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Hugh Hendry December Commentary: Must Read

Tyler Durden's picture




 

This evening's must read report comes from Hugh Hendry, arguably the most creative and free-thinking money manager in the world, of The Eclectica Fund.

Manager Commentary, December 2010 (pdf)

 

h/t Michael

 

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Fri, 12/03/2010 - 19:35 | 777055 Spalding_Smailes
Spalding_Smailes's picture

I'll sell him my US Steel at $70.00-$100.00.

 

...."American Iron & Steel Industries reported that, in the week ending November 27th 2010, US domestic raw steel production was 1.652 million tons while the capability utilization rate was 68.3%. Production was 1.469 million tons in the week ending November 27th 2009, while the capability utilization then was 61.4%. The current week production represents a 12.5% YoY increase from the same period in the previous year.

Production for the week ending November 27th 2010 is down by 2.8% WoW from the previous week ending November 20th 2010 when production was 1.699 million tons and the rate of capability utilization was 70.3%.

Adjusted YTD production through November 27th 2010 was 80.307 million tons, at a capability utilization rate of 70.2%. That is a 40.7% YoY increase from the 57.059 million tons during the same period last year, when the capability utilization rate was 50.5%."....

Fri, 12/03/2010 - 19:29 | 777080 Fat Ass
Fat Ass's picture

Well that was weird.

Fri, 12/03/2010 - 19:41 | 777103 DoChenRollingBearing
DoChenRollingBearing's picture

OK, it was kind of weird, but I thought it was of great interest.  Nowhere to hide, sounds about right to me.

About the only thing he did not mention was gold.  Gold is good place to hide, everyone should have some.  Check out FOFOA's splendid new piece:

fofoa.blogspot.com

Fri, 12/03/2010 - 21:14 | 777251 blunderdog
blunderdog's picture

He mentioned it, just seems like his imagination falters a bit when considering it.

It...it just couldn't possibly be...never...that a commodity up by a factor of four over the past decade is The Next Big Trade!

Unpossible.

Sat, 12/04/2010 - 12:30 | 778063 Lux Fiat
Lux Fiat's picture

What was the factor increase of gold in the 1970s?  Granted it started from a unrealistically controlled price....hmmm....

Fri, 12/03/2010 - 21:51 | 777305 ViewfromUnderth...
ViewfromUndertheBridge's picture

He mentioned gold...going up every year for a decade, only surpassed by the Nikkei in the 12 years to 1989...he just doesn't offer a conclusion other than he thinks it is unlikely to be the next great trade.

He is short Japan.

Sat, 12/04/2010 - 02:24 | 777600 dehdhed
dehdhed's picture

he's said in cnbcw interviews that he thinks japan in due to come out of a 22 year cycle and begin a bull run.  i think he used 22 years but not sure .. maybe it was 26 or something in between.    perhaps he is short japan but it would seem to contradict his previous stance.

Fri, 12/03/2010 - 22:01 | 777315 Sespian
Sespian's picture

I liked this from FOFOA:

It is certainly fair play to place your bets on the ability of government to overpower the gravitational pull of value. But when you do, you should be aware that you have just purchased the opposite of real value. And to understand why this may be detrimental to our financial wellbeing, we must first understand the concept of value.

So true, and so easily missed by many.

Sun, 12/05/2010 - 17:45 | 780037 flacon
flacon's picture

FOFOA is a genius because he explains that if you jump off a building you will eventually meet the ground. So obvious and yet so obviously obfuscated by the "modern mind". I read every FOFOA article - despite his verboseness. :)

Fri, 12/03/2010 - 22:21 | 777363 Billy Shears
Billy Shears's picture

But wasn't the point of much of what he said that a massive defaltion was inevitable because of the gargantuan private sector debt...and that Japan was the ultimate example of what can go wrong. The prescription being that debt deflations are terminal until you have a bankruptcy. No amout of money printing without confidence in the economy to create real wealth will induce people to borrow at any rate. No borrowing, no debt, no multiplier, no economic activity...no inflation?

Sat, 12/04/2010 - 23:32 | 778942 Brutlstrudl
Brutlstrudl's picture

It's demand, bitchez. Yo Bill. When you gettin' back with the band? it's been a while

Fri, 12/03/2010 - 20:56 | 777221 Lionhead
Lionhead's picture

Long, poorly focused & rambling rubbish.  If this chap was my fund manager, I would immediately remove my capital. Anyone that cannot think or write clearly is flawed, no matter how they may think of themselves. Waste of time to read...

