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Money Is Leaving Financial Markets

VRIC Media Jul 3, 2026

Summary

Strong global growth is draining liquidity out of financial markets into the real economy, tightening conditions without central bank action.

Because all money must be somewhere, capital absorbed by the real economy is, by definition, absent from financial markets.

Michael Howell argues the result is a paradox: strong growth becomes a drag on financial market performance.

Michael Howell's takeaways

  • Top takeaway Howell argues that liquidity is shifting out of financial markets into the real economy, so financial markets are tightening even though central banks are not applying the brakes.
  • He says all his indicators point to a fairly strong world economy, and that as of July 2026 this strong real economy is crowding out the financial markets.
  • He explains the mechanism simply: all money must be somewhere, so funds absorbed by the real economy are no longer available inside financial markets.
  • He concludes that strong growth is paradoxically a drag on financial market performance rather than a support for it.