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Speaker 1: This is Bloomberg Surveillance. I think the fet you continue

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Speaker 1: a very gradual rate HiPE cycle this year. I think

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Speaker 1: that is their baseline case. You have very very low growth.

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Speaker 1: We are highly addicted in most economies to very low rates.

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Speaker 1: It's hard to know where opportunity lies. If you look

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Speaker 1: around the world, the weakness is in the investment side

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Speaker 1: of global economies, and I think that's where the incentive

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Speaker 1: should be going forward. Bloomberg Surveillance your link to the

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Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good

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Speaker 1: morning everyone, Bloomberg Surveillance. Who welcome all of you worldwide,

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Speaker 1: coast to coast as the election begins in this hour

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Speaker 1: one Dennis Gartment will join us. We'll get to the

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Speaker 1: election in a moment. Politics, investment, finance, low interest rates.

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Speaker 1: Bloomberg Surveillance this morning brought you by cone Resnik Accounting,

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Speaker 1: Jack's Advisory, look Ahead, Gain Insight, Imagine more of the

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Speaker 1: professionals at KHON Resident can help your busines his breakthrough.

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Speaker 1: Find out more at kone Resnick dot com. We'reout further ado,

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Speaker 1: Mr Gartman. If Donald Trump calls, will you choose to

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Speaker 1: run for Vice president? Answer? I will not answer the phone.

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Speaker 1: I will not if if elected, I will not serve.

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Speaker 1: If nominated, I will not run. And no, Well, but

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Speaker 1: this is I say this, folks with great respect for

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Speaker 1: Mr Gartman's uh adding of the political debate into his

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Speaker 1: acclaimed note. And you do it with a southern tinge.

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Speaker 1: I want you to explain to me, Well, we're we're

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Speaker 1: about a rocks throw from from North Carolina. He spans

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Speaker 1: like six or seven states, Senator Senator Gartman, the seuth

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Speaker 1: the prism of what we've seen the last number of days.

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Speaker 1: We are still America of eighteen fifty, the Wig Party,

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Speaker 1: the Kansas Nebraska I'm serious, the Kansas Nebraska moment. How

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Speaker 1: does this play in your neck? The golf course? The

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Speaker 1: big question in Virginia is actually what our governor has

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Speaker 1: done by adding two hundred thousand new voters to the

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Speaker 1: voters registration, as he has granted voting rights back to

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Speaker 1: convicted felons, where one of the few states has still

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Speaker 1: once once you have been convicted of a felony, they

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Speaker 1: take your voting rights away. He's restored them, probably meaning

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Speaker 1: that you've gotten at least thirty five thousand to fifty

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Speaker 1: thousand new Democratic voters, which is going to be enough

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Speaker 1: to guarantee that Virginia goes to a Democrat in the

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Speaker 1: coming election. Sadly but true. Should our listeners be distracted

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Speaker 1: by the Derby to the first Tuesday of November by

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Speaker 1: the Derby? The Derby? We're gonna have a Derby, well

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Speaker 1: breakfast coming up. You should call it the Derby the Derby. Yes?

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Speaker 1: Should we be distracted by this politics? Yes? Should you not?

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Speaker 1: I think it's I think this is the United States,

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Speaker 1: as you said, and I think it's dismaying that these

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Speaker 1: are the two best candidates that we could come up with.

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Speaker 1: I think it's embarrassing and I think people will be

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Speaker 1: disturbed and dismayed by what's going on. Volume is declining

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Speaker 1: on most of the exchanges. Thing have going sideways, and

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Speaker 1: I think that's the exemplary of the fact that people

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Speaker 1: are dismayed and going going absolutely to the side to say,

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Speaker 1: I don't know what's going to happen, and I'm concerned

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Speaker 1: about what may. All right, let's um if we can

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Speaker 1: set aside the narrative of Donald Trump is the racism

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Speaker 1: and the commentary and and all of that sort of thing.

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Speaker 1: But if he were to be elected, he would have

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Speaker 1: to have policies. Have you looked at the policies and

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Speaker 1: how they to the extent that you can uh, to

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Speaker 1: the extent they exist, and how they would affect the markets.

