Dennis Gartman: There Are 'Huge Amounts' Of Uncertainty

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Dennis Gartman, Editor and Publisher of the daily ‘The Gartman Letter' discussed the "huge amounts" of uncertainty that are presenting themselves in the market. Gartman started off by stating that it is "almost comical" that many individuals within the investment community believe that the Chinese Central Bank's move to devalue their currency was a "one-off event." The investment pro further argued that over the past three years the Renminbi/Yen rate has gone from effectively 12 RNM/Yen to just over 20. This is the relationship, not the RNM/$ rate, that the Chinese central bank is focusing on as the Japanese currency gave it a "very material edge" in export trade with the US and Europe. "Those focusing their attention then solely upon the Renminbi/US$ rate shall miss what is really going on: a veritable currency war between China and Japan," the letter stated. "This ‘war' is only now a goodly sized skirmish. It very likely shall become much, much worse over time." Shifting over to Greece, Gartman stated the country has been "dealt to the sidelines" and "quite honestly, who cares really at this point?" Moving on to the domestic front, Gartman noted that the Commerce Department reported that wholesale inventories rose 0.9 percent in June to $586 billion, an increase of 5.4 percent from a year ago. This compares to the Street's expectations of 0.4 percent – implying inventories are beginning to back up which "is rarely a good sign." Meanwhile, sales at the wholesale level rose by a "scant" 0.1 percent, and are down 3.8 percent year-on-year, which "is not good news."
Equities ‘Rather Sharply' Lower
Moving over to the equity market, Gartman pointed out some disturbing trends in the market. "One by one the markets are turning downward through important moving averages signaling that the present downturn is more than a mere bout of profit taking," the letter argued. "We do indeed find it disconcertingly bearish when the 50 day moving average falls downward through the same market's 200 day moving average: the so-called "Death Cross." We find it disconcertingly bearish when the market falls below its own 200 day moving average and we find it disconcertingly bearish when the broader moving averages are themselves turning downward." Meanwhile, the stocks that had led the recent bull-run, such as
Apple Inc.AAPL
have broken trend lines themselves. As such, it is possible that a "very real bear market has begun." "We've been unwilling to make that case heretofore, although we feared that that was precisely what has been developing, because every time it appeared that a potential interim top was forming the markets would right themselves; dust themselves off; look around; see that the economic coast was still clear and head higher once again," the letter further stated. "But this them the market appears staggered; it is not dusting itself off, and rather than leaping to its feet to begin the fight anew it is staggering to one knee, bloodied and exhausted and looking for the referee to stop the fight.
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Posted In: NewsChinese Central BankDennis GartmanrenminbiThe Gartman Letter
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