Investor Dennis Gartman says stocks are rallying in a bear market, and apart from the jobs number, all the data points to an economy in recession

• Investing veteran Dennis Gartman says stocks are in a bear market in an "exuberant" event.
• The market recent strength comes as surprise to Gartman, as US Treasury yields remain inverted.

Investing veteran Dennis Gartman says stocks are rallying in a bear market, which he says is surprising given the evidence that suggests a recession is very much on the cards.

"The rally has been a little more exuberant that I thought," Gartman told Bloomberg Radio.

"Maybe it's just a rally in a bear market which I think is what it is but I have to admit, I have been somewhat taken aback by the fact that this market has remained as strong as it has," he continued.

The recent uptick in stocks not only has Gartman thinking it suggests signs of a bear-market rally. Morgan Stanley echoed the same view but warned that huge dips may still lie ahead for the market as it stands vulnerable to inflation and ongoing labor shortages.

Gartman's surprise over stock markets comes as the Treasury yield curve has remained inverted - where shorter-dated yields are higher than those for longer-dated bonds, which many see as a harbinger of recession - for more than a month and will continue to invert more substantively, alongside a hawkish Federal Reserve that is likely to deliver further rate hikes over the next couple of months, Gartman said.

Both factors are flashing signs for a recession which has been anticipated by many market leaders. An inverted yield curve has historically been a reliable indicator of a coming recession, although brief inversions typically don't predict an economic downturn.

Industry commentators have also warned that the Fed will drive the US economy into a slowdown as it tackles high inflation with big rate hikes.

That's despite the July jobs report which showed the US added 528,000 nonfarm payroll, exceeding economists estimates, to show a booming labor market.

"All of the economic data, other than the employment number seems to indicate an economy that's recessionary. Nonetheless, the jobs number was impressive," Gartman said.