Fri, 12/03/2010 - 23:08 | 777448 Arius
Arius's picture

well, not everyone has a lion head...most of us have a man head.

Fri, 12/03/2010 - 23:24 | 777476 Mark Medinnus
Mark Medinnus's picture

"Well, not everyone has a lion head...most of us have a man head," replies the blockhead.

Sat, 12/04/2010 - 02:59 | 777787 single digit
single digit's picture

or a bag for a head

Sat, 12/04/2010 - 03:38 | 777820 Lost My Shorts
Lost My Shorts's picture

Yes. Hendry likes to embellish his stuff with literary flourishes that add very little to the argument, and only seek to entertain other would-be literati who share this acquired taste.  Also, you need to work hard to extract the argument, though it is possible.

It seems that he is:

1) Sticking to a deflationist outlook despite QE2 to N.  Thinks bankruptcy would be better for the real economy, but that policy makers won't go there.  Hence:

2) Short steel on grounds that demand will remain weak and over-capacity will squeeze profits.

3) Short Japanese corporate credit on grounds that their endless QE journey is about to meet a bad end, and the bankruptcies they have worked so hard to forstall will happen anyway, contrary to market expectations.

4) Long Western government bonds on grounds that our endless QE journey is just starting, and QE2, 3, 4 etc. will keep rates down.

Or something like that.  True, it could be more clear.

Sat, 12/04/2010 - 05:06 | 777861 Lost My Shorts
Lost My Shorts's picture

Further note -- you could accuse Hendry (when writing) of posing as a sort of Delphic oracle, trying to baffle people into thinking his obscure and round-about talk conceals some great truth.  (Hendry as talking head on TV is much more pithy and provocative.)

This letter actually struck me as more clear than his previous offerings, and the reasoning more of a stretch.  Perhaps he is doing the typical money manager thing of talking his book, describing the logic that got him into his current positions, but neglecting to mention that he is now actively bailing out of them.

Sat, 12/04/2010 - 05:07 | 777862 scratch_and_sniff
scratch_and_sniff's picture

Granted, he does take a while to get the ball rolling, a summary of key points would probably be helpful to his busier clients, rather than assuming that everyone has the time to muse away the hours wearing a cravat and smoking jacket. But after all, he is running a well respected hedge fund, so he has to sound like he is putting the effort in. As for the "Anyone that cannot think or write clearly is flawed, no matter how they may think of themselves" comment, well clearly you are just an uppity little spigot. I can think of no better treatment for you than to put you over my knee and slap the arse off you until you wince.

Fri, 12/03/2010 - 19:32 | 777086 YHWH
YHWH's picture

I'd rather see a video.  The guy is a gifted speaker.

Fri, 12/03/2010 - 19:49 | 777122 goldmiddelfinger
goldmiddelfinger's picture

Haud yer wheest ya fykie! Ees doun a' pub!

Sat, 12/04/2010 - 00:00 | 777506 GoinFawr
GoinFawr's picture

hahah! I read the whole thing with that accent on my mind. Nice one!

Fri, 12/03/2010 - 19:52 | 777129 Bob
Fri, 12/03/2010 - 19:52 | 777130 reload
reload's picture

Thanks for posting. Enjoyed reading it. I disagree that UK rate policy will remain .unchanged, at lease past Q1 next year, Some small increase will be expedient to create the impression that the ravaged saver has not been forgotten and that inflation (in consumables) is deemed unwelcome.

But shame there was nothing about gold, or exchange rates.

Fri, 12/03/2010 - 19:58 | 777137 Rainman
Rainman's picture

Excellent read....especially Japan's two decade effort to do anything to avoid purging bad debts from their system. Debt for Japan now at 6x GDP means Ben has a way to go to match the Japanese non solution.

Sat, 12/04/2010 - 12:40 | 778074 Monetary Lapse ...
Monetary Lapse of Reason's picture

No comparison.. most of Japan's debt is held internally.. that combo along with ongoing QE means bond vigilantes held at bay.  In the US... not so much.

Fri, 12/03/2010 - 19:58 | 777139 Mark Medinnus
Mark Medinnus's picture

Hugh's Psychic Blindness is self-referential.  He whistles and hums, but he hums to whom?  My suggestion: lose the faux literary flair and launch into your subject with some basic word analysis.        

Fri, 12/03/2010 - 21:37 | 777151 goldmiddelfinger
goldmiddelfinger's picture

"There are no policy prescriptions for debt deflation."

