Liquidity Fueled This Bull Market. The Cycle Is Turning | Why Michael Howell is Watching Bonds

Global liquidity cycles dictate financial market performance, functioning primarily as a mechanism for debt refinancing rather than new capital formation. Michael Howell, founder of GL Index and Cross Border Capital, identifies a robust 65-month liquidity cycle currently transitioning from a speculative phase toward turbulence. As global debt levels grow exponentially, the capacity of financial balance sheets to roll over this debt becomes the primary driver of systemic risk. While AI-driven earnings have provided a late-cycle boost to technology stocks, broader market fragility is emerging as liquidity growth slows. Investors should prioritize government bonds as a defensive measure during this cycle’s decline and consider gold as a hedge against the inevitable monetary expansion required to manage massive debt maturity walls. This shift underscores the necessity of monitoring money flows over traditional valuation metrics like P/E ratios.