1 00:00:00,400 --> 00:00:02,440 Speaker 1: All right, thanks very much. Let's get to our guest, 2 00:00:02,520 --> 00:00:06,240 Speaker 1: Dennis Gartman, chairman of the University of Akron's Endowment Investment 3 00:00:06,240 --> 00:00:10,920 Speaker 1: Committee and the retired editor and publisher of the Gartman Letter. Dennis, 4 00:00:10,960 --> 00:00:14,000 Speaker 1: thanks very much for being with us. We're hearing some 5 00:00:14,120 --> 00:00:18,760 Speaker 1: debate even among those who see recession coming. They agree 6 00:00:18,760 --> 00:00:20,920 Speaker 1: on that, but some see it as short and shallow. 7 00:00:21,480 --> 00:00:24,800 Speaker 1: Others are saying it could be much deeper and longer lasting. 8 00:00:25,040 --> 00:00:27,960 Speaker 1: And I know your Barish on equities. Do you favor 9 00:00:28,040 --> 00:00:31,360 Speaker 1: the latter thesis. I tend to favor the former thesis. 10 00:00:31,360 --> 00:00:32,879 Speaker 1: I think it'll be short. I think it will be 11 00:00:33,000 --> 00:00:35,239 Speaker 1: far less dramatic than than the recession of the two 12 00:00:35,280 --> 00:00:37,280 Speaker 1: thousand and eight and nine. I think it will be 13 00:00:37,320 --> 00:00:39,360 Speaker 1: something similar to the recessions always saw in the late 14 00:00:39,400 --> 00:00:41,879 Speaker 1: sixties and early seventies. I don't think it will be 15 00:00:42,000 --> 00:00:45,080 Speaker 1: terribly severe. I think that the unemployment rate will go 16 00:00:45,080 --> 00:00:47,320 Speaker 1: to five or five and a half percent before it's done. 17 00:00:47,760 --> 00:00:51,479 Speaker 1: And the only disconcerting circumstances that I see happening is 18 00:00:51,520 --> 00:00:54,440 Speaker 1: that there will be a a rise in in in 19 00:00:54,760 --> 00:00:59,160 Speaker 1: uh job the payments in salaries and earnings that will 20 00:00:59,360 --> 00:01:02,680 Speaker 1: that will constru earnings of corporations. But I don't think 21 00:01:02,720 --> 00:01:05,319 Speaker 1: the recession is going to be terribly severe, and I 22 00:01:05,360 --> 00:01:08,120 Speaker 1: don't I'm not lying awake at night quaking that there's 23 00:01:08,120 --> 00:01:10,160 Speaker 1: going to be something similar to two thousand seven, eight 24 00:01:10,160 --> 00:01:13,080 Speaker 1: and nine. It will be demonstrably less severe than that. 25 00:01:13,720 --> 00:01:16,240 Speaker 1: And it's does that mean that the federal re is 26 00:01:16,319 --> 00:01:19,840 Speaker 1: more let's say prone, perhaps, or should I say, is 27 00:01:19,880 --> 00:01:22,400 Speaker 1: it easier for them not to make a policy mistake? 28 00:01:23,920 --> 00:01:26,320 Speaker 1: The FED always makes policy mistakes a shot, and then 29 00:01:26,400 --> 00:01:28,399 Speaker 1: they'll make another policy mistake this time. It's just a 30 00:01:28,400 --> 00:01:31,600 Speaker 1: matter how severe shall over the mistake be. I think 31 00:01:31,600 --> 00:01:33,640 Speaker 1: the overnight set funds rate gets to five and a quarter, 32 00:01:33,720 --> 00:01:35,880 Speaker 1: maybe five and a half at the terminal level, But 33 00:01:35,920 --> 00:01:37,760 Speaker 1: then the real question shall be how long shall it 34 00:01:37,800 --> 00:01:40,640 Speaker 1: be before the SAD begins to ease monetary policy? And 35 00:01:40,680 --> 00:01:42,480 Speaker 1: if I've learned anything in the forty eight years of 36 00:01:42,560 --> 00:01:46,679 Speaker 1: being involved with