100% Chance of Further Fed Easing: Dennis Gartman

The weak U.S. jobs report for May and a deterioration in the U.S. economy will lead the U.S. Federal Reserve to announce another round of quantitative easing as early as this month, Dennis Gartman, the editor and publisher of The Gartman Letter told CNBC on Monday.

Dennis Gartman
Dennis Gartman

According to Gartman, Friday's employment report, which showed an increase of just 69,000 jobs was "very disappointing," especially since numbers for March and April were revised downwards.

"The Fed has made it abundantly clear that it has kept QE3 up on the table; (it) would be executed if economic circumstances deteriorated. And you have to admit that Friday's number — no matter how you try to slice it — was deterioration," Gartman told CNBC's “Capital Connection.”

Gartman believes a third round of quantitative easing could come as early as the Fed’s next meeting on June 19-20, or at the following meeting on July 31-Aug. 1. The central bank will want to ease as “far ahead” of the U.S. presidential election in November as possible, so it doesn't come off as being "politically amenable" to the current administration, he noted.

While Gartman concedes that further Fed easing and another round of long-term refinancing operation by the European Central Bank won't have a big effect on the global economy, he said it will be better than doing nothing.

Gartman added that European leaders’ plans to cut spending were "terribly ill-advised" and they should instead bail out the region's banking system.

"I'd much rather be optimistic than pessimistic, but I think the European governments have forced me into being somewhat pessimistic," he said. "Until they come to their senses and stop this silliness of austerity demands, do something to recapitalize the banks, and give consumers, give governments, and give businesses time to take a breath, one has to be frightened about the future prospects."

Gartman warned that gold won't act as a safe haven in the current environment, and suggested investors stay on the sidelines and remain in cash.

"One might be wise to be there for another month or two months until this tsunami of ill-economic news has passed," he said. "And it will pass, these things always do, but in the interim, this is very disconcerting."