My 13 year old knows this by now. (I haven't spoken to the older boys since the COH Black Ops release to confirm it as collective dogma)

Fri, 12/03/2010 - 22:14 | 777344 Spitzer
Spitzer's picture

So are you going to buy lots of Euro's before the first country defaults ?

 

Fri, 12/03/2010 - 20:13 | 777161 Orly
Orly's picture

"I pass death with the dying and birth with the new-washed babe

and I am not contained between my hat and boots."- Walt Whitman

Fri, 12/03/2010 - 20:18 | 777174 goldmiddelfinger
goldmiddelfinger's picture

Birth was the death of him-

Samuel Becket

Fri, 12/03/2010 - 20:35 | 777194 Spalding_Smailes
Spalding_Smailes's picture

Who you calling ugly, sucker ?

-Aunt Esther

I'm calling you ugly, I could push your face in some dough and make gorilla cookies.

-Fred Sanford

 

My body was blessed by Mother Nature.

-Aunt Esther

And as you got older, it was cursed by father time.

-Fred Sanford

Sat, 12/04/2010 - 02:51 | 777770 Bananamerican
Bananamerican's picture

Fred Sanford, you a messy fool 

-Aunt Esther

Uh, and, you a cessy pool!

-Fred Sanford

Fri, 12/03/2010 - 20:53 | 777211 Spalding_Smailes
Spalding_Smailes's picture

“Man was put on this earth to eat meat...The Bible says so dumbbell...I mean look it up will ya? All them old bible peoples, they was always eating meat; soon as they found out eating apples was wrong...It's true, on special occasions: goats and lambs. Who the hell ever hear of sacrificing a head of lettuce? You?”

-Archie Bunker

               

“I never said a guy who wears glasses is a queer. A guy who wears glasses is a four-eyes; a guy who's a fag is a queer.”

-Archie Bunker



Fri, 12/03/2010 - 20:49 | 777207 Hugh_Jorgan
Hugh_Jorgan's picture

The so called "expert" ivy-league economists were all taught revisionist history and Keynesian drivel as the economic gospel. They weren't shown the opposing theories. They never learned real debate or discourse. They were taught what to think, not how. 70% of your professors are second generation ideologues that never leave their circle-jerk of elitist cronies long enough to try to validate any of their beliefs or worldviews. These are the houses of insanity that pass for instituions of higher learning in the 21st Century. I would say that "we might as well have the janitor making the calls at the Fed, but eventually the janitor would figure out that his magic wand wasn't working and would try something new. We are screwed, bitchez...

Fri, 12/03/2010 - 21:03 | 777232 liberal sodomy
liberal sodomy's picture

Hugh Hendry is my second favorite person in the world, just after Tyler.

Fri, 12/03/2010 - 23:11 | 777453 BrosMacManus
BrosMacManus's picture

with that avatar, Tyler and McHugh should be very, very afraid...

 

Sat, 12/04/2010 - 02:52 | 777775 Bananamerican
Bananamerican's picture

I'd recommend hugh panic....

Sat, 12/04/2010 - 08:02 | 777904 French Frog
French Frog's picture

+ + +

Sat, 12/04/2010 - 10:04 | 777958 liberal sodomy
liberal sodomy's picture

now yaw just been fweekin weedickuwuss.

Sat, 12/04/2010 - 10:07 | 777963 DavidC
DavidC's picture

Joe Saluzzi's up there as well.

DavidC

Fri, 12/03/2010 - 21:12 | 777244 Phineas Gage
Phineas Gage's picture

For all the Hendry fans, there was a short clip of a BBC interview posted on ZH a few months back on the demise of the hedge fund industry.  Part I (and II) of the full interview can be found here:

http://www.youtube.com/watch?v=S_b9NmBMVWo

In a rare occurrence, HH was out jabbed and out classed in this exchange.  He seemed unprepared and was disarmed by the interviewer.  Hendry is always at his best when he is countering.  He should save his energy for the frauds and buffoons out there.

Fri, 12/03/2010 - 22:29 | 777374 ViewfromUnderth...
ViewfromUndertheBridge's picture

Thanks for posting the link.

Having watched the 3 interviews on BBC Hardtalk I disagree with you, Hugh came out smelling like a rose, and I would encourage anyone who likes Hugh Hendry to watch them.

It was an insight for me on the extent to which journalists still have no clue as to what is going on. They should rename that show "Ret(H)ard-Talk"...the interviewer had preconceptions that he kept returning to as if he was not listening to HH at all.