watching markets, in trading markets, commenting upon markets, 37 00:01:46,680 --> 00:01:49,480 Speaker 1: and watching FED policy, if I've learned one thing is 38 00:01:49,520 --> 00:01:52,120 Speaker 1: that when the FED begins to change monetary policy, when 39 00:01:52,160 --> 00:01:55,040 Speaker 1: it goes from easy too tightening, or from tightening to easing, 40 00:01:55,440 --> 00:01:58,320 Speaker 1: it takes rates much farther and makes them last much 41 00:01:58,360 --> 00:02:01,520 Speaker 1: longer than anybody, even even the most radical amongst us 42 00:02:01,520 --> 00:02:05,080 Speaker 1: at the shifting point wants to anticipate. So I think 43 00:02:05,080 --> 00:02:07,040 Speaker 1: that the FED takes the overnight FED funds right to 44 00:02:07,080 --> 00:02:08,959 Speaker 1: five and a quarter five and a half and I 45 00:02:09,240 --> 00:02:13,560 Speaker 1: and we may well get there in mide but I 46 00:02:13,600 --> 00:02:17,079 Speaker 1: think it could be before they even consider at a 47 00:02:17,160 --> 00:02:20,160 Speaker 1: for a moment, easing a monetary policy. I think they'll 48 00:02:20,200 --> 00:02:21,880 Speaker 1: end up keeping the rate at that level for a 49 00:02:21,919 --> 00:02:23,799 Speaker 1: long period of time and probably surprise a lot of 50 00:02:23,840 --> 00:02:25,840 Speaker 1: people in the process of doing so. Well, that's the thing. 51 00:02:26,000 --> 00:02:28,760 Speaker 1: It depends on how you define a mistake, I suppose, 52 00:02:28,800 --> 00:02:31,280 Speaker 1: because the markets at the moment, as you say, are 53 00:02:31,320 --> 00:02:34,000 Speaker 1: seeing the FED retreating from the peak in rates next year, 54 00:02:34,040 --> 00:02:38,000 Speaker 1: whereas the chair himself is maintaining that rates will stay 55 00:02:38,280 --> 00:02:41,000 Speaker 1: higher for longer. And if you do that, if you 56 00:02:41,080 --> 00:02:43,840 Speaker 1: keep them higher for longer, and it causes a recession, 57 00:02:44,120 --> 00:02:46,799 Speaker 1: but you beat inflation, to some it would be a mistake, 58 00:02:46,840 --> 00:02:50,799 Speaker 1: to some of it would be victory. Very good, very 59 00:02:50,800 --> 00:02:52,680 Speaker 1: good statement. I think that's exactly what we should look 60 00:02:52,720 --> 00:02:54,000 Speaker 1: at it. To some of it will be a mistake, 61 00:02:54,320 --> 00:02:55,880 Speaker 1: to some it shall be victory. If you're trying to 62 00:02:55,880 --> 00:02:57,920 Speaker 1: find inflation. It will be a victorious It'll be a 63 00:02:58,000 --> 00:03:00,079 Speaker 1: victory if you're trying to stave off for set, and 64 00:03:00,200 --> 00:03:02,959 Speaker 1: it will be you'll you will lose the war. So, Dennis, 65 00:03:03,000 --> 00:03:06,440 Speaker 1: which would be the better mistake in your view? That 66 00:03:06,760 --> 00:03:09,560 Speaker 1: I think defeating inflation will be the better mistake. I 67 00:03:09,600 --> 00:03:12,960 Speaker 1: think one hates to see that anybody loses their job, 68 00:03:13,040 --> 00:03:15,160 Speaker 1: and then one hates to see an unemployment go from 69 00:03:15,200 --> 00:03:16,639 Speaker 1: three and a half to five and a half percent. 70 00:03:17,200 --> 00:03:20,200 Speaker 1: One hates to see any weakness in the economy whatsoever. 