#400 Michael Howell: The Liquidity Cycle Has Turned, Low Quality Returns for Stocks, The Real Driver Behind Gold

<p>Michael Howell, CEO of CrossBorder Capital, an investment advisory firm, and author of Capital Wars, returns to explain why the global liquidity cycle peaked in late Q3/early Q4 of last year — and what that means for the rest of 2026. His core argument: money is fungible but finite, and a booming real economy is now pulling liquidity <em>out</em> of financial assets, which compresses P/E multiples even as earnings look fine. That puts us in what he calls the speculation phase: rising bond yields, strong commodities, pressured crypto, and low-quality equity returns where index gains mask widespread underperformance. He also pushes back hard on the popular &quot;debasement trade&quot; explanation for gold, arguing the real driver is the People&#39;s Bank of China injecting liquidity to devalue the yuan internally while holding it steady externally — with Chinese retail locked out of crypto and the Shanghai Gold Exchange now setting the marginal price. On the bond side, he lays out how the Treasury is quietly monetizing through front-end issuance and buybacks — private-sector QE under Treasury direction — a strategy that works until it doesn&#39;t, with Japan&#39;s move from 50bps to nearly 3% as the cautionary tale. His bottom line: range-bound Wall Street, no bonds, gold and silver on weakness, and watch commodities for the first sign the boom is ending.</p><p><br></p><p><br></p><p>Thank you to our partners </p><p><strong>Augusta Precious Metals </strong>— To learn more, visit <a href="https://juliabuysgold.com/" target="_blank">https://juliabuysgold.com/</a> or text “Julia&quot; to 35052</p><p><strong>Monetary Metals</strong> - learn more at https://www.monetary-metals.com/julia/</p><p><br></p><p>Links:  </p><p>Website: http://www.crossbordercapital.com/ </p><p>Twitter/X https://x.com/crossbordercap</p><p>Substack: https://capitalwars.substack.com/ </p><p>Book: https://www.amazon.com/Capital-Wars-Rise-Global-Liquidity/dp/3030392902</p><p><br></p><p><br></p><p>0:00 The call: range-bound market, own gold</p><p>0:20 Welcome back, Michael Howell</p><p>1:19 Two pools of money: markets vs. the real economy</p><p>2:30 The liquidity cycle has peaked</p><p>3:20 What this phase looks like</p><p>4:48 Why a booming economy is bad for stocks</p><p>5:22 The P/E multiple is where liquidity shows up</p><p>6:34 Late cycle, explained</p><p>7:38 Augusta Precious Metals</p><p>9:29 Global liquidity vs. the world business cycle</p><p>10:45 Atlanta Fed nowcast near 6%</p><p>11:54 The K-shaped economy is global</p><p>12:45 Monetary inflation vs. Main Street inflation</p><p>14:45 Speculation now, turbulence next</p><p>15:15 The cycle map</p><p>17:55 Monetary Metals</p><p>19:49 Gold: it isn&#39;t the debasement trade</p><p>20:30 It&#39;s China: PBOC liquidity</p><p>22:15 Why gold and not crypto</p><p>23:14 Inside the PBOC balance sheet</p><p>25:00 Yuan gold and the 27,000 line</p><p>26:15 Bond yields track nominal GDP</p><p>27:40 NGDP at 7-8% vs. a 4.7% ten-year</p><p>28:18 Treasury QE: funding at the front end</p><p>30:20 Who&#39;s actually buying the debt?</p><p>30:51 The beach ball under water</p><p>32:35 The two-year note leads the Fed</p><p>34:30 The 2022 analogue</p><p>36:00 Why MOVE matters more than VIX</p><p>37:08 Treasury buybacks and the volatility cap</p><p>38:30 Margin debt and the 2026 range call</p><p>39:31 Parting thoughts: commodities as the warning</p><p>40:30 Gold, silver, and the ratio to watch</p>