Dennis Gartman Sees Stocks Falling 15% in 2022 on Aggressive Fed Hikes

(Bloomberg) — Stocks could face a “slow, laborious” decline in 2022 as a result of a more hawkish Federal Reserve that may raise interest rates four times, according to Dennis Gartman.

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The University of Akron Endowment Chairman said in an interview with Bloomberg Radio Monday that stocks could trade 10% to 15% lower this year. While Gartman has long been calling for a bear market, he said the catalyst for the decline could be the central bank raising interest rates amid a continued rise in inflation.

While most of Wall Street is forecasting that the Federal Reserve will raise rates three times in 2022, Gartman expects a more aggressive approach in part because of newly appointed members who tilt hawkish. He also said one hike could be as much as 50 basis points and the benchmark overnight rate could jump at least 100 basis points from current levels by the end of the year.

“The advent of a bear market will come when the Fed begins to tighten monetary policy, and that will be later this year. No question,” said Gartman, who formerly published the influential “The Gartman Letter.”

The S&P 500 gained 27% in 2021 and surpassed nearly all of even the most bullish analyst estimates. Gartman admitted he’s been wrong for the past six months to call for a bear market. As the chairman of the University of Akron endowment, he reduced equity exposure by 10% to assure the foundation has ample spending money, but he said the risk in this strategy is that they miss out on further gains.

“I think it’ll be a slow, laborious decline in prices, not a crash of any sort of any substance,” said Gartman. “So it’s a matter of being less involved in the market. Going to the sidelines in a quiet and reasonable manner I think is the proper way to trade for the next year or two.”