Hugh Hendry Warns To “Prepare For Hyperinflation”
by ilene - May 28th, 2010 3:40 pm
Hugh Hendry Warns To "Prepare For Hyperinflation"
Courtesy of Tyler Durden
The endlessly entertaining Hugh Hendry, who gave Jeffrey Sachs a royal beatdown yesterday and pretty much discredited the Columbia professor for life, is back in this interview with Money Week’s Merryn Webb, in which he once again is not afraid to make "bold" statements. Such as that hyperinflation is pretty much inevitable, that China is the functional equivalent of the Next fashion chain in the 1980s, that instead of listening to idiots on TV who just talk their high beta books, investors should buy the largest and safest stocks. Interestingly, Hendry actually suggests a viable way to fix America’s problems, which would require China to write off its US debt, thus "securing the health and vitality of China’s biggest customer." Alas, we don’t think it would be sufficient, as China holds about $1 trillion of US debt (at least officially). For the Hendry plan to work, debt repudiation would have to go viral, with all banks, US and European, writing down foreign debts as well. Of course, this would bring about the crash of the financial system overnight which is why it won’t happen. And yes, it still will crash, as the financed assets are bled of all their cash flows, but at least the grind into systemic bankruptcy will be slow, painful (for the middle class) and very drawn out. As for hyperinflation, Hendry’s view coincides with that of Zero Hedge: "the current deflationary shock will deepen and then create "political legitimacy to go nuclear with hyperinflation" via the printing press."
h/t Kevin
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DiggHugh Hendry’s Slams Economist Jeffrey Sachs: I Would Recommend You Stop Going Skiing And Panic
by ilene - May 27th, 2010 1:20 pm
Hugh Hendry’s Slams Economist Jeffrey Sachs: I Would Recommend You Stop Going Skiing And Panic
Courtesy of Courtney Comstock of Clusterstock/Business Insider
The European banking system is in crisis, says Hendry.
"I would recommend you panic."
The hedge fund manager of Eclectica Management went on BBC Newsnight last night to play pessimist against Jeffrey Sachs, an economist from Columbia University.
Of course the two get into a fight. It’s awesome.
At first Hendry is talking quietly and his manner is worryingly subdued but wait just a minute. He starts going after Sachs at 2:38.
"When you bring on a professor and when you bring on a politician, they are unaccountable. Jeffrey’s wrong, you know what? He’ll survive and tenure. I’m wrong, I go bankrupt."
Then Jeffrey defends himself a little bit, says no one should jump to the conclusion that all is lost, and Hendry literally jumps on him. (4:50)
"I don’t know," says Hendry, "because, was Jeffrey skiing two months ago? I was working, Gillian (Tett, who was also on the show) was working. So we can tell you about the real world."
It’s so offensive that the host has to jump in and say, "Now that’s just a low blow."
(Meanwhile, Gillian Tett is loving this, grinning from ear to ear.)
Then Jeffrey, who doesn’t want to let some other guy fight his fight for him, warns Hendry:
"Please watch your language, it’s just ridiculous. Watch your rhetoric a little bit."
Seriously, says Hendry. It’s time to worry. Panic.
"Banks today are refusing to lend to each other. Bank share prices are collapsing. We have no ability to gauge the credit-worthiness of the banking system."
"I say, let’s purge this system of its rottenness," recommends Hendry. "Let’s take on a recession. It’s going to be tough. People are going to lose their jobs."
"The banking sector is responsible for gross folly," he says. The solution is just, "Don’t pay them. Don’t reward folly."
"We can spread this over 20 years or we can get rid of it over 3 years… You make a mistake, you pay for it."
Of course remember that Hendry is shorting the crap out of Greece and the European banking crisis. He’s a big proponent of speculation and shorting, so he hates bailouts and would love massive failure.
Deep Thoughts From Hugh Hendry: Eclectica Fund May 2010 Manager Commentary
by ilene - May 20th, 2010 12:05 pm
Courtesy of Tyler Durden
h/t Rio Tinto must die
| Attachment | Size |
|---|---|
| Eclectica Letter May 2010.pdf | 619.64 KB |
Hugh Hendry Sees 1920′s Japan-Like Crash In China
by ilene - May 19th, 2010 2:17 pm
Hugh Hendry Sees 1920′s Japan-Like Crash In China
Courtesy of Tyler Durden
Hugh Hendry, whose previous appearances have been well-logged by Zero Hedge, and who is currently raking the money thanks to long Treasury bet and his EURUSD short from when the pair was 20% higher, has never been a fan of China, and almost got into a fight with Marc Faber recently discussing the country’s future prospects. In fact, Hendry uttered this memorable soundbite back in February, in which he mopped the floor with Goldman permabull Jim "BRIC" O’Neill: "I love Jim O’Neill. I love that Goldman Sachs guy. He says you either get it, or you don’t. I don’t get it. In the future there will be a Confucius saying: the wise man not invest in overcapacity. The flaw of the business model, at the center of it is a craving for power as opposed to profit." BusinessWeek reports that Hendry has now officially put his money where his mouth is and has bought puts on 20 companies that will profit from “a dramatic collapse” of China’s growth. With the Chinese stock market approaching 52 week lows, will Ecclectica soon become the next Paulson & Co. hedge fund iteration, even as the latter continues (allegedly) to bet on a US recovery, and thus stands to lose tens of billions if the thesis does not play out (although we are fairly confident Paulson’s long stock positions are matched by even longer CDS hedges… but without additional data, we can never be sure).
