Speaker 1: Bloomberg Audio Studios, podcasts, radio news, joining.
Speaker 2: Us in studio George Noble, who changed investment.
Speaker 1: There's no other way to put it. This oddity came out.
Speaker 2: Years ago Fidelity Overseas Fun and was a juggernaut for
Speaker 2: a decade working with mister Lynchett Fidelity.
Speaker 1: He is with Noble Capital Advies US. I got eight
Speaker 1: ways to go.
Speaker 2: I'm going to ask one look back question and then
Speaker 2: we got to look at the present tense right now.
Speaker 1: Because you're fired up out on.
Speaker 2: LinkedIn and Twitter, everybody needs to read one hundred and
Speaker 2: twenty eight pages John Kenneth Gelbraith lived almost to a
Speaker 2: green span one hundred A short history of financial euphoria.
Speaker 1: It's an exquisite jewel. I put it out on Twitter
Speaker 1: and LinkedIn.
Speaker 2: What's the character of our financial euphoria right now?
Speaker 1: A la JK. Gilbraith.
Speaker 3: Great to be here. There's really nothing new under the sun,
Speaker 3: and that's his human nature. Doesn't change. The characters changed,
Speaker 3: names change, but it's fear and greed. We can go
Speaker 3: back to the South Sea bubble, Dutch Tulip bulb mania.
Speaker 3: History repeats itself over and over again.
Speaker 4: Put AI into that context here because people have been
Speaker 4: positioning AI other than electricity, There's been nothing more important
Speaker 4: than AI. How do you think about just this whole
Speaker 4: concept writ large.
Speaker 3: I'm not bearish on AI per se. I'm sure we're
Speaker 3: all going to use it. Many of us are using
Speaker 3: it already. The question is what's the ROI on the AI.
Speaker 3: It starts out the way these bubbles all start. There's
Speaker 3: a kernel of truth. It captures the imagination of the individual,
Speaker 3: whether it's a Southsea bubble, or it's Dutch tulip bulbs,
Speaker 3: or it's dot com, which I've lived through. Ye, And
Speaker 3: it starts out it's a good idea, But what happens
Speaker 3: is the price changes immeasurably. And the best definition I've
Speaker 3: actually heard of a bubble. There are many definitions. The
Speaker 3: best one I've heard is something that changes human behavior,
Speaker 3: that people do things that they wouldn't do otherwise, and
Speaker 3: whether it's because of fomo, fear of missing out or otherwise.
Speaker 3: And I think that's kind of where we are with
Speaker 3: with AI. I mean, I'm happy to change my mind,
Speaker 3: but show me the money. Where's the ROI? And I
Speaker 3: don't see it, and I don't see it coming either.
Speaker 4: It doesn't seem to be deterring capital from flowing to
Speaker 4: that business. We've seen extraordinary amounts of equity raised. Now
Speaker 4: we're seeing tech companies and everything thought about the bond
Speaker 4: market raising tens of billions of dollars in investment grade
Speaker 4: bond market. We've got a Korean company listing its ad
Speaker 4: rs today here in the US. I mean that I've
Speaker 4: been on Global Wall Street for thirty years. I've never
Speaker 4: seen this amount of money flow.
Speaker 3: The things I read the same sources you do. I
Speaker 3: file that under my category on X of things you
Speaker 3: don't see at a bottom. We've seen this movie before
Speaker 3: with Japanese subtitles, Housing subtitles, Tech subtitles. Go back to
Speaker 3: dot com. I actually think this is much worse than
Speaker 3: dot Com simply because the sums involved by that much greater.
Speaker 2: This is really important because you know, the fossil sitting
Speaker 2: around the table.
Speaker 1: You know, we talked about Dana for a couple of
Speaker 1: days ago.
Speaker 2: I remember being in meetings at sixty State Street dot
Speaker 2: com and all that. What's the distinction right now versus
Speaker 2: ninety eight ninety.
Speaker 1: Nine and then what we enjoyed in.
Speaker 3: One again, I want to elaborate on the sheer magnitude
Speaker 3: of this. Julian Garrett of Micro Macro Strategic Partners in
Speaker 3: the UK Aerodyite Economists of the in many years has
Speaker 3: made a calculation that this bubble, this malinvestment is seventeen
Speaker 3: times seventeen times what we saw in the air of
Speaker 3: dot com and what's allied to that. What's really important
Speaker 3: is the sums involved are so much larger relative to
Speaker 3: the real economy. The fallout from this could really be
Speaker 3: much more significant.
