WEBVTT - Dennis Gartman: Negative Population Growth Is Problem (Audio) 0:00:02.200 --> 0:00:05.600 Global business news twenty four hours a day. If Bloomberg 0:00:05.640 --> 0:00:08.720 dot Com, the radio plus mobile last and on your radio. 0:00:09.000 --> 0:00:13.120 This is a Bloomberg Business Flash from Bloomberg World Headquarters. 0:00:13.160 --> 0:00:17.120 I'm Charlie Palott. Stocks are extended, lost, extending losses amid 0:00:17.160 --> 0:00:20.160 growing speculation that the Federal Reserve sees firm and off 0:00:20.160 --> 0:00:24.040 economic growth to raise rates as soon as June. SMP 0:00:24.239 --> 0:00:27.200 five hundred indecks are racing yesterday's rally. Right now, the 0:00:27.360 --> 0:00:30.160 SMP down twenty one points, a drop of one percent. 0:00:30.600 --> 0:00:34.000 Town Industrials down one ninety four points to decline there 0:00:34.040 --> 0:00:38.159 of one point one percent. Nastack is down sixty points, 0:00:38.200 --> 0:00:41.000 a drop of one point three percent. He old on 0:00:41.040 --> 0:00:43.800 the tenure one point seven five percent, Gold up six 0:00:43.840 --> 0:00:46.480 fifty ounce to twelve eighties seventy a gain of point 0:00:46.520 --> 0:00:49.800 five percent, and crude oil hired by seventy nine cents 0:00:49.800 --> 0:00:53.600 of arrowy fifty one now on West Texas intermediate crude. 0:00:53.840 --> 0:00:56.920 That is a gain of one point seven percent. I'm 0:00:57.000 --> 0:01:01.200 Charlie Palett. That's a Bloomberg Business Flash. Charlie Polla, thank 0:01:01.200 --> 0:01:02.920 you so very much. Time now for the e t 0:01:03.040 --> 0:01:05.240 F Report, brought to you by Vanack Vector's e t 0:01:05.560 --> 0:01:08.720 F expect more from your munis target tax exempt income 0:01:08.760 --> 0:01:12.040 by maturity and credit quality, all with low cost et 0:01:12.280 --> 0:01:15.240 F s. Visit van k dot com slash Muni vanek 0:01:15.600 --> 0:01:18.720 access the opportunities for e t F report we return 0:01:18.800 --> 0:01:21.959 to our own Catherine Cowdery. It's a tough year for 0:01:22.000 --> 0:01:24.560 the e t F industry. That's a word from Bloomberg 0:01:24.560 --> 0:01:28.120 Intelligence analyst Eric bel Tunis. He says flows into e 0:01:28.240 --> 0:01:31.320 t s is slowed. However, some e t F providers 0:01:31.360 --> 0:01:33.319 are doing better than others. This is the kind of 0:01:33.400 --> 0:01:36.800 year that Schwab and Vanguard live for. They are taking 0:01:36.800 --> 0:01:39.040 in se of all of the new cash going into 0:01:39.040 --> 0:01:41.160 e t F s. Val Tunas says that investors who 0:01:41.280 --> 0:01:43.440 chase performance are selling off in the midst of the 0:01:43.480 --> 0:01:47.000 market's volatility, but Vanguard and Schwab, those products go in 0:01:47.200 --> 0:01:51.080 like clockwork. The flows go in every month, every day, 0:01:51.120 --> 0:01:53.520 so you have the both of them taking in money 0:01:53.560 --> 0:01:56.200 and all products, even products that are down. So it 0:01:56.280 --> 0:01:59.320 just shows you the long term power of of these companies. 0:01:59.400 --> 0:02:02.320 Bel Tunis says flows this year illustrate the sea change 0:02:02.320 --> 0:02:05.400 that's taking place in the financial industry from high price 0:02:05.440 --> 0:02:09.040 to low priced investments. Hedge funds and active mutual funds 0:02:09.040 --> 0:02:11.760 have seen outflows this year, while e t F has 0:02:11.760 --> 0:02:15.920 seen inflows. That's your Bloomberg ETF report. I'm Katherine Cowdery. 