Why Macro is “Pretty Risk-On” for Equities | Tian Yang of Variant Perception

The current market environment remains in a "risk-on" regime, supported by stable growth and liquidity, despite recent volatility in AI-linked semiconductor stocks. While the initial narrative surrounding agentic AI has exhausted, leading to a period of potential stagnation for high-growth tech, equity markets are broadening out toward value sectors like energy and financials. Geopolitical competition, framed by the "primacy of sovereignty," drives a new reality of frequent supply-side shocks, rendering traditional defensive assets like nominal bonds less effective. China’s economic strategy prioritizes industrial and technological manufacturing over household consumption, limiting the potential for a consumer-led recovery. Tactical models like the Log Periodic Power Law (LPPL) suggest that while extreme crowding has subsided, investors should focus on portfolio ballast and tactical rebalancing rather than betting on a rapid return to previous highs in speculative tech.