we have to constantly be careful about a reversal so we're okay with that that's the bargain that we that we strike you know we we know that we can't participate if the market goes vertical from here we're only going to get a piece of it and that's all right so you know that's what I wanted to add on the S&P so let's talk about two more things you mentioned uh gold and I think you mentioned bonds too yeah so a weekly chart of gold this is GLD as a proxy now essentially gold is actually I'm going to go to a month here because a monthly chart's better in terms of understanding it this giant cup and handle it's definitely a stretched out handle but this is a basically 13 14 years and um in inverted Head and Shoulders this is the head is there's a complex shoulder another shoulder here and a triple top and triple tops don't usually hold and so gold on the monthly chart absolutely looks like it wants to break higher about a week or so ago we saw 2130 I think in the Futures Market it sharply reversed we're at around 2030 on the spot we'll move back into the uh the closer chart so it has been consolidating for three or four weeks so frustrating for gold bulls because it literally looks like it wants to go but it hasn't yet and the same thing with gold stocks um and silver stocks and silver itself I'll bring up as well it looks very similar if I went out to a monthly chart of silver I find it very interesting that we've got this giant triangle that's been forming for the last few years and just a few weeks ago it looked like we're finally breaking out and then we came back into the triangle and so here we are again I'll go back to the week you know we broke out here a couple weeks ago and then failure so we'll see what we need is one big week silver to break higher gold to break higher and the miners will absolutely follow you know the miners have been underperforming but they also are coiling up um the market hasn't paid that much attention to them if this happens and I believe it will um we we're going to see these miners start to move so that's that's gold let's take a quick look at long-term bonds TLT all right so here's TLT on the weekly chart TLT has been absolutely obliterated here is the monthly chart lost over 50% of its value actually fell more than stocks fell during the housing crisis and yields went from basically zero or you or at least on t- bills and you know well under 1% on the 10 year they went to 5% on the 10 year and this was a bit of a capitulation move I I believe it was a capitulation at least a near-term capitulation we were getting all kinds of calls and people were very concerned and we'll admit we were caught a little bit surprised by how fast this fell we we hedged the best we could with options and we held on to the position now if we go to the daily chart you'll see just how much this has moved the 10year went from 5% here to you know 3.9 or something here I haven't looked at it in the last day or two but below 4% so it's been a straight up move on the daily chart in this Channel and we've actually uh let half the position go back a few days ago because we had an in the money call and we frankly expect a pullback we're very bullish on long-term bonds longterm in fact I wouldn't be surprised to see TLT go 20% higher from here at least 120 to 130 maybe but I think it's very likely that yields uh come back towards 45 or so and that would be maybe TLT 90 to 92 you know I believe we're probably going to get a pullback there's a lot of bulls in this trade now and it's been a straight up move so we're still in the position but half at the moment likely add back if we get a pullback um and so you know certainly would take profits if you haven't taken any in this space um because it's not going to be it's not going to be straight up okay all right so what I hear you saying guys is um probably for the you know foreseeable shortterm uh likelihood is the markets are going to keep going higher um you are worried the higher they go of of a pullback risk here um in uh gold specifically this this could be the inflection point right this could be that that long awaited you know multi- multi-year uh breakout moment that folks have been looking for and again if if in uh liquidity and and momentum and everything continue to bring everything higher from here this could finally be what gold needed to to break out and if it does that'll ignite the mining sector so I know you're not saying that's definitely what's going to happen but I can I can see it in your eyes that you're you're you're looking at this you know with some degree of eagerness to see if this is the moment um with bonds love to see love to see it yeah and with bonds you expect higher prices as well but probably after some sort of pullback given how rapidly they've moved uh in the in the relatively near future agre all right well we're going to have to end it there um this has been a longer than normal uh video with Michael and you guys and it's the weekend I want to let people you know get back to their weekend chores uh if they need to get them done uh real quick just in wrapping up folks um if you'd like to see Michael come back on this program in early 2024 and give us an update on what he sees uh with his liquidity Outlook at that point in time uh please let us know by hitting that like button then clicking on the red subscribe button below as well as that little bell icon right next to it and just a reminder while this channel is still new the growth in our subscribers really does make a difference in getting the YouTube algorithm to pick us up and give us love so please hit that subscribe button it's totally free speaking of subscribing if you haven't done so yet consider subscribing to my new substack that's at Adam tag. substack docomo information about all the content and and the goings on here at the new thoughtful Money Channel and the premium subscribers um who get in at a very very low price it's just like eight bucks a month right now um get my Adams notes which are my detailed sort of Cliff note summary to all the interviews that I've done but but especially this one with Michael how so to get that go to substack um if you are thinking about subscribing to the premium service do it now because the price is increasing at the end of the year and if you do it now you'll get grandfathered in at the the low price for as long as you remain a subscriber so want folks to know about that um and then wrapping up folks um if you um one of the questions I wanted to talk with Michael about that I didn't get a chance to was his on housing and how liquidity you know might impact the the housing market um I just recorded uh a very just released a very detailed interview on housing with Lance Lambert and so if you've got some more stamina left in you after watching this video I'll put up a link to Lance right here John and Mike great week as always thanks so much for joining me everybody else thanks so much for watching thank thank you Adam have a great day and Merry Christmas to everybody I think it's Christmas Eve as you're watching this excellent thank you again Adam and we look forward to seeing you and your viewers next week

Channel: Adam Taggart | Thoughtful Money

Views: 80,924

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Id: Cw4oPNBpC8w

Length: 109min 1sec (6541 seconds)

Published: Sun Dec 24 2023