#411 George Noble: Market Is Entering a Dangerous Phase

SPEAKER_1 (0:00)

When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

Julia La Roche (0:31)

Hey everyone, welcome back to another episode of The Julia La Roche Show. We have a friend of the show joining us in studio today is George Noble. He is the CIO of Noble Capital Advisors. He was also Peter Lynch's assistant back in the day. In this episode, we get George's assessment of the markets, why he thinks we are in the dangerous phase right now, where he wants to be in the stock market and the areas that he is avoiding and why he thinks that we'll see higher rates, higher energy until the market breaks and what that could look like.

We got his critique of Scott Bessent and why he thinks the Treasury Secretary should resign. I really enjoyed this in-studio appearance with George, and I hope you all enjoy this one as much as I did.

Hey, everyone. Welcome back to another in-studio episode of The Julia La Roche Show where we have a friend of the show joining us for his first time ever in studio, George Noble, CIO of Noble Capital Advisors. It's great to meet you for the first time in real life.

George Noble (1:34)

In the flesh. Great to be here.

Julia La Roche (1:36)

Great to be here.

George Noble (1:36)

Good to see you.

Julia La Roche (1:37)

Well, you've been a good friend of the show. We've had you on several times now, so always great to have somebody in studio.

I actually want to start since it's been a while, and I feel like a lot's happened since we've last had you on. Can we just get your latest update, like the big picture for you, when it comes to the markets? What's the big picture assessment for you today? Where do you see things headed in the remainder of the year?

George Noble (2:04)

So again, to use the line from, which is incorrectly attributed to Vladimir Lenin, which is sometimes decades happen, go by and nothing happens. Another time, the weeks go by and decades happen. There's a lot going on right now. Between AI, which is going from bad to worse, and I think we were bearish the last time we were together, energy and interest rates.

So there's a constellation of factors being brought to bear. It's not just one thing, there's multiple things. And you're seeing globally the cost of capital going up, the risk-free rate going up. The 10-year today, no great surprise, it's through 5% after wars did its thing. And that by itself puts pressure on markets. I'm surprised, frankly, markets haven't gone down more. I think we're in a very dangerous phase of the market right now.

I haven't been calling for a bear market, but we're getting closer. For me, the real call has been our offer rotation, not recession. So the reflationary assets, you know, energy, precious metals, etcetera, etcetera, negative on things like consumer discretionary and technology. And I still believe that very high-conviction point of view for me.

Julia La Roche (3:16)

Okay. So R for you is for rotation, not recession. All right.

Why the rotation? Why not the recession part?

George Noble (3:25)

We're slouching towards a recession, okay? But you have to take things in sequence. People like to call the market, the S&P is going to be at 8,000, 7,000, 9,000, whatever. That's really a fool's errand in my view, because it's a market of stocks.

The indices, sound bite indices haven't really been doing much the last two or three months. But if you look beneath the surface, there's been huge dispersion. Energy stocks have been flying, gold stocks have been flying, consumer discretionary is tanking, interest sensors are tanking. For me, why the rotation? We're in a much different market environment than we were pre-COVID, post-GFC. I think Michael Howe's a good mutual friend, and his view of liquidity, and that's where the dominant influence of markets, I think he's right.

We've got this intractable deficit situation. Inflation is still sticky.

I'm not saying we're going to go as Weimar tomorrow inflation off to the races, but this idea that inflation is not going to go down to 2 percent, to me, it's just unfathomable. And so, we also have administration which is hell bent on making sure that market hangs up, stays up, and the economy does well. And so, they're not taking the necessary measures to try to get inflation under control. They have a lot of bonds to sell. That's the real problem. I mean, Julia, think about it for a second.