Michael Howell: AI Will Fuel Inflation, And Markets Aren’t Ready

Global liquidity cycles are currently shifting as capital migrates from financial markets into the real economy, signaling a late-stage market environment. Michael Howell, Managing Director at GLIndexes, highlights that while the US economy demonstrates robust growth, rising inflation and climbing bond yields exert significant pressure on asset valuations. China’s recent liquidity contraction serves as a critical headwind for the gold market, though strategic state-level gold accumulation continues to support the renminbi's international standing. Furthermore, the massive capital expenditure boom surrounding artificial intelligence acts as an inflationary force in the short term. Historical patterns in the gold-oil ratio suggest that oil prices may face upward pressure if mean reversion occurs, further complicating the Federal Reserve’s ability to manage inflation without triggering broader financial instability.