The last time Tian Yang, founder of Variant Perception, appeared on Forward Guidance in August 2022, he gave viewers a welltimed 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 riskoff assets like bonds will perform well. Yang expects a “blowout” 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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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 Setup 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