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Speaker 1: And it's now time to check in with Dennis Gartman,

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Speaker 1: chairman of the University of Akron endowmentn Investment Committee, former

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Speaker 1: publisher of the Gartment letter. As we get three started.

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Speaker 1: Happy new year, Dennis, it seems like investors are happy

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Speaker 1: to put two behind them. Is that kind of explains

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Speaker 1: the gains we're seeing across the board this morning. Well,

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Speaker 1: it's interesting, Nathan, this is one of those rare days

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Speaker 1: when you have gold higher, bonds higher, in stocks higher.

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Speaker 1: One of them has to be wrong. Normally they cannot

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Speaker 1: move all and tandem one with the other. But perhaps

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Speaker 1: it's just the fact that it's the start of the

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Speaker 1: new year. We always see an influx of money coming

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Speaker 1: in the first of the month of the first of

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Speaker 1: the year. That happened exactly the same last year. The

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Speaker 1: first day of the year was a was a rather

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Speaker 1: substantive rally, and then it ended up being a bear

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Speaker 1: market the day after. But it is rare to see

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Speaker 1: both to see gold, stocks and bonds all all higher,

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Speaker 1: and rather sharply higher. So, as I said earlier, one

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Speaker 1: of them probably is wrong. I think that stocks are

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Speaker 1: probably the one that is wrong. But we'll see. Time

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Speaker 1: shall tell. Well what makes you say that, Dennis, I mean,

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Speaker 1: you were one of the first to call this a

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Speaker 1: bear market shortly after the SMP five hundred made its

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Speaker 1: peak one year ago. Today was its last closing record.

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Speaker 1: What makes you think things are going to be the

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Speaker 1: same as they were last year? Is? Is that what

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Speaker 1: you're saying? Yeah, that's basically what I'm saying. I think

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Speaker 1: this is just the fact that we had. It's the

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Speaker 1: start of the year, the start of the month, and

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Speaker 1: there's always an influx of capital that comes in exactly

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Speaker 1: a replication of what happened last year. The problem is

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Speaker 1: that we have stock prices I think have had an

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Speaker 1: inordinately high, large rally in the course of the past

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Speaker 1: month and a half, predicated upon the Fed uh pivoting

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Speaker 1: from its tightening monetary policies, and I think that that's

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Speaker 1: ill advised to consider that fact. I think the Fed

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Speaker 1: is going to continue to allow the overnight not allow,

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Speaker 1: but but move the overnight said funds right to five

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Speaker 1: to five and a quarter percent over the course of

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Speaker 1: the next several months. We'll see when we get to

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Speaker 1: the first f MC meeting in February, but time shall tell.

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Speaker 1: The The I m F has said that we're going

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Speaker 1: to have that one third of the world is going

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Speaker 1: to be in recession over the course of the next

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Speaker 1: year or two. I think that that will will weigh

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Speaker 1: upon stock prices eventually. So again, it's unusual to see

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Speaker 1: that we have stocks, bonds, and in gold rallying and

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Speaker 1: on all on the same day. One of them has

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Speaker 1: to be wrong. And as I said, I think it's

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Speaker 1: the stock market that is wrong. I think we're going

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Speaker 1: to see a replication of what happened last year. Yeah,

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Speaker 1: you mentioned that call from the the director of the

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Speaker 1: i m F that will third of the world is

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Speaker 1: going to be in a recession this year. Uh, do

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Speaker 1: you include the US in that third of the world. Basically,

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Speaker 1: I think the US is going to have a slowing economy.

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Speaker 1: I'm not sure they will have an official recession two

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Speaker 1: consecutive quarters of negative GDT growth such as what we

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Speaker 1: had at the beginning of last year. But I think

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Speaker 1: that the U s economy is going to be continuously

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Speaker 1: slower than had been hoped for. And they said will

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Speaker 1: will will probably tighten for far too long. It's the

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Speaker 1: tennessee of the FED is to be too too late

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Speaker 1: and in tightening too late, and early or too early

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Speaker 1: in easying or too late and easing. And I think

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Speaker 1: that that's going to be the same circumstances this year,

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Speaker 1: So we'll have a I don't think we'll have a

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Speaker 1: recession by normal textual uh definition, but I think we're

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Speaker 1: gonna see a weekly economy. Housing prices clearly are are weakening.

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Speaker 1: Housing the man is clearly weakening, and housing is a

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Speaker 1: dominant force in the US economy. And I think that

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Speaker 1: that's going to be the major thing, the major problem

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Speaker 1: that will have to deal with over the course the

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Speaker 1: next several months. If I remember rightly the last time

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Speaker 1: we spoke, I think you've said that, along with consensus

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Speaker 1: that the FED is probably going to peak at five

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Speaker 1: to five and a quarter per cent. Is that still

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Speaker 1: your call? And do you think that the FED? I

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Speaker 1: mean you already said that you think the FED should

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Speaker 1: probably be pivoting sooner than expected. When do you think

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Speaker 1: the FED should start thinking about reducing the the terminal rate? Actually,

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Speaker 1: I think what I said is the said will be

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Speaker 1: slow to to to go to a pivot. If I've

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Speaker 1: learned anything in forty five years of being in the market,

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Speaker 1: is so when the sad begins to tighten monetary policy

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Speaker 1: after easing, or easing policy after tightening, it takes rates

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Speaker 1: far farther, far higher or far lower, and for a

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Speaker 1: longer period of time than even the most radical among

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Speaker 1: us want to believe. So I think the fact that

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Speaker 1: the said will pivot eventually will be in three and

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Speaker 1: if it's four, it will probably late in the year

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Speaker 1: the FED will be The FED is slowed to change policy,

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Speaker 1: and once it changes, it keeps that new policy in

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Speaker 1: the in effect for a much longer period of time

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Speaker 1: and takes rates much farther than anybody wants to anticipate.

