SignalPlus Macro Analysis Special Edition: 'Tangluoism'

Regardless of geopolitical tensions, the market is decisively returning to a full risk-on mode, with the S&P 500 index approaching the 7000-point mark. Although there has been much discussion about the situation in Venezuela and the next target under the new “Tandroism” (Iceland?), it is clear that a global effort to stockpile precious metals and input raw materials is underway. In a world where free trade and strategic alliances are gradually breaking down, this creates a long-term bullish outlook for commodities. While 2025 has been a remarkable year for nearly all macro asset classes except cryptocurrencies, there is concern that the factors fueling further animal spirits in the market may already be in place. First, despite ongoing worries about dollar depreciation and capital outflows from the US market (Ha!), by the end of 2025, the 12-month rolling total of foreign investments in US stocks has hit a… record high. The notion of moving away from dollar assets can be put to rest… Foreign investors are buying US stocks at a record high scale.

Second, despite the surge in capital inflows, the put/call ratio of the S&P 500 has remained at low levels (indicating caution) as the index continues to reach new highs. Historically, rebounds in this ratio (red dots in the chart) often signal a strong increase in risk appetite in the stock market, one of which we observed at the end of last year. (Entirely thanks to Jim Paulson’s research.)

Third, we may be witnessing a significant shift in animal spirits. Recently, high-beta, low-quality, small-cap stocks, and IPOs have performed strongly, beginning to regain leadership and generate excess returns. Ultra-long-term charts suggest we might be seeing a structural breakout driven by FOMO (Fear of Missing Out)/animal spirits—could this be one of the real effects of the long-term AI supercycle and the influence of superpower mercantilism?

Fourth, technicals look promising, with the Nasdaq index seemingly poised for further upward breakthroughs.

Finally, declining volatility and correlations are another signals. As stock breadth improves, implied correlations continue to decline, and lower macro volatility is helping to push stock prices higher. Despite endless doomsday talk about rising debt and climbing Japanese government bond yields, implied volatility in fixed income has closed at multi-year lows by the end of 2025.

Regarding interest rates, the market has begun to focus on Federal Open Market Committee meetings, with several Fed officials scheduled to speak soon. Richmond Fed President Barkin is trying to strike a balance, noting a delicate equilibrium between inflation and employment; while super-dovish official Milan calls for “more than 100 basis points” of rate cuts this year, reminding everyone that until further notice, an easy monetary policy remains the basic assumption.

In cryptocurrencies, since we have held the 2024 trendline, prices have rebounded strongly to around $93,000. MSCI has decided to maintain index eligibility for digital asset trusts like MSTR, providing much-needed short-term support, though the index provider announced that they will initiate “broader consultations” on how to handle non-operating companies.

Recently, the skew of call options has improved, especially around the $100,000 level, as traders’ views on BTC have slightly turned more positive, but overall caution remains since ETF fund flows have been tepid since November. Market activity remains generally subdued, waiting for more powerful catalysts to break the persistent $87,000–$95,000 range since November. Good luck and happy trading.