And it's now time to check in with Dennis Gartman, chairman of the University of Akron endowmentn Investment Committee, former publisher of the Gartment letter. As we get three started. Happy new year, Dennis, it seems like investors are happy to put two behind them. Is that kind of explains the gains we're seeing across the board this morning. Well, it's interesting, Nathan, this is one of those rare days when you have gold higher, bonds higher, in stocks higher.
One of them has to be wrong. Normally they cannot move all and tandem one with the other. But perhaps it's just the fact that it's the start of the new year. We always see an influx of money coming in the first of the month of the first of the year. That happened exactly the same last year. The first day of the year was a was a rather substantive rally, and then it ended up being a bear market the day after. But it is rare to see both to see gold, stocks and bonds all all higher,
and rather sharply higher. So, as I said earlier, one of them probably is wrong. I think that stocks are probably the one that is wrong. But we'll see. Time shall tell. Well what makes you say that, Dennis, I mean, you were one of the first to call this a bear market shortly after the SMP five hundred made its peak one year ago. Today was its last closing record. What makes you think things are going to be the same as they were last year? Is? Is that what
you're saying? Yeah, that's basically what I'm saying. I think this is just the fact that we had. It's the start of the year, the start of the month, and there's always an influx of capital that comes in exactly a replication of what happened last year. The problem is that we have stock prices I think have had an inordinately high, large rally in the course of the past month and a half, predicated upon the Fed uh pivoting from its tightening monetary policies, and I think that that's
ill advised to consider that fact. I think the Fed is going to continue to allow the overnight not allow, but but move the overnight said funds right to five to five and a quarter percent over the course of the next several months. We'll see when we get to the first f MC meeting in February, but time shall tell. The The I m F has said that we're going to have that one third of the world is going to be in recession over the course of the next year or two. I think that that will will weigh
upon stock prices eventually. So again, it's unusual to see that we have stocks, bonds, and in gold rallying and on all on the same day. One of them has to be wrong. And as I said, I think it's the stock market that is wrong. I think we're going to see a replication of what happened last year. Yeah, you mentioned that call from the the director of the i m F that will third of the world is going to be in a recession this year. Uh, do
you include the US in that third of the world. Basically, I think the US is going to have a slowing economy. I'm not sure they will have an official recession two consecutive quarters of negative GDT growth such as what we had at the beginning of last year. But I think that the U s economy is going to be continuously slower than had been hoped for. And they said will
will will probably tighten for far too long. It's the tennessee of the FED is to be too too late and in tightening too late, and early or too early in easying or too late and easing. And I think that that's going to be the same circumstances this year, So we'll have a I don't think we'll have a recession by normal textual uh definition, but I think we're gonna see a weekly economy. Housing prices clearly are are weakening. Housing the man is clearly weakening, and housing is a
dominant force in the US economy. And I think that that's going to be the major thing, the major problem that will have to deal with over the course the next several months. If I remember rightly the last time we spoke, I think you've said that, along with consensus that the FED is probably going to peak at five to five and a quarter per cent. Is that still your call? And do you think that the FED? I mean you already said that you think the FED should
probably be pivoting sooner than expected. When do you think the FED should start thinking about reducing the the terminal rate? Actually, I think what I said is the said will be slow to to to go to a pivot. If I've learned anything in forty five years of being in the market, is so when the sad begins to tighten monetary policy after easing, or easing policy after tightening, it takes rates far farther, far higher or far lower, and for a longer period of time than even the most radical among
us want to believe. So I think the fact that the said will pivot eventually will be in three and if it's four, it will probably late in the year the FED will be The FED is slowed to change policy, and once it changes, it keeps that new policy in the in effect for a much longer period of time and takes rates much farther than anybody wants to anticipate. So it will be along a long period of time
before the TED pivots. About thirty seconds left in this segment, Dennis, But you said that the that you don't expect that there's going to be a technical recession for the US. How do you square that with the possibility that the FED could keep rates higher for longer? That that is the the prime question, isn't it. Time shall tell what happens,
how that how plays out. But again, I think it'll be a long period of time before the FED begins to pivot to to lower rates at little it'll manufacture higher overnight and said funds rate to five five and a quarter or five and a half percent, and then they'll stay stay at that level for a long period of time, just as they did when they ease and capt rates at the low level for a long period
of time. They'll do the same with high rates. They'll want to make sure that they see real definitive action, real definitive recessionary circumstances before they begin to begin to pivot. It will be a long period of time, so be patient, Dennis. If stocks are wrong, how much further do they have downward to go? I think they make a new low for the year, taking out less taking out the load that was made to the one in late September early October.
I don't think they'll go much below. They're ten to fifteen percent from down from where we are right now, would probably be sufficient to turn me from being barish of equities to being at least neutral, perhaps even bullish. So let's call attend to fifteen percent from where we are right now. It's a it's interesting, as we talked earlier, it's an unusual circumstances to see on stocks and gold
all rallying on the same time the same day. At the same time, they're doing it in almost exactly the same amount, about eight eight tenths of one percent across the board. So it's unusual and strange, and one of them has to be wrong. What's the catalyst that turns stocks from a bear market to a ball market for you? The FED changing monetary policy, and that's gonna be a
long period of time before that happens again. As I said earlier, in the forty five years I've been in the markets and and since graduate school, the one thing I've learned is that when the FED changes monetary policy, moves from easing to tightening or tightening to easing, it takes rates much farther and for a longer period of time than the most radical among us want to believe.
The FED changed policy last year, It's going to take at least until late probably early before the FED begins to pivot, and pivot means that they change from from tightening to easing and actually let rates go lower. That's gonna be a long period of time into the future. So I'm gonna be barished on stocks were probably quite some more protected period of time. I've been barised since January last year, had the university move a good ten to fift of its portfolio out of out of stocks
into two year notes. And that's we we got. Let's call it, let's say we got very lucky. Are you looking for further inversion in the yield curve? Then? With that view, why what's your outlook for treasuries? I think two s tens goes back to eight basis points again,
it'll test that level. It seemed that there was, for lack of a better term, resistance at about two basis points in the in the inversion of twos to tens, and I think we try to go back to that level before it's before we're done, before the Fed has done tightening monetary policy. In our last minute here, Dennis, gold hasn't really been the inflation hedge that it's been historically. Uh do you see that changing in twenty three? Well, first of all, gold has been moving from the lower
left of the upper right. It's broken out. It's done something unusual. In November, it had an outside reversal month, a new low and taking out the previous lows for the year, and then closing higher for the month, taking out the previous months high at the same time. Outside reversal days are important. Outside reversal weeks are more important side of reversal months for technicians. And I'm not always a technician, but I watched the technical circumstances are amongst
the most important technical circumstances that you see. So I think gold has broken out to the upside, and I think, uh, in my own account, I'm long gold and short to stock market. Today I'm I'm breaking even. But over the course of the past month and a half, it's been the proper trade, and I'm gonna any any correction in that, I'm going to add to it buying more gold, selling
more stocks. It's always good to get your thoughts. Dennis Happier Returns for three was Dennis Gartman, former publisher of the Gartment Letter, now chair of the University of Akron Endowment Investment Committee.