Gartman Now Bullish Both Stocks and Bonds

Dennis Gartman, the world-renowned investor, has turned bullish on both stocks and bonds.  He showed up on CNBC Fast Money and flip-flopped again after looking for a correction last week!  By the way, I am not going to short stocks because of him, but it is one of the indicators that I look at.

I actually got short bonds yesterday, at sort of bad prices compared to where it is trading now, so I was early.  Bonds are another thing where I should wait for perfect conditions to short, and yesterday I jumped the gun.  I will stay short into next week, as I believe the bond bus has gained too many fast money traders and is due for a little shake out.  At 2.43% 10 yr yields, it would not surprise me to see it back at 2.60% after the ECB meeting and NFP next Friday.

Most of the strength in Treasuries is being derived from an insanely strong European sovereign debt market.  Bunds are trading at 1.34%, close to all time lows hit in July 2012 at 1.16%.  Back then, US 10 yrs were trading at 1.45%.  The European bond market strength has spilled over to Treasuries, as a weakening euro has catalyzed a shift to US fixed income.   The strength in the European sovereigns is unsustainable for the short term, and very overbought, but I would not dare to short them long term.

I don't think the euro will weaken much more here, it is front running the ECB stimulus coming next week.  I am a long term believer in a strengthening euro and weakening dollar.

Stocks seem down right boring compared to bonds these days.  Even with a strong bond market, that doesn't signal any near term equity weakness, because this is foreign capital flows and short covering, not a change in the US economy.  The S&P will grind higher as it now has the tailwind of lower rates going for it.