Michael Howell: Markets On “Nervous Knife-Edge Equilibrium" As Global Liquidity Momentum Has Peaked

The global liquidity cycle and its impact on financial markets are analyzed with Michael Howell of Capital Wars. Howell argues that global liquidity is peaking, which will pressure risk assets. He dismisses the narrative that Chinese buying explains the surge in gold prices, attributing it instead to specific actions by China, which is decoupling from the global liquidity cycle. Howell believes the Fed's balance sheet is more critical than interest rates, cautioning against Kevin Warsh's hawkish stance on reducing it. He suggests the US market is in speculation, while China is in an early rebound phase. Howell advises investors to rotate towards defensive sectors like utilities and consumer staples, holding more cash, and considering mid-duration bonds, with China being the only convincing bull market this year.