The CrossBorder Capital Blog

Global Liquidity Should Rise in 2023, But Investors Are Positioned Badly   We expect stronger Global Liquidity in 2023. Risk assets have two moving parts – liquidity and risk exposure. We are most concerned that risk exposure looks too high, particularly compared to the weakening state of the World economy. This makes equities more risky than normal at this stage of the cycle. Elsewhere, we have suggested that better opportunities lie in precious metals and corporate debt.         See our latest published research , Global View: Global Liquidity Should Rise in 2023, But Investors Are Positioned Badly – December 2022    

China and Emerging Markets Liquidity: Closer to the Bottom   ·            EM liquidity will rise strongly through 2023, because of lower US dollar and further policy ease from China   ·            Expect a progressive firming in World commodity markets through 2023         See our latest published research, China and Emerging Markets Latest GLI™ – December 2022  

2023: Asset Allocation in a Rising Liquidity World   2023 will be a challenging year for asset allocation. Although Global Liquidity looks set to expand and rate volatility should subside, the World economy faces recession and potentially very weak earnings. We use the Global Liquidity Cycle to guide our asset allocation choice. Tread carefully, but cash, gold and corporate debt look to us among the better choices. This report summarises our investment views.       See our latest published research , Global View: 2023: Asset Allocation in a Rising Liquidity World – December 2022    

  Global Liquidity Update: All Change in 2023!   ·                 We may have already passed the point of ‘maximum tightness’ in Global Liquidity. The US investment refrain for 2023 will be: “…get the US dollar down and get the (effective) Fed balance sheet up”.   ·                 A future boost to the World economy may also be underway through easier Chinese liquidity conditions. Given China’s large economic footprint, it seems likely that this will spill-over into global business activity and help to underpin commodity markets.         See our latest published research, Global Liquidity Latest – December 2022  

Has US Federal Reserve Policy Secretly Changed?   The robust economy probably ensures that US policy rates stay higher for longer. Yet, behind the scenes, policy makers may have shifted away from a more aggressive 'higher, higher' stance, accompanying by hints that QT may also be softening. Because we always focus more on the liquidity impact of Central Bank policies, right-or-wrong, this change matters.       See our latest published research , Global View: Has US Federal Reserve Policy Secretly Changed?  – December 2022    

King Dollar Unseated and China’s Yuan Rebels: Currency Volatility Comes Back in 2023   A stronger US dollar has been a feature of the 2022 bear market in risk assets. US monetary tightness and a rush of foreign capital into US safe havens have lifted the US unit. 2023 will likely see a reversal of both drivers as policy-makers clamber to underpin fragile sovereign debt markets with liquidity and so trigger a 15-20% correction in the US dollar. Yet, this fall may hide more worrying developments in China, where we figure there is potential for a larger fall in the Yuan. All-in, currency volatility is back.       See our latest published research , Global View: King Dollar Unseated and China’s Yuan Rebels: Currency Volatility Comes Back in 2023 – December 2022