Asset Markets Will be ‘Short of Cash’ in 2026, Warns Liquidity Guru Michael Howell – Here’s His Outlook

Global liquidity analyst Michael Howell says he believes asset markets will face cash shortages in 2026, even as the Federal Reserve ends quantitative tightening (QT).

In a new interview with the Monetary Matters Network, the founder of CrossBorder Capital says he’s cautious despite upcoming liquidity injections.

Analysts project the Fed will add about $20 billion monthly in Treasury purchases starting 2026, injecting roughly $240 billion annually.

Although Howell calls this “not QE QE” – he warns it will likely be insufficient to boost asset prices.

“The sort of figures that we’re projecting for next year, that money is going to be absorbed out of financial markets and drained into the real economy. So asset markets are still going to be short of cash.”

Howell says liquidity from the Fed will fall short because bank reserves remain below his estimated adequate level of $3.3 trillion, versus Fed’s $2.7 trillion target.

And although the Treasury’s bill issuance shifts liquidity to the real economy, Howell says the move risks inflation without fully supporting assets.

Howell remains cautious, believing global liquidity cycles are approaching a peak and signaling a shift to range-bound stocks. In a new note to investors, he says people should know it’s late in the game.

“While these actions are a welcome positive step and may slow the decline of the global liquidity cycle, they are not enough to prevent its upcoming peak.

We conclude that the Fed’s new stance is more consistent with a rangebound stock market, but investors should remain cautious and alert. It is late cycle.”

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