This page has been archived and commenting is disabled.

Hugh Hendry Capitulates: "Can't Look At Himself In The Mirror" As He Throws In The Towel, Turns Bullish

Tyler Durden's picture




 

"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."

      - Hugh Hendry

First David Rosenberg, then Jeremy Grantham, and now Hugh Hendry: one after another the bears are throwing in the towel.

As Investment Week reports, speaking at Harrington Cooper's 2013 conference this morning, Hugh Hendry said "he is no longer fighting the two-way feedback loop which is continuing to boost risk assets." The reflexive feedback loop envisioned by Hendry is the following and centres on the currency war being played out between the US and China, "in which US QE prompts dollar-denominated investment to head to China, and China fights the resulting upwards pressure on its currency by manufacturing an investment boom. Hendry said this creates a "global supply glut", leading to falling US inflation expectations (as this supply far outweights US domestic demand) - which in turn prompts the Federal Reserve to loosen policy once again." Rinse. Repeat.

Of course, there is a limitation here as we have explained previously, namely the amount of "high-quality collateral" which the Fed and the other central banks can and are rapidly soaking up, in the process destroying bond market liquidity, but that "discovery" will be made by the Fed far too late, despite even the repeated warnings of the Treasury Borrowing Advisory Committee.

And since Hendry is constrained by daily, monthly and annual P&L, he simply does not have luxury of waiting for the "fat tail" event, which incidentally will be quite terminal and thus hardly profitable for anyone exposed to fiat-denominated assets.

So the end result is that Hugh Hendry is merely the latest bear to throw in the towel:

"I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out," Hendry said.

"I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years' time."

"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."

So what does the newly christened "bull" like?

Though he first began turning more positive on the likes of US and Japanese equities last year, Hendry suggested this morning the current environment created more counter-intuitive opportunities. "This applies to European banks, Greek equities, Spanish equities. You have got to be in things that are trending," he said.

 

The manager's Eclectica Absolute Macro fund had a 64% value at risk equity allocation in September, up from 45% in August, with December 2013 Japanese TOPIX index futures his biggest single holding on a VaR basis.

 

Addressing attendees this morning, Hendry said his comments would take on a "confessional" tone, and admitted his performance over the past year had been "at best, mediocre". Hendry's CF Eclectica Absolute Macro fund has lost 2.6% in the nine months to 30 September, according to the firm.

In other words the "dash for trash" mentality, which we predicted in September 2012 when we forecast that the most shorted stocks would outperform the market (and they have), has just won another convert. That, and of course, Fed-balance sheet induced momentum chasing, in which the only thing that matters is one's view how many "assets" the Fed will hold at any point in the future (see from April: "Bernanke & Kuroda Capital LLC: Overweight S&P 500, 2013 Target 1950").

Finally, Hendry's "come to Bernanke" moment does not come easily:

The manager acknowledged his changing stance may be viewed by some investors as a 'top of the market' signal, but said he is not concerned by the prospect of a crash.

 

"I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell'. The S&P 500 is up 30% over the past year: I wish I had thought this last year."

 

"Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending."

Sadly, his last statement is just the latest confirmation that in the New Centrally-Planned Normal, FOMO  or Fear of Missing Out (the trend, the media appearance, the herd, the year end bonus, you name it) is indeed the new POMO as we warned in May.

And like that, everyone is now on the same side of the boat.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 11/22/2013 - 19:08 | 4182455 falak pema
falak pema's picture

when you can't beat em join em; as they say rape impossible with a SENSIBLE gal...

hells bells, the contrariarns are becoming fellow travellers of CB Keynesian schemes. Burn the truth buy the legend.

Next we'll know the great Kyle is out looking for minnows like an astute fisherman on  the HFT line,  a hungry Bass hooked on the Treasury carry trade  for S&P blue chips having sold all his gold for a huge loss. Banner year 2014! 

When is a Libertarian a dried out died  in the wool capitalist who can see the writing on the wall? When he wakes up. 

Ask Hugh and don't ask the Monty Pythons, they are back into court jesting in earnest. They never pretended otherwise as they couldn't tell a put from a call any more than a jackal could sing like a soprano. 

Money changers all. The financial market makes you that. 

Fri, 11/22/2013 - 18:30 | 4182456 teolawki
teolawki's picture

Hugh's famous last words...just before being butt punched.