71 00:03:20,240 --> 00:03:22,720 Speaker 1: But I think we need to see a modest recession 72 00:03:22,760 --> 00:03:25,560 Speaker 1: to to eke out the inflation rate, and I think 73 00:03:25,600 --> 00:03:28,120 Speaker 1: that's the better course of action. We'll see if that's, 74 00:03:28,240 --> 00:03:31,680 Speaker 1: of course, that they follow. Mr pardon me, I have 75 00:03:31,720 --> 00:03:34,080 Speaker 1: a very bad cold, so I'm losing my voice. But 76 00:03:34,200 --> 00:03:35,920 Speaker 1: Mr Powell has made it a bunnily clear that rates 77 00:03:35,920 --> 00:03:38,960 Speaker 1: will stay, as you said, higher for longer than anybody 78 00:03:39,000 --> 00:03:41,040 Speaker 1: wants to anticipate. And I think it will be at 79 00:03:41,120 --> 00:03:44,600 Speaker 1: least before we see any sign of a movement from 80 00:03:44,600 --> 00:03:47,920 Speaker 1: the other direction of easing the overnight said funds. Right. Plus, 81 00:03:47,960 --> 00:03:51,200 Speaker 1: we have a fact the feed has a nine well 82 00:03:51,240 --> 00:03:53,480 Speaker 1: almost now about eight point four eight point six or 83 00:03:53,480 --> 00:03:55,880 Speaker 1: eight point seven trillion balance sheet that they have to 84 00:03:55,960 --> 00:03:58,320 Speaker 1: run back down to four to five trillion before it's done, 85 00:03:58,640 --> 00:04:01,320 Speaker 1: taking dollar out of their assets over their course the 86 00:04:01,400 --> 00:04:03,600 Speaker 1: next four or five years, which I think will be 87 00:04:03,600 --> 00:04:07,360 Speaker 1: delictorious to share prices generally anyway. So it's the that 88 00:04:07,680 --> 00:04:09,840 Speaker 1: the the economy has to fight a FED that's going 89 00:04:09,880 --> 00:04:11,960 Speaker 1: to be tightening policy for a longer period of time 90 00:04:12,320 --> 00:04:15,160 Speaker 1: than anybody right now wants to anticipate. Well, I was 91 00:04:15,200 --> 00:04:17,279 Speaker 1: going to ask exactly that point. Do you think that 92 00:04:17,400 --> 00:04:20,680 Speaker 1: the effect of quantitative tightening is not really at the 93 00:04:20,760 --> 00:04:25,280 Speaker 1: moment perhaps being factored in. I don't think it's being 94 00:04:25,320 --> 00:04:27,560 Speaker 1: talked about. It should be talked about more seriously. I 95 00:04:27,560 --> 00:04:29,719 Speaker 1: think it's far more serious than people want to anticipate, 96 00:04:29,760 --> 00:04:33,200 Speaker 1: people who want to think, and people give it credit for. So, 97 00:04:33,279 --> 00:04:34,880 Speaker 1: I think that the fact that they're going to take 98 00:04:35,080 --> 00:04:37,440 Speaker 1: and they have to be consistent about it because they 99 00:04:37,520 --> 00:04:39,359 Speaker 1: made they've made the statement that that's what they're going 100 00:04:39,440 --> 00:04:42,080 Speaker 1: to do. They're gonna be taking ninety five billion dollars 101 00:04:42,080 --> 00:04:44,240 Speaker 1: out every month. That's as if you've taken your foot 102 00:04:44,279 --> 00:04:46,000 Speaker 1: off the gas pedal for a long period of time, 103 00:04:46,360 --> 00:04:48,240 Speaker 1: the car will slow down. It has to, it can 104 00:04:48,279 --> 00:04:51,800 Speaker 1: do otherwise. We have a lot of changes that are 105 00:04:52,000 --> 00:04:54,400 Speaker 1: in our midst at the moment which could really affect 106 00:04:54,440 --> 00:04:58,239 Speaker 1: what the fed's work is. One thing is this move 107 00:04:58,320 --> 00:05:02,600 Speaker 1: of reshoring and friendshore. One would would would think, I 108 00:05:03,000 --> 00:05:07,039 Speaker 1: guess that that is inevitably inflationary because the