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Dennis Gartman: Bank Stocks Hit Bottom On Downgrades

Wednesday, 7 Dec 2011 | 6:56 PM ET

RecentS&P bank downgrades mean that financial stocks have hit bottom, investment pro Dennis Gartman said Wednesday on “Fast Money.”

“When they rang that bell on Thursday evening, downgrading, that was it,” he said. “It happens too many times. I’ve been at this for 35 years. I’ve seen this happen before. It’s happening again. It’ll happen again in the future.”

Gartman: Long Gold & Equities, Short Euro
The Fast Money traders, Dennis Gartman weighs in on the trade in gold, stocks, and the euro.

The publisher of The Gartman Letter said this will bear out six months from now.

As for Gartman’s move away from gold in favor of equities, which was widely publicized earlier in the day, he clarified it was a shift, not a liquidation.

“It wasn’t that gold bothered me. It’s that equities are starting to do the right things, and given the valuations you have, given the corporate balance sheets in the United States, the cash that’s on hand, I thought, you know what I’d rather do? I’d rather own real assets rather than gold,” he said. “So at the margin, I’m moving a bit.”

Gartman said he swapped half of his gold positions for equities.

“I think the trade next year is to be long equities, long gold, short the euro in equal dollar amounts in both sides. I’ve got that trade on,” he said.

MF Global Effects

Gartman, who is on the Kansas City Board of Trade, said the failure of MF Global Holdings might create a ripple effect.

“We could have some problems next year in the production of crops because farmers use the derivatives markets to price their production and they don’t have that right now,” he said. “You have created confusion amongst farmers, who use derivatives to hedge. Anytime you create confusion, you get problems.”

Gartman also had harsh words for the U.S. Commodity Futures Trading Commission over its role.

“Now what is CFTC doing coming into this circumstance? CFTC said, ‘We’re the ones responsible.’ And the first questions you had from CFTC were, ‘Oh, we didn’t realize there were an equal number of longs and shorts in the futures markets. Is that really true?’ I mean, it was astonishing the ignorance and the stupidity of some of the regulators at the beginning of this,” he said.

Amid the traders’ talk of top trades, Gartman weighed in on IBM, which saw a 34.70 percent increase in its share price from last year.

“Do you know any of your buds who own it? No,” he said. “And should they? Absolutely. It keeps making new highs. Strongest stock up there, and I bet none of us own it.”

Trader Joe Terranova said he expected IBM stock to hit $200 per share. “That’s how I’m playing it.”

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Trader disclosure: On Dec. 7, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Seymour is long AAPL; Seymour is long BAC; Seymour is long INTC; Seymour is long CSCO; Gartman is long Gold; Terranova is long EMC; Terranova is long SU; Terranova is long NCR; Terranova is long UPC; Terranova is long TRLG; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long AXP; Terranova is long IBM; Terranova is long HES; Terranova is long CAT; Terranova is long SWN; Terranova is long CNI; Terranova is long DECK; Terranova is long SBUX; Murphy is long AKS; Murphy is long BAC; Murphy is long BTU; Murphy is long PCX; Stutland is long INTC; Stutland is long IBM ; Stutland is long CSCO and short calls; Stutland is long WMT and short calls; Stutland is long FXE put spread ; Stutland is long EWZ and short call; Stutland has GOOG short put spread; Stutland is long LQD; Stutland has TLT short puts; Stutland is long TIPS; Stutland is long DBA and short calls; Stutland is long AAPL and short calls; Stutland is long MSFT and short calls;

For Brian Kelly
Shelter Harbor Capital is long IWM

Shelter Harbor Capital is long EUO

Shelter Harbor Capital is long AUSSIE $

Shelter Harbor Capital is long RRC

Shelter Harbor Capital is long LNG

Shelter Harbor Capital is long CAT

Shelter Harbor Capital is long UK Gilts

Shelter Harbor Capital is long CAF

Shelter Harbor Capital is long Oil

Shelter Harbor Capital is long Corn

Shelter Harbor Capital is long Soybeans

Shelter Harbor Capital is long Rice

Shelter Harbor Capital is short Suisse Franc

For Brian Stutland
Stutland Volatility Group is a market maker holding hedged positions in VIX and VXX underlying and options holding hedged positions in SPY and SPX underlying and options.

For Jeff Palma
Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

For John Bollinger
Bollinger has positions in SPY

For Michael Graham
No disclosures

For David Greenberg
No disclosures

For Patrick Doyle
No disclosures

For Peter Schiff
No disclosures

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