Fri, 12/03/2010 - 23:31 | 777483 Phineas Gage
Phineas Gage's picture

Agreed, the interviewer had an agenda, but Hendry seemed to waffle and struggle.  Not his best showing.  He should/could have buried that journalist.  He came off a bit flat-footed.

Sun, 12/05/2010 - 18:01 | 780063 flacon
flacon's picture

I read his looong missive. It did come across as waffling - and it's hard to tell what his conclusions are vis-a-vis: what should I do if I have wealth that I don't want to be confiscated. He's a contrairian, but I don't know what else to say. 

Fri, 12/03/2010 - 21:12 | 777245 putbuyer
putbuyer's picture

Wow. He is such an amazing writer and brainiac. 3rd to last paragraph left me in awe. Never heard such an analysis before. Still trying to decipher it - the one that starts with "The only hope". The Chinese would accept an almighty paper loss? Could HH be the wiser? The bet of the century and what if he is right - interesting indeed. Wonder what Faber would say...

Fri, 12/03/2010 - 21:18 | 777256 Ted K
Ted K's picture

Two reasons I like ZeroHedge,  you give commenters a lot of freedom with comments, even allowing the wilder stuff so people can feel freedom to express their emotions, and "the shit" (When I say "the shit" I mean in positive way) like Hugh Hendry.  To be able to download Hendry and Rosenbergs, and Seth Klarman and these guys.  Hey I will criticize Tyler Durden when he is wrong--but I give Tyler Durden his "props" on this.  Tyler this type of stuff on a Friday night is great. Thanks from the investment community out here.

Fri, 12/03/2010 - 21:53 | 777311 Bolweevil
Bolweevil's picture

"Teddy K ladies and gentlemen. Let's give it up for Teddy K." President and CEO Globocom

Fri, 12/03/2010 - 23:15 | 777459 Arius
Arius's picture

Applause....

Teddy K - another American Titan

Fri, 12/03/2010 - 22:42 | 777396 PeterSchump
PeterSchump's picture

The only criticism for ZH is for the very bearish equities bias for the last year, but they have never tried to silence any of the bulls here.  The gold call has outperformed equities, so my argument is only valid if they were recommending shorts, which ZH never did. ZH recommended staying away from equities. 

Long PM's and staying away from equities on either side would have made many people many $$$$'s.  Long equities since March 2009 is second best.  Short anything is certain death.  Anyone paying attention to HeliBen could have seen that last train coming.  Seriously, when in history has everything correlated as today?  Pick a long and win. 

This will end badly. I am confident that ZH, in the longer term and unfortunately for all of us, will be proved correct. The eventual direction of equities and most everything else will resume the trend downward.

Sat, 12/04/2010 - 03:14 | 777803 YHWH
YHWH's picture

On your knees, cretin.  Mr. Durden requires fellatio.

Sat, 12/04/2010 - 16:10 | 778356 WaterWings
WaterWings's picture

Go punch yourself.

Fri, 12/03/2010 - 21:51 | 777306 DisparityFlux
DisparityFlux's picture

Well, if Mr. Hendry’s manager commentary is to assuage his clientele’s concerns as to the safety and return on their investments, he probably succeeded given the eloquent use of allusions to present his observations, assumptions and actions.  However, one cannot discount that a single person or event can disrupt the most carefully designed plan, just as well as the misdirected actions of a few or the concerted effort of multitudes.

But Mousie, thou art no thy lane,
In proving foresight may be vain:
The best-laid schemes o' mice an' men
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!

“To a Mouse”, Robert Burns, 1785

 

Fri, 12/03/2010 - 21:51 | 777307 THE DORK OF CORK
THE DORK OF CORK's picture

Hendry is the court jester of the Bank of England , nothing more.

A bullshit artist extraordinaire yes but I am sceptical of his long term strong dollar play - although I do concede I may be catastrophically wrong on this.

Remember England has little Gold in state hands - it must talk up the dollar to save its skin.

Its still about Gold vs Dollar bitches.

Fri, 12/03/2010 - 22:36 | 777388 Cheesy Bastard
Cheesy Bastard's picture

You are not wrong on this, catastrophically or otherwise.

Sun, 12/05/2010 - 15:06 | 777541 GoinFawr
GoinFawr's picture

"Its still about Gold vs Dollar bitches."

And 'Poof!' Twelve pages of Scottish brogue go up in one line of Irish lilt.... any Welshman out there wanna chime in? er, nm. 

