The last time Tian Yang, founder of Variant Perception, appeared on Forward Guidance in August 2022, he gave viewers a well-timed warning that the commodity supercycle was "on hold." Now, he returns to argues that the world is well on its way to a global recession that will provide a hostile environment for risk assets. Yang shares his "equity bottom checklist" with Jack Farley to argue that equities have much more down to fall, and he explains why he thinks risk-off assets like bonds will perform well. Yang expects a "blow-out" of credit spreads and he thinks that the U.S. dollar will perform less well against other currencies than it does in a typical recession. Filmed on January 12th, 2023.
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
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Timestamps:
(00:00) Intro
(01:36) Base Case For 2023
(04:14) Where's The Recession?
(08:11) Liquidity
(18:25) Housing and Manufacturing Are Weak
(24:21) Interest Rates
(28:05) Cruve Ad
(29:08) China
(33:36) Underweight Equities (Asset Allocation Part 1)
(43:03) The Checklist For A Market Bottom
(47:19) Incredibly Rare Set-up in Gold"
(48:43) Overweight Bonds (Asset Allocation Part 2)
(55:19) Neutral On Commodities (Asset Allocation Part 3)
(01:02:26) The U.S. Dollar
(01:05:13) The Most Crowded Trade In Macro Right Now
(01:11:22) The VIX in 2023