WEBVTT - Markets Have Been Ridiculously Overpriced for Weeks, Gartman Says 0:00:09.720 --> 0:00:12.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keen with 0:00:13.560 --> 0:00:16.520 David Gura. Daily we bring you insight from the best 0:00:16.560 --> 0:00:22.279 of economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:22.320 --> 0:00:27.000 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 0:00:27.320 --> 0:00:33.680 on the Bloomberg. We begin this morning with Alan Ruskin. 0:00:33.720 --> 0:00:35.640 He's the global head of G ten Epic Strategy of 0:00:35.680 --> 0:00:37.720 Deutsche Bank. Joins us here in our Bloomberger and leven 0:00:37.760 --> 0:00:39.800 three of studios in New York. Let's start with the 0:00:39.800 --> 0:00:41.600 news out of Spain, right of northern Spain. I suppose 0:00:41.640 --> 0:00:44.000 I should say what does this mean for for the 0:00:44.040 --> 0:00:46.160 economy of the region more generally? There are a number 0:00:46.200 --> 0:00:49.440 of other places, not unlike Cataloni. They're probably watching what's 0:00:49.479 --> 0:00:53.600 what's unfolding there, watching this dynamic between uh Spain and Catalonia. 0:00:53.880 --> 0:00:55.680 What are the lessons to be learned, both politically and 0:00:55.760 --> 0:00:57.880 economically from what we're seeing happened there. Well, I think 0:00:57.880 --> 0:01:01.960 it's some danger that would you of is some resources 0:01:01.960 --> 0:01:06.160 get pulled out of Catalonia to other regions in Spain, 0:01:06.560 --> 0:01:10.440 and you know, net net, those other regions probably benefit 0:01:10.520 --> 0:01:16.280 to some degree. Catalonia loses art. The uncertainty overall probably 0:01:16.319 --> 0:01:20.120 means that they're a Spain tends to lose art to 0:01:20.200 --> 0:01:22.360 some extent, and I think you're seeing that in some 0:01:22.440 --> 0:01:24.639 of the downward revisions to growth. But for the moment 0:01:24.720 --> 0:01:27.399 at least, I think you know, those downward revisions are 0:01:27.520 --> 0:01:30.160 are quite modest. Does it say anything to you about 0:01:30.200 --> 0:01:33.760 the future of the integrity of the European experiment? Does 0:01:33.760 --> 0:01:36.280 it give you concern about where things might be added? Yeah, 0:01:36.280 --> 0:01:40.000 I think there's a wider problem here as such. If 0:01:40.440 --> 0:01:48.040 you know some smaller regions can pull apart and you 0:01:48.080 --> 0:01:53.480 can actually see independence from from regional elements in Spain, 0:01:53.800 --> 0:01:56.520 you would think that could happen anywhere. And I think 0:01:56.560 --> 0:01:59.240 it's indicative of what you're seeing in in in a 0:01:59.280 --> 0:02:03.640 way world, which is, if these smaller regions can fall 0:02:03.800 --> 0:02:07.600 under a defense umbrella and can adopt a currency as 0:02:07.640 --> 0:02:12.240 such as stable currency, then why not have some independence 0:02:12.400 --> 0:02:15.720 in the senses? I think? So, you know, the issue 0:02:15.760 --> 0:02:18.440 you have here is it must be made clear to 0:02:18.560 --> 0:02:23.040 some extent that there costs to independence as well. Otherwise 0:02:23.080 --> 0:02:25.080 I think you're going to see more of this rather 0:02:25.120 --> 0:02:26.799 than less of it. Explain to us why we're not 0:02:26.840 --> 0:02:29.360 seeing wilder swings in the euro as a result of this, 0:02:29.639 --> 0:02:31.839 as a result of you know, what's been a many 0:02:31.880 --> 0:02:34.440 weeks long ordeal here again in northern Spain. But I 0:02:34.440 --> 0:02:36.520 think we've just you know, come off the French election, 0:02:36.600 --> 0:02:38.560 where I think there was a genuine perception that this 0:02:38.639 --> 0:02:41.840 was an existential crisis. Is the possibility that you'd have 0:02:41.880 --> 0:02:44.400 a government that would actually want to pull out of 0:02:44.440 --> 0:02:47.960 the euro um. I think on the contrary over here, 0:02:48.440 --> 0:02:52.519 it's very very likely that even if you had in 0:02:52.600 --> 0:02:56.800 the Catalonian