Fri, 11/22/2013 - 18:53 | 4182500 grunk
grunk's picture

Taking the Patsy Cline plane right into the mountain.

Hell, go first class!

Fri, 11/22/2013 - 19:24 | 4182578 moneybots
moneybots's picture

"I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."

The prism of unending financial fraud.

Fri, 11/22/2013 - 19:41 | 4182612 El Hosel
El Hosel's picture

"I saw the light through the Prism of Fraud, these are "the Markets" of the New Normal"... Very Profound after the 11,000 point "rally".

 That boy needs more smoke to go with that mirror, no big deal. If you can't beat em go ahead and join them for the ride down the other side.

Fri, 11/22/2013 - 19:56 | 4182638 JR
JR's picture

The only thing I can say is that the world may be crazy but fundamentals are fundamentals. A foundation is a foundation is a foundation. Black is not white and up is not down. You can say nuts to the guy who says this market is all based on the lie that by printing money the Fed is keeping the American economy going and that fundamentals aren’t important anymore but he isn’t nuts.

For the rest of us, it’s important to understand what is right and what is wrong because wrong does not win the day when there’s this much involved. The Fed cartel is enriching the international bankers and the multinational corporations and impoverishing America and her people.  And it's buying its support with EBT cards.

The country is being stripped; the market is a crooked market; and the winning side is cheating. You cannot run a nation – even the United States of America - without running it into the ground if its medium of exchange has become a medium of confiscation… in the hands of an international cartel.

The Fed cartel is able to provide the Chinese with a market by purchasing it with the power of a printing press. It’s like you sitting in the basement dreaming that if you could just sit there in your T-shirt with a money machine that issued a nation’s medium of exchange out of thin air you could go out and buy anything…and end up with the world.

Today’s market momentum is based on lies and lies will not run a country or a market. If this country survives it will crush the criminals who have taken over our currency and our politicians and it is they who will be the losers else there will be absolutely no country.

When central bankers can make money out of nothing with the words “this note is legal tender for all debts, public and private,” and your politicians declare it legal tender,  Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s explained your people’s problem:

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the earth. Take it away from them but leave them the power to create money, and with a flick a pen, they will create enough money to buy it back again (Goldman Sachs, AIG, Morgan Stanley, Merrill Lynch, Citigroup…).  Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.” (Speaking at the University of Texas, 1927)

And, that my friends, is the real story of the Money Power’s control over America and her markets…via the Fed.

Fri, 11/22/2013 - 22:48 | 4182996 joego1
joego1's picture

Well said.

Fri, 11/22/2013 - 19:58 | 4182642 resurger
resurger's picture

everyone is a greater fool now

Fri, 11/22/2013 - 20:56 | 4182758 Road Hazard
Road Hazard's picture

http://www.bloomberg.com/news/2013-11-20/pboc-says-no-longer-in-china-s-...

Should we be worried that the PBOC is stating it doesn't want to purchase any more USD's?

Fri, 11/22/2013 - 21:09 | 4182787 jomama
jomama's picture

not really.

Fri, 11/22/2013 - 23:33 | 4183070 SAT 800
SAT 800's picture

Yes.

Fri, 11/22/2013 - 21:00 | 4182771 Professorlocknload
Professorlocknload's picture

Maybe it's been asked here already, the thread is too long to confirm that now, but...

The real question is, when will the Fed capitulate? Will it be when Con-gress rolls the tanks on it? Or some Andrew Jackson rides into town? What will this country look like when that happens?

 

Fri, 11/22/2013 - 21:03 | 4182778 razorthin
razorthin's picture

The pretend is your friend.

Fri, 11/22/2013 - 21:13 | 4182799 Downtoolong
Downtoolong's picture

So, was that you I sold to today Hugh? Or was that you Ben? Have fun with it. Stick it wherever you like.

 

Fri, 11/22/2013 - 23:35 | 4183071 SAT 800
SAT 800's picture

Good for you; t ake the money and run. the great thing about rats that desert sinking ships; is that they're the live ones. Sell it all and buy some real money. live happily ever after; or whatever.

Fri, 11/22/2013 - 21:36 | 4182854 q99x2
q99x2's picture

Don't forget Catherine Austin Fitts.

They all make money off of others peoples gains.

Hey they see it coming but WTF its not their loss. As long as everyone does it their asses are covered.

Never trust anyone with your money.