0:02:17.400 --> 0:02:20.440 You're listening to Taking Stock with Kathleen Hayes and Pimp 0:02:20.520 --> 0:02:25.119 Box on Bloomberg Radio. Imagine if you had invested your 0:02:25.120 --> 0:02:27.760 money at the beginning of the year in an asset 0:02:27.800 --> 0:02:32.200 that now is higher by more than eighteen percent. I 0:02:32.240 --> 0:02:34.280 was looking at some of the fine print in the 0:02:34.320 --> 0:02:37.880 fine work done by Dennis Gartman, because Dennis Gartman has 0:02:37.919 --> 0:02:42.040 been putting together the Gartman Letter uh since nine eight 0:02:42.320 --> 0:02:46.120 seven that I could not believe. Dennis Gartman, thank you 0:02:46.200 --> 0:02:50.560 for being with us economist publisher the Gartman Letter, joining 0:02:50.639 --> 0:02:55.040 us from Suffolk, Virginia. How are you old and tired? 0:02:55.040 --> 0:02:58.600 But all right? All right, Well that's le's stop. But 0:02:59.080 --> 0:03:02.320 that's good enough. You know. I I read your commentary, 0:03:02.400 --> 0:03:05.960 but I read it back to front um. Tell me 0:03:06.040 --> 0:03:10.840 what's going on with gold and precious metals and palladian 0:03:10.919 --> 0:03:13.600 and all that. What's going on with this? They first 0:03:13.600 --> 0:03:17.200 of all, the world suddenly does like gold in dollar terms. 0:03:17.680 --> 0:03:20.840 What's important to understand is that the world liked gold 0:03:21.000 --> 0:03:24.760 in euro terms two years ago, had made its low then, 0:03:24.880 --> 0:03:28.880 and the world liked gold in yen denominated terms four 0:03:28.960 --> 0:03:32.400 years ago. It's it's been a demonstrative bowld market in 0:03:32.520 --> 0:03:36.000 gold predicated in other currencies, and I think one has 0:03:36.040 --> 0:03:38.440 to understand that gold is nothing more than a currency. 0:03:39.440 --> 0:03:41.640 As an old four X trader, we always used to 0:03:41.640 --> 0:03:45.080 trade dollar mark against the end yen, against the Swiss frank, 0:03:45.120 --> 0:03:48.320 Swiss frank against the old Italian lira. You're always taught 0:03:48.360 --> 0:03:50.840 to be a spreader of one thing, a buyer of 0:03:50.880 --> 0:03:53.120 one thing, a seller of something else. And in the 0:03:53.160 --> 0:03:55.440 world of for in the world of gold trading, I 0:03:55.480 --> 0:03:57.840 think people are beginning to understand that gold really is 0:03:58.280 --> 0:04:02.080 simply another currency. And we're beginning to understand that if 0:04:02.120 --> 0:04:04.119 gold was a bull market in the end terms four 0:04:04.160 --> 0:04:06.920 years ago, if gold was a bull market in euros 0:04:06.960 --> 0:04:09.840 two years ago, gold began to be a bull market 0:04:09.880 --> 0:04:13.360 in the dollar about four months ago, and that's starting 0:04:13.360 --> 0:04:17.600 to engender a little interest on the part of speculators everywhere. 0:04:17.640 --> 0:04:20.680 People tend to think of gold only in dollar terms, 0:04:20.680 --> 0:04:23.120 and until you've got a bull market going there, it 0:04:23.160 --> 0:04:26.280 was hard to get a bullish enthusiasm much. But you're 0:04:26.279 --> 0:04:28.240 starting to see that, and I think you're starting to 0:04:28.279 --> 0:04:32.359 see an increase in inflationary expectations. The grains are turning 0:04:32.400 --> 0:04:35.520 for the better, Livestock is turning for the better. Clearly 0:04:35.520 --> 0:04:37.800 the crude oil market has turned for the better. So 0:04:37.839 --> 0:04:40.719 there's inflationary circumstances