independence, there would still be adopting the Euro. 0:02:56.960 --> 0:02:59.239 Just can't quite see them having their only independent central 0:02:59.240 --> 0:03:02.239 banking such And I think in that sense, you don't 0:03:02.320 --> 0:03:06.920 have any of these concerns about you know, past contracts 0:03:06.919 --> 0:03:10.000 effectively and will there be fulfilled, etcetera. So it's not 0:03:10.080 --> 0:03:13.680 perceived as an existential threat in a direct sense. There 0:03:13.680 --> 0:03:16.400 will be issues that relate to Spanish debt and who 0:03:16.440 --> 0:03:19.239 pays for Spanish debt, etcetera, and that would be more 0:03:19.240 --> 0:03:22.080 problematic I think, in the next downturn, But I don't 0:03:22.120 --> 0:03:24.760 think that's as problematic. Well, you know, it's as big 0:03:24.800 --> 0:03:28.920 an issue as if people feel that, uh, the contracts 0:03:29.320 --> 0:03:31.320 are not going to be on it because there's a 0:03:31.360 --> 0:03:34.320 different currency at play. What was that your takeaway were 0:03:34.360 --> 0:03:36.400 your takeaways from the annual meetings of the i m 0:03:36.440 --> 0:03:39.080 from the World Bank last week? The the outlook that 0:03:39.160 --> 0:03:42.000 was released by the IMF slightly more optimistic than it 0:03:42.040 --> 0:03:45.160 had been, projecting more growth in the global economy. Of course, 0:03:45.160 --> 0:03:47.480 there's the general condizzance of the fact that we have 0:03:47.560 --> 0:03:50.000 low inflation globally as well. What did you take away 0:03:50.000 --> 0:03:53.160 from the conversation of those of those leaders of financing 0:03:53.200 --> 0:03:55.560 the economy gathered and Watchington last week. But I think 0:03:55.560 --> 0:04:00.080 it's a quiet optimism. But beneath that, of course, you 0:04:00.080 --> 0:04:01.960 always have to worry, right, I think these guys are 0:04:02.040 --> 0:04:04.839 to some extent paid to worry and paid to look 0:04:04.880 --> 0:04:07.520 out for what could be the next crisis. Now we've 0:04:07.560 --> 0:04:11.200 really gone through a period of unbelievable stability and global growth. 0:04:11.280 --> 0:04:12.680 I mean we've you know, if you look at I 0:04:12.680 --> 0:04:15.839 think it's the i m F global growth data, we've 0:04:15.880 --> 0:04:19.960 tracked between roughly about three and three point two for 0:04:20.440 --> 0:04:24.200 five years three two thousand and sixteen. That's unbelievable in 0:04:24.320 --> 0:04:27.120 terms of lack of volatility as such, and it's not 0:04:27.279 --> 0:04:29.680 a great performance from a global growth standpoint. But it's 0:04:29.720 --> 0:04:32.440 okay as such, and now I think the perception is 0:04:32.440 --> 0:04:34.200 we're going to error on the top side of that, 0:04:34.640 --> 0:04:38.160 but that maybe there's other issues lurking in the winds 0:04:38.200 --> 0:04:40.120 as such. As I think that then that's that's I 0:04:40.120 --> 0:04:44.119 think what concerns central bankers. Good morning, I want listening. 0:04:45.040 --> 0:04:47.400 I'm sorry, just got in. I can I just say, 0:04:47.480 --> 0:04:49.920 David is a starting point. I love four and five 0:04:50.000 --> 0:04:54.000 pm baseball starts. Yeah, well wrapped up at what that's great. 0:04:54.480 --> 0:04:58.560 The kids children actually watched the baseball game. AILCE hosts 0:04:58.560 --> 0:05:02.679 as well. Yeah, us to talk about today, Ellen Roskin? 0:05:02.760 --> 0:05:06.960 Where this with Deutsche Bank? And I guess one place 0:05:07.040 --> 0:05:09.400 we can start. Alan, lovely to have you here through 0:05:09.440 --> 0:05:12.279 the half hour. It's just a dollar call. It was 0:05:12.320 --> 0:05:16.960 the great missed call of the summer. Why was that? 0:05:17.040 --> 0:05:21.600 Why did Why was everybody long? The dollar? Consensus long? Dollar? Oops? 0:05:21.720 --> 0:05:24.120 It went the other way. Well, I think we've been 0:05:24.160 --> 0:05:26.599 on a trend for a while. It's on and it's 0:05:26.760 --> 0:05:31.320 very difficult to call turning points. And part of the 0:05:31.400 --> 0:05:34.360 turning point I think came through two big sources. One 0:05:34.440 --> 0:05:38.240 was the Trump reflation trade, which had given the dollar 0:05:38.560 --> 0:05:40.800 a boost right at the end of last year that 0:05:41.000 --> 0:05:44.000 that one flagged and flagged quite quite heavily as such. 0:05:44.360 --> 0:05:46.320 And then it came at the same time as the 0:05:46.400 --> 0:05:51.840 French elections tended to remove European political uncertainty to some extent, 0:05:51.920 --> 0:05:53.760 so that put the bit on Europe and put a 0:05:53.800 --> 0:05:56.359 bit on Europe, and then I think you saw a 0:05:56.440 --> 0:05:59.040 lot of investors feel, wait a minute, we were really 0:05:59.120 --> 0:06:03.800 underweight yours and you've had an asset allocation story as 0:06:03.800 --> 0:06:06.120 well into Europe. And then you and I agree that 0:06:06.160 --> 0:06:08.480 technical analysis can keep you out of trouble. You may 0:06:08.480 --> 0:06:10.080 not make any money with it, but it's good at 0:06:10.480 --> 0:06:13.240 not losing money. We've had I guess we've had a 0:06:13.279 --> 0:06:17.680 breakthrough the downtrend. But as you mentioned earlier, there's a 0:06:17.720 --> 0:06:22.479 fragility to this dollar rally. It's not for real, is it. Yes. 0:06:22.520 --> 0:06:25.039 I think it's a problem we have right now in 0:06:25.040 --> 0:06:28.080 the currency world is that we love divergence, right so 0:06:28.120 --> 0:06:31.960 we love the idea that um fed's going to tighten 0:06:32.200 --> 0:06:34.440 and some other central bank's going to ease. That's a 0:06:34.560 --> 0:06:38.280 relatively easy trade. But right now, actually the euro looks okay. 0:06:38.320 --> 0:06:41.080 As I mentioned earlier, I think is under acid allocation, 0:06:41.640 --> 0:06:44.240 long term acid allocation, and that I think will be 0:06:44.279 --> 0:06:47.760 helpful for the euro going forward. And the European Central 0:06:47.760 --> 0:06:51.159 Bank is tightening, albeit it's really effectively just tapering its 0:06:51.160 --> 0:06:54.839 past quear such, but it's we are in a world 0:06:54.960 --> 0:06:59.279 now where central banks in general thinking of tightening. So 0:06:59.320 --> 0:07:00.920 this is we've got a horse race here and they go, 0:07:01.520 --> 0:07:03.560 but they're all running in the same direction, which makes 0:07:03.560 --> 0:07:06.039 a little bit more confusing for us. How cheap is 0:07:06.040 --> 0:07:09.040 the the yeen at this point? Is there value on 0:07:09.080 --> 0:07:11.240 the yeen as you see it right now? There's value 0:07:11.280 --> 0:07:13.239 on a long term basis, and so much as pretty 0:07:13.280 --> 0:07:16.520 much all our longer term metrics suggest it's cheap by 0:07:16.560 --> 0:07:20.720 in the order of saw so PPP purchasing power parity 0:07:20.760 --> 0:07:24.480 indicators suggests the low nineties rather than in a twelve, 0:07:24.720 --> 0:07:28.760 So there's there's a big difference there. And historically when 0:07:28.800 --> 0:07:33.640 you do see divergences of over that does suggest you 0:07:33.720 --> 0:07:36.240 need to go in the opposite direction. It's time to 0:07:36.280 --> 0:07:38.040 buy yen. But I think it's a little too early, 0:07:38.480 --> 0:07:41.200 the cause too early, because I think right now it's 0:07:41.320 --> 0:07:44.880 essentially been driven by US treasuries and the US tenure 0:07:44.920 --> 0:07:47.840 heel you we We confuse that a little bit. We 0:07:47.960 --> 0:07:50.960 pretend we're playing Dolly Yen. Yeah, but we're actually really 0:07:51.000 --> 0:07:53.440 trading the U S tenure heeled, and I think the 0:07:53.520 --> 0:07:55.760 U S tenure heeled on balance is going to move 0:07:55.880 --> 0:07:58.160 highron heeled. I want to ask you the money questions 0:07:58.160 --> 0:08:00.680 just to explain your strong yarn means that yet No. 0:08:00.800 --> 0:08:03.080 One twelve goes down to one hundred or ninety or 0:08:03.080 --> 0:08:06.800 whatever goes to a lower statistic p p P. Can 0:08:06.840 --> 0:08:10.800 guys on the street make money off of p PP analysis? 