The Variant Perception Podcast

This post is an excerpt from our April 7, 2024 market discussion video to VP clients. The full length, original video can be viewed here. Highlights from April 2024 Big Picture discussion: * Investors now view inflation as the “biggest tail risk”, but leading data is telling a different story, aligning more with a “mini inflation scare” scenario. We view fading fiscal stimulus as the actual greatest risk over the next 6-12 months, with upcoming April tax receipts as a key sign post. * History tells us fiscal deficits persist overtime in democratic nations, which raises long-term inflation risks. To combat these risks, the political path of least resistance is likely financial repression pending a major rise in social unrest. * Commodities and real assets are the likely winners in this environment. This creates major structural tailwinds for resource-intensive Latin American economies that remain capital scarce. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This post is an excerpt from our March 22, 2024 market discussion video to VP clients. The full length, original video can be viewed here. Highlights from the March 2024 Global Macro Trading discussion: * What's worked and we still like: short THB, short CHF, short CNH * What hasn't moved or moved against us, but we still like: short SONIA vs SOFR, AUD flatteners * Cyclical trades that could be tactically choppy: long gold / energy / commodities, long Brazil equities, long USD Links to the March and February EM/DM Leading Indicator Watch reports This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This video was originally shared with VP clients on February 4, 2024, and is also available on YouTube. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This post is an excerpt from our March 8, 2024 market discussion video to VP clients. The full length, original video can be viewed here. Highlights from the March 2024 Big Picture discussion: * The ongoing rebound in global leading growth inputs paired with the US fiscal outlook support our structural preference for commodities and real assets. * The covid-distorted inventory cycle is normalizing, shown by the closing of the ISM customer vs manufacturer inventory gap. This is a big positive development that we have been waiting for since 3Q23, and suggests we can have a classic manufacturing recovery again. * The mid-1990's disinflationary boom scenario was led by surging private investment, and while private investment has room to rise today, labor market and fiscal dynamics suggest greater inflation risk now vs the 90s. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This post is an excerpt from our February 19, 2024 market discussion video to VP clients. The full length, original video can be viewed here. Each month, we plan to have separate, more targeted market discussion calls, centered around a) big picture, top of mind macro themes b) asset allocation c) global macro trade ideas and d) ad hoc single stock discussions. Highlights from the February 2024 Asset Allocation discussion: * Fixed Income: There remains a tension between the longer-term structural outlook for higher yields (the Age of Scarcity) vs the cyclical peak in term premiums. We continue to see attractive value in MBS and TIPS and like adding exposure in the current backdrop. * Equities: In the US, we likely cannot price any less cuts from the Fed this year, given the need to price in a probability of accidents/stress later in the year. We view capital scarce sectors with high duration as the best way to capture upside from a cutting cycle while staying aligned with core structural return drivers. Globally, energy, goldminers, and LatAm are our favorite equity expressions. * Commodities: Tactical, cyclical, and structural signals have aligned to support going long real assets. Oil & gas and gold are structural winners in the Age of Scarcity. Clients can access the Desert Island and Asset Allocation dashboards using the respective links. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This video clip is courtesy of The Grant Williams Podcast and is used with permission. Investors need to be aware of when market participants are acting for reasons other than economic. Our LPPL (log periodic power law) models are one of many powerful VP tools that allow investors to better "play the game." VP CEO Tian Yang recently sat down with Grant Williams on his podcast to discuss. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

US fiscal and labor hoarding have been key supports for US growth. Under-the-hood issues of tax receipts and job openings suggest an elevated dependence on deficit spending, creating inflation upside risk. The AI investment spree has echoes of the fiber optic build-out. The productivity gains need to be weighed against an increasingly geopolitical world focused on security vs efficiency and where fiscal and monetary policy co-ordination is much more likely. China structural risks appear to be a feature, not a bug, favoring proxy plays to benefit from upside risks. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

Tian Yang, Head of Research / CEO at Variant Perception Aaran Param, CFA, Head of Asset Allocation at Variant Perception Tian and Aaran engage in a discussion where they tie together insights from recent reports and discuss Variant Perception's thought process. We hope you find value in the conversation. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

Macro themes: • US Recession Signal active + LEIs point to deep downturn in 1H23. • Inflation LEIs showing a clear rollover across most of the world (ex Japan and eurozone). • Stick with risk-off asset allocation • When to buy back into risk assets: 1) policymakers panic and ease, 2) surge in selling exhaustion buy signals, 3) upturn in LEIs + Recession Signal falls to zero + market bottoms checklist confirmation. • Fed pivot unlikely in 1H23 and do NOT expect China reflation bonanza. Equity themes: • Short candidates: cyclical capex/industrial names + bad capital cycle (software + healthcare) • Long candidates: defensives (food, tobacco, telco) + beaten up cyclicals with positive capital cycle (homebuilders) • Regional themes: OW Brazil + UW Thailand, OW Switzerland + UW Canada Fixed income themes: • US 10y fair value in recession: 1.7-1.8% • Timing is key for steepeners • EM spreads not compelling. Stick with Brazil Alternatives themes: • Commodities: still in supercycle intermission, pare back energy euphoria • Credit: avoid HY, bet on spread blowout • FX: left-hand side of dollar smile but largely priced in. Play recession pairs: short CADJPY This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit blog.variantperception.com