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US Stocks 'No Place for Pros or Amateurs': Gartman

As Republicans in the House of Representatives failed to agree on a plan to raise the US debt ceiling and postponed a vote initially planned for Thursday, Dennis Gartman, author of The Gartman Letter, warned that the US stock market was a dangerous place at the moment.

House Speaker John Boehner (R-OH) conducts his weekly news conference at the U.S. Capitol, on July 21, 2011 in Washington, DC.
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House Speaker John Boehner (R-OH) conducts his weekly news conference at the U.S. Capitol, on July 21, 2011 in Washington, DC.

"It's no place for pros or amateurs," Gartman told CNBC Friday. "The sidelines seems like such a nice place to be."

Rebel Republicans refused to back a budget deficit plan proposed by John Boehner, their own leader in the Republican-controlled House of Representatives, on Thursday night, despite the August 2 deadline for a deal looming. Democrats had already promised that Boehner's plans would be blocked in the Democrat-controlled Senate.

The deadline of August 2 is not critical, and the US could continue paying its debts until the middle of August, according to Gartman. The impasse over the country's repayment of its debt has driven US stocks lower this week as members of the radical Tea Party movement within the Republican Party demand deeper spending cuts.

"This is a 15 minutes of fame situation for some politicians," Ralph Silva, director of SRN, told CNBC Friday. "They are getting a lot of air time, and this is going to have a direct effect on the next election."

Opportunity for Investors

He warned that traders in London don't believe that there is a possibility that US lawmakers won't resolve the debate over the debt ceiling.

"This offers an opportunity for investors. If you take your money out of the equity markets until August 3rd, and the talks don't work by then and US equity markets take the plunge, there will be some great buying opportunities of depressed companies for the future," he said, adding that he plans to pursue this strategy himself.

"If you look historically, the markets that take the biggest hit with news like this are the equity markets," he explained.

Gartman described himself as "completely on the sidelines" with US stock markets at the moment. "I find myself spending far more time on the forex and energy markets and far less in the energy markets," he said.

Investors will turn towards other markets as part of a long-term trend away from the US, Gartman believes.

"The Canadian market, the Australian, the Kiwi, the Brazilian, some places in Europe, are all going to be of far greater importance in the coming decades than they have been in previous decades," he said.

"The world is a smaller place, communications are better, manufacturing is all around the world, and the game really has changed," Gartman added.

One of the threats facing the US is the possibility that it would lose its treasured AAA credit rating, which would raise its borrowing costs. Gartman is bullish on the US retaining its AAA credit rating, and argued that even if it was downgraded to AA, it would be "the best AA rating ever".

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