Great conversation. I think understanding that global credit/liquidity flows are driving asset prices versus economic fundamentals is essential. This is evidenced by the fact that the US stock market is now worth ~200% GDP and growing. Policy makers need to deleverage massive debt burdens and monetary debasement is the tool of choice - LT bond holders should be worried.
The only thing I do not understand is why 5-6y cycle (or whatever amount of time) would be present because of the refinancing cycle, given that governements, banks and companies issue debts at almost infinite amounts of points in time and the same time with a vast array of different durations ...
It's a good point, but a similar argument applies to the link between the 9-10 year depreciation of capex and the traditional business cycle. There is a mathematical property based on difference equations that can derive this result. A more intuitive explanation is to think of debt and capex being bunched into certain periods, eg early economic booms, and then recurring based on the 5-6 year or 9-10 year cycles, respectively. We just figure that the debt refi cycle now overwhelms the capex replacement cycle.
Good discussion - Michael always gives good, timely insights. I might quibble with the idea that Bitcoin is a "hard asset." Precious metals, yes, Collectibles, yes. RE yes. BTC??? Scarce asset maybe, but not a hard one.
keep calling it a hard assets. with it's fixed supply its the hardest money out there. just compare btc and usd on 10y chart lol. no errors there, just people need to realise BTC is here to stay
It is a monetary inflation hedge, but it’s misleading to call it a hard asset because unlike gold and land, it has no intrinsic value. Its value is relative to “money.”
This was Really Really Great! This conversation made som very complicated things for me as a newbie more easy to understand. I would love for you guys to do more of these! Thanks!
Great conversation. I think understanding that global credit/liquidity flows are driving asset prices versus economic fundamentals is essential. This is evidenced by the fact that the US stock market is now worth ~200% GDP and growing. Policy makers need to deleverage massive debt burdens and monetary debasement is the tool of choice - LT bond holders should be worried.
I’ve subscribed to you both, gentlemen and there is no other way then you talk regularly in the future ! Awesome content, well done
The only thing I do not understand is why 5-6y cycle (or whatever amount of time) would be present because of the refinancing cycle, given that governements, banks and companies issue debts at almost infinite amounts of points in time and the same time with a vast array of different durations ...
It's a good point, but a similar argument applies to the link between the 9-10 year depreciation of capex and the traditional business cycle. There is a mathematical property based on difference equations that can derive this result. A more intuitive explanation is to think of debt and capex being bunched into certain periods, eg early economic booms, and then recurring based on the 5-6 year or 9-10 year cycles, respectively. We just figure that the debt refi cycle now overwhelms the capex replacement cycle.
Super content. Just bought Capital Wars. Michael, do you do Institutional / buy-side expert calls?
Hi Roland, yes we have a more thorough Institutional service. If you contact Angela ac@crossbordercapital.com, she can help
When Michael Howell shares his analysis on global funding liquidity or treasury markets I always weight his inputs heavily.
TL;DR;
Liquidity not far off, debasement to follow. Prepare accordingly- have assets that perform well in that environment (gold, bitcoin).
Good convo. Stirred me to look up even more details about RRF and related things. Useful.
Good discussion - Michael always gives good, timely insights. I might quibble with the idea that Bitcoin is a "hard asset." Precious metals, yes, Collectibles, yes. RE yes. BTC??? Scarce asset maybe, but not a hard one.
Hopefully I didn't call it a 'hard' asset. It is a monetary inflation hedge with fixed supply. It will do badly in a 'hard money' regime
keep calling it a hard assets. with it's fixed supply its the hardest money out there. just compare btc and usd on 10y chart lol. no errors there, just people need to realise BTC is here to stay
It is a monetary inflation hedge, but it’s misleading to call it a hard asset because unlike gold and land, it has no intrinsic value. Its value is relative to “money.”
Awesome interview
This was Really Really Great! This conversation made som very complicated things for me as a newbie more easy to understand. I would love for you guys to do more of these! Thanks!
This was great hope you guys will do more, you could charge sats for this content.
This is great content. Thank you. Long term, it is clear. Short term, next few months, it is still muddy to me.
Great talk. Thanks so much guys
Amazing conversation! Please chat to each other from time to time.
Awesome! James is a natural. Always listen to Michael when I have an opportunity. Please continue this series 🙏
This was just excellent. Cannot recommend enough how insightful this is about the contemporary moment in markets with respect to liquidity drivers.
Dr Howell, Please release this and future substack videos on your YouTube channel.