0:08:10.840 --> 0:08:14.440 I mean this goes ages ago to Kassal of eighteen 0:08:14.480 --> 0:08:18.040 and even before that. Can you make money and a 0:08:18.120 --> 0:08:22.880 p p P analysis or is that just too sixty feet? Um? Yeah, no, 0:08:23.000 --> 0:08:25.600 it might be Highland might be even more rarefied to 0:08:25.680 --> 0:08:28.440 some extent in terms of trying to make money, because look, 0:08:28.520 --> 0:08:30.440 I think you can. You're gonna cross have a p 0:08:30.440 --> 0:08:33.560 p P maybe once every five years exactly, but I 0:08:33.600 --> 0:08:36.599 think you do want to be very alert to extremes 0:08:37.120 --> 0:08:41.680 relative to when you're suggesting. Is a decent democad in 0:08:41.760 --> 0:08:44.319 terms of extremes for old G ten currencies. Actually, this 0:08:44.360 --> 0:08:46.960 is why we do surveillance, folks. You just had a 0:08:47.040 --> 0:08:51.719 clinic on what you do within the set of observations. 0:08:51.720 --> 0:08:54.319 You have to make a set up to get to 0:08:54.360 --> 0:08:56.360 a trade. Whether your trade is two days, I mean 0:08:56.440 --> 0:08:59.280 Ruskin is trading over two hour period. But whether it's 0:08:59.280 --> 0:09:02.840 two hours of two days or two years, there's there's 0:09:02.880 --> 0:09:05.080 a mix here of things, and you've got to be 0:09:05.160 --> 0:09:08.440 sure you're looking at something like P P P over 0:09:08.480 --> 0:09:13.120 the appropriate time frame and amplitude. Here end of the lecture, 0:09:13.200 --> 0:09:16.280 Alan rescued with Deutsche Bank will continue. David Girl will 0:09:16.280 --> 0:09:20.240 try to do something less esoteric than that. David lead 0:09:20.280 --> 0:09:22.800 it off here, but first Abby sends in a really 0:09:22.840 --> 0:09:25.439 smart tweet about what do we mean when we mean 0:09:25.559 --> 0:09:30.400 long dollar. That's that's a really really smart question, and 0:09:30.520 --> 0:09:34.840 that with the dollar is the global currency. You can 0:09:34.880 --> 0:09:38.079 look at it versus many different pairs, or you can 0:09:38.120 --> 0:09:41.679 look at it on a trade weighted basis. Is well 0:09:42.320 --> 0:09:45.280 is taking trade weighted which can be like ten countries 0:09:45.360 --> 0:09:48.040 or twenty seven countries, whatever it is, plus the Euro. 0:09:48.760 --> 0:09:51.480 There are indexes that allow us to look at the 0:09:51.559 --> 0:09:56.319 dollar discreetly. The classic index is the d X Y, 0:09:56.400 --> 0:09:59.040 which we quote, and there's a new index of Bloomberg 0:09:59.040 --> 0:10:01.280 Dollar Index which on your Bloomberg is b B d 0:10:01.440 --> 0:10:04.160 x Y, which is actually really good math. So when 0:10:04.200 --> 0:10:08.439 we say long dollar, that's strong dollar. David is usually 0:10:08.480 --> 0:10:12.840 based off one of those blended in disease that bring 0:10:12.880 --> 0:10:16.080 in all the different currency pairs. Very good. No one 0:10:16.160 --> 0:10:23.280 drove off the road, Ruskin Doll. He's here from Dutch 0:10:23.360 --> 0:10:24.719 back of course, and Allen I wanted to ask. We 0:10:24.760 --> 0:10:27.200 just heard from Chris Kirkham about the parlor game about 0:10:27.240 --> 0:10:28.480 who's going to lead the Fed. Here. We're going to 0:10:28.559 --> 0:10:31.079 get a decision from the president, he says by November 0:10:31.120 --> 0:10:33.280 the third, when he leaves on for this trip to Asia. 0:10:34.080 --> 0:10:35.760 How does the market price that in? We hear that 0:10:35.840 --> 0:10:37.360 John Taylor is in the lead this week, it was 0:10:37.400 --> 0:10:39.280 Kevin Warsh last week. There's still a lot of movement 0:10:39.280 --> 0:10:41.839 among the ranks of these five candidates. The president, his 0:10:42.160 --> 0:10:43.800 interviewer is going to interview. I think he sits down 0:10:43.800 --> 0:10:46.760 with Janet Ye in the FED chair today. How is 0:10:46.800 --> 0:10:50.480 the market processing what may or may not happen here? David, 0:10:50.520 --> 0:10:54.080 It's very difficult for the market process this because