Speaker 2: For Global Wall Street. On this Friday, A real treat
Speaker 2: George Noble with us of course definitive infidelity with mister
Speaker 2: Lynch a few years ago at is Noble Capital Advisors.
Speaker 2: He's been on fire out on LinkedIn and Twitter with
Speaker 2: his criticism of the moment at him.
Speaker 1: Paul Sweety with George Nobook again.
Speaker 4: Another definitive part in this market was the I feel
Speaker 4: of a company called SpaceX.
Speaker 1: Oh my thought. I thought you'd never ask what do
Speaker 1: you make of that?
Speaker 4: I mean, I can't imagine setting in a fidelity office
Speaker 4: conference room, and you know the bankers bring elon muskin
Speaker 4: to make this pitch. I would have loved to have
Speaker 4: been a fly on the wall. What do you make
Speaker 4: of that.
Speaker 3: History shows that buying companies that over ten times revenues
Speaker 3: usually ends very badly. We all recall Scott McNeely famously
Speaker 3: in some microsystems. What happens when you have to, when
Speaker 3: your return is gonna be you buy number ten x.
Speaker 3: This is one hundred and twenty times revenues. And you
Speaker 3: know it's even if you look at companies and projection,
Speaker 3: I mean they're already borrowing money. You look at the
Speaker 3: companies projection, they'll be cashful negative for years to come.
Speaker 3: And here's the worst part of SpaceX, which I don't
Speaker 3: want to engage in the captain obvious thinking. But the
Speaker 3: thing everyone should consider, and that is the staggered lockup
Speaker 3: that we're now, the unlocked that we're looking at. Okay,
Speaker 3: starting from next month, when the quarterly earnings come out,
Speaker 3: you're twenty percent of this shares come unlocked shortly thereafter,
Speaker 3: and then there's a whole series of unlocked seven percent
Speaker 3: every twenty or thirty days. By December, one hundred percent
Speaker 3: of the shares will be freely floating. The point of
Speaker 3: the important point that investors should understand is even without
Speaker 3: any change in the fundamentals, when you go from a
Speaker 3: five percent float to one hundred percent float.
Speaker 2: George, in the old days when you would take a
Speaker 2: two hour lunch at Lockovers and you use the whole.
Speaker 1: Court there off the bar.
Speaker 2: But in the old days, when a company went public,
Speaker 2: it like took its shares public and maybe they had
Speaker 2: a little stub that kept private. Now we're unloading five
Speaker 2: percent of the public. To me, it's manipulative. Should regulators
Speaker 2: step in and get the initial public offering market back.
Speaker 1: To a normal segmentation one hundred percent.
Speaker 3: It's not a question of what's legal or illegal.
Speaker 1: It's just not right.
Speaker 3: Society is not well served by allowing this. Grandma's four
Speaker 3: oh one k is an exitent liquidity for this manipulation.
Speaker 3: And I think I think the regulators are sleep at
Speaker 3: the wheel. They only usually jump in action after the
Speaker 3: carpinases occurred.
Speaker 2: Guenstler who sat in this chair recently, and I said
Speaker 2: to Gary Gensler, I said, okay, you let bitcoin in.
Speaker 2: I get it, it's a free market and all that,
Speaker 2: But what do you say to retail that enjoyed bitdog
Speaker 2: at one ten and it's now down at sixty SpaceX, Okay,
Speaker 2: it's back to one fifty. I'm watching the debt of
Speaker 2: SpaceX to be blunt, it can't find a bid.
Speaker 3: A lie to that, Tom, I promise you that once
Speaker 3: it goes under the offering price and the unlocked shares
Speaker 3: come to market, the insiders who were in at a tenth
Speaker 3: of the current price, they're going to hit the bid
Speaker 3: so fat that it's gonna make it well.
Speaker 1: I got to make some news here.
Speaker 2: To be honest, Fidelity was way out front christer Munts
Speaker 2: on this. Would you recommend that Abbie Johnson and the
Speaker 2: team sell their SpaceX?
Speaker 3: They know the company better than I do. Let's just
Speaker 3: say if I was handed a portfolio, if Philly were
Speaker 3: to rehire me, I would sell it right away.
Speaker 4: Elon Musk, you have to. I'm not sure we've seen
Speaker 4: anything like this in terms of the value that gets
Speaker 4: described to mister Musk relative to the earnings, relative to
Speaker 4: the cashlow. We've seen it year for years in Tesla,
Speaker 4: and you look that Tesla analysts, the auto analysts all
Speaker 4: have holds their cells on it and they've been wrong.
Speaker 4: And the tech anisi filou all been saying, just buy it.