It is true that the limited number of times I have heard Mr. Hendry speak on PM's, or read anything he's written about them, he always comes off a bit dismissive, which is odd seeing as even some of the advisors/fund managers most bearsish on the PM's will concede they have at least small place in any portfolio; he's not even at that level of enthusiasm (or lack of). It's almost as if he is in a hurry to change the subject anytime PM's come up. HH seems a bit of a paper chaser waiting on the 'big deflation'  to make every million bitz of paper he holds seem like a billion. As I have outlined in previous comments, I can't see that happening until the world forces (and then enforces) a return to  'mark to market' accounting standards for the most toxic 'assets' still floating around all over the place, and I can't see that happening anytime soon either for a variety of reasons. Considering his apparent heavy investment in the industrial metals or their proxies you would think he would at least offer a some insight into his position on silver, or rare earth elements, for that matter. JMHO.

Not that every post and article must focus on the PM's to contain value, far from it, and I have definitely not read everything HH has written, or listened to every word he has ever uttered. Any links to set me straight on this would be most welcome, natch.

 

Regards

Fri, 12/03/2010 - 21:55 | 777313 gwar5
gwar5's picture

Well, there it is -- too much debt (I knew it!). But it's back to the old deflation vs inflation argument.

I guess it's been hard to get a straight answer on that one because no one really knows. And FrankenFed has no idea either.

The Bernank is aiming his vaunted 20th century inflation alchemy to charge a 21st century deflationary windmill and not a scratch.

Just a thought, but we could always let the fat crony big banks fail and just start over. Maybe that would be better than making everyone live in a more pathetic version of Japan for the next 3 generations just so they can maintain their glorious banker existence.  

 

 

 

 

Fri, 12/03/2010 - 22:21 | 777330 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The markets are moving at breakneck speed, and POMO roars on.  The economic war had reached a turning point when Hendry wrote this, and since then QE 2 has been similar to a bombing raid.  It has destroyed investment opportunities in large markets such as US Equities, which are now highly over leveraged and thus over valued.  The small investor is bunkered down with treasuries and small yield while hoping to god that the next bet will keep the room from catching a nuke.  Go long gold, at the top?  But how do you buy Netflix 100 to 1; that is how the great depression started.

The nightmare begins with Bernanke feeding the troll.  He feeds the troll, and feeds the troll, until the troll is very large and strong.  The troll realizing Bernanke has no way of stopping him, flexes his muscles and searches for mischief.  When the troll finds the town is when the trouble bigins.  The tens of trillions of dollars that Bernanke must toss at the market, is the food for the troll.  We never want that troll standing over us. 

The fact that he thinks of gold as a trade is too bad.  It is an investment.

And why he pulled Thomas Huxley's name out of nowhere is beyond me.

Fri, 12/03/2010 - 22:14 | 777347 Kina
Kina's picture

If somebody criticises an author/contributor of being such and such could they please post a link or some supporting evidence. Otherwise it just sounds like big noting yourself by slagging of at your betters.

Fri, 12/03/2010 - 23:12 | 777456 Mark Medinnus
Mark Medinnus's picture

"Otherwise it just sounds like big noting yourself by slagging of at your betters." 

On either side of the pond, this sentence violates the rules of English usage.

References:

Fowler, H. W. 1908. The King's English, 2nd edition

Strunk & White  2000. The Elements of Style, 4th edition 

Fri, 12/03/2010 - 23:49 | 777510 Mark Medinnus
Mark Medinnus's picture

A false flag as junk?

Fri, 12/03/2010 - 22:45 | 777377 rlouis
rlouis's picture

Less poetically spoken than Shakespeare: If all fiat is debt and fed issue buys bad debt, then bad debt gives birth to bad debt.  And that is deflationary evermore - a virtuous circle? Me thinks not.

Sat, 12/04/2010 - 03:06 | 777795 ViewfromUnderth...
ViewfromUndertheBridge's picture

Gresham's Law

Fri, 12/03/2010 - 23:07 | 777447 SloSquez
SloSquez's picture

Damn TD, where to start.  A good read for sure.  Thanks!!!!!!...as usual.

Fri, 12/03/2010 - 23:12 | 777457 blindman
blindman's picture

@"elvis lives"

yes, apparently it is true but commodities inflation

might hurt less without feeding the failed system and

fraudsters free interest credit systematically used to

beezle value out of commodities essential for life by

blatant criminals. 

http://www.youtube.com/watch?v=e_hkIN38qnY

Mojo Nixon - Elvis is everywhere

no relation to richard nixon as far as i can tell, 'cept they

both have their dose of elvis in them.  the beat goes on.... imo

Fri, 12/03/2010 - 23:46 | 777475 revenue_anticip...
revenue_anticipation_believer's picture

Hugh Hendry - the fund

the document is, of course propaganda for the fund re the investors placing their trust in the fund....reasons are given and actually claimed to be reasonable and true...not mere soothing salesmanship....