we're 0:10:54.120 --> 0:11:00.000 seeing the indicators of who's the favorite things like predict 0:11:00.040 --> 0:11:04.880 to a one one example, very very flighty in terms 0:11:04.880 --> 0:11:08.280 of responding very much to the next headliners. So if 0:11:08.320 --> 0:11:10.480 you took that at face value and say, the market's 0:11:10.520 --> 0:11:13.320 expectations of who's going to be the next chair is 0:11:13.360 --> 0:11:18.560 just flipping around. And I think there's a sense that 0:11:19.559 --> 0:11:26.199 right now Powell is in the forefront, Yellen's certainly in 0:11:26.240 --> 0:11:29.240 the running and on the rise perhaps, and I think 0:11:29.760 --> 0:11:32.640 beyond that, Kevin Walsh is perceived to be in decline 0:11:32.720 --> 0:11:34.840 and John Taylor is on the rise as well. But 0:11:34.960 --> 0:11:38.439 that is, you know, really based off the last few 0:11:39.240 --> 0:11:43.720 Bloomberg headlines. How much does it does it matter after 0:11:43.880 --> 0:11:47.559 somebody dealing with currencies? How much does the appointment of 0:11:47.559 --> 0:11:50.600 a FED term matter in the near term? I think this, this, 0:11:50.600 --> 0:11:52.680 this is one of the matters a lot. Yes, I think, 0:11:52.720 --> 0:11:56.040 you know, you've had a few changes which matter a lot. 0:11:56.120 --> 0:12:00.720 I think Vulka coming in, actually green Span following Volka, 0:12:00.840 --> 0:12:04.160 those who are potential shifts in regime very relevant for 0:12:04.400 --> 0:12:07.600 you know today Black Monday really because that transition was 0:12:07.640 --> 0:12:11.640 part of the Black Monday story. I think the handover 0:12:11.679 --> 0:12:14.439 from Greenspan to Banankee and Banankee to yell And was 0:12:14.520 --> 0:12:17.200 much more benign. I think I think the sense was 0:12:17.240 --> 0:12:21.520 that the frameworks would essentially stay unchanged. It depends now 0:12:21.640 --> 0:12:23.920 who the next FT chair is. If you do have 0:12:23.960 --> 0:12:25.800 someone like Taylor, and if you have someone like more 0:12:25.960 --> 0:12:31.720 warsh or maybe cone Um, then the prospect is that 0:12:31.800 --> 0:12:35.679 actually there's some regime change. If we do shift towards 0:12:35.679 --> 0:12:39.400 a more rules based FED, that's going to be extremely interesting. 0:12:39.880 --> 0:12:42.640 The market right now is taking that as a sign 0:12:42.679 --> 0:12:44.520 that in the short term at least, the FED would 0:12:44.520 --> 0:12:48.120 be more hawkish. In the long term, who knows, um. 0:12:48.160 --> 0:12:50.960 I would say this, it's not that simple in terms 0:12:50.960 --> 0:12:53.560 of market reaction, because what will happen is if you 0:12:53.600 --> 0:12:57.600 get a more hawkish pick for the FED, the equity 0:12:57.600 --> 0:13:01.319 market will probably go down to the point where bonds 0:13:01.440 --> 0:13:03.640 might even rally. Really, so you've got to be careful 0:13:03.679 --> 0:13:05.920 here in a sense. So in fact, the yield curving 0:13:05.960 --> 0:13:08.160 general is going to flatten in a more hawkish pick, 0:13:08.360 --> 0:13:09.880 and it's going to steep and really on a more 0:13:09.920 --> 0:13:12.439 davish pick. And that's partly because the equity market will 0:13:12.440 --> 0:13:14.560 be the arbiter in terms of driving the bond market. 0:13:14.679 --> 0:13:17.320 We've spoken a few times since the last presidential election. 0:13:17.320 --> 0:13:19.319 I think each time I ask you how clear a 0:13:19.400 --> 0:13:22.719 sense you have of this administration's trade policy. What have 0:13:22.840 --> 0:13:25.760 we learned this week? This fourth round of NAP negotiations, 0:13:25.760 --> 0:13:28.720 taking place outside of Washington, ended with a press conference 0:13:28.760 --> 0:13:31.640 that I think could safely say it wasn't optimistic about 0:13:31.640 --> 0:13:33.240 where things are. Hadn't we have a president still talking 0:13:33.240 --> 0:13:37.720 about terminating at the n after deal. How much does 0:13:37.760 --> 0:13:40.440 that weigh on the pay so so? Um, it was 0:13:40.480 --> 0:13:43.640 weighing on the page so over the last few weeks. Absolutely, so, 0:13:43.960 --> 0:13:46.320 it's been a big deal. At the same time, I 0:13:46.320 --> 0:13:48.920 would say, don't get caught up with the short term 0:13:48.920 --> 0:13:51.920 headlines easeration. You really don't have a deal until we 0:13:51.960 --> 0:13:54.120 have a deal. I lost money last night betting on 0:13:54.160 --> 0:13:57.200 the Dodgers. It comes being I'm Hailey, Corfax told me 0:13:57.280 --> 0:14:00.160 to go along Dodgers and I got crushed. Can make 0:14:00.200 --> 0:14:02.840 it back on dollar pay? So is there a directional 0:14:02.880 --> 0:14:05.000 Deutsche Bank a way for me to make that trade back? 0:14:06.280 --> 0:14:12.600 That's not the one I would recommend everybody. Which trade? 0:14:12.720 --> 0:14:16.280 Which trade can I use for immediate alpha? Yeah? Well, look, 0:14:16.360 --> 0:14:18.720 I think you know, if you were looking in Latin America, 0:14:18.800 --> 0:14:21.440 I'd much prefer the idea that you'd go to the 0:14:21.600 --> 0:14:25.200 Brazilian real because that's you know, it's more stable, it's 0:14:25.560 --> 0:14:28.240 it's got decent healed and I think you're gonna earn 0:14:28.280 --> 0:14:32.560 your carry on long Brazilian rail versus US dollar. Yeah. 0:14:32.600 --> 0:14:35.560 And and the yen Colin of the twins put that 0:14:35.600 --> 0:14:37.800 trade in. Please if if we lose money on it, 0:14:38.080 --> 0:14:41.680 take it out of Hailey kofax is Uh Pacheck Dodgers 0:14:41.720 --> 0:14:45.080 Cubs CUB three to two over the Dodgers. Allen Ruskin, 0:14:45.200 --> 0:14:48.520 thank you so much for wisdom across assets and particularly 0:14:48.520 --> 0:14:51.880 on foreign exchange. He is with Deutsche Bank. Stay with us. 0:14:52.200 --> 0:15:08.480 This is Bloomberg. Dennis Gartman tried to buy Kansas City 0:15:08.480 --> 0:15:13.080 wheat in the depths of the crash, of honored that 0:15:13.160 --> 0:15:16.480 he would join us. Uh this morning, Uh, Dennis, I 0:15:17.120 --> 0:15:20.680 think within your beautiful essay we can go to when 0:15:20.760 --> 0:15:23.840 the shift occurred. For me, it was about two pm, 0:15:23.880 --> 0:15:27.760 maybe one thirty in the afternoon, where we took out 0:15:27.800 --> 0:15:32.360 paper tickets and started buying those of us courage and 0:15:32.720 --> 0:15:35.840 courageous enough to know the underlying economics. And we didn't 0:15:35.840 --> 0:15:38.480 know for four four days if our trades were filled. 0:15:38.680 --> 0:15:40.960 What did you do at two pm on the day 0:15:40.960 --> 0:15:46.360 of the crash? Threw up a lot of people were 0:15:46.400 --> 0:15:49.880 doing up. Yeah, it wasn't It was an incredible day, 0:15:49.880 --> 0:15:52.200 and as I was trying to explain this morning in 0:15:52.240 --> 0:15:55.080 my commentary, I knew what was going to happen. On 0:15:55.080 --> 0:15:58.200 Friday afternoon. I was with some friends from North Carolina State. 0:15:58.200 --> 0:16:00.560 We were going to a football game, and we were 0:16:00.760 --> 0:16:03.080 we checked in on our phone because our phone started ringing. 0:16:03.120 --> 0:16:06.720 The doll was down a hundred on Friday afternoon before 0:16:06.760 --> 0:16:09.120 the crash, and people don't think much about a hundred 0:16:09.160 --> 0:16:11.280 points now, but then that was the first time the 0:16:11.360 --> 0:16:13.200 doll had ever fallen by a hundred, and I was 0:16:13.240 --> 0:16:16.360 worried about what was going to happen Monday with what 0:16:16.440 --> 0:16:19.880 we now know. Who became the problem with portfolio insurance 0:16:20.320 --> 0:16:21.920 because you knew that there were going to be a 0:16:22.000 --> 0:16:24.120 huge amount of cell orders coming in. What was I 0:16:24.160 --> 0:16:27.240 doing Tuesday or Monday afternoon? Like I said, I was 0:16:27.280 --> 0:16:30.520 throwing up. It was an incredible experience, one I shall 0:16:30.520 --> 0:16:33.120 never forget, and one that's still here thirty years later. 