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Hugh Hendry Channels Irony And Paradox In His Latest Financial Outlook

Tyler Durden's picture


Submitted by Brett of Contrary Investing

Hugh Hendry Channels Irony and Paradox in His Latest Financial Outlook

Yesterday I had the great honor and opportunity to sit courtside for a live one-hour presentation from our favorite contrarian, irreverent hedge fund manager – Hugh Hendry himself.  What a thrill!

Hendry, as you may know, is partner and Chief Investment Officer at Eclectica Asset Management.  While his claims to fame are numerous, his two most notable (for those getting to know him for the first time) are:

  1. A 31.2% *positive* return in 2008
  2. Some truly hysterical TV clips (See: Hugh  Hendry’s Greatest Hits for four minutes of financial bliss)

Hendry is a big favorite of ours at  I also just learned that he was “The Plasticine Macro Chapter” interviewed (at the time) anonymously by Steven Drobny in his excellent recent book Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money – which profiles a select group of hedge fund managers (all “off the record”) that made money in 2008.  I went back and re-read this chapter the night before Hendry’s preso, to re-familiarize myself with his investing/trading philosophy.

Hugh Hendry Eclectica Asset Management 2012 outlook

Hendry electrifies his Sacramento audience.

The Power of Irony and Paradox

Rather than trying to compete pure “intellect-for-intellect” with the likes of George Soros, Julian Robertson, and the other great minds of the hedge fund world, Henry instead relies upon what he calls “the power of irony and paradox” to foil the logically minded and deliver his superior returns.

In other words, he bets on strange events happening – those not anticipated by the mainstream.

This strategy paid off in a big way in 2008, when his out-of-the-money options hit big, and his fund returned 31.2%.  It has tended to underperform, though, when (to paraphrase Hendry) “bad stuff doesn’t happen.”  Fortunately for Eclectica investors, he sees a bad moon rising once again.

Why China is Not 19th Century America

While many economic observers have drawn an analogy between China's ongoing industrialization and that of America’s, Hendry sees a critical difference.

In the US, he says, capital has always been allocated where it could achieve the highest return.  In the 19th century, when America was the economic upstart on the block, it was also on the gold standard.  Which is very important, according to Hendry, because it allotted entrepreneurs one – and only one – chance to succeed.  It was not a time of bailouts and multiple bankruptcies!

China is different, he believes, because it is industrializing with a fiat currency.  Thus they fall into the trap of misallocating capital – building bridges to nowhere, towers for nobody, and so on.  China’s goal is similar to that of 1980’s Japan in his opinion – full employment, rather than maximizing return on capital.  A critical, and even fatal, difference, in his mind.

The New Model for the Global Economy

You know the old drill – China and Asia produce, the US consumes.  They cycle their greenbacks back over this way, finance our debt, we buy more of their stuff, and the beat goes on.

This model officially stopped with the launch of QE2, Hendry says, as the US officially started rejecting the globalization that had made the global economy hum (perhaps largely at the expense of US employment and manufacturing).  With QE2, dollars were printed and exported – along with inflation – to Asia.

This led to the countries in Asia – and Europe, too – raising rates to combat inflation.  The result, he says, is that global economic growth has essentially ground to a halt.

So what’s next?

A crash, of course.

Europe’s Debt Spiraling Out of Control

Hendry then pulled up a chart of US and Europe non-financial debt to GDP, illustrating that Europe’s debt has been spiraling out of control ever since the formation of the European Union.

Participant nations, he puts it, received initial “ALT-A” rates – nice low German interest rates – for signing on.  But the fixed exchange rate that the euro imposes on the peripheral nations started the time bomb ticking.

Hendry, in fact, is very down on fixed exchange rates, and believes the euro and the dollar/renminbi peg are at the heart of global economic insecurity today.

He believes the recent referendum in Greece could be a very significant event, likening it to a 1931 mutiny in England that forced the Brits off the gold standard.  He things the Greek referendum could be the trigger to disengage from their fixed exchanged rate (and cited everyone’s lack of anticipation for the referendum as a classic example of irony in finance).

Stage Not Yet Set for Hyperinflation and Gold $3000

The high CPI numbers being reported in the UK and other Western nations are “meaningless”, Hendry says, because in today’s economic environment, it does not translate into wage growth.  (In the 1970’s, it did).

Because wage labor is approximately 70% of total business costs, he does not see meaningful inflation without wage inflation.

He’s also down on gold because it is not a contrarian investment today as it was 10 years ago (he had a nice year in 2003 buying gold and gold stocks when nobody wanted them).

The widespread belief among the greatest financial minds today that hyperinflation is inevitable greatly disturbs him.

