Gartman: US Stocks Near Bear Market

Guru discusses the U.S. market, as well as the latest developments in China and commodity markets.

Senior ETF Analyst
Reviewed by: Sumit Roy
Edited by: Sumit Roy

Dennis Gartman is the man behind The Gartman Letter, a daily newsletter discussing global capital markets. For more than 20 years, The Gartman Letter has tackled the political, economic and social trends shaping the world’s markets, and Gartman himself is a frequent guest on CNBC, Bloomberg and other financial media outlets. recently caught up with Gartman to discuss U.S. stocks, China's currency moves and the commodity markets. What's your take on this week's currency devaluation in China; do you think it's part of a bigger currency war?

Gartman: I'm afraid it might become part of a bigger currency war. But for now, I'll take the Chinese government at its word. I'll accept it as an attempt to allow the renminbi to float in a somewhat freer manner than it has in the past.

The currency has obviously been well-managed for the past several years. For the past month and a half, it never traded differently than 6.2095 [to the U.S. dollar]. It looked like the EKG of a dead man for a long while, and then all of a sudden this happened.

It seems to me that now the currency will be less managed and more free float, and that's what the International Monetary Fund has said it wanted to see in order to make the renminbi part of the SDR [reserve currency] basket. China clearly wants the renminbi to be part of that basket.

The staff at the IMF said it would probably not be until September or maybe October of 2016 before the renminbi is part of that basket. The People's Bank of China and the government are hoping this decision will speed that process up; I suspect it probably won't.

But it did catch everybody off guard, and it has sent all of the markets into a bit of chaos. We'll see what happens. So it's something to keep an eye on, but it's too early to make any bigger conclusions.

Gartman: Yes, that's the way one has to approach it. This is China; this is not a devaluation of the Zimbabwe dollar. This is not a devaluation of the Angolan currency. This is China, so you have to pay attention. What's your take on the Chinese stock market after the recent plunge?

Gartman: Chinese stocks were ridiculously overvalued two or three months ago. The public had moved into the market in a manner in which I've never seen anywhere, other than in the 16th century during the tulip bulb craze in Holland. The average investor over there has been taken out to the woodshed, and for President Xi, this is a very real black mark.

He and the government are going to throw everything and anything at the stock market. They still have a lot of firepower that they can throw at that market to get it to move higher again. After all, what is the reserve requirement in China? Something like 15 percent if I'm not mistaken. They can take that all the way down to zero. Are you a buyer of the stocks at these levels?

Gartman: No. I don't understand Chinese stocks. I'll let somebody else trade them. U.S. stock market volatility has picked up a bit recently. Are you concerned about that?

Gartman: Yes. For the last several months, we've failed to make new highs. We're beginning to take the leading stocks―the Apples of the world―out one by one and shoot them.

The inability to make new highs is very disconcerting. The inability to rally with good volume is disconcerting.

The technicals are starting to turn in an ill manner. It is possible―I don't know for sure― that the bull market may be over and a bear market may have started. If so, we're in the very early, very incipient phases of that. One area you're very familiar with is commodities, where we've seen this dramatic bear market. Is there any end in sight to the sell-off?

Gartman: The fact that the coverage in the media is so overwhelmingly bearish and the articles are so one-sided tells me that being short of commodities makes no sense at all.

Does that mean that one goes out and buys them? No. But I think the time for being short of them in collective terms is behind you. There are markets in which one can still be short. The crude oil market still wants to go lower; WTI will probably go into the $30s just to scare everyone.

But grains have probably seen their lows. Cotton's trying to see its lows. I think some of the soft commodities have seen their lows.

In collective terms, the worst in the commodity market is probably behind. In individual terms, there are some markets that still could move more to the downside. What's your take on gold specifically?

Gartman: Gold made its lows in yen terms years ago. Gold in euro terms made its low about a year and a half ago. Gold in dollar terms probably hasn't seen its low yet.

Relatively, it's been unbelievable how much better it has been to own gold in non-U.S. dollar terms. I see gold as nothing more than a currency; it's a different kind of currency, but it's a currency. And currencies are always traded one against another.

Why would you want to buy gold with a currency, such as the dollar, that has been strong and where the monetary authorities are threatening to tighten, when you can buy gold in yen or euro terms, where the monetary authorities are still experimenting openly with quantitative easing and have said that they're going to continue? It's patently illogical to do the former compared to the latter.

Contact Sumit Roy at [email protected].

Sumit Roy is the senior ETF analyst for, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for, with a particular focus on stock and bond exchange-traded funds.

He is the host of’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays,’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.