Yesterday we were joined on Talking Markets by George Noble, a 44 year market veteran. George has traded through a ton of booms and busts, and geopolitical turmoil, so getting his insight on the current environment was invaluable…
Thank you , , , , and many others for tuning in live on Substack…!
“Nobody Knows Nothing”
“One of the things I’ve learned is ‘fade the hot takes,’” George said of the current, fast-moving environment. “As screenwriter William Goldman said, ‘nobody knows nothing.’”
“Everyone loves narrative,” he said. “And the narrative is constantly shifting. Everyone has stories, and it’s so hard to stick to your process, but you have to have a process.”
He continued: “It’s become a national sport… Before that, it was all about the tariffs. Nobody knows. Not even Trump knows. He’s changing his mind every other day.”
Social media, he added, doesn’t help. “Especially if you get caught up in the world of Twitter… People were epidemiologists and they were shipping experts that became tariff experts and now nuclear experts. It doesn’t stop.”
STONKS
George said the up moves this year have been largely driven by positioning and sentiment, not fundamentals. “Came into the year pretty cautious,” he said, invoking technical analyst Tom McClellan’s comparison between the current setup and the early 1980s when “the market ran up in anticipation of Reagan’s election. And then it went up a little bit more and then promptly sold off.”
George described a similar pattern playing out now, where “the traveling’s better than the arriving.”
More recently, he argued, two big uncertainties (trade and war) began to resolve, or at least became clearer. “First, you had the tariff thing… Trump has been basically negotiating in public. I don’t think the market’s really paying any attention to his proclamations anymore. And then we had the whole Israel situation, the Iran situation.”
The response from institutions and retail traders also caught his eye. “People got beared up on the narrative of it’s the end of the world. And then things changed. And retail just kept buying relentlessly. And it was institutions that got caught out.”
When Safe Havens Don’t Rally
More revealing than the stock market’s resilience, George said, was the behavior of the bond and currency markets in the face of escalating conflict. “You look at how little bond yields fell and how little the dollar rose,” he said. “US Treasuries and US dollars should be safe havens when that sort of thing happens… If the dollar and bonds are not going to rally under those conditions, to me, that’s a tell.”
GOLD
“Is gold going to go up this week?” George said. “Probably not.” But for longer-term investors, he sees gold as one of the few rational hedges.
“There’s a bull market in gold and gold bears,” he said. “Everyone’s coming out of the woodwork just ‘cause the RSI rolled over and it’s broken trend for 72 hours.”
But “gold has kicked the daylights out of the S&P and it's kicked the daylights out of bonds,” he said. As for gold equities, he said: “This is a particularly good time for gold equities because of the operating leverage… costs are well under control… the jaws of profitability are opening and the companies have been blowing away numbers.”
The Apple Problem
“I think Apple is a walking disaster,” George said yesterday. “They’re getting hit by tariffs and they’re losing market share in China.”
But it’s not just about the headlines. “Apple went into China, they set up all their production stuff. They basically taught the Chinese how to do all the samples, assembly and production. And China basically took all that and… applied that to all their other manufacturing companies.”
He added: “Apple’s in so deep now… The supply chain is so deep. So they’re in deep. And I think they’re trapped.”
For investors, that spells trouble. “They’ve had de minimis sales growth the last few years,” he said. “If you’re a pure bottom-up guy, you would have been short the stock years ago and got your head blown off… But I’m telling you, I think the fundamentals are finally catching up with the stock.”
The Great Rotation
“People are so over-allocated to US assets, dollar-denominated assets,” Georg said. “The US is about 25% of global GDP, but it’s 70% of equities.”
“I think some of the foreign markets have more scope for monetary expansion… more scope for fiscal expansion,” he said. “There’s a big rotation going on, a global rebalancing away from the US toward other markets.”
What Next?
Georg said he thinks the US fiscal trajectory is unsustainable. “We are going to have a soft default,” he said. “We’re just going to devalue the debt like we always do. And the best way to express that is long gold versus Treasuries.”
He’s not rooting for collapse—but he’s preparing for consequences. “If we had some fiscal rectitude… interest rates at a level that were mildly appropriate or restrictive… some monetary discipline, we’d have a different picture,” he said. “Right now, it’s nowhere in sight.”
Asked whether the US has monetary discipline right now, he didn’t hesitate: “Absolutely not.”
Enjoy,
Maggie
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.
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