In the Western world, he sees hyperinflation as a political choice – one that requires the will of the populous.  (Forget Zimbabwe, he says – that might as well be Timbuktu.  It’s not our culture.)

He sees society’s current mood as “dark” (Tea Party, Occupy Wall Street, and social unrest in Europe to name a few), and believes this makes bailouts and money printing very hard.  The only environment that makes hyperinflation possible is “the mother of all depressions” he says.

In keeping with his anticipation of paradox, he quipped that if you believe in hyperinflation, then you should be levered up long on 10 and 30-year Treasuries…because in order for hyperinflation to become a political reality, deflation must arrive first.

2012 Economic Outlook and Investment Positions

Of the many places Hendry doesn’t want to be long, China is near or at the top of the list.  He thinks China could be subject to a 25% (!) decline in GDP over the next five years.

How is that possible?

He draws an interesting analogy: “UK GDP fell 8% in the Great Depression, while US GDP fell 25%.”  Inferring, of course, that today’s China is the upstart US to our current “UK peak empire” role.

In what he calls “the great unwinding”, the strongest economies in the world are also – ironically – the most vulnerable.

But that doesn’t mean he’s bullish on the developed world, either.  He has an aversion to just about everything.

“It’s checkmate.  Everywhere it’s checkmate.”

He believes Italy is insolvent, citing their huge borrowing binge over the last ten years that has only achieved 0% growth.

He loves Japan – as a culture and place to visit – but is especially bearish on several Japanese sectors.  He’s long credit default swaps with respect to cyclical, leveraged Japanese businesses.  He’s also bearish on Japanese utilities, which have issued tremendous amounts of debt since the Fukushima disaster.

Hendry’s favorite sacred belief – which he’s betting against, of course – is the fact that no one believes the ECB will ever cut rates below 1%.

He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year.

Big thanks to the CFA Society of Sacramento for hosting the event, and to my pal Jonathan Lederer for landing Hugh and letting me crash the event as his guest!


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Thu, 11/03/2011 - 18:16 | 1843368 UP Forester
UP Forester's picture

He's not bearish on gold anymore, but long CDS on Japanese sectors.

Too bad the first has only been worth something for thousands of years, while the latter was proven last week to be useless last week....

Thu, 11/03/2011 - 18:23 | 1843388 Bananamerican
Bananamerican's picture

"The only environment that makes hyperinflation possible (& gold golden) is “the mother of all depressions” he says."

I think Hugh underestimates western populations impatience with pain...

We've got the embers of unrest now....

How much farther into deflation do we need to go till Argentina? Not as far as he thinks, imho

Thu, 11/03/2011 - 18:36 | 1843432 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

every month more and more baby boomers retire and expect fat pensions. Goverments might think, oh just a little, just a little bit more easing

meanwhile china says, hmmm like to expand the military and take more control in africa, dollar becoming worth less and less, lets just dump a few more billion

and with the velocity picking up the money supply is already big enough to lead to hyperinflation

Having said that I do think we'll see massive deflation first

Thu, 11/03/2011 - 19:06 | 1843507 agent default
agent default's picture

Depends on the definition of massive, it tends to be very subjective.  Western society mentality seems to be stuck in "entitlement mode" for quite some time.  can really blame them either.  Many people paid contributions to a national insurance/security system that spent their money instead of saving it for them.  They will be righteously angry when financial reality hits and they will have to be satisfied.  Running the printing press seems to be the most efficient means of doing so, so far.  Very few people understand the implications of CB actions.  Most of them are happy with a scape goat like evil commodity speculators, hedge funds shorting bonds etc.

Thu, 11/03/2011 - 19:16 | 1843528 Spitzer
Spitzer's picture

The countries involved in the Asian financial crisis (400 million people) did not experince "deflation" first.

Thu, 11/03/2011 - 20:42 | 1843647 nick elsworth
nick elsworth's picture

The easiest way to determine what TPTB will do (regarding inflation/deflation) is to indentify which demographic has the most money to lose, then bet that they will suck that money from them.  In my opinion the retirees have the most money to grab, so the easiest way to grab it is to inflate their money into irrelevence.  The majority of retirees are already investing in bank CDs yielding NEGATIVE real returns. 

Thu, 11/03/2011 - 21:19 | 1843684 Spitzer
Spitzer's picture

Unfortunatly allot of people look to be dumb enough to hold these bonds while their capital gets destroyed. Negative returning assets actually destroy capital.

Fri, 11/04/2011 - 07:00 | 1844266 Treason Season
Treason Season's picture

Spitz, please,

it's  "... a lot of... .

