Bubbles Pop Rather Than Crack: 3-Minutes MLIV

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00:00Probably more excited though by the fact that gold is through 4,000. Mark, what's next?

00:07I am excited by gold. I'm excited about what's happening on the stock side. I'm also excited

00:11what's happening on the French side at the moment. I think there's a little bit of nervousness

00:16creeping into the market. Not on the gold side, clearly. That's one of the most consensus

00:21trades out there. Anecdotally, I'm hiring at the moment. Whenever I interview any candidate,

00:26their top trade seems to be bullish gold. So it's definitely completely consensus out there.

00:31But I get why. We're seeing a debasement trade. We're seeing an underminement of fiat currency.

00:37We're seeing an attack on institutional credibility. I can see why gold is such a popular trade.

00:43When it's so consensus, it's a little bit worrying, but it's hard to fight against it.

00:47On the flip side, what I think is probably where there is nervousness in markets is back to the idea

00:52of fiscal concerns. I think we've had France and Japan in the radar this week. France will stay on

00:59the radar today, very much so. Yes, so fiscal concerns. We're also concerned about the tech

01:05sector. At least in the last 24 hours, Mark, we've rediscovered our concerns around valuation,

01:11around ballooning AI spending, the circularity of some of the deals being announced. Is there

01:16anything new in this? Any cracks that you think could sort of linger in the market psyche?

01:24It's a very hard one. I think it's very tempting for people for the last few months to go,

01:31hey, these stocks are overvalued and it's a bubble. And I think we all have been talking about that for

01:36months and we know that. Just where we are on this bubble? Where are we on this parabola of kind

01:42of gains? I am still worried that we're kind of at the, I won't say early, but we're on the way up.

01:48Now, on the way up in bubbles, you sometimes get increasing volatility. That doesn't mean it's a

01:52straight line-up. But I'm not sure that we're going to see the catalyst just yet to pop this bubble.

01:58I think we only see that when we start getting realisation that we just won't get the revenues to

02:03justify the incredible capex. And that might be a quarter to our way. But maybe what we're seeing on the

02:08sentiment change, what we're seeing in terms of what Oracle said overnight, what we're seeing in terms of

02:13the circularity stories of all these big AI-themed companies all investing in each other, is that

02:18we're going into the more volatile stage. So it's the latter stage of the bubble, perhaps. It's the

02:22beginning of the end rather than the end of the beginning. Have I got that the right way around?

02:27But, Mark, as stocks start to stutter, as gold tops $4,000 a troy ounce, you say there could be a case for a year-end

02:35dollar rally? Yeah, very much so. And I think this is one of the things, even gold is the most

02:43consensus trade, and I completely get why. I am loathe to jump on the gold bandwagon here at these

02:49levels because, obviously, the two biggest dynamics going into the kind of marginal gold value are real

02:55yields and the dollar. And I do think the dollar is ripe for a bit of a year-end rally, mainly because

03:01its main competitors around the world are all being undermined. That's the euro, that's the yen,

03:06Canadian dollar. So all these key currencies, there's fresh bearish reasons. So the dollar will rally by

03:11default rather than its own strengths.