0:16:33.680 --> 0:16:36.400 Colors how I think about everything because I'm always worried 0:16:36.400 --> 0:16:38.600 that we may have yet another one of those again. 0:16:38.720 --> 0:16:42.120 I strongly agree with that, But to carry forward here 0:16:42.200 --> 0:16:46.920 down twenty six is a bear market? Ten percent is 0:16:46.960 --> 0:16:50.960 a correction? Or with the structure of our economy and 0:16:51.000 --> 0:16:54.240 finance today, Uh, Dennis Gartman, do you have to put 0:16:54.280 --> 0:16:56.480 a new number on a bear market if it's not, 0:16:57.880 --> 0:17:00.600 if it's not eighteen percent, what's a bear mark? In 0:17:00.640 --> 0:17:05.040 two oh? I think actually that we give it much 0:17:05.080 --> 0:17:07.960 too much leeway saying that you have to be down 0:17:08.720 --> 0:17:11.840 before you constituted as a bear market. You can actually 0:17:11.880 --> 0:17:14.880 have a bear market started much earlier than that. If 0:17:14.920 --> 0:17:17.440 you have one failed to go to new highs to 0:17:17.800 --> 0:17:20.600 take out a previous low. You could have the start 0:17:20.680 --> 0:17:22.960 of a bear market if you were only down five percent. 0:17:23.000 --> 0:17:25.199 It's just a matter of how much farther down you 0:17:25.240 --> 0:17:29.360 can go once down gets started. But what's the kount 0:17:29.440 --> 0:17:31.800 What what constitutes today? I guess I'll still go with 0:17:32.680 --> 0:17:35.520 and say when we're down, the public will have become 0:17:35.560 --> 0:17:38.960 concerned that prices may go down further. I want to 0:17:39.000 --> 0:17:40.359 go back to something you just said, which is it 0:17:40.520 --> 0:17:42.639 it really shaped the way that you think about the 0:17:42.680 --> 0:17:45.280 markets and think about investing. How did it change your 0:17:45.320 --> 0:17:50.520 sense of the irrationality of markets? Prior to that time, 0:17:50.560 --> 0:17:53.800 I was a believer that markets were rational until that time, 0:17:53.840 --> 0:17:56.760 I actually did believe that markets probably could remain rational. 0:17:56.880 --> 0:17:59.800 After that time, I understood that irrationality can break out 0:17:59.800 --> 0:18:02.280 it almost any one period of time. And in the 0:18:02.320 --> 0:18:05.280 words of my my good friend Gary showing, the market 0:18:05.320 --> 0:18:09.119 can remain irrational longer than you can remain solvent, and 0:18:09.240 --> 0:18:11.399 my corollary to that, as the market will return to 0:18:11.480 --> 0:18:15.560 rationality the moment you have been rendered insolvent. Let's talk 0:18:15.600 --> 0:18:17.680 a bit about the stock market here. We've been mentioning 0:18:17.680 --> 0:18:19.919 this throughout the show. That we hit twenty three thousand 0:18:19.960 --> 0:18:23.119 on the Dow yesterday. You're right, this morning prices may 0:18:23.119 --> 0:18:27.280 be egregiously, preposterously, dangerously, unimaginably overextended to the upside, but 0:18:27.320 --> 0:18:30.800 they may become even more preposterously, even more dangerously, even 0:18:30.800 --> 0:18:34.120 more unimaginably overextended to the upside before they turn lower. 0:18:34.160 --> 0:18:36.480 How do you react to the highest that we're seeing, Dennis, 0:18:37.720 --> 0:18:43.960 When they start bringing out the hats for the thousand, 0:18:44.720 --> 0:18:48.040 three thousands, you almost become it's as you just did. 0:18:48.320 --> 0:18:53.760 It's almost laughable. The market is ridiculously overpriced. It has 0:18:53.840 --> 0:18:56.679 been for several weeks, it has been for several months. 