medium convictionactive · updated 2026-08-15T00:00:00.000Z
65-month global liquidity cycle has rolled over → everything-bubble bust risk → 2027 rebound
Howell's CrossBorder global-liquidity index has peaked and is more than halfway through the down-cycle; the bottom is a mid-to-late-2027 event, not a 2026 event. The everything bubble is still running on liquidity that has slipped central-bank control; after every bubble a bust. China PBoC liquidity is the gold driver (yuan internal devaluation), out of phase with the US.
The chain
1
Global liquidity (money flowing through world financial markets) is the key driver of asset markets; the 65-month cycle has already peaked and is more than halfway through the down-cycle.
michael-howell in 2026-08-15-macro-voices-macrovoices-545-michael-howell-warsh-vs-the: "Global liquidity is the key driver of asset markets. Money drives markets, basically. And that's really our thesis."
michael-howell in 2026-08-15-macro-voices-macrovoices-545-michael-howell-warsh-vs-the: "This everything bubble will inevitably come to an end and you're starting to see signs that liquidity is rolling over. And therefore we've got to accept the fact that after every bubble comes a bust."
2
The liquidity-cycle bottom is unlikely inside six months and is much more likely a mid-to-late-2027 event; an earlier concertina rebound is possible but unlikely.
michael-howell in 2026-08-15-macro-voices-macrovoices-545-michael-howell-warsh-vs-the: "The liquidity cycle per se is unlikely to bottom within the next six months. It's much more likely to be a 2027 event. And if I had to venture a time, I would say sometime around the middle to later in 2027."
3
The everything bubble is still being fueled by liquidity that may have been triggered by CB easing but is now running out of their control; China is out of phase (PBoC liquidity correlated with gold as internal yuan devaluation).
michael-howell in 2026-08-15-macro-voices-macrovoices-545-michael-howell-warsh-vs-the: "We're already seeing the asset bubble. This is the everything bubble that has been fueled by, again, more liquidity. ... it may have been originally triggered by central bank easing, but it's running now out of their control."
michael-howell in 2026-08-15-macro-voices-macrovoices-545-michael-howell-warsh-vs-the: "The gold price is going up now because of China's historic debts. And the liquidity injection that we've seen from the People's bank is all about trying to devalue the yuan internally. And that is what's driving gold up."
What would falsify this
- Step 2: Global-liquidity index bottoms in 2026 or the first half of 2027 and risk assets make a sustained new high without a bust.
- Step 3: Gold decouples from PBoC liquidity / yuan-devaluation while US liquidity is still rolling over.
Contradictions / tensions
- UNRESOLVED contradiction vs ai-housecleaning-to-structural-margin-uptrend / us-recession-resistance-regime: Yardeni says no recession through 2029 and S&P 10,000; Howell says the everything bubble ends and a bust follows a liquidity rollover. Same cycle window, opposite landing. Not adjudicated.
- Single-source cycle call (CrossBorder / Howell). The 65- vs 60-month periodicity is his own charting.
Implications
- Risk-off / lower-beta into 2027 if the cycle path holds; do not treat a 2026 liquidity bottom as the base case.
- Gold as a China-PBoC / yuan-devaluation hedge, not an Iran-war hedge (corroborates Shvets' gold-failed-as-war-hedge on disinflation-backdrop-to-policy-spike-whiplash from a different causal spine).
- Warsh-vs-markets: a cut-eager White House vs a liquidity cycle that has already rolled — fork on warsh-higher-for-longer-to-brokerage-nii-rerate, not adjudicated.
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Concepts
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