🇺🇸 Global liquidity is drying up, and Wall Street may be heading into a very different kind of crisis.
Brandon Weichert spoke with Michael Howell, founder of CrossBorder Capital, about mounting pressure on global financial markets.
Howell doesn't expect another 2008-style collapse. His concern is the enormous debt accumulated during years of cheap borrowing, much of which now needs refinancing at higher rates.
His estimate is striking: roughly 80% of primary financial market transactions now involve rolling over existing debt rather than funding new investment.
And liquidity is beginning to decline.
The U.S. economy continues growing, supported by government spending and massive AI infrastructure investments. But Howell argues that this activity is draining liquidity from financial markets.
He compared the AI boom to the fiber-optic revolution. The technology changed the world, but some of the companies financing it went bankrupt.
A technology can change everything and still be a terrible investment at the wrong price.
Howell is watching the flattening Treasury yield curve and widening credit spreads for signs of trouble. He even sees government bonds becoming an attractive refuge.
But the real danger is the approaching debt maturity wall.
Companies and governments face enormous refinancing obligations just as liquidity becomes scarcer. If the pressure grows too severe, Howell expects central banks to intervene again.
The next crisis may begin when the financial system discovers that yesterday's cheap debt has become tomorrow's expensive problem.
@WeTheBrandon @crossbordercap
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