Veteran strategist Dennis Gartman says this is still a bear market with no Fed pivot in sight.

As the market heads into the new week, attention is still very much on Friday’s jobs report which showed an unexpected 528k rise in nonfarm payrolls. “It came as quite a surprise to me,” said Dennis Gartman, the retired editor of the Gartman letter and now chair of Akron University’s Endowments and Investments Committee. in an interview with Bloomberg Radio.

He said the digit numbers show no Fed pivot in sight. Gartman said he expects not just a 75 basis point hike in September, but another 75 basis point hike in November and possibly a half-point hike in December. However, shares moved from their lowest levels of the session following the release of the report, with the Dow Industrials DJIA,
actually ended in positive territory, while the S&P 500 was down just 0.2%.

“I have to admit that the rally was a bit more exuberant than I thought. I was a little surprised by the response on Friday. Maybe it’s just a rally in a bear market, which I think is the case, but I have to admit that I was a little surprised that given the strength of the yield curve, the market has inverted and is staying so strong continue to invert even more,” he said. He added that he was now “less approachable” to his earlier prediction that the stock market would fall another 20% by the end of the year.

Gartman advised the Akron Foundation to divest 12% of its portfolio from stocks at the end of December, and then recommended that it divest an additional 3% from stocks and gold in March. The S&P 500 SPX,
is down 13% this year while Gold GC00,
has slipped by 2%.

He acknowledged that not everyone sees the world their way. “When Warren Buffett buys, you at least have to be careful, but you don’t always have to follow him. You need to offset, here’s one of the greatest investors of all time doing something on the bullish side,” Gartman said. And he sees stocks worth buying. “I really like dividend stocks,” he said. “I like things that hurt when I drop them on my foot. I like copper, I like trains, I like ships, I like things that move.”

Gartman said the bond market is more likely to be right than the Fed on long-term growth. “I’ve only been doing this for 45 years, so I’m still a newbie,” he said. “The bond market has reversed in the last week. We had a new price high, a new yield low, and on Friday, after the numbers came out, there was a sudden technical reversal. I’ve learned to look for reversal days and I really do look for reversal weeks, which are rare.”

The market

The mood is positive, even if not exuberant at the beginning. US stock futures ES00,

were higher, Bitcoin BTCUSD,
rose, and the dollar DXY,
was a little weaker.

The Buzz

The Senate narrowly passed the roughly $740 billion Inflation Reduction Act over the weekend, setting the stage for the Climate and Prescription Drugs Act to pass in the House of Representatives later in the week.

Fed Governor Michelle Bowman said over the weekend that she supports a 75 basis point hike until inflation is contained. “In my view, hikes of a similar magnitude should be on the table until we see inflation coming down in a consistent, meaningful and durable manner.” she said.

China posted a record trade surplus in July after exports rose 18% year-on-year while imports rose just 2%.

cvs health cvs,
trying to buy Signify Health SGFY,
a home health services company, according to The Wall Street Journal. Pfizer Closed $5.4 Billion Global Blood Therapeutics GBT Deal

vaccine manufacturer BioNTech BNTX,
posted worse-than-expected profits and sales in the second quarter.

Buffett’s Berkshire Hathaway BRK.B,
reported a $44 billion loss on the falling value of its equity investments, even as its operating profits increased.

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Baseball legend Pete Rose sparked controversy after returning to Philadelphia to celebrate the 1980 Phillies team his statements about an alleged relationship with an underage girl.

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Palantir Technologies

The graphic

So which companies are at risk from the 1% share buyback tax included in the Inflation Reduction Act? Lori Calvasina, head of US equity strategy at RBC Capital Markets, created this chart of sectors that have been more aggressive on buybacks. She doesn’t expect the legislation to have too much of an impact — companies could find their stock prices too low at this point, even with a buyback tax.

Random Reading

Here’s how Nicolas Cage squandered a fortune of $150 million.

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Need to Know starts early and will be updated by the opening bell, but sign up here to have it delivered to your email box once. The emailed version will be sent around 7:30am EST. Veteran strategist Dennis Gartman says this is still a bear market with no Fed pivot in sight.

Brian Lowry

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