Howell: Global Liquidity Momentum Has Peaked, Best Window for Stocks Has Passed
N.R. Finch
CrossBorder Capital founder Michael Howell says global liquidity momentum peaked in Q4 last year and has been decelerating since — the tailwind that powered equities is fading, and his cycle model places markets in a late-cycle phase dominated by commodities, with the next rotation toward cash and long-duration bonds approaching.
Liquidity momentum peaked — what does that actually mean?
Howell tracks the rate of change in liquidity, not the absolute level. This means → even if total global liquidity remains high, once the acceleration turns negative, the relative ranking of asset returns reshapes.
In his 65-month global liquidity cycle model, momentum bottomed in late 2022, climbed through 2023, peaked in Q4 last year, and has been slowing since.
In plain terms = the pool is still full, but the tap is closing — and markets react first to the change in flow speed, not the water level.
Is there a fixed rotation script? Where do equities sit?
Howell overlays a fixed asset-rotation sequence onto the liquidity cycle: rising momentum → equities lead; cycle peak → commodities top out; falling momentum → cash outperforms; cycle trough → long-duration bonds shine.
By this script, equities' best window was the rising-momentum phase — and that phase is over. Markets have entered what he calls the "speculative phase": strong commodities, a bear-flattening yield curve — both consistent with his model.
The commodity trade has been running for roughly twelve to fifteen months, a late-cycle signature. This means → the next switch point — commodities to cash, then cash to long-duration bonds — is approaching.
What underpins the 65-month cycle?
Howell first fitted the curve in 2000 using Fourier analysis — a mathematical method that decomposes complex fluctuations into regular cycles — and has never re-estimated the parameters since.
The Foundation for the Study of Cycles independently fed its own data into a separate algorithm and arrived at exactly the same 65-month figure, providing cross-institutional validation.
CrossBorder Capital now tracks roughly 90 financial systems, collecting about 30 data series per country, and upgraded its refresh rate to daily nine months ago.
Howell and Pal both follow liquidity — why do they disagree?
Global Macro Investor founder Raoul Pal built a similar base logic in his "Everything Code" framework: a global liquidity cycle at a comparable frequency drives all risk assets.
The key divergence is operational: Pal, under a long-term currency-debasement narrative, stays structurally long risk assets; Howell's near-term read is that momentum is fading and now is not the time to add risk.
In plain terms = both run the same engine. Pal keeps it in high gear; Howell is downshifting. This reflects how the same analytical toolkit can yield opposite tactical calls depending on the time horizon.
Content is for reference only, not financial advice.