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Speaker 1: The policy that bothers me most is that clearly he

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Speaker 1: has a protectionist when it comes to international trade. He's

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Speaker 1: already said he wants to raise the tariffs on Chinese

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Speaker 1: goods by i e. You're an next refrigerator's gonna cost

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Speaker 1: you more than it cost you before. Your next uh

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Speaker 1: I phone is gonna cost you more than it costs

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Speaker 1: you before. That's absurd. He says that that's going to

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Speaker 1: save jobs. That's absolutely absurd. It's going to take money

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Speaker 1: out of the economy and save no jobs whatsoever. Protectionism

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Speaker 1: does not work. It is reminiscent of what happened in

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Speaker 1: the middle nineteen thirties. I'm very fearful that. To me,

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Speaker 1: that's the one policy of his that frightens me more

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Speaker 1: than anything when it comes to economics. All right, but

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Speaker 1: I can see the tweets and letters coming in now saying,

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Speaker 1: uh yeah, Mr Garban, you've got a job. I'm a

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Speaker 1: factory worker. I don't have a job. What are you

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Speaker 1: gonna do for me. Donald Trump at least is acknowledging

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Speaker 1: my issue. I understand that, and and I I can

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Speaker 1: understand the concern in the steel industry. I can understand

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Speaker 1: the concern in the automobile industry. But at the same time,

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Speaker 1: I can understand the concern that might have occurred at

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Speaker 1: the turn of the twentieth century when automobiles were being

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Speaker 1: manufactured and horseshoe manufacturers were wondering where their next job

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Speaker 1: was going to come from. The name of the game

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Speaker 1: has changed. Things changed, and it's hard to turn the

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Speaker 1: clock back. I tell people that I was lucky enough

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Speaker 1: to grow up in Akron, Ohio, where every tire in

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Speaker 1: every car was manufactured in the nineteen thirties, forties, and fifties.

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Speaker 1: Hasn't been a tire manufactured in Acarno House since nineteen

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Speaker 1: seventy two. That industry has gone. It's not coming back.

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Speaker 1: It has been replaced by a myriad number of other

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Speaker 1: industries completely. The unemployment rate is no worse en Acron

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Speaker 1: than it is any place else. But it has evolved,

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Speaker 1: revolutionized itself, and that's what has to happen. In the

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Speaker 1: other end. Well, it's good to have a little back,

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Speaker 1: but we'll see what happens tonight. I'm a little frightened

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Speaker 1: about being down too, and having been buried the other

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Speaker 1: night by the Warriors Dennis Scarpment with us as we

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Speaker 1: look at politics and sports, let's try investment right now.

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Speaker 1: Is the commodity decline over? You go long here and

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Speaker 1: say markets have cleared, We're back to the micro foundations

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Speaker 1: that lead from the lower left to the higher right.

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Speaker 1: I think, I think, in fact, that commodity markets have

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Speaker 1: seen their lows. If it matters not if you scan

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Speaker 1: across the the universe of commodities, the grain markets have

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Speaker 1: turned from the lower left to the upper right. Clearly,

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Speaker 1: the metals markets have turned from the lower left to

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Speaker 1: the upper right. Energy has turned from the lower left

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Speaker 1: to the upper right. Uh Co, Cooke, coffee, sugar have

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Speaker 1: gone from the lower left to the upper right. I

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Speaker 1: think that is is being represented by the fact one

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Speaker 1: the dollars weaker, but two the monetary authorities around the world,

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Speaker 1: whether it's US, whether it's the Japanese, whether it's the Europeans,

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Speaker 1: are all expanding the supply reserves in the system. That's

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Speaker 1: finding its way one into equities too, into commodities. Is

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Speaker 1: that reflation? And this is something we've talked about all

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Speaker 1: morning here and frankly all week. Have you seen in

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Speaker 1: your textbooks a successful effort to reflate? Usually they end

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Speaker 1: up badly ultimately, Well, I shouldn't say usually, almost always

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Speaker 1: they end up badly. I think the the attempt to

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Speaker 1: reflate is going on. I think that attempt to reflate

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Speaker 1: is being seen as being evidence in the commodity markets.