Fri, 11/22/2013 - 21:41 | 4182868 CashCowEquity
CashCowEquity's picture

P/E 1,318.14

AMZN's PE ratio Roflmfao !!!
Fri, 11/22/2013 - 21:55 | 4182892 jim249
jim249's picture

He finally caved in to the "food stamp program" for the rich. I want no part of it.

Fri, 11/22/2013 - 23:37 | 4183072 SAT 800
SAT 800's picture

If that's the food stamp program for the rich, we're going to have some real skinny rich folks; and not a minute too soon, either.

Fri, 11/22/2013 - 22:16 | 4182924 grunk
grunk's picture

Perhaps, on the collapse side, things will make such little sense that things will have no rational value relative to what is owed.

Those who are owed will suffer. If you try to seize everything from those who owe you have a revolution.

Fri, 11/22/2013 - 22:52 | 4183008 joego1
joego1's picture

It's Hugh Hendry- The I'm pretty smart but I need to be a sheep because that is where the fiat lies guy.

Sat, 11/23/2013 - 00:01 | 4183094 gnomon
gnomon's picture

"He who knows enough is enough will always have enough".  That's all you need to know.  A good woman, a stash of food and water, a place to hole up, some skills to get by, armaments and ammo, enough cash to get to the collapse and enough PMs to bridge yourself to the other side.  And time to think instead of chasing the next bauble or shallow experience.

This is a sad time, a time for reflection and resolve.

Sat, 11/23/2013 - 00:16 | 4183107 putbuyer
putbuyer's picture

Mr. Hendry, some 2 or so years back you said you have no religion. Your choice - no problem. Find Jesus Christ and find your mirror.

Sat, 11/23/2013 - 01:04 | 4183143 Escapeclaws
Escapeclaws's picture

Buy high and sell higher--now there's a good plan. Must be a lot of 401k money in the market.

Sat, 11/23/2013 - 01:15 | 4183152 Big Johnson
Big Johnson's picture

Sounds like the bell just rang. Time to short.

Sat, 11/23/2013 - 01:25 | 4183161 Atomizer
Atomizer's picture

Welcome aboard Mr. Hendry. It will get worst before better. Weather the storm my friend. 

Sat, 11/23/2013 - 02:12 | 4183189 gosh
gosh's picture

why would anyone short this market you have to be suicidal!!!!!!

Sat, 11/23/2013 - 02:43 | 4183204 Atomizer
Atomizer's picture

You may want to talk with the independent employer and EBT subsider. They are about to rain bullets. Placing the nigro figure head has lost, than gained. (claps hands). Cat is out of the bag. 

Mon, 11/25/2013 - 01:17 | 4183195 evernewecon
evernewecon's picture

 

 

Certainly if it should prove a failed

artificial bubble supporting a privatized

mortgage/monetary sector/system, 

then it makes me think of Newton's Third 

Law Of Motion:

 

When one body exerts a force on a second body,

the second body simultaneously exerts a force

equal in magnitude and opposite in direction

to that of the first body.

 

Now economic systems are ordinarily open

to growth contraction, net investment in/out.

 

And it's not that easy still, with Bernanke

hoping America's engineers will grow with

QE financing artificial bubbles, though that's

getting hard to imagine with the world 

sending back seeds and IT equipment and 

software.

 

But if the mortgage business and totally

attached monetary policy dominate an

economy, then it really starts resonating

with that Law.

 

 

http://pages.citebite.com/o2c0d2e1j0mlb

 

http://pages.citebite.com/d1i8e3n1t3rpv

 

http://online.wsj.com/news/articles/SB123336541474235541

 

http://oag.ca.gov/hbor

 

http://www.businessinsider.com/californias-foreclosure-starts-hit-seven-...

 

It's always been over a petty

mortgage scheme, selling to unqualified

people, selling that out, and shorting it.

 

The bankers should have skin in the game

somewhere.

 

The mortgagors should borrow with bankers

caring that they're not qualified.

 

And where the former's put down 5 or 10%

they should simply enjoy non-recourse

and those who SOLD the bubble shouldn't

underwrite banks' loss sharing while

simultaneously holding the mortgagors'

feet to the fire.

 

 

Sat, 11/23/2013 - 02:36 | 4183202 q99x2
q99x2's picture

As BitCoin approaches 900 again don't get Zhou Tonged

Sat, 11/23/2013 - 05:23 | 4183262 TPTB_r_TBTF
TPTB_r_TBTF's picture

if i go long, i mak'a profiiit

but, zhou tonged, i lose aaall my shiiit.