More from BusinessWeek:
“There are striking parallels with Japan in the 1920s, when ultimately the whole system collapsed,” said Hendry, 41, whose firm manages $420 million in assets. “China could precipitate a much greater crisis elsewhere in the world.”
Japan’s export boom collapsed after the war amid excess global capacity, slashing growth and sparking a stock-market crash and bank runs.
Hendry’s flagship Eclectica Fund, a global macro hedge fund with $180 million in assets, may gain almost $500 million from its options if China’s economy plunges into a recession, he said. The options cost the fund about 1.5 percent of its net asset value annually, Hendry said.
China’s vulnerability to a crash comes from the “inherent instability” created by a lending binge for infrastructure projects that’s “unprecedented in 400 years of economic history,” Hendry said. The country is also exposed to exports to
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Hugh Hendry: The Greek “Bailout” Is Really A Bailout Of French Banks
by ilene - May 6th, 2010 5:34 am
Hugh Hendry: The Greek "Bailout" Is Really A Bailout Of French Banks
Courtesy of Tyler Durden
Yesterday we pointed out that France was a global top three derisker in sovereign CDS as traders have shifted their worries from the periphery to the core. We have long discussed that the reason for this is that France, not Germany, has the greatest exposure to Greece and the PIIGS. Below is an RT clip in which Hugh Hendry confirms just this: according to the Ecclectica head man, a mark to realistic market of Greek debt would wipe out E35 billion in French bank capital, "and it is questionable whether the French banking system would take such a hit." Hendry’s solution, as has been the case from the solution, is for Greece to leave the euro, and points out that due to FX inflexibility, there will be no tourists in Greece this year as everything becomes painfully expensive, not in Drachmas but in Euros.
We would add that the burning parliament is probably not that much of a tourist draw either. In typical fashion, Hugh dismembers Angela Merkel’s hypocrisy: "When the truth becomes unpalatable, what is the truth. Angela Merkel, when we say she is being generous, there is nothing generous about spending taxpayers’ money in another country, that is not generosity, that is merely trying to salvage a bankrupt set of political ideology. So to blame the messenger when it’s the truth that hurts, I find that inexcusable." Just as Hugh’s huge bet against the euro has proven to be a terrific success, we are confident that he will be correct about the end of the EMU quite soon as well. And as the moderator adds "Shame on you, Europe, for needing the IMF to bail you out. Europe is like an African nation." Amen.
Hugh Hendry: “We Hedge Fund Managers Are On Your Side”
by Zero Hedge - March 11th, 2010 11:47 am
Hugh Hendry: "We Hedge Fund Managers Are On Your Side"
Courtesy of Tyler Durden
Originally authored by Hugh Hendry and appearing in the Daily Telegraph
You don’t know me; we’ve never met. But I fear you are being encouraged to dislike me. Let me explain: I’m a speculator. I manage a hedge fund. Apparently I profit from your misery. Accordingly, our political leaders are keen to see the back of me.
Only yesterday, Germany and France were calling for the "fastest possible" adoption of new rules to put an end to financial speculation. But before you write me off I ask that you listen to my side of the story.
First, and much like the bogeyman of folklore, the size and significance of the hedge-fund industry is vastly over-stated. The best estimate is that people like me control just 2.5 per cent of total global financial assets under management. The ability to move prices and markets resides more with the managers of pension funds, unit trusts and our banking contemporaries; fortunately, for them, they are on much better terms with our political masters.
Second, and much to my regret, I have to correct another misconception. I am not guaranteed success; far from it. I have no certainty or monopoly on making money; that’s the nature of risk taking, there is no free lunch. And believe me, I am subject to the harshest possible critic: the market.
Unlike my political adversaries I can’t spin this out. If I am wrong in my deliberations, I have to record a loss immediately. So it should come as no surprise that I give great consideration to what I do.
But what about this short-selling business and the allegation that hedge funds seek to profit from the misery of others; are we simply a scourge on society?
I believe not. Let me explain. In short selling, investors borrow shares and sell them, hoping that the price will fall and they can buy the shares later at a lower price, replace them and thereby turn a profit.
Hedge funds are not seeking to dictate economic affairs. Rather we are preoccupied by price. A market-based economy like ours requires a pricing mechanism to allocate resources and ensure that we all prosper. Get it wrong and we endure the calamity of the technology bubble and the sleazy debacle of the American mortgage crisis.