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Speaker 1: So it will be along a long period of time

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Speaker 1: before the TED pivots. About thirty seconds left in this segment, Dennis,

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Speaker 1: But you said that the that you don't expect that

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Speaker 1: there's going to be a technical recession for the US.

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Speaker 1: How do you square that with the possibility that the

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Speaker 1: FED could keep rates higher for longer? That that is

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Speaker 1: the the prime question, isn't it. Time shall tell what happens,

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Speaker 1: how that how plays out. But again, I think it'll

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Speaker 1: be a long period of time before the FED begins

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Speaker 1: to pivot to to lower rates at little it'll manufacture

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Speaker 1: higher overnight and said funds rate to five five and

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Speaker 1: a quarter or five and a half percent, and then

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Speaker 1: they'll stay stay at that level for a long period

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Speaker 1: of time, just as they did when they ease and

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Speaker 1: capt rates at the low level for a long period

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Speaker 1: of time. They'll do the same with high rates. They'll

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Speaker 1: want to make sure that they see real definitive action,

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Speaker 1: real definitive recessionary circumstances before they begin to begin to pivot.

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Speaker 1: It will be a long period of time, so be patient, Dennis.

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Speaker 1: If stocks are wrong, how much further do they have

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Speaker 1: downward to go? I think they make a new low

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Speaker 1: for the year, taking out less taking out the load

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Speaker 1: that was made to the one in late September early October.

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Speaker 1: I don't think they'll go much below. They're ten to

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Speaker 1: fifteen percent from down from where we are right now,

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Speaker 1: would probably be sufficient to turn me from being barish

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Speaker 1: of equities to being at least neutral, perhaps even bullish.

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Speaker 1: So let's call attend to fifteen percent from where we

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Speaker 1: are right now. It's a it's interesting, as we talked earlier,

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Speaker 1: it's an unusual circumstances to see on stocks and gold

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Speaker 1: all rallying on the same time the same day. At

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Speaker 1: the same time, they're doing it in almost exactly the

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Speaker 1: same amount, about eight eight tenths of one percent across

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Speaker 1: the board. So it's unusual and strange, and one of

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Speaker 1: them has to be wrong. What's the catalyst that turns

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Speaker 1: stocks from a bear market to a ball market for you?

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Speaker 1: The FED changing monetary policy, and that's gonna be a

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Speaker 1: long period of time before that happens again. As I

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Speaker 1: said earlier, in the forty five years I've been in

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Speaker 1: the markets and and since graduate school, the one thing

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Speaker 1: I've learned is that when the FED changes monetary policy,

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Speaker 1: moves from easing to tightening or tightening to easing, it

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Speaker 1: takes rates much farther and for a longer period of

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Speaker 1: time than the most radical among us want to believe.

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Speaker 1: The FED changed policy last year, It's going to take

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Speaker 1: at least until late probably early before the FED begins

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Speaker 1: to pivot, and pivot means that they change from from

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Speaker 1: tightening to easing and actually let rates go lower. That's

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Speaker 1: gonna be a long period of time into the future.

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Speaker 1: So I'm gonna be barished on stocks were probably quite

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Speaker 1: some more protected period of time. I've been barised since

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Speaker 1: January last year, had the university move a good ten

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Speaker 1: to fift of its portfolio out of out of stocks

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Speaker 1: into two year notes. And that's we we got. Let's

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Speaker 1: call it, let's say we got very lucky. Are you

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Speaker 1: looking for further inversion in the yield curve? Then? With

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Speaker 1: that view, why what's your outlook for treasuries? I think

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Speaker 1: two s tens goes back to eight basis points again,

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Speaker 1: it'll test that level. It seemed that there was, for

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Speaker 1: lack of a better term, resistance at about two basis

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Speaker 1: points in the in the inversion of twos to tens,

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Speaker 1: and I think we try to go back to that

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Speaker 1: level before it's before we're done, before the Fed has

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Speaker 1: done tightening monetary policy. In our last minute here, Dennis,

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Speaker 1: gold hasn't really been the inflation hedge that it's been historically.

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Speaker 1: Uh do you see that changing in twenty three? Well,

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Speaker 1: first of all, gold has been moving from the lower

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Speaker 1: left of the upper right. It's broken out. It's done

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Speaker 1: something unusual. In November, it had an outside reversal month,

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Speaker 1: a new low and taking out the previous lows for

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Speaker 1: the year, and then closing higher for the month, taking

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Speaker 1: out the previous months high at the same time. Outside

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Speaker 1: reversal days are important. Outside reversal weeks are more important

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Speaker 1: side of reversal months for technicians. And I'm not always

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Speaker 1: a technician, but I watched the technical circumstances are amongst

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Speaker 1: the most important technical circumstances that you see. So I

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Speaker 1: think gold has broken out to the upside, and I think, uh,

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Speaker 1: in my own account, I'm long gold and short to

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Speaker 1: stock market. Today I'm I'm breaking even. But over the

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Speaker 1: course of the past month and a half, it's been

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Speaker 1: the proper trade, and I'm gonna any any correction in that,

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Speaker 1: I'm going to add to it buying more gold, selling

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Speaker 1: more stocks. It's always good to get your thoughts. Dennis

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Speaker 1: Happier Returns for three was Dennis Gartman, former publisher of

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Speaker 1: the Gartment Letter, now chair of the University of Akron

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Speaker 1: Endowment Investment Committee.