"Allot" has a completely different meaning. Cheers.

Fri, 11/04/2011 - 07:17 | 1844280 twotraps
twotraps's picture

agree, totally overlooked aspect of todays trade.  I also wonder about Deflation, despite all the arguments bla bla bla ....simply because its what they fear the most and if there is Any semblance of a mkt left, it finds a way to punish you in the end.  In this case it may just be deflations.

Fri, 11/04/2011 - 08:31 | 1844523 Bicycle Repairman
Bicycle Repairman's picture

"The easiest way to determine what TPTB will do (regarding inflation/deflation) is to indentify which demographic has the most money to lose, then bet that they will suck that money from them."

Another thing to consider is: what has worked in the past?  Looking to the 1970s inflation is the answer.  If we look to the 1930s we see deflation, but that is the period that is marked as a mistake and a never-to-be-repeated calamity.  The 1970s is just another decade.  So the answer is inflation.  2% to 10% a year until this blows over.  This might take a generation.

Sat, 11/05/2011 - 02:10 | 1847974 mkkby
mkkby's picture

Everyone on ZH believes banks rule the world.  So hyperinflation will never happen because that frees everyone from their debt.

The banks already have their perfect setup.  Zero interest rates, which allows them to slowly suck the retirees savings.

If you (wrongly) believe in hyperinflation, don't just buy gold.  Get as heavily into debt as you can.

Thu, 11/03/2011 - 21:49 | 1843731 Voodoo-economist
Voodoo-economist's picture

but wage inflation, to be fair

Mon, 06/18/2012 - 19:24 | 2537778 hbjork1
hbjork1's picture

In addition, there is always the destruction of buying power in any savings denomitated in paper money buying power.  I have two fixed pensions granted as a result of corporate acquisitions. One was 1972, the other abouit 1979.   The buying power when granted would be roughly equiviliance to Social Securiy payemts today. 

But I know what it is to dig ditches professionally with a shovel in a southern summer sun.  Life is a terminal condition and I am at an age of entitlement so I might as well enjoy it.  

Thu, 11/03/2011 - 19:46 | 1843575 Citxmech
Citxmech's picture

It's never been "either/or" it's been whether hyper-inflation would follow the deflation that is looming. 

Deflation is assured at this point.  If loans aren't being made at a rate to pay the interest on the current debt-load - our debt-based system will collapse out of necessity.

Do our "leaders" have the will to idle the printing presses in the face of catastrophic deflation?

I'm with M. Faber:  NO.

PMs Bitchez.

Fri, 11/04/2011 - 02:58 | 1844172 Libertarians fo...
Libertarians for Prosperity's picture



Deflation is assured at this point?  Are you aware that there are individuals at ZH who don't believe in deflation?  They think it's a myth.  


Fri, 11/04/2011 - 08:38 | 1844547 Bicycle Repairman
Bicycle Repairman's picture

Inflation, deflation or hyperinflation are policy decisions, IMHO.  If the economy was left to its own devices there would just be deflation.  Does anyone believe that the economy will be left to its own devices?  Deflation will be tolerated to a point when it is helpful e.g. driving down gas prices in an election year.  The long term solution is inflation and lots of it.  They will not allow hyperinflation.  It's not helpful to TPTB.

Thu, 11/03/2011 - 22:13 | 1843761 Dane Bramage
Dane Bramage's picture


"The only environment that makes hyperinflation possible (& gold golden) is “the mother of all depressions” he says."

I think Hugh underestimates western populations impatience with pain...

We've got the embers of unrest now....

How much farther into deflation do we need to go till Argentina? Not as far as he thinks, imho




Zactly!  & yes, we can "forget about Zimbabwe" (maybe?) , but what of the litany of all other inflationary examples throughout the world & history?   Untenable debt is untenable, even in bizarro land where debt = *money*...errr, currency.  Default or Inflate (or do I repeat myself?) ~ those are the only options.  Place yer bets &/or prepare accordingly.


Fri, 11/04/2011 - 02:26 | 1844158 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

The 2 leading causes of hyperinflation are, foreign denominated debt, and war.

Thu, 11/03/2011 - 18:30 | 1843413 camaro68ss
camaro68ss's picture

who says you cant have inflation with out wage incresses? why? why cant you have staghyperinflation?

Thu, 11/03/2011 - 18:32 | 1843419 Mike2756
Thu, 11/03/2011 - 18:45 | 1843462 pirea
pirea's picture

Hyperinflation will come when all money on the side, in preservation mode, will start bidding on something real.

Does not have anything in common with wages this time, because is going to be run by a minority.

