Hougan: What about emerging markets? They’re also taking it on the chin this morning. Can you own them?
Gartman: Well, the dollar’s getting strong and foreign currencies are getting weak. That’s beneficial to their stock markets. But I’ll leave fishing in the emerging markets to people wiser than I am.
If you must look into emerging markets, look at India. It has the best government right now. I have enormous respect for Prime Minister Modi (related ETF: iShares MSCI India ETF (INDA)).
Hougan: One sector that caught my attention today is financials, which is moving up big: Is that a long-term move, or a kneejerk reaction anticipating less regulation?
Gartman: Financials understands that interest rates are going higher, spreads will widen, and it will be a better environment for banks. Banks make no money when interest rates are at zero; they make a lot more money when interest rates are at 5%. So it will be a better environment for banks going forward.
Hougan: What about gold?
Gartman: I am now, have been and will continue to be bullish on gold in euro-denominated terms …
If you look at the adjusted monetary base, it has tumbled in the U.S. … as the Fed stopped experimenting with quantitative easing. The same cannot be said in Europe, where the monetary authorities have had no choice but to continue. Their economies are still mired in deflation and far underperforming the economies here in the United States.
So … I think the euro will fall well below par to the U.S. dollar, and if I believe that—and the charts are telling me that too—why would you buy gold with a rising dollar when you could buy it in a devaluing euro? I think it’s the best of all trades.
Hougan: We’re roughly two months away from Inside ETFs 2017, where you’re giving the closing keynote speech. Between now and then, are you bullish in general? Where would you tell investors to place their bets?
Gartman: The trend in equity prices is still from the lower left to the upper right. Weakness is to be bought, especially in infrastructure-oriented equities. If you’re uncomfortable being outright long, there are myriad ways to hedge yourself. But you want to err upon the side of being bullish on stocks.
Beyond that, I think you want to err on the side of being bullish on the U.S. dollar and bearish on the euro. I think you want to err on the side of avoiding debt securities, because I think interest rates are going to rise. … If you’re a punter, you probably want to be short the bond market; if you’re an investor, you just want to steer clear. And I think you want to err on the side of being bullish on gold, but specifically in euro terms. That’s my story and I’m sticking to it.