If there was one event that made us certain that Donald Trump would become the next US president, it was when none other than Dennis Gartman made a prediction on August 31: “the market is wise enough to know that Mr. Trump has no chance of becoming the next president and thus cannot and will not affect monetary and/or economic policy here in the U.S. or abroad.”
Fast forward three months to the first day under President Trump, when 24 hours after the same Dennis Gartman said he was unwinding his short hedges and going longer, he now warns his newsletter clients to sell everything and “that positions on the long side have to be reduced into any strength that may develop; that we fear that the bull markets are indeed finished and that bear markets are now full engaged.“
STOCK PRICES HAVE COLLAPSED EVERYWHERE AROUND THE WORLD following the election results here in the US; however, that loss is not fully reflected in the mere 67 “point” decline in our International Index for the collapse in the US stock index futures and the eventual collapse in the stock prices here and in Europe shall not be reflected in our Index until tomorrow. However, at one point earlier today the S&P futures were trading 95 “points” lower and the Dow futures were 675 points lower, and of course the European stock index futures too will be down several full percentage points when they begin to trade.
The global stock markets are fearful… properly… that a Trump Administration will lead to a collapse of world trade; that trade protection and tariffs will become the norms and that the era of freer, open trade has come… or may come… to an abrupt, powerful end. This is perhaps an exaggeration and hopefully far cooler heads shall prevail. Hopefully, that which Mr. Trump has promoted on the campaign trail regarding closed trade will be dismissed as being properly and utterly lunatic by the wiser minds in the Republican Party, but for the moment there is real panic in the air and prices are collapsing.
At this point there is nothing that we can say other than protection must be taken; that positions on the long side have to be reduced into any strength that may develop; that we fear that the bull markets are indeed finished and that bear markets are now full engaged [sic]… unless something truly amazing happens regarding the final states whose votes have not been fully counted and Mr. Trump suddenly loses the election he never should have been nominated for in the very first place.
Populism is now the guiding light of global economics until further notice and the era of freer, open trade is now in eclipse. The US under Mr. Trump shall lead the way toward greater trade protection, and other nations shall have no choice but to erect “Walls” and tariffs in response. We have not learned the lessons of Smooth-Hawley in the 30’s and shall have to re-learn then the very hardest way apparently.
The S&P is about 40 points higher since he made this prediction, and is now effectively assured to close green.
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