So, there are a set of fixed guidances used, and insistence that the primary guidance is superior intellectual market assetment...with superior highly knowledgeable principals...degree in 'classics' (for 3000 year perspective?), but also in pure REALISM = the Market is God = truth, the concreteness of Financial Reality...they respect THAT above, even  intellect... 

In other words, they don't throw darts and they don't hire women excepting for clerical work..they are male-rational, sort of 'quants' but without the mathematical rigidity..Certainly NOT like LTCM 1999 quants Inc...

Oh yah? they are exactly like LTCM...and unregulated even in Britain, and not allowed at all in the USA....You know, 'unconventional thinking, using history, politics,economics....Oh yes, ONE MORE THING, 'a priori'

They 'credo' as the altar stone...a 'fixed idea' quaintly simple...that the prime Creditor nations Namely German and China, have the financial power and the motivation .... and soon the 'opportunity...suddenly implemented/blitzkreig style...to stop the debtors bullshit....to unilateratlly take charge...and THAT 'fact' the concrete reality upon which stone their Church is built...THAT is the Black Swan event that they are READY for...

indeed, in this investors quarterly report, there ARE repeated hints that THE FUND is following something BIG, taking small losses/opportunity costs, say, INTENTIONALLY....

So if you aren;'up to it'....leave, its OK, just means you are stupid..no problem..

the whole fund is actually quite SMALL less than $1 billion USA, but strictly British/European based...not directly the China ++ bet, but inverted into being the Europe -- bet, and ALL at once.....Its an 'all in sort of thing..right?...

anyway, the report is merely the selling/propaganda to the funds investors, selling the book/theme..all dressed up in Dramatic Literate English, for perhaps 'Upper class Private Investors?...I am un-impressed, with this, and with a whole series of other Hugh Hendry reports, but THEN this is my first survey of Hendry, just an hours time...so what do i know, right? just a first impression, and an intuitive revulsion for sophisticated "Oxbridge Greek" Oscar Wilde 'posers'

http://en.wikipedia.org/wiki/Hugh_Hendry

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/28_Hugh_...

http://www.huffingtonpost.com/2010/07/19/hugh-hendry-hedge-fund-ma_n_651...

 

Sat, 12/04/2010 - 05:54 | 777876 Non Passaran
Non Passaran's picture

Your comment is off-topic and of no value whatsoever.

The only part of it that is semi-coherent is that you imply they ought to employ women. What a bunch of liberal nonsense! Private businesses should be able to employ whoever they like.

Fri, 12/03/2010 - 23:34 | 777491 omi
omi's picture

Let me guess, CDS on Japanese industrial credits? Written by Euro banks?

I can see the trade working in theory, but there could be an issue GETTING PAID.

Fri, 12/03/2010 - 23:55 | 777527 Diogenes
Diogenes's picture

Damned if I can tell what he is driving at. Seems to have something to do with Japan.

Sat, 12/04/2010 - 00:11 | 777548 TonyV
TonyV's picture

So how has his fund performed in the last few years? I am not able to find anything on the internet.

Sat, 12/04/2010 - 00:26 | 777566 jm
jm's picture

Performance reports are on the Eclectica website.  He blew other funds out of the water in 2008 with those long-dated treasuries.  Of course didn't do so hot since April 2009 until Greece blew up.  He is outperforming his benchmark last time I looked.

I've noted a bit of a shift in his style.  He's taking the other side of mis-priced tail risks and waiting for short-squeezes, with a clearly defined loss limit.  This is death by ten thousand tiny cuts, folks. 

 

Sat, 12/04/2010 - 00:28 | 777570 chindit13
chindit13's picture

Sometimes one can be too literary, though I shall never be so accused.

I am reminded of the two famous Irish homosexuals, Gerald Fitzpatrick and Patrick Fitzgerald, when I see the reach around the governments of the world are doing to save each other from themselves.

The US will contribute to a fund to bail out Europe, while Europe will contribute to a fund to bail out the US.  Similarly within Europe.

Closed system.

End of system.