It’s not that hedge fund…
Hugh Hendry: “We Hedge Fund Managers Are On Your Side”
by ilene - March 11th, 2010 9:13 am
Hugh Hendry: "We Hedge Fund Managers Are On Your Side"
Courtesy of Tyler Durden
Originally authored by Hugh Hendry and appearing in the Daily Telegraph
You don’t know me; we’ve never met. But I fear you are being encouraged to dislike me. Let me explain: I’m a speculator. I manage a hedge fund. Apparently I profit from your misery. Accordingly, our political leaders are keen to see the back of me.
Only yesterday, Germany and France were calling for the "fastest possible" adoption of new rules to put an end to financial speculation. But before you write me off I ask that you listen to my side of the story.
First, and much like the bogeyman of folklore, the size and significance of the hedge-fund industry is vastly over-stated. The best estimate is that people like me control just 2.5 per cent of total global financial assets under management. The ability to move prices and markets resides more with the managers of pension funds, unit trusts and our banking contemporaries; fortunately, for them, they are on much better terms with our political masters.
Second, and much to my regret, I have to correct another misconception. I am not guaranteed success; far from it. I have no certainty or monopoly on making money; that’s the nature of risk taking, there is no free lunch. And believe me, I am subject to the harshest possible critic: the market.
Unlike my political adversaries I can’t spin this out. If I am wrong in my deliberations, I have to record a loss immediately. So it should come as no surprise that I give great consideration to what I do.
But what about this short-selling business and the allegation that hedge funds seek to profit from the misery of others; are we simply a scourge on society?
I believe not. Let me explain. In short selling, investors borrow shares and sell them, hoping that the price will fall and they can buy the shares later at a lower price, replace them and thereby turn a profit.
Hedge funds are not seeking to dictate economic affairs. Rather we are preoccupied by price. A market-based economy like ours requires a pricing mechanism to allocate resources and ensure that we all prosper. Get it wrong and we endure the calamity of the technology bubble and the sleazy debacle of the American mortgage crisis.
It’s not that…
Hugh Hendry: Here Are Four Reasons China Will Start Sucking Wind
by ilene - February 14th, 2010 7:34 pm
For an enjoyable, hour long video version of Hugh’s thoughts (among those of others), click here.
Hugh Hendry: Here Are Four Reasons China Will Start Sucking Wind
By Courtney Comstock, courtesy of Clusterstock
hugh-hendry-on-newsnight
Source: screen shot from you tube
People are way too psyched about China, says Hugh Hendry.
In a piece he wrote for the Telegraph, the hedge fund manager admits that China has been growing like crazy.
- China’s conomic growth has averaged 9% a year over the past 10 years, compared with 1.9% for the British economy.
- Last year, despite the credit crunch, China posted a remarkable growth rate of 10.7% compared with a British contraction of 3.2%
But here’s why China is not that great, according to Hendry:
- China, now the world’s biggest creditor, is also running persistent trade surpluses. That’s only happened twice before: with the US economy in the 1920s and with the Japanese economy in the 1980s.
- Unlike in most countries, China’s share of consumption within its economy has fallen relentlessly, reaching 35% of GDP in 2008.
- Foreign demand for its exports dropped. Now China relies on a massive surge in domestic bank lending to fuel its growth rate.
- China’s state planners have favored investment over consumption. China’s investment spending has tripled since 2001. Domestic consumption never grows fast enough to absorb the supply, and Chinese profitability is already low.
Read Hugh Hendry’s full article in the Telegraph >
See Also:
PIMCO On The Euro, Greece, And Preferred Investments In Brazil, Poland And Russia
by ilene - February 11th, 2010 4:07 pm
Courtesy of Tyler Durden
Pimco’s Michael Gomez, who recently shared the floor with Hugh Hendry, Marc Faber and Nassim Taleb, and who was likely the key voice in Pimco’s recent decision to accumulate German Bunds, shares insights on the euro, Greece and new investment opportunities. Based on this Bloomberg TV interview, it is likely that PIMCO will soon be accumulating a variety of Polish and Brazilian sovereign bonds, as well as corporate bonds in Brazil, Mexico and Russia, with an emphasis on the first. With tens of billions in dry powder, PIMCO will likely have an increasingly risky EM exposure as it departs from its traditional MBS/UST portfolio.
Hugh Hendry’s Eclectica Fund August Commentary
by ilene - September 1st, 2009 1:21 pm
Hugh Hendry’s Eclectica Fund August Commentary
Courtesy of Market Folly
Many of you may have already read this, but we found it prudent to post up the latest from Hugh Hendry’s Eclectica Fund. The resident deflationist is back with his August 2009 commentary and you can read it below. As we noted in our hedge fund news update recently, Hendry sees a very crowded trade in that so many people are confident inflation is in our future. You can also view Hendry’s previous letter here.
Without further ado, Hugh Hendry’s Eclectica Fund August 2009 Commentary (Email readers will need to come to the blog to view the embedded document, or you can attempt to download the .pdf via this link):
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