Thu, 11/03/2011 - 18:49 | 1843472 Mike2756
Mike2756's picture

Where's Tyler's lampost pick again, lol. We'll see how long the minority lasts.

Thu, 11/03/2011 - 22:26 | 1843775 wisefool
wisefool's picture

Someting real? Groupon IPO'ed at $20/share. As explained to me, you are going to take one of these into a local business and have the lost in translation soup nazi negotiation with your local small businessman. That sounds real funny!

Thu, 11/03/2011 - 18:53 | 1843480 hayesy316
hayesy316's picture

Because inflation is self-limiting unless labour can demand higher nominal wages. In a low-skill, globalised economy obsessed with free trade and a bottomless pit of slave labour (ie, China), it ain't gunna happen. But hey, buy gold, right? You know better than Hugh Hendry.

Thu, 11/03/2011 - 21:04 | 1843667 CapitalistRock
CapitalistRock's picture

You could not be more wrong. Ever since the Roman Empire inflations were created by debasing the currency. Higher wages are never necessary if your central bank keeps printing.

Fri, 11/04/2011 - 06:47 | 1844259 Crime of the Century
Crime of the Century's picture

But hey, buy gold, right? You know better than Hugh Hendry.

If you are speaking of physical gold, then yes, I guess I do. Hendry likes to tell people his judgement of whether they are true contrarians, but it is still a most accurate assertion that owning bullion is a contrary position. ETFs, shares and rolling futures are something fundamentally different from bullion, the ultimate contrarian position.

Fri, 11/04/2011 - 08:42 | 1844568 Bicycle Repairman
Bicycle Repairman's picture

Inflation without wage inflation means a lower standard of living.  Well we know that could never happen.  LOL.

Thu, 11/03/2011 - 18:54 | 1843481 jcaz
jcaz's picture

Yep- Hugh needs to update the value on those CDS's to "when they don't feel like honoring them" on his balance sheet....

Thu, 11/03/2011 - 21:35 | 1843705 Bad Lieutenant
Bad Lieutenant's picture


Hendry obviously has an impressively keen mind.  I think his weakness, however, is that is pride is so wrapped up in identifying with being contrarian that his mind is biased against strategies that happen to be even somewhat widespread (the key of course being to figure things outs before the masses do).  Being a contrarian may pay off well in minor to moderate turning points in history, but when the insolvency of the G8 is becoming increasingly clear to even the most wool-headed financial minds then guess what: we're getting close to the rapids and waterfall.  The sad thing is that most people are still in subconscious denial in what's ahead, so in that way it's still not even contrarian to to be positioning in common-sense trades that will payoff when things start to go nuts.

Zh posted that four part video of Hendry a week ago, and to me it was really apparent how much on the edge of sanity that guy is.  


Thu, 11/03/2011 - 22:31 | 1843789 Bolweevil
Bolweevil's picture

Sanity is overrated. Could it be said that the definition of INsanity is NOT doing something repeatedly and expecting a different outcome (read: sit idly by as fraud and corruption rule the day)? Short ban pfft! ES pump pfft! PM manipulation pfft! Regulatory capture pfft! Moral hazard pfft! Have honesty and transparency always been so elusive?

Fri, 11/04/2011 - 01:28 | 1844122 Bad Lieutenant
Bad Lieutenant's picture

Yeah, you're totally right, plus I'd be the first to agree with the fine line between genius and insanity augment.  I suppose my criticism should have been more thought out.  Now that I'm putting my finger on it (and I thank you for your comment), I suppose that it was comment about his long term return figure written on a piece of paper that he said what he was most interested in.  It made me think that although being right in trades can feel good and do amazing things to a life, I'm pretty sure it's not healthy for that to be the most important thing.  It's the same affliction as any of these bankers have, except that Hugh runs his own show.

Fri, 11/04/2011 - 06:27 | 1844251 Bolweevil
Bolweevil's picture

Some of them are full on pathological. How else could they sleep at night with their shenanigans? And we only know about the few things that get reported...

Thu, 11/03/2011 - 21:33 | 1843706 Bad Lieutenant
Bad Lieutenant's picture




Thu, 11/03/2011 - 18:23 | 1843385 kaiserhoff
kaiserhoff's picture

Bad moons, and facials, and money shots, oh my!

Thu, 11/03/2011 - 18:24 | 1843389 wisefool
wisefool's picture

I generally dont like low humor, but man, that was funny. On the more up and up side of humor, bloomberg had a "Formal Federal Prosecutor" on the phone today around 15:00 EST re: MF Global.