Sat, 12/04/2010 - 03:00 | 777788 Bolweevil
Bolweevil's picture

Lest we forget the fanciful Philip McKracken.

Sat, 12/04/2010 - 00:37 | 777588 King
King's picture

Hugh Hendry's demeanour is ever so eccentric and entertaining, I would be keen to have him actully articulate that in a speech.

Sat, 12/04/2010 - 01:31 | 777662 Dreamwalker420
Dreamwalker420's picture

I once told Michael Jordan that he wasn't allowed to dunk the basketball.  He ripped the ball out of my hands in a seemless motion that moved around me and through the air with great switness as to elude my detection; stunned by the awareness that something was amiss I was turning to see him dunk the ball.

Bad asset mangers often tell better asset managers what "is" is.  Hendry has a proven track record and public presence that can be followed ... he's not hiding anything, he's only asserting his beliefs of the markets condition and how to best navigate the complexities of it.  I'm sure he doesn't realy care about the ramblings of ZH trolls who want to sound like they posses some greater knowledge!

Listen to what he is saying: he believes that severe instability is stressing the global markets.  He has taken investment action that supports his thesis.  And he recommends you do the same.

A wise man knows when to shut up and listen ... a fool wants to be heard.

Sat, 12/04/2010 - 03:09 | 777799 ViewfromUnderth...
ViewfromUndertheBridge's picture

I hear you...

Sat, 12/04/2010 - 02:05 | 777714 dehdhed
dehdhed's picture

i think he summarized his point with the first thing he wrote

There Are No Policy Remedies for Debt Deflation

imho, i agree and would add, priced in real money everything will eventually deflate

 

Sun, 12/05/2010 - 00:20 | 778993 Cursive
Cursive's picture

@dehdhed

priced in real money everything will eventually deflate

This is very profound and very true.

Sat, 12/04/2010 - 02:20 | 777742 markmotive
markmotive's picture

Since everyone's referring to past Hugh Hendry comments, here's an Oct interview

http://www.planbeconomics.com/2010/10/30/hugh-hendry-%E2%80%93-uk-economy-q3-gdp/

Hendry is exciting and charasmatic. But I still haven't decided if he's as prescient as everyone says.

Sat, 12/04/2010 - 08:12 | 777905 Crispy
Crispy's picture

"Hendry is exciting and charasmatic. But I still haven't decided if he's as prescient as everyone says."

 

I have known literally well over a 100 PM`s so far in my career. And trust me when I say the best arent prescient. They are simply good traders.

Sat, 12/04/2010 - 09:48 | 777946 whopper
whopper's picture

Hendry was in gold early, made 100% and got out in the 7 or 800s. Then I saw him a few years back on CNBC europe, when gold was around 800 after the crash in 2008 saying he was greedy, he was only going to buy if it made it back to 550. Of course it never got close and he has been left behind.  Don't hold me on the numbers or dates, just going from memory.  

Sat, 12/04/2010 - 09:48 | 777947 tom
tom's picture

I like this guy and his boldness in shorting the steels that are most exposed to a downturn. And he's very right that today's commodity bullishness is reminiscent of 2002 commodity skepticism. And that perfect candour excuses all other faults, especially in a fund manager. I have no sympathy whatsoever for all the Madoff victims. People who invest according to performance and don't want to know how their manager did it are asking to get burned.

What I don't get is how Hendry can believe that QE1 was good but QE2 is bad. QE1 was the biggest subversion of capitalism in US history. Capitalism defeated feudalism partly because capitalism renews itself through periodic purges of its elites as they grow fat, stupid and reckless, called recessions. QE1 prevented a badly needed purge from occurring. QE2 is the sort of extra sop to the fat, stupid and reckless that one would expect after QE1.

I also don't like that he likes the Australian professor, who seems not to understand that credit growth is already built in to GDP, so it makes no sense to invent a "total demand" of GDP plus credit growth, in which the latter is double-counted.

Sat, 12/04/2010 - 11:46 | 778032 jm
jm's picture

Tom, I understand your point.  I hope you can see mine.  QE1 wasn't to save banks from insolvency.  It was to save everyone from complete collapse.

It would be naive to puke up what unemployment would be now without QE1, but without doubt it would be multiples of what it is now.

The purges of the "fat, stupid, and reckless" you mention are indeed appropriate and necessary, but sometimes you have to weigh whether in some cases they take everything down if unmoderated. 

QE2 is another matter altogether.