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Speaker 1: We'll see how far it can carry. But yes, I

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Speaker 1: think we've seen the loads in the commodities in general. Well,

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Speaker 1: is this the is the market move demand story or

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Speaker 1: supply story or uh? External factor central banks pumping money

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Speaker 1: into the economy. I think it has demand improved enough. Now,

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Speaker 1: I don't think demands proved. No, I don't think demand

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Speaker 1: has proved an off uh. And I'm not sure that

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Speaker 1: the supply has been diminished enough. So I'm gonna I'm

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Speaker 1: gonna suggest that it is solely thus far a monetary

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Speaker 1: circumstances very important. Gary Showing makes that same distinction because

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Speaker 1: he looks for lower oil prices. He just doesn't think

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Speaker 1: supply discipline is coming yet. Well, I think it's important,

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Speaker 1: uh And I've always argued this. People talk about commodities

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Speaker 1: as if it were one thing. They're not, and they're not. Uh.

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Speaker 1: In the oil markets, we are seeing evidence that supply

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Speaker 1: is diminishing, are we not. I'm not sure I'd say that. Uh, yes,

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Speaker 1: you've seen a huge decline in drill rigs, but and

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Speaker 1: and and far too much evidence emphasis has given upon

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Speaker 1: the fact that the rig count is down. But we

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Speaker 1: now can drill with one drilling rig fourteen fifteen sixteen, Uh. Fragmented.

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Speaker 1: We send the soda straw down and bended into various areas,

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Speaker 1: so we get far more out of each rig than

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Speaker 1: we ever did in the past. I'm not sure that

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Speaker 1: that that supply has been diminished at all in the

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Speaker 1: energy market. And I'm I'm absolutely convinced if we are

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Speaker 1: fracking and successfully here in the United States, I'm absolutely

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Speaker 1: convinced that fracking is going to begin abroad elsewhere as

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Speaker 1: they learn how we have learned how to do it.

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Speaker 1: Can you go along oil with that statement you just

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Speaker 1: made that supply is still there if you have sold

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Speaker 1: oil short and of course, the past two months it's

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Speaker 1: been a very dismaying and disconcerting circumstance You can't be

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Speaker 1: short of crude oil until you watch and I pay

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Speaker 1: attention to what's happening and what's known as the contango,

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Speaker 1: the term structure, and until you start to see the

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Speaker 1: term structure begin to widen, until you see the front

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Speaker 1: month begin to lose relative to the deferred months, you

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Speaker 1: can't be short. There will be a time. I don't

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Speaker 1: think it's reasonable to be aggressively long. The trend is

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Speaker 1: from the lower left to the upper right. Right now,

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Speaker 1: I think on balance is but I think it's gonna

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Speaker 1: be very hard to push the w t I past

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Speaker 1: fifty five dollars, especially if you have a two dollar

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Speaker 1: contango out to the one year is it is it

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Speaker 1: more important to stabilize oil at least stable oil at

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Speaker 1: fifty dollars would be a wonderful thing for everybody. I think.

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Speaker 1: At fifty dollars in spot w t I fifty one

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Speaker 1: dollar for spot Brent fifty three dollars for one year forward,

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Speaker 1: frackers can make money by hedging in the forward. In

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Speaker 1: the forward futures markets. They can be happy and make

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Speaker 1: a few dollars. Consumers would be happy, Industry wouldn't be happy.

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Speaker 1: That would be the best of all worlds. Give me,

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Speaker 1: give me stability at fifty. Want you to answer your

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Speaker 1: critics right now you're doing not speculation, but trades in

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Speaker 1: the equity markets. Yes, it has been brutal for everybody.

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Speaker 1: Yeah everybody. I'm up marginally, but it has been brutal.