prevailing, which is helping to put a 0:04:40.720 --> 0:04:43.640 bit to the gold market. See that's why we've always 0:04:43.720 --> 0:04:49.160 enjoyed talking to each other, because we are macro people, right, gold, bonds, currencies, Dennis, 0:04:49.240 --> 0:04:52.080 But but you know, the gold going up, but the 0:04:52.120 --> 0:04:54.920 dollars starting to strengthen. Two, because people are were first 0:04:54.960 --> 0:04:58.440 working comments from key Feather Reserve officials that hey, we 0:04:58.440 --> 0:05:00.600 we could raise rates, and in fact some people are 0:05:00.600 --> 0:05:03.280 talking about the fact that they will and sooner, maybe 0:05:03.279 --> 0:05:05.880 than the market expects. This has been boosting the dollar 0:05:05.920 --> 0:05:07.440 a bit. Does that continue and if it does, what 0:05:07.480 --> 0:05:11.159 does it mean for this UH dollar rally and goals? Well, 0:05:11.200 --> 0:05:14.000 I first of all, I think that people are somewhat surprised. 0:05:14.040 --> 0:05:16.080 We're seeing weakness in the stock market to day, which 0:05:16.120 --> 0:05:18.280 I think is going to develop into something a little 0:05:18.320 --> 0:05:21.200 more difficult over the course of the next several weeks. 0:05:21.200 --> 0:05:23.600 But the stock market began to sell off this afternoon 0:05:24.040 --> 0:05:27.560 following comments by Mr Kaplan, the the the president of 0:05:27.560 --> 0:05:29.719 the Fellow Reserve Bank of Dallas, who, although it's not 0:05:29.800 --> 0:05:32.520 a voter on the f o MC this year, I 0:05:32.560 --> 0:05:35.000 think is one of the better voices given the fact 0:05:35.040 --> 0:05:37.320 that he came out of the trading arena. He's not 0:05:37.360 --> 0:05:40.400 a PhD in economics. He's actually somebody who's had to 0:05:40.480 --> 0:05:42.560 run a fund, and I think the market tends to 0:05:42.560 --> 0:05:44.880 pay more attention to him. And he made this to 0:05:44.960 --> 0:05:47.560 the the comment that we might well see a FED 0:05:47.640 --> 0:05:50.600 funds rate increase at the June meeting, and I suspect 0:05:50.600 --> 0:05:53.359 that that's probably very likely. So there in lies the 0:05:53.400 --> 0:05:56.279 problem with the equities market. Equities wanted to see nothing 0:05:56.360 --> 0:05:59.960 but flat rates, rates held lower for longer, and sudden 0:06:00.120 --> 0:06:02.240 there's on the table once again as an increase in 0:06:02.320 --> 0:06:06.400 rate in the June meeting. Dennis Scartman as someone that 0:06:06.520 --> 0:06:11.120 I believe I grew up watching companies leave one by 0:06:11.160 --> 0:06:14.560 one in there in your neighborhood. I wonder if you 0:06:14.560 --> 0:06:17.760 could mix a little politics with a little investment in 0:06:17.839 --> 0:06:23.280 the financial perspective for us, well, tis what I grew 0:06:23.320 --> 0:06:26.640 up in Akron, Ohio, where back in the nineteen forties, fifties, 0:06:26.640 --> 0:06:29.800 and sixties, every tire on every car, literally every tire 0:06:29.800 --> 0:06:32.919 and every car was manufactured. There hasn't been a tire 0:06:32.960 --> 0:06:37.839 manufacturing naquenceins ninety four entire industry. The rubber industry left, 0:06:38.080 --> 0:06:41.920 good Year, good Rich, Firestone, Uniroyal, Cyberling, they were all there. 0:06:42.320 --> 0:06:45.039 Their headquarters are still there, but their production facilities have 0:06:45.080 --> 0:06:48.800 moved elsewhere. What's interesting is it's all been replaced by 0:06:48.960 --> 0:06:52.760 hundreds of other businesses. And therein is the magic of America. 