The Market Is Giving A Bearish Signal Rarely Seen

George opens by calling the market’s current message “a huge, huge red flag” and examines a relationship that changed in October. Before October, oil prices and Treasury yields had been about 80% correlated because oil influences long-term growth and inflation expectations. In October, oil rose from start to finish while Treasury yields fell sharply, meaning some force was exerting more downward pressure on rates than higher oil prices were exerting upward pressure. He says investors must combine signals across oil, bonds, currencies, and other markets rather than label one input simply inflationary or deflationary.

George identifies last week’s technology selloff as the likely force overwhelming oil’s rate pressure. Intel fell nearly 30% on Friday, which he attributes partly to weak personal-computer demand rather than only AI concerns. He also points to Google, Amazon, and Facebook losing value and operating with negative free cash flow. Facebook, he says, announced another $95 billion equity issuance, while a potential Anthropic IPO would add still more supply. With limited capital chasing more equity, he expects prices to fall and existing shareholders to face dilution.

George argues that companies funding AI infrastructure through both debt and equity are losing access to cheap capital. Credit-default swaps are signaling rising concern about defaults, and higher borrowing costs may force companies to issue debt at still-higher rates. He asks why an investor would buy SpaceX debt at 6% if further issuance could push the yield to 8% or more. He applies the same logic to equity: Google at roughly $283 and a 14–15 earnings multiple is not necessarily cheap, especially if falling earnings cause the multiple to rise while the share price drops.

George reads a promotional segment for the free Rebel Capitalist Newsletter. It arrives twice per week, with one email explaining the key macro developments of the week and another presenting his trade idea of the week. He stresses that the ideas are for educational purposes, not investment advice, and says the newsletter is designed to provide concise, actionable information for navigating a credit cycle, possible crash, or reset. He tells viewers they can sign up without providing a credit card through the link in the description.

George returns to the 10-year Treasury, noting that its yield had recently reached about 5.33% before collapsing below 5%, to roughly 4.89%, even as oil remained near $100 a barrel. Because nominal GDP is above 6%, he says a sub-5% 10-year yield is the market “screaming disinflation” over the next year or two. He insists yields must be compared with nominal GDP, not merely with historical rate levels; in the 1990s, when nominal GDP was similar, 10-year yields were often above 7% and sometimes above 8%.

George cites Marvell’s reported $115 billion acquisition of Lumentum, financed entirely with stock, as resembling the 1999 dot-com bubble, when richly valued tech companies bought businesses with equity because they lacked cash. He says corporate issuance could surge from roughly $200 billion in recent equity issuance to $600 billion or even close to $1 trillion when IPOs and hyperscaler funding are included, exceeding the roughly $400 billion historical high. If stock and bond markets both shut companies out, AI capital spending would have to slow, layoffs like Microsoft’s would reduce aggregate demand, and recession could follow.