Dennis Gartman, who was so down on US stocks he reduced equity holdings under management on Dec. 31, is exiting the perma-bear camp.
“Quietly, slowly, laboriously, I’m beginning to become less bearish,” the chairman of the University of Akron Endowment told Bloomberg Radio on Monday. “That doesn’t mean I’m becoming bullish, but the market seems not to want to go down any longer. I’m quietly neutral.”
The equity market last week had its best week in a month and stocks gained again on Monday, paring this year’s losses to less than 17% as measured by the S&P 500. A market debate is raging on whether the worst of the selloff has passed, partly because there are signs that Federal Reserve rate hikes already are starting to rein in rampant inflation.
Investors are “discounting the fact that the Fed is going to raise the overnight fed funds rate by 75 basis points” this week, Gartman said. That increase and subsequent ones “are already factored in,” he said.
What persuaded the former publisher of the influential “The Gartman Letter” to become less bearish was the volume of trading in stocks. “We used to go down on big volume,” he said. “Suddenly in the past week and a half or two, we’re going up on better volume. So follow what volume does. Volume speaks volumes.”
But as he said, Gartman is no bull. “I think we’re already in a recession,” he said. “When we see the numbers on GDP later this week, we’ll acknowledge that we’ve had two consecutive quarters of negative GDP growth. And I think the third quarter is gonna be negative GDP growth also. It’s not going to be nearly as deleterious as was the great recession of 2007 to 2009. Nonetheless, it’ll be negative GDP growth for two or three quarters.”
In January, he said stocks could face a decline of as much as 15% in 2022, and he reduced the equity portion of the university’s endowment by a range of 12% to 15% on Dec. 31.
This article was provided by Bloomberg News.