0:06:53.360 --> 0:06:55.839 Uh And instead of having six companies that had that 0:06:55.920 --> 0:06:59.360 had twenty thousand employees, there are six hundred companies with 0:06:59.720 --> 0:07:03.279 two hundred employees, and the unemployment rate and acronism is 0:07:03.279 --> 0:07:06.640 holding nicely right at the US at average rate. We 0:07:06.800 --> 0:07:09.680 replaced everything, and that's that's what we do well here. 0:07:10.120 --> 0:07:13.480 The problem that I have and looking forward into this 0:07:13.560 --> 0:07:15.800 next election, is that we have on the Republicans, and 0:07:15.800 --> 0:07:18.800 I'm somewhat to the right of Jengis Khan politically and economically, 0:07:19.280 --> 0:07:22.520 but the Republican standard there as a protectionist, wants to 0:07:22.560 --> 0:07:26.120 protect the businesses. The business of America is actually to 0:07:26.200 --> 0:07:29.760 come up with new businesses, destroy the old, build the new, 0:07:29.880 --> 0:07:34.040 and that's why we're great. Well, I'm gonna go too 0:07:34.040 --> 0:07:35.960 far down that road, because there are some pretty strong 0:07:36.040 --> 0:07:39.160 voices arguing these days, Dennis. It's an argument that didn't 0:07:39.200 --> 0:07:41.560 go away. But there's more and more focus being put 0:07:41.600 --> 0:07:44.240 on the dollar and whether or not it is artificially 0:07:44.280 --> 0:07:47.440 manipulated by our trading partners. And if it is, then 0:07:47.920 --> 0:07:50.800 maybe Donald Trump has a point that free trade is 0:07:50.800 --> 0:07:52.560 one thing, but fair trade is what a lot of 0:07:52.600 --> 0:07:54.720 people are saying we must have in order for this 0:07:54.760 --> 0:07:59.400 to work for everybody, including us workers. Well, Mr Trump 0:07:59.440 --> 0:08:01.520 takes on the es the reman By. He folks who 0:08:01.520 --> 0:08:04.960 focuses on the remand as being a manipulated currency. If 0:08:04.960 --> 0:08:07.400 it is being manipulated over the course of the last decade, 0:08:07.680 --> 0:08:10.720 it's been manipulated against the Chinese, because the reman By 0:08:10.760 --> 0:08:15.520 has gotten demonstrably stronger. It's written by what from five 0:08:15.600 --> 0:08:17.320 or sickle of actually from eight years ago. I don't 0:08:17.320 --> 0:08:19.960 have my screen in front of me, but if up dramatically, yes, 0:08:20.040 --> 0:08:22.960 the reman b is down relative to the dollar over 0:08:22.960 --> 0:08:24.920 the course of the last year and a half, but 0:08:25.000 --> 0:08:27.600 over the course of the last decade, it is up 0:08:27.640 --> 0:08:30.920 and up dramatically, and if the if the Chinese have 0:08:31.000 --> 0:08:33.880 been manipulating, then they've got manipulation in the wrong direction. 0:08:35.240 --> 0:08:40.320 Dennis Gartman expound on the theme of demographics and Europe 0:08:40.480 --> 0:08:43.160 and what is going on because this is a problem, 0:08:43.240 --> 0:08:45.439 or is not a problem, but this is a situation 0:08:46.280 --> 0:08:51.960 that may not necessarily be so widely known about. Well, 0:08:52.000 --> 0:08:56.120 all economics derives from demographics. You cannot have a growing 0:08:56.120 --> 0:08:59.280 economy if you have a falling population. It's just that simple. 