Why Macro is “Pretty Risk-On” for Equities | Tian Yang of Variant Perception
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I'm joined once again by Tian Yang, cofounder and head of research at Variant Perception. Tian, what do you think about the stock market right now, the S and P, the Nasdaq, the semiconductor stocks? They have been trading quite weekly for the past month. Do you think that this is a bottom?
So I I think time horizon matters. So on our macro risk indicators that generally looking forward more three to six months. We're still in a risk on macro regime where it sees the mix of growth, inflation policy, liquidity is broadly still supportive risk assets. In general, I think the environment is still good. Now, clearly with the kind of hype around AI, the kind of mania in Korea, there's obviously signs of excess linked specific to AI. And that's clearly why we've obviously had that bubble like price action. You had a bunch of LPPL bubble exhaustion go off in early June. We've had the co
Tell me about the LPPL exhaustion signals. Remind me what that stands for. Why did what what were the signals you got, you know, a month, two months ago about there's too much risk, too much leverage in Korea exhaustion? And also, do the signals work the other way? Are you getting bullish LPPL signals, or do they only work on the downside?
They should work both ways. LPPL stands for Log Periodic Power Law. It's our bubble and crash detection system. It's designed to get you that final OF leg of the move that typically is not obvious. It's more like after something has been moving exponentially for a while, it looks like it's stable. But then because inherently of just the way markets were forced price action, there's always that final leg. Like recently we had it on China, for example, China sold off, sold off, sold off, just kept going lower. In May, April, it looked like it was bottoming and you have a final OF leg in June. An
And are you getting LPPL exhaustions to the downside indicating bottoms in semis in NASDAQ or no, not yet?
You're getting a little bit on more the intraday. Obviously, the hourly fifteen minute, there was a bunch of those yesterday. I think that would fit into the situational awareness, the short term liquidation. But for the daily frequency, the medium term, you're not quite that yet. So I I would say it's you've gone from, like, extremely crowded on the long side to now clearly it's uncrowded, but not extremely so.
You you said agentic AI is kind of over as a growth factor of the semiconductor AI trade. Tell me about why you said that.
I think we think of investing as partially trying to understand cycles, but a lot of it is about playing the game. You've got to understand the narrative. It's like an S curve, right? Like the narrative diffuses out, a narrative starts somewhere and it diffuses out, lots of people start participating and then everybody knows it. By the time everyone knows it, we have to ask what's the next narrative. So I think the AI trade has been capitalised by multiple legs of suddenly a new narrative takes hold and it slowly bleeds out to everyone. But by the time everybody is aware of it and understands
So what's not dead money right now to you?
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