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Speaker 1: What did the pros listening do? Do they just have

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Speaker 1: to absolutely lengthen their time horizon. Actually, I think everybody's

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Speaker 1: shortening their time horizon. I think right now there's more

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Speaker 1: people putting in stops. As my friend Dougie Cast says,

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Speaker 1: and I think this is a brilliant friend. Yeah, Douggie

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Speaker 1: is a great friend. Uh. Douggie has a great line

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Speaker 1: when he says, this is a market that has no memory,

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Speaker 1: and it's exactly correct. One day you're up two hundred

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Speaker 1: Dow points, the next day you're down to seriously done.

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Speaker 1: It's your opinion out there. I've been one of your

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Speaker 1: great defenders because you're you have the right to lose money. Yes,

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Speaker 1: you gotta make money one out of three trades, one

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Speaker 1: out of four trades, whether your gartment, Cramer, Keen, whatever,

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Speaker 1: so you have a confidence you can make money in

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Speaker 1: equity has given the volatility we see, I have a

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Speaker 1: confidence that if you do the right things, if you

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Speaker 1: don't average down, if you add to winning trades, and

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Speaker 1: if you keep your stops in order, if you use

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Speaker 1: options correctly, I have confidence that you will do fine.

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Speaker 1: I have great and a great deal of confidence that

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Speaker 1: if you do the wrong things, if you that you

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Speaker 1: will lose money. And what Dennis Gartman just said, there

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Speaker 1: are folks and I Martin go theory you don't buy

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Speaker 1: into your dipths, you add your winners is a foundational

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Speaker 1: theory of ed Thorpe to Leban others. It is profound.

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Speaker 1: Dennis gartment with us. We will continue. Let us check

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Speaker 1: in with John Tucker now and get the latest world

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Speaker 1: in national headlines. All right, Michael and Tom has the

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Speaker 1: first woman to lead a major party at a presidential

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Speaker 1: candidate to Hillary Clinton, says the campaign is about making

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Speaker 1: sure there are no ceilings. Her solid win in California

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Speaker 1: confirmed this morning. It solidifies Senator Bernie Center's defeat, but

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Speaker 1: he vouls to continue his campaign. A massive explosion blew

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Speaker 1: the front off of five story police headquarters in eastern Turkey,

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Speaker 1: killing at least three people, a day after a car

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Speaker 1: bombing targeting security personnel left eleven people dead in Eastanbul,

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Speaker 1: and a monkey triggered a nationwide blackout in Kenya. It

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Speaker 1: fell onto a transformer one of the nation's main hydro

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Speaker 1: electric plants. Supply has since been restored. The monkeys survived.

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Speaker 1: Maybe the next host of surveillance who knows Global News

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Speaker 1: keep it up, n Tucker or run for Vice President

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Speaker 1: Michael McKee. There, John Chucker, get out of here fast

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Speaker 1: a Bloomberg Business Flash And I'm Karin Moscow US dot

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Speaker 1: Index Futures are arriving this morning, along with nime x

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Speaker 1: s crude oil. Let's go to the First Word breaking

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Speaker 1: news desk for today's morning call. Here's Bill Maloney, Good morning, Bill,

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Speaker 1: Good morning Can. That's right. Gains in the US futures

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Speaker 1: today with doubtfuures currently hired by thirty three points, sub

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Speaker 1: scained four, Nazak futures rise by eight, the US ten

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Speaker 1: yel at one point, and w t I crew futures

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Speaker 1: top fifty one on the US economic front at ten o'clock,

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Speaker 1: jolts job opening and a ten thirty energy inventory numbers

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Speaker 1: After debellas night, Valiant filed it's tan Q and vera

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Speaker 1: phone cut your adjusted EPs and revenue views. Shares their

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Speaker 1: down twenty nine percent pre market. Regarding airrings this morning,

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Speaker 1: Lula lemon Q one was mixed, although shares are a

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Speaker 1: bit higher pre market. In other news, RBC said F

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Speaker 1: five networks may be worth as much as a hundred

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Speaker 1: and fifty dollars you share in a buyout. Finally, some

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Speaker 1: of your well sheet upgrades and downgrades. Ralph Florin raised

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Speaker 1: the neutral versus underperform at Bank of America. Advo cut

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Speaker 1: to eco weight at Morgan Stanley Capital One, cut under