0:08:59.679 --> 0:09:01.880 You need need children, you need to have growth in 0:09:01.920 --> 0:09:07.520 the population. And what's happening the birth rates in Europe UH, 0:09:07.559 --> 0:09:10.000 the United Nations, the u N says that unless you 0:09:10.040 --> 0:09:12.280 have two point one children for every woman in in 0:09:12.320 --> 0:09:16.480 a birth age population, the population declines. In Europe, now 0:09:16.520 --> 0:09:18.840 you're starting to get down to one point seven children 0:09:18.880 --> 0:09:22.520 for for women. That's not enough to keep the economy 0:09:22.600 --> 0:09:25.800 to keep the population moving higher. What's interesting is in 0:09:25.800 --> 0:09:29.480 the industrialized world, the only countries that have populations that 0:09:29.520 --> 0:09:34.000 are growing are the United States, Canada, Australia, and New Zealand. 0:09:34.080 --> 0:09:36.320 What do we have in common other than the English language. 0:09:36.760 --> 0:09:39.920 The thing that we have most in common with is immigration. UH. 0:09:40.080 --> 0:09:43.520 You have a problem in in in countries where the 0:09:43.520 --> 0:09:48.280 population growth is negative, and in places like Japan, for example, 0:09:48.280 --> 0:09:51.640 where the population growth is even more negative than in Europe. 0:09:52.000 --> 0:09:54.440 Not only is it growing negative, it is growing older 0:09:54.480 --> 0:09:56.679 by the hour. There are as I like to say, 0:09:56.679 --> 0:09:59.440 there are entire villages in Japan who have never heard 0:09:59.440 --> 0:10:01.640 of baby in the last fifteen years because there haven't 0:10:01.679 --> 0:10:05.080 been any born. It's a very serious problem that needs 0:10:05.080 --> 0:10:08.640 to be dealt with. Certainly, we started to see the 0:10:08.720 --> 0:10:10.760 Chinese begin to deal with it when they when they 0:10:10.840 --> 0:10:14.800 ended their ludicrous one child program. At least they have 0:10:14.880 --> 0:10:17.400 on them now allowed to have two children if they 0:10:17.440 --> 0:10:21.120 ask permission. You need to have population growth, and in 0:10:21.280 --> 0:10:24.160 most of the industrialized world we have negative growth. And 0:10:24.200 --> 0:10:26.080 if it's not negative yet, it will be negative in 0:10:26.080 --> 0:10:28.280 another couple of years. It's a very serious problem that 0:10:28.320 --> 0:10:30.920 no one talks about. Just about fifteen seconds left, but 0:10:30.920 --> 0:10:32.800 I have to ask you gold that one thousand, two 0:10:32.960 --> 0:10:36.600 or eighty dollars roughly an ounce would you buy it here? Dennis? 0:10:36.640 --> 0:10:39.600 Is it gonna move higher this dollar gold rally? Uh? 0:10:39.760 --> 0:10:41.880 Six months from now it will be higher. A year 0:10:41.920 --> 0:10:44.160 from now, it'll be higher, two years from now, it'll 0:10:44.200 --> 0:10:46.360 be higher how much. I'm not one of those people 0:10:46.360 --> 0:10:49.440 who thinks it's going to several thousand dollars. It's the 0:10:49.480 --> 0:10:51.280 trend is from the lower left to the upper right. 0:10:51.640 --> 0:10:54.880 It's probably gonna be higher, nicely, probably six seven percent 0:10:54.920 --> 0:10:57.559 higher a year from now than it is now. Dennis Carbon, 0:10:57.600 --> 0:10:59.520 thank you so very much for joining us. It's great 0:10:59.600 --> 0:11:02.560 to have on taking stock here on Bloomberg Radio. Economist, 0:11:02.600 --> 0:11:05.840 publisher of the Gartman Letter. He's in Suffolk, Virginia. We're 0:11:05.920 --> 0:11:11.600 in Alexandri Alexander, Virginia. Very special broadcast in the Washington 0:11:11.720 --> 0:11:13.600 metro area on Bloomberg Radio.