- Investing veteran Dennis Gartman says stocks are in a bear market in an “exuberant” event.
- Recent market strength surprises Gartman as US Treasury yields remain inverted.
- Despite a superb jobs report in July, all data points to a recession, he added.
Investing veteran Dennis Gartman said stocks were rallying in a bear market, which he said is surprising given evidence suggesting a recession is very much in the cards.
“The rally was a little more rambunctious than I expected,” Gartman told Bloomberg Radio.
“Maybe it’s just a rally in a bear market which I think is what it is, but I have to admit I was somewhat surprised that this market stayed so strong” , he continued.
The recent rise in stocks not only made Gartman think it suggests signs of a bear market recovery. Morgan Stanley echoed the same view, but warned that huge declines could still come for the market as it is vulnerable to ongoing inflation and labor shortages.
Gartman’s surprise in equity markets comes as the Treasury yield curve has remained inverted – where shorter-term yields are higher than those on longer-term bonds, which many see as a harbinger of the recession – for more than a month and will continue to reverse further on the bottom, alongside a hawkish Federal Reserve that is expected to make further rate hikes over the next two months, Gartman said.
These two factors are harbingers of a recession anticipated by many market leaders. An inverted yield curve has always been a reliable indicator of an upcoming recession, although brief inversions generally do not predict an economic downturn.
Industry commentators have also warned that the Fed will drag the US economy down as it tackles high inflation with big rate hikes.
This is despite July’s jobs report which showed the United States had added 528,000 non-farm payrolls, beating economists’ estimates, to show a booming labor market.
“All economic data, other than job numbers, seems to point to an economy in recession. Nonetheless, job numbers were impressive,” Gartman said.