whole reason 109 00:05:07,080 --> 00:05:09,200 Speaker 1: you were producing in China and Vietnam as it was, 110 00:05:09,279 --> 00:05:11,360 Speaker 1: it was cheaper. I mean, it was reliable and most 111 00:05:11,440 --> 00:05:14,440 Speaker 1: cheaper to bring a home. It will be more costly. Um. 112 00:05:14,520 --> 00:05:17,560 Speaker 1: The The other thing is that maybe the the economy 113 00:05:17,600 --> 00:05:21,000 Speaker 1: because of the pandemic is restructuring and it takes a 114 00:05:21,000 --> 00:05:23,719 Speaker 1: while for that to play out, and then the supply chains, 115 00:05:24,120 --> 00:05:27,200 Speaker 1: and then there's China coming back to perhaps full growth 116 00:05:27,240 --> 00:05:29,800 Speaker 1: with reopening, and so it's a lot too. It's a 117 00:05:29,839 --> 00:05:31,960 Speaker 1: lot to consider. You think the next twelve months is 118 00:05:32,040 --> 00:05:34,760 Speaker 1: just really going to be bumpy. I think the next 119 00:05:34,760 --> 00:05:36,640 Speaker 1: twelve months will be bumpy. I don't think they'll be 120 00:05:36,760 --> 00:05:38,600 Speaker 1: I don't think it'll be heat deep potholes, but I 121 00:05:38,600 --> 00:05:40,360 Speaker 1: think they'll be potholes along the way. The car will 122 00:05:40,360 --> 00:05:43,120 Speaker 1: bounce as we go down the street. I think that 123 00:05:43,560 --> 00:05:47,040 Speaker 1: expecting China to do better and to do demonstrably better 124 00:05:47,120 --> 00:05:50,400 Speaker 1: is and I'll advised the expectation. They they have extreme 125 00:05:50,440 --> 00:05:52,560 Speaker 1: problems over their demographic problems that are not going to 126 00:05:52,640 --> 00:05:55,279 Speaker 1: go away for twenty and thirty and forty years, and 127 00:05:55,360 --> 00:05:56,960 Speaker 1: real estate problems that are not going to go away 128 00:05:57,000 --> 00:05:59,800 Speaker 1: for a decade. So I think that we're gonna see 129 00:06:00,000 --> 00:06:02,680 Speaker 1: going to be far slower than people anticipate. And the 130 00:06:02,800 --> 00:06:08,440 Speaker 1: restoring of please excuse me, I'm sorry, and the restoring 131 00:06:08,560 --> 00:06:13,320 Speaker 1: of of production of chips of steel of automobiles is 132 00:06:13,320 --> 00:06:14,560 Speaker 1: going to be something that's gonna be with us for 133 00:06:14,600 --> 00:06:16,920 Speaker 1: a long period of time. My wife and I'd argue 134 00:06:16,920 --> 00:06:19,480 Speaker 1: about that all the time. She thinks we should reshore. 135 00:06:19,520 --> 00:06:22,320 Speaker 1: I think we should have continued to do what we 136 00:06:22,320 --> 00:06:24,120 Speaker 1: have been doing for the past twenty years, which was 137 00:06:24,160 --> 00:06:28,440 Speaker 1: to globalize. But right now I'm losing that argument and 138 00:06:28,480 --> 00:06:33,000 Speaker 1: losing your voice, hopefully not that you no. So where 139 00:06:33,000 --> 00:06:35,800 Speaker 1: does that leave you if you are an investor? I 140 00:06:35,800 --> 00:06:39,600 Speaker 1: mean the hoste of growth versus valued debate perhaps is 141 00:06:39,640 --> 00:06:43,200 Speaker 1: a bit redundant. Now what's your take. I'm very I've 142 00:06:43,240 --> 00:06:46,719 Speaker 1: been various of stocks since January this this year, and 143 00:06:46,760 --> 00:06:48,680 Speaker 1: as the chairman of the University of Akroms endowment. I 144 00:06:48,680 --> 00:06:50,840 Speaker 1: got us to move five percent of our portfolio, which 145 00:06:51,080 --> 00:06:53,359 Speaker 1: in an endowment is a big move. I got us 146 00:06:53,400 --> 00:06:57,680 Speaker 1: to move five percent our endowment out to conserve spending capabilities. 