Speaker 4: It's Elon, It's Elon, It's it's autonomous robots and all
Speaker 4: that kind of stuff. Have you seen that in the
Speaker 4: past where one individual can have such an influence on valuation.
Speaker 3: No, I think Tesla's probably the biggest misallocation of capital
Speaker 3: at scale in the history of stock markets, perhaps only
Speaker 3: surpassed by SpaceX. I was one of those wrong analysts.
Speaker 3: I'm a fossil. I happen to be the auto analyst
Speaker 3: for Peter Lynch in nineteen eighty one. We went to
Speaker 3: Detroit to visit Chrysler, Ford and GM, so I know
Speaker 3: of what I speak. Fundamental work has not guided one
Speaker 3: in the case of Tesla. I think, however, though he's
Speaker 3: bitten off more than he can chew. Now everyone's speculating
Speaker 3: whether or not SpaceX may merge take over Tesla. I
Speaker 3: have no special insight on that, but if I had
Speaker 3: to gamble, if I had to speculate, and if I
Speaker 3: ever speculate, I would say it's a reasonable speculation.
Speaker 2: Let me reintroduce here worldwide, including overseas and across America.
Speaker 2: George Noble with us for years, definitive in the business
Speaker 2: of over seas investment and fidelity thrilledies in our studio
Speaker 2: today controversial to say the least on the euphoria at hand.
Speaker 4: Paul Sweene, So, George, where do you see opportunity these days?
Speaker 4: I'm sure you look at various markets, various geographies.
Speaker 1: Where do you see value these days?
Speaker 3: Well, it's a market of stocks. As Peter J. Always
Speaker 3: used to say, don't try to call the market. I
Speaker 3: think they're outstanding opportunities right now. On energy, I'm actually
Speaker 3: quite concerned about the energy picture. I think we're sleepwalking
Speaker 3: into the biggest energy this location in history. You look
Speaker 3: at the disparity between the divergence between the financial market
Speaker 3: for oil and the physical market for oil. We're between
Speaker 3: a rock and a hard place. The energy stocks. Crude
Speaker 3: is sold off significantly the last few weeks, as have
Speaker 3: the energy stocks. You know. I think the risk award
Speaker 3: is very appealing. There's very little downside and potentially a
Speaker 3: lot of upside. I like reflation. Generally speaking, gold stocks
Speaker 3: I think are a huge buy right here SSRM as
Speaker 3: an example, seven times earnings, not cash flow, seven times earnings, right, So,
Speaker 3: gold stocks, energy stocks, other commodity names, like some of
Speaker 3: the copper copper names, they're all they're all very interesting
Speaker 3: to me.
Speaker 4: Part of this AI story to the extent people are
Speaker 4: looking for other ways to buy it other than the chips.
Speaker 4: Has been some of the picks and shovels. One of
Speaker 4: them has been energy. How are we going to power
Speaker 4: all these data centers that are being built in everybody's backyard.
Speaker 4: I mean, they can stick a little nuclear reactors next
Speaker 4: to each one. How are we going to do that?
Speaker 1: It took thermodynamics exactly.
Speaker 3: Well, the one thing you shouldn't do is buy oklow,
Speaker 3: which is one of the biggest frauds out there on
Speaker 3: the market right now.
Speaker 1: But that's a whole nother story. Ok L.
Speaker 3: We've been short that for a year. You know. The
Speaker 3: problem with it was some of the names you mentioned,
Speaker 3: some of the utility stocks with the AI trade comes unstuck,
Speaker 3: and I believe it will. I think a lot of
Speaker 3: those derivative plays are going to take on water cru
Speaker 3: It's a little different so in sight, a different orbit,
Speaker 3: but a lot of the derivative power plays I think
Speaker 3: are going to have a big problem. One last joke
Speaker 3: of it was great lines, someone you used a few
Speaker 3: weeks ago and me. They talk about, hell, you know,
Speaker 3: you got to buy the picks and shovels. They said, yea, Well,
Speaker 3: what happens to buy the picks and shovels and there's
Speaker 3: no gold in them?
Speaker 1: Hills Georgia.
Speaker 2: I got to get two things in here that I
Speaker 2: think our audience is really interested in.
Speaker 1: And overseas in the huge.
Speaker 2: Ups and some of the challenges you had a t
Speaker 2: ton as well. Are you correlated on overseas to what
Speaker 2: the dollar does? Like do you have to have a
Speaker 2: week dollar to make overseas work?