Sat, 12/04/2010 - 13:17 | 778109 Lux Fiat
Lux Fiat's picture

Hendry is always an interesting read, whether you agree or not with his quixotically worded viewpoints.  One 1930s parallel not mentioned that seems to be appearing today is that of post-WWI reparation-laden Germany.  In today's economic/currency warfare, it might not be to much of a stretch to compare losing countries being placed in similar positions - Greece, Ireland, and who ever may follow in their footsteps.  Austerity without debt repudiation when the debt level is extreme to start off with and only being added to, is a nice recipe for an economic death spiral.  

While Greece and Ireland are not at the same economic or military level as Germany, the conditions to necessary to breed extreme nationalism and extremism are present.  Ireland already has a history of some segments of society expressing themselves violently when more peaceable avenues are closed.  I wonder if this type of political expression is going to pick up and spread.  And if Spain, Italy and/or France go the same way, things will could get a lot more dicey from a military standpoint on down the road. 

Sat, 12/04/2010 - 13:45 | 778156 Jerry Maguire
Jerry Maguire's picture

I don't see anything particularly insightful in the attached article.  Inflation?  Deflation?  He doesn't know, doesn't claim to know, though he makes some observations. 

I don't see why the thing seems so complicated.  The debt is too big and cannot be repaid.  Efforts to roll it over by forcing new money out into the economy cannot work even if they managed it because the problem is that the debt levels are too high and the only way to creat more money is to make the debt levels even higher. 

You can do what Japan has done and drag it out for 20 years or more but this is a bad plan.  You avoid a short term big shock, maybe, at the cost of excruciating but slower general impoverishment. 

There are parallels with "theology"?  Certainly.  We're undermined by our self-created demographic problems too, among other things. 

The world needs a jubilee, a generalized debt forgiveness or cancellation.  But that is very unlikely to happen, at least peacefully.

Sat, 12/04/2010 - 16:25 | 778380 Temporalist
Temporalist's picture
Peter Schiff & Steven Keen on Dateline(Australia) - Part 1 of 2

http://www.youtube.com/watch?v=YsoeVL5biq8

http://www.youtube.com/watch?v=9qOCcAu_vlc&NR=1

Sat, 12/04/2010 - 23:30 | 778941 FrankIvy
FrankIvy's picture

The video is over 2 years old.

Sun, 12/05/2010 - 00:28 | 779000 Jerry Maguire
Jerry Maguire's picture

Keen doesn't come right out and say it explicitly, but he keeps asking:  what do you do with debt that cannot be repaid?  Guys like Schiff talk about "liquidating" it but that's impossible.  It has to be canceled.  Wiped out.  Start over.

The alternatives are all much, much worse.

Sun, 12/05/2010 - 13:18 | 779560 Temporalist
Temporalist's picture

I was aware of that.  It just shows they have been trying to alert people for years to the systemic problems.

Sat, 12/04/2010 - 21:29 | 778782 FrankIvy
FrankIvy's picture

Gotta say I read 90% of the article and did not find it useful.  It should be titled, 'random musings of a guy who knows a lot about economics.'

Sun, 12/05/2010 - 01:38 | 779077 Occams Aftershave
Occams Aftershave's picture

Would be helpful to know the returns of his Fund.

Sun, 12/05/2010 - 08:39 | 779316 fiftybagger
fiftybagger's picture

What a pompous ass.  My double up on silver in the fall of 08 is up 344% as we sit here.  How much are his government paper bets up?  This guy is the Bill Gross from across the pond, a one trick pony who's only trick consists of long winded explanations of why the only place to be is in government paper.  One day, when the bond market crashes and burns we'll have to listen to this little central bank shill tell us he got out just in time.

 

Hugh sees no inflation.  Hmmm, neither does the FED.  Something is starting to rhyme here isn't it?  Did Hugh here call the rise in gold and silver?  Did Hugh tell you to buy silver in 08?  How about palladium?  Sugar?  Corn?  Coffee?

 

This pompous little pinhead is not worthy to untie Jimmy Roger's shoe laces.  And when all paper goes up in a gigantic ball of flames, this central bank ass kisser will be nowhere to be found.  Remember his words then, and find the nearest lamp post.....

Sun, 12/05/2010 - 11:48 | 779443 FreedomGuy
FreedomGuy's picture

I took the time to read this and I am not sure of what it all meant by the end. It seemed a lot of musings and ramblings about how things could go. He writes in more of a literary style than a business style. I'd prefer more bullet points, conclusions and at least general direction of his bets. I don't think he say specifically beforehand because of competitors reading his work. While I found it educational I did not find it really helpful.

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