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Speaker 1: perform at stern a g and vera phone kind of

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Speaker 1: Pacific Crest, JP Morgan and Barkley's Live from the First

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Speaker 1: Breaking News Desk on Bill Maloney, Karen, thanks built here

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Speaker 1: live breaking news of your Bloomberg type squawk A go

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Speaker 1: on your term at all. That's sq you a w

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Speaker 1: k go, that's a Bloomberg business flash. Tom and Mike Karina,

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Speaker 1: thanks so much. A Bloomberg surveillance this morning, or brought

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Speaker 1: you buy Investo looking for investment views Investco's high Conviction

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Speaker 1: at investco US on Twitter at investco us on Twitter.

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Speaker 1: We are with Dennis Gartman, which means once in the

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Speaker 1: interview we have to go geeky, which we will attempt

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Speaker 1: to do right now. We say this with immense respect

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Speaker 1: for the passing of Jack Trainer. There are different measurements

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Speaker 1: of beta and risk and reward in the market, and

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Speaker 1: Mr Trainer was iconic and driving that debate forward with

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Speaker 1: William Sharpe and a few others Jensen and others like that.

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Speaker 1: Dennis Gartman, we have theories that that were good and

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Speaker 1: well intentioned, theories of beta equaling the co variants over

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Speaker 1: the variants. And we memorized all these equations. I think

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Speaker 1: we learned they really don't matter in terms of not

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Speaker 1: losing money. How do you use this stuff at through

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Speaker 1: what we've been through the last eight years. We we

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Speaker 1: use beta. I trade only from my own account, and

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Speaker 1: we use beta rather consistently. We try to adjust, We

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Speaker 1: use derivatives to hedge out the beta that we think

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Speaker 1: is analogous to the stocks that we hold. Do we

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Speaker 1: do we hold dear to it? Do we absolutely embrace

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Speaker 1: it fully? Now, what we do toss aside is we

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Speaker 1: don't think the markets are rational under any circumstance. Markets

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Speaker 1: can't be rational. We are human beings. We are irrational

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Speaker 1: responding to irrational and rational news in an interrational and

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Speaker 1: rational manner. Markets are behaviorist. And we pay attention to that,

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Speaker 1: to Mr Trainer's legacy, in Bill Sharp's legacy, and I

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Speaker 1: like the Sharp ratio gifts because it does not include beta.

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Speaker 1: But within this is something you're expert at, which is

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Speaker 1: the cost of hedging. Nobody ever talks about that. It's expensive.

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Speaker 1: Not a question about it if you look at the

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Speaker 1: futures markets, for example, if you just use futures, you're

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Speaker 1: always paying away the points to get to to hedge

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Speaker 1: your the the events away. So there is a cost

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Speaker 1: to it. Uh, what does that cost? It's expensive? Do

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Speaker 1: we pay attend? Do we pay attention to it? In

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Speaker 1: my portfolio? Directly not pertending? How do I hedge? Right now?

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Speaker 1: The observation that blue chip dividend growing stocks are priced

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Speaker 1: to madmen perfection? I don't know that's the correct I

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Speaker 1: don't know, Mike. We just heard the first correct answer.

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Speaker 1: You don't. I don't know. I I rarely say this, Mike.

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Speaker 1: I can't believe I'm saying this. Gartment in the room agree, Mike,

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Speaker 1: I don't know. It raises the question of how we

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Speaker 1: know anymore what's price to perfection? Given the risks out there?

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Speaker 1: And have been going the prices, the prices, the price,

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Speaker 1: And that's all I know. As I grow older and

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Speaker 1: and and longer in the business, I'm more and more convinced.

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Speaker 1: What I want to do is put a chart up

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Speaker 1: on the wall, walk twenty feet away from it. Is

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Speaker 1: it going from the lower left of the upper right.

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Speaker 1: I'm gonna try to buy it three ument dividend growth

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Speaker 1: twenty two multiple. Michael McKey, Well, you look said A

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Speaker 1: key thing to look at these days is dividend growth. Um.