Speaker 3: No, you don't, but it's a very good question. You
Speaker 3: don't need a week or dollar. What you need to
Speaker 3: keep in mind is the economic cycles across different geographies
Speaker 3: varies enormously, and that's what you're trying to anticipate. You
Speaker 3: need to have somewhat of a top down perspective, not
Speaker 3: just bottom investing Internationally. However, one thing I will say
Speaker 3: the dirty secret they don't tell you anymore. Way back
Speaker 3: when when I was a young and in the early
Speaker 3: days at Fidelity, it was much less correlation between the markets. Now,
Speaker 3: given the increasing interlinkages between markets, the correlation is a
Speaker 3: much higher.
Speaker 1: I like to joke, why do.
Speaker 3: I need to be up at ten o'clock at night
Speaker 3: trading the Japanese mark? I get up at five am
Speaker 3: to watch the London market. I can lose money just
Speaker 3: as well between nine thirty a m. At four pm
Speaker 3: Eastern time, and I can get and I can get a.
Speaker 2: Jobs padhground on that, and of course on private credit.
Speaker 2: I know you've been in the dump known as the
Speaker 2: Saint Regis. The old Saint Regis in Beijing was an
Speaker 2: absolute dump, folks. I'm sitting there in the nineties listening
Speaker 2: to CEO squared stuff and bankers giddy and the whole thing.
Speaker 2: Are we doing the reducs there on private credit and
Speaker 2: private equity where there's some shadows to say.
Speaker 3: The least, you couldn't have said it better. My father
Speaker 3: always used to like to say, there's two ways of
Speaker 3: learning things, either by precept or by experience. It's much
Speaker 3: or more economical. But with my precept, we're all human.
Speaker 3: We all think that this is brand new. It's Dayevo
Speaker 3: all over again, as Yogi would say.
Speaker 4: So how about just real quick US versus non US?
Speaker 4: How do you think about that these days? Because there
Speaker 4: was a flight out of the US when the tariffs
Speaker 4: sure started happening.
Speaker 3: Sure you know, the US we had a more than
Speaker 3: a decade of app performance largely in the back of
Speaker 3: the fact that US had much superior Ernie's growth was
Speaker 3: justified largely led by tech. Okay, but now that when
Speaker 3: this global reflation growth is not as scarce as it was,
Speaker 3: so the rest of the world, rarely speaking, starts to do,
Speaker 3: the gap closes, and in fact that Ernie's growth and
Speaker 3: a lot of the farm markets exceeds what you see
Speaker 3: in the US right now in particular, but not all.
Speaker 3: It's rather a heterogeneous group. So I think Japan's interesting.
Speaker 3: I think selected emerging markets like Brazil and China, but
Speaker 3: you can't color them all the same brush.
Speaker 2: I got to ask one final question, and I'm doing
Speaker 2: this for ninety two nine.
Speaker 1: Good morning up in Boston.
Speaker 2: Thrill that you're with us from Mount Cataden down to
Speaker 2: the National Hotel on Black Island.
Speaker 1: George Noble, there was a girl.
Speaker 2: That was just sort of at Fidelity. She came out
Speaker 2: of Hobart Williams Smith, have a name named Johnson, and
Speaker 2: Fidelity was there when you were there and after you
Speaker 2: were there. What Abby Johnson has done at Fidelity is
Speaker 2: a miracle. I mean, are you surprised or shocked at
Speaker 2: what her leadership has done? There after the turmoil going
Speaker 2: from dad to daughter.
Speaker 3: It really has been outstanding, you know it. Phail is
Speaker 3: a wonderful company, is I think it was Garrett Morrison
Speaker 3: Saturday Night Live used to say Fidelity bad any bety
Speaker 3: good to me. It's extremely well run company. Ned was fantastic.
Speaker 3: She's done a fantastic job as well. When I joined
Speaker 3: FIDELI you're gonna laugh.
Speaker 1: Last thing.
Speaker 3: I'll say they had eight billion under management. I think
Speaker 3: only three billion inequities. Fidelity, believe it or not, only
Speaker 3: hired two people a year back in nineteen eighty one.
Speaker 3: They came through the seventies, they lost money some years,
Speaker 3: they had the layoffs, and now they're eighteen trillion.
Speaker 1: This is the final line.
Speaker 3: I think it comes from Ned Johnson himself with something
Speaker 3: like never confused brains with a bull market.
Speaker 1: So we'll do that. You can leave right now. George Noble,
Speaker 1: thank you so much. Definitive at Fidelity Overseas.
Speaker 2: Can't say enough about Look for him out on LinkedIn
Speaker 2: alone and on Twitter.
Speaker 1: His caution of the disease times of Euphoria