0:18:57.680 --> 0:19:00.680 Perhaps today, perhaps yesterday was a high who knows, only 0:19:00.680 --> 0:19:03.720 time shall tell, but it does look a little precarious 0:19:03.720 --> 0:19:06.280 this morning. I guess some of the weakness can be 0:19:06.280 --> 0:19:10.600 attributed to the promised extent in Spain and Catalonia. But 0:19:11.480 --> 0:19:15.159 here here, nonetheless, we're down and we're not bouncing today, 0:19:15.320 --> 0:19:19.400 and that is that alone is concerting. Do I think 0:19:19.400 --> 0:19:21.560 that the market can make new highs? No, I really 0:19:21.600 --> 0:19:25.040 don't um but is it possible. It's possible, but I 0:19:25.040 --> 0:19:27.640 don't think it shall Debnis Garment. I spoke to Colne 0:19:27.720 --> 0:19:29.879 resident this week and went through the usual litany of 0:19:29.880 --> 0:19:33.199 optimism and some of the things pushing against it. And 0:19:33.240 --> 0:19:35.480 one thing I mentioned, I'm looking out into two thousand 0:19:35.600 --> 0:19:39.080 eighteen is on the edge of Jack Welch, the idea 0:19:39.160 --> 0:19:42.479 of we lose pricing power, and I'm frankly focusing this 0:19:42.520 --> 0:19:45.240 in where areas were at the revenue line. You've got 0:19:45.320 --> 0:19:49.000 unit dynamics and price dynamics, and there's something in the wind. 0:19:49.040 --> 0:19:53.760 There's something changed. Do you agree with that? Uh, it's 0:19:53.520 --> 0:19:56.199 it's it feels like that this morning, suddenly out of 0:19:56.240 --> 0:20:01.520 nowhere has come rather rather agreed his price weakness today 0:20:01.560 --> 0:20:04.160 could be a very important day. Let's be blunt if 0:20:04.200 --> 0:20:06.880 you don't rally. And in the past, we've had these 0:20:06.920 --> 0:20:09.000 mornings where the Dow was down a hundred, where the 0:20:09.080 --> 0:20:11.640 SMP was down fifteen, where the mask Act was down 0:20:11.680 --> 0:20:14.639 forty or fifty, and by ten thirty or eleven o'clock 0:20:15.119 --> 0:20:17.639 we were staging a rally and heading for new highs. 0:20:17.800 --> 0:20:20.760 If it doesn't do that today, the game has changed. 0:20:21.920 --> 0:20:23.440 Are you willing to put money on that? I mean, 0:20:23.440 --> 0:20:25.800 the great acclaim of Dennis Gartman is he actually shows 0:20:26.119 --> 0:20:28.720 his trades in the back. I believe Dennis in your 0:20:28.760 --> 0:20:32.360 Morning note, there's no equity trades. It's the usual gold malarkey. 0:20:32.480 --> 0:20:35.560 And you and your commodity of fixation and better North 0:20:35.600 --> 0:20:39.040 Carolina football? Are you going to institute an equity trade? 0:20:39.040 --> 0:20:40.639 We got to get out in front of this and 0:20:40.680 --> 0:20:45.399 make news at Bloomberg Surveillance. Well, actually, late yesterday afternoon, 0:20:45.440 --> 0:20:47.959 I'll find things on my own before I'll put them 0:20:47.960 --> 0:20:50.560 in the newsletter, just to test the water. And I 0:20:50.600 --> 0:20:54.600 bought a few puts yesterday afternoon, not many, just a few. 0:20:55.080 --> 0:20:57.480 I gave an order to my to the young man 0:20:57.480 --> 0:20:59.080 who works on me back home. I'm not I'm an 0:20:59.119 --> 0:21:02.280 akron this morning for an endowment committee meeting, but I 0:21:02.280 --> 0:21:04.400 gave him a note saying, if we don't rally by 0:21:04.400 --> 0:21:06.600 and buy some more puts, if we are still down 0:21:07.000 --> 0:21:09.679 by the end of the day, I'll probably officially come 0:21:09.680 --> 0:21:12.159 out tomorrow and say, let's buy some puts. Do you 0:21:12.200 --> 0:21:15.280 place your orders through MC trucks, spread and whatever the 0:21:15.400 --> 0:21:17.920 name is. I mean, do you get taken on put 0:21:17.920 --> 0:21:22.280 options like the rest of us? No? No, not really. 0:21:22.320 --> 0:21:25.200 I mean there's there's the liquidity, and the puts is 0:21:25.240 --> 0:21:28.160 really quite magnificent. So you know, I don't trade large 0:21:28.160 --> 0:21:30.520 twenty and thirty and forty lots of the time. I 0:21:30.520 --> 0:21:34.000 don't trade thousand lots, but thirty and forty you can 0:21:34.040 --> 0:21:35.639 get a good price within a penny or two of 0:21:35.680 --> 0:21:37.399 what you saw last on the screen. And for me, 0:21:37.440 --> 0:21:41.880 that's that's quote David David Doug cast just fell off 0:21:41.880 --> 0:21:45.520 his chair in Florida. He knows Gartman's starting order is 0:21:45.600 --> 0:21:51.280 five thousand. That's his odd lots. Spurious spurious allegations. Dennis, 0:21:51.480 --> 0:21:54.000 I love the I love the occasional estery in your 0:21:54.040 --> 0:21:56.200