Sat, 11/23/2013 - 07:56 | 4183307 Dan The Man
Dan The Man's picture

Bitcoin is fine up to 10,000. and then the lights will go out.

My ears have been zhou tongued....ugh

Sat, 11/23/2013 - 04:31 | 4183244 Iam Yue2
Iam Yue2's picture

So, Hugh Hendry throws in the towel; grantham, who Have been expecting low returns for years (markets have surged) are now forecasting a 20-30% rally over 1-2yrs, and John Hussman, uber-bear tweets;

"@hussmanjp: So this is creepy. The bubble is getting fractal (self-similar at every scale). Continuation would give it another 3% http://t.co/xa0h1fK3eo."

2014 will see Krugman embrace austerity, and Zerohedge turn bearish on Gold.

Sat, 11/23/2013 - 05:29 | 4183266 TPTB_r_TBTF
TPTB_r_TBTF's picture

S&P up ~30%


Gold down >20%

Silver down ~35%

Bitcoin up 100*XY?%

 

Boy, were you ever wrong this year!

You gonna make the right bet for next year?

Sat, 11/23/2013 - 10:05 | 4183356 surf0766
surf0766's picture

The only way to win is to not play the game. At any time whether you are bear or bull , you could be a winner or looser. If you stop playing the game you can't lose any more.

Sat, 11/23/2013 - 05:44 | 4183272 vonMises
vonMises's picture

hussman will be the last to go (if ever)... 

that will be the time to go short

Sat, 11/23/2013 - 05:45 | 4183273 Apostate2
Apostate2's picture

Et tu Hugh.

Beware the Ides of March. Maybe payback time.

Sat, 11/23/2013 - 06:04 | 4183278 jmcadg
jmcadg's picture

What he's realised is, he's only playing with other people's money and when it crashes, everyone crashes, so his investors will see that regardless of where they had put their money, they would have lost. But in the meantime, they expect great returns because everyone else is sucking on the FEDs teat.

Obviously on a personal level Hendry has made sure his physical stash is safely at the bottom of the lake, so frankly couldn't give a shit what happens.

Respect.

Sat, 11/23/2013 - 08:09 | 4183311 ak_khanna
ak_khanna's picture

The stock, bond, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.

The markets continue to rise till all short positions in the market are covered and the majority of traders move to the long side. Once this is done the market falls till all long positions are closed and short positions undertaken. Then rinse and repeat. The price mechanism has little to do with the actual demand, supply, fundamentals or state of the economy.

www.marketoracle.co.uk/Article40231.html

Sat, 11/23/2013 - 10:09 | 4183360 rsnoble
rsnoble's picture

I gave up shorting and calling tops several thousand points ago.  It's pretty straught forward......as long as the Fed's are printing it will go up.  No one knows the day it's all gona blow up.  I suspect one day we'll wake up and the headlines will read 'economy crashes overnight'.  LOL.

Sat, 11/23/2013 - 10:33 | 4183376 AgileArjuna
AgileArjuna's picture

FOMOAR

Sat, 11/23/2013 - 10:44 | 4183387 Sathington Willougby
Sathington Willougby's picture

 

The SHTF people and the bears all have the same problem.  They fail to see three things:

1.  The world's superpower backs the dollar and all related paper.  No significant transaction is above this touch.  It's known as Empire but the fiction machine has tefloned any such label.

2.  The options available to prop up the dollar aren't limited by law, in the world of corporate legal fiction no constraint is felt by a grifter of proper merit. 

3.  All fictions are continually pressed and perpetuated by a giant fiction machine.  The most genius is how livestock currently pressure other livestock to accept the manufactured yet fraudulent reality.

30 years or more this thing will grind down everyone.

Sat, 11/23/2013 - 18:01 | 4184020 ZH11
ZH11's picture

Faber's a Marxist and now Hendry's long!

The wipeout must be nearer than it's ever been now.

 

Sun, 11/24/2013 - 20:44 | 4186602 Hedge Fund of One
Hedge Fund of One's picture

There must be a few more bears left to surrender. 

Sat, 11/30/2013 - 14:38 | 4202089 ThanksIwillHave...
ThanksIwillHaveAnother's picture

Have the bears ever caved like this before?  If not, I shudder at the coming correction as this is more fuel to the fire.

Do NOT follow this link or you will be banned from the site!