The Grant Williams Podcast Ep. 117 - Tian Yang

**Grant Williams** (0:10)
Before we get going, here's the bit where I remind you that nothing we discuss should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So, while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets.
You're about to listen to a very special preview edition of The Grant Williams Podcast, featuring my friend and guest, Tian Yang of Variant Perception. This conversation was built around a couple of reports they published recently, The Primacy of Sovereignty and their latest thematic, which had me scratching my head and just triggered so many thoughts in my head that I thought it was a great opportunity to get Tian Yang back on for another conversation about what those guys do. This conversation is an example of the many extraordinary discussions which I regularly engage with a series of smart, insightful and experienced people across the financial, political and business spectrums. If you'd like to become a part of this growing community of subscribers looking to gain an edge as we navigate an increasingly turbulent world, why not head over to grantwilliams.com and find out more about both my multiple podcast series and my written work, Things That Make You Go Hmmm, a monthly letter that analyzes important issues affecting the world around us and providing clarity, insight and understanding in an accessible way. Find out more at grantwilliams.com And in the meantime, on with the show.
Tian, great to see you, my friend. It's been a minute since we last saw each other.

**Tian Yang** (1:52)
Yeah, likewise. Glad to be back.

**Grant Williams** (1:54)
It's such an interesting time to be involved in the things we do and the things we talk about. I read a couple of your recent reports that you sent me recently, and it just felt like the perfect opportunity to have another conversation, because there's just so much in them that I find just deeply fascinating. And you've created this framework where you've made three comparisons, and I'll let you reveal what they are, because it's more important you do that. But the kind of thing I took away was that we're in this weird and very unusual period where we are smack bang in the middle of late macro, but we're also in early stage of proper regime shift. Not a financial regime shift, but a geopolitical and structural and maybe systemic regime shift, which is going to kind of muddy the waters in every direction possible. So with that being said, why don't I just let you lay out this from whichever starting point you want, because I kind of know the directions we're going to go in, but I'd rather you take us there rather than me trying to lead you to water and force you to drink something.

**Tian Yang** (2:58)
These days, I guess for the last couple of years as well, whenever we sit down to think about the outlook, how we want to position the portfolio, I'm reminded that the movie is everything everywhere all at once all the time. And again, we don't want to overuse that, but that's how it's felt. So I think a lot of times, we've defaulted back to relying a lot on our kind of macro risk models, right? That try to understand the causal links between growth, inflation, policy, liquidity, and always use that as an anchor. And then we are trying to then look at what the model is telling us and figure out if it makes sense, because otherwise everything is affecting everything and it's nonstop and you have all these loops. So that was essentially the context in which our macro risk model has actually been pretty risk-on since August of last year when it's felt, at the time it felt really wrong. And then over time, it's obviously stayed risk-on into January this year when suddenly it feels like very consensus to be risk-on. So one of the things we wanted to dig into was, okay, when was the last few times we had this kind of very extreme shift into risk-on behavior on our models? And are there lessons to be learned, roadmaps, analogs to today? And now what we found was that, you know, no historical period is perfect where there's elements that I think can inform how to position and think about the outlook. So I think the first one that we thought made sense was at the 2016 in terms of the cyclical economy. So this is specific to the idea of, you've had a rolling recession in certain cyclical parts of the economy. They've gone through their own kind of deleveraging down cycle.