The CrossBorder Capital Blog

Monetary and Fiscal Stimulus At a Peak?   Weekly balance sheet data from the World’s major Central Banks show aggregate liquidity growth slipping a tad to 16% (3m ann.). Western economies remain lacklustre, although encouragingly there are few signs of deterioration despite the recent lockdowns. Liquidity provision soared to record highs in 2020 and there is more in the pipeline for this year – we estimate some US$6tr. Recent policy actions suggest that policy makers sense this may be enough, especially when historically high fiscal provision is added to the mix. The current stability in the liquidity data reflects this stance. That said, Central Bankers have made clear in recent policy statements that they stand ready to increase liquidity provision beyond what is already in the pipeline, if needed.           See our latest published research, Weekly Global Liquidity Update 26 February 2021   For ...

Why This Is Not A Bubble!   Although we remain focussed on a potential correction in risk assets through Q2 and Q3 2021, we must stress that this is not the result of a market bubble. Bursting bubbles are bad news. Rather a less-damaging pull-back is more likely to reflect faltering liquidity. In fact, underlying valuations look moderate in our view. We acknowledge that traditional P/E multiples do appear stretched. However, P/Es are a dangerously biased tool to use at the market level and inappropriate for macro-investing. We far prefer the P/L ratio. P/L’s are not stretched but we fear that the strongly rebounding real economy will soon pull liquidity (L) away from risk assets.     See our latest published research, Global View - Why This Is Not A Bubble! – February 2021   For further information, or to change user options, please contact us at crossbordercapital@liquidity.com          ...

A Two-Speed World: Asia and the Rest   Weekly balance sheet data from the World’s major Central Banks show aggregate liquidity growth broadly stable at 18.6% (3m ann.). Beneath the stable headline number, there is a divergence with Asian liquidity growth significantly slower than elsewhere. The People’s Bank of China is now level-pegging with the Bank of Japan at just over 1% (3m ann.). Meanwhile, US Fed liquidity expansion has picked up, and, together with the ECB, continues to outpace other majors (30.3% and 39.2%, respectively). This divergence reflects a similar gap in economic activity. China is outpacing other major economies by some margin, and Japan’s export sector is benefitting. Elsewhere, growth is lacklustre, but there are few signs of deterioration despite the recent lockdowns.           See our latest published research, Weekly Global Liquidity Update 19 February 2021   For further informatio...

Evidence that Liquidity Injections Are Working?   Weekly balance sheet data from the World’s major Central Banks show aggregate liquidity  growth picking up to 20% (3m ann.).   The PBoC and, to a lesser degree, the Fed are behind the upward move. The ECB is still expanding at the fastest clip among the majors (nearly 40% 3m ann.), although this has been tempered. Elsewhere, liquidity growth is similar to the previous week.   Latest economic data point to weak growth and a lack of momentum, but, encouragingly, no deterioration, despite the recent lockdowns. Is this evidence that the injections are working?         See our latest published research, Weekly Global Liquidity Update 12 February 2021     For further information, or to change user options, please contact us at crossbordercapital@liquidity.com  

Emerging Market Liquidity: Second Quarter Business Boom   ·          A stronger World economy and softer US dollar in 2021 give potential for EM to perform strongly, particularly cyclical and commodity-sensitive names ·          Given the absence of major foreign money since 2012, there remains huge potential for far greater cross-border capital inflows into the Emerging Markets       See our latest published research, Emerging Markets Latest GLI™ – February 2021     For further information, or to change user options, please contact us at crossbordercapital@liquidity.com            ————————————————————————————...

Global Liquidity Latest: Global Liquidity Has Peaked   ·                 Chinese Central Bank Liquidity remains elevated at an index of 62.2. Evidence of a general monetary easing since August 2020 ·                 Recent acceleration in Eurozone credit growth explained by the ECB’s credit guarantee programme. This essentially creates a single currency with nineteen printing presses       See our latest published research, Global Liquidity Latest –   February 2021   For further information, or to change user options, please contact us at crossbordercapital@liquidity.com              —————————————————...

Are Central Bankers Eyeing a Vaccine-Driven V-Shaped Recovery?   Weekly balance sheet data from the World’s major Central Banks show aggregate liquidity growth edging lower (latest 18.2% 3m ann.). The slowdown is most noticeable in the Fed data, and more gradual in the Bank of Japan and Bank of England numbers. The exception is the ECB, where liquidity growth has picked up since New Year. Latest economic data show major economies broadly stable, except in the case of the Eurozone where sentiment indicators point to further weakness. Recent policy statements make clear that Central Bankers are erring on the side of caution.  Yet, monetary policy is on hold and policy liquidity growth, whilst still relatively strong, is past its peak.       See our latest published research, Weekly Global Liquidity Update 5 February 2021   For further information, or to change user options, please contact us at crossbordercapital@liquidity....