147 00:06:57,680 --> 00:06:59,040 Speaker 1: And I got us to move three percent of the 148 00:06:59,040 --> 00:07:01,599 Speaker 1: portfolio into Goal a year and a half ago to 149 00:07:01,640 --> 00:07:05,279 Speaker 1: hedge against inflationary risks. I in my own account, i'm 150 00:07:06,320 --> 00:07:10,080 Speaker 1: reasonably barrissh with the equities market, not overtly so I've 151 00:07:10,120 --> 00:07:12,760 Speaker 1: been wrong now for the past eight weeks. I've been 152 00:07:12,840 --> 00:07:15,160 Speaker 1: right for the past eleven months. I think that the 153 00:07:15,280 --> 00:07:18,040 Speaker 1: rally that we've gone through since the early later late 154 00:07:18,040 --> 00:07:21,560 Speaker 1: September early October has been nothing more than a low 155 00:07:21,680 --> 00:07:25,680 Speaker 1: volume bear market rally that will probably saw its highs 156 00:07:25,680 --> 00:07:27,840 Speaker 1: and the course of the past several days, and so 157 00:07:27,880 --> 00:07:30,080 Speaker 1: I'm quite bearish for share prices. We'll see what happens. 158 00:07:30,120 --> 00:07:32,120 Speaker 1: I've been, like I said, I've been wrong for the 159 00:07:32,200 --> 00:07:34,200 Speaker 1: last eight weeks. I've been right for the last eleven months. 160 00:07:34,200 --> 00:07:36,920 Speaker 1: We'll see if the rightness of the eleven months Trump's 161 00:07:36,960 --> 00:07:40,520 Speaker 1: the a week none a weeking problem that I've had. 162 00:07:41,280 --> 00:07:43,520 Speaker 1: You don't like equities, you do like gold? Do you 163 00:07:43,560 --> 00:07:48,520 Speaker 1: like bonds? Here I'm ambivalent to the bomb market. I 164 00:07:48,520 --> 00:07:50,480 Speaker 1: own a lot of two year notes from my own account, 165 00:07:50,800 --> 00:07:52,440 Speaker 1: and I've been buying them for the past several weeks. 166 00:07:52,480 --> 00:07:53,960 Speaker 1: When you get over four and four and a half 167 00:07:54,000 --> 00:07:56,040 Speaker 1: four and three quarter percent, four and a half percent, 168 00:07:56,520 --> 00:07:58,440 Speaker 1: I think two year notes make a great place to 169 00:07:58,480 --> 00:08:00,720 Speaker 1: store cast. So I have a large position and I 170 00:08:00,960 --> 00:08:03,920 Speaker 1: account in two year notes. I don't want to extend 171 00:08:03,960 --> 00:08:05,920 Speaker 1: out the Yiel cerve. I don't go put anywhere past 172 00:08:05,920 --> 00:08:09,120 Speaker 1: a five year to be blunt. So I'm neutral of 173 00:08:09,160 --> 00:08:12,760 Speaker 1: the bond market, barish of stocks, and very bullish of gold. 174 00:08:12,800 --> 00:08:14,640 Speaker 1: And that's the position I have on in my own account. 175 00:08:14,640 --> 00:08:16,800 Speaker 1: That's the position I moved the University of Aklhams and 176 00:08:16,800 --> 00:08:19,760 Speaker 1: Down in two Dennis, thank you so much for joining. 177 00:08:19,760 --> 00:08:22,320 Speaker 1: As Dennis Gotland hope you feel better, Chairman of the 178 00:08:22,400 --> 00:08:25,920 Speaker 1: University of Acorns and downmand Investment Committee, and the time 179 00:08:26,000 --> 00:08:29,800 Speaker 1: publisher of the Gartman Letter of his take on the markets. 180 00:08:29,840 --> 00:08:30,680 Speaker 1: This is Blomberg