The CrossBorder Capital Blog

What Drives Global Liquidity and How to Spot The Next Crisis?   This report examines the drivers of Global Liquidity from the angle of financial intermediation. It studies two components – the shadow monetary base and the collateral multiplier – and concludes that Global Liquidity likely bottomed last October and should rise gradually from its trough through 2023. Bad things always happen at low levels of liquidity. Not surprisingly, the takeovers of distressed SVB and Credit Suisse mark the low. Uncertainty still remains but we offer a simple daily stress index as one way to monitor upcoming liquidity risk.       See our latest published research , Global View: What Drives Global Liquidity and How to Spot The Next Crisis? – March 2023      

Californication – BTFP & The Death of QT   ·            QT is effectively dead in the US, evidenced by the latest Fed (BTFP) QE program brought in to support markets after the Silicon Valley Bank (SVB) demise   ·            China's People's Bank (PBoC) is employing an aggressive 'stop-go' policy: having injected RMB 1.53 trillion into China's money markets in December and RMB 900 billion in January 2023, the PBoC has tightened by RMB 884 billion (US$127 billion) in the past six weeks         See our latest published research, Global Liquidity Latest – March 2023  

China Throttles Down   China's large liquidity impetus from late-2022 has rapidly faded through March. We suspect further doses of stimulus will come, but the latest fall-off will feed through. As it does, markets will likely pull-back as cyclical and 'Risk-On' concerns build. This does not alter our longer-term view that the major stock and bond markets will be range bound in 2023. Within this framework, we continue to prefer cyclicals and still favour EM, on weakness.       See our latest published research , Global View: China Throttles Down – March 2023