“Liquidity” is a concept with two meanings investors need to know. The first, basically, is at the individual security level: the ability to trade a stock or a bond or an option at a given price on a given day. Call it “market liquidity.” The second is more complex, and it involves the functioning of the entire global financial system. Call it “funding liquidity.” “So,” as Michael Howell explains it, “if market liquidity starts to deteriorate, it's really a heads up to the fact that funding liquidity is already going down significantly. And that's very much the case at the moment.” Is it a crisis? Well, the CrossBorder Capital Global Liquidity Index has fallen from levels around 80 to barely 20. Howell, the founder of CrossBorder Capital, joins Ash Bennington to talk about what the Federal Reserve has already done to tighten financial conditions, when it might turn from its hawkish stance, and how markets will respond to a continuing liquidity squeeze. Recorded on August 15th, 2022.