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Speaker 1: If you're not getting the top line earnings, you might

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Speaker 1: just will get it somewhere and I will say it's

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Speaker 1: sixty five years old to me. As I get closer

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Speaker 1: and closer to inevitable retirement, which I don't know when

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Speaker 1: it's gonna come, dividends and dividend growth are more and

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Speaker 1: more imperative. I'm a coupon clipper already. A question about that.

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Speaker 1: Are you on board oil at eighteen of barrel to

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Speaker 1: being an owner of it? Yeah? Do you want to

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Speaker 1: be long crude? I'm long. I'm in my own account.

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Speaker 1: I'm long a little bit of an e MP company

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Speaker 1: out of South Texas only because I know that, I

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Speaker 1: know the management. I like the chart, and I'm long

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Speaker 1: of crude oil because it is moving from the lower

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Speaker 1: left to the upper right. Am I absolutely do? I

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Speaker 1: embrace it enthusiastically. No, do I have stops underneath it? Absolutely.

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Speaker 1: Gold still wants to go higher. I've been bullish of

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Speaker 1: gold in yend and euro terms, in golden yend terms

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Speaker 1: has been a bullmarket for four years. Looks like a

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Speaker 1: genius on that trade. Looks smart now and and it's

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Speaker 1: been a four year bull market. Took a while, it

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Speaker 1: took a while. It's been a two year bull market

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Speaker 1: in euroterms, and now it's actually six months long a

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Speaker 1: bull market in dollar terms, because I think the monetary

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Speaker 1: authorities around the world have no choice, whether they like

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Speaker 1: it or not, but to be expansionary, and that's going

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Speaker 1: to continue to be supportive. I could ask to follow

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Speaker 1: up questions oil, give me a price, where can it

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Speaker 1: go to from here? What gold? Oil? I I doubt

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Speaker 1: that w T I can move beyond fifty five dollars

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Speaker 1: a barrel. I really think that at that point there's

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Speaker 1: a lot more crude that will be found. There are

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Speaker 1: plenty of tankers filled with crude out in the out

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Speaker 1: of the waters. That that crude fault comes to the market,

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Speaker 1: I think fifty five is going to be very difficult

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Speaker 1: to push through. One just what what hurts the yen

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Speaker 1: gold trade? UH, something that happens to gold or something

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Speaker 1: that happens to the yen, Something that happens to the

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Speaker 1: end hurts the end gold trade? The what the Japanese

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Speaker 1: need to do. They made a terrible mistake. They're not

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Speaker 1: the only ones, but by taking uh interest right to

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Speaker 1: negative numbers they have created they have unleashed their own

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Speaker 1: deflationary circumstance. Because what has happened is Japanese Mr and

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Speaker 1: Mrs Matsuma have taken their money out of the banking system.

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Speaker 1: Why be penalized by putting money into banks where you're

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Speaker 1: gonna be charged. They've taken cash out, and cash is

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Speaker 1: by definition deflationary. It's lost to the reserve banking system.

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Speaker 1: If they don't change that policy, they need to get

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Speaker 1: interest rates to actually go higher in Japan marginally. If

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Speaker 1: they continue with negative interest rates, that's Deleastaria Dennis a

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Speaker 1: very short term here. And there's a famous Lehman photograph

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Speaker 1: to collapse a Lehman and you can see through the

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Speaker 1: kids the gartment letter on the monitor that they've been reading.

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Speaker 1: That was all around all the great men's restrooms of

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Speaker 1: the world. One day, yes, one day, I'll be running

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Speaker 1: a hedge fund. Is the hedge fund game over? Is

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Speaker 1: the two and twenty game over? The two and twenty

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Speaker 1: game is clearly over. The hedge fund game is not over,

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Speaker 1: but the two and twenty game is over, no question

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Speaker 1: about that. Dennis Gartman, thank you so much the Gartment letter.

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Speaker 1: We protect the copyright of our guests. We will not

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Speaker 1: send you the Gartment letter, but Dennis will if you subscribe.

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Speaker 1: Michael McKee, Tom Key, this is Bloomberg's surveillance coming up,

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