Maybe my eyes are bad, but for the entire telephone conversation segment they had the guys portrait on the screen and his title was "Formal Federal Prosecutor" what woud an "informal" federal prosecutor be?

Thu, 11/03/2011 - 19:00 | 1843496 Strom
Strom's picture

Probably was a "former federal prosecutor" and the person typing it in heard it wrong.

Thu, 11/03/2011 - 19:03 | 1843500 wisefool
wisefool's picture

Ohh I know. I was just kinda wishful thinking that there is a shadow government that catches the bad guys like corzine. (legally, without violence)

Thu, 11/03/2011 - 19:30 | 1843551 Strom
Strom's picture

Likely a shadow government, but they do not catch bad guys like corzine (unfortunately).

Thu, 11/03/2011 - 18:21 | 1843372 moskov
moskov's picture


So dollar is not currency of capital, but fake confidence without manufacturing production backing with it.

Nuclear Bombs? Plenty of countries have them these days. Not a big deal.


Hugh Hendry Long CDS? good luck with him. Hope you can dress them AS underwear in the bedroom and put your food on the table
Thu, 11/03/2011 - 18:47 | 1843445 Bumblebee Tuna
Bumblebee Tuna's picture

I reckon that Fort Knox is stuffed full of gold, 'however' it's probably mostly illegally looted gold from post WWII Germany and Japan, and more recent exploits in Iraq and Libya.  

All the gold that the US doesn't want the rest of the world to know it has in its possession.

Thu, 11/03/2011 - 19:19 | 1843533 wisefool
wisefool's picture

What exactly could they do about it? The world pulled more gold out of the western hemisphere than is still there (above or below ground) regardless of who "owns" what chunk.

Thu, 11/03/2011 - 19:30 | 1843550 iDealMeat
iDealMeat's picture

Even if you can "prove" or at least provide a compelling argument that there is no god, the blind faithful will still go to church.


Thu, 11/03/2011 - 19:39 | 1843565 donsluck
donsluck's picture

Yes, we are a faith based economy. Geitner et al have been complaining about the loss of faith, and what to do about it. So, the question is, what happens to a society who has lost it's faith. Your argument is that we will "still go to church" ie use this instrument we have lost faith in and I agree. But this site is not for those who want to get by. This site interests those whos' persuit is profit.

Thu, 11/03/2011 - 18:20 | 1843374 Mike2756
Mike2756's picture

Let them print some more, real incomes will fall even faster.

Thu, 11/03/2011 - 18:20 | 1843375 smoked
smoked's picture

Engaging site.  Happy surf & turf all you can Heat branding.

Thu, 11/03/2011 - 18:20 | 1843376 knight99
knight99's picture

HH is Legendary

Thu, 11/03/2011 - 18:33 | 1843422 centerline
centerline's picture

HH is legenday - no doubt.  He is right on the fucking money.  The only thing he doesn't do (because it would be moot in his position) is outright connect the dots a little further outside the economic spectrum.  What I am talking about is the obvious unsustainable, silly notion of perpetual exponential growth based on a monetary system that generates malinvestment on the basis of pure profit (serving those closest to the creation of various fiat currencies most) over what is best for society as whole.  "Checkmate" alludes to this though - so I have to give another favorable nod to HH.

Thu, 11/03/2011 - 19:47 | 1843577 Bruin4
Bruin4's picture

I like Hugh a lot, but his timing has been absolutely fuking awful these past 2 years, then again so has does not mean he is wrong - just early, which is wrong no?

Thu, 11/03/2011 - 20:18 | 1843615 WonderDawg
WonderDawg's picture

When it comes to trading, yep, early is wrong. When it comes to preparation for a cataclysmic event, early is genius.

Thu, 11/03/2011 - 18:24 | 1843381 DormRoom
DormRoom's picture

"Because wage labor is approximately 70% of total business costs, he does not see meaningful inflation without wage inflation."


His analysis is partially incorrect.  There will be huge wage inflation in the BRICS, which will be exported back to the developed countries. Food & Energy costs will soar in the BRICS, fueling non-core CPI, in developed nation, pushing non-core CPI higher.

Walmart will be the first to experience a margin squeeze, after they finish fiddling with item sizing.


Thu, 11/03/2011 - 18:24 | 1843392 Mike2756
Mike2756's picture

Really? Chinese companies are getting hammered by wages and input costs.

Thu, 11/03/2011 - 18:27 | 1843403 moskov
moskov's picture

So does the rest of the World.

Thu, 11/03/2011 - 18:38 | 1843439 Mike2756
Mike2756's picture

Wage inflation over there is moderating, companies can't payout what they dont' have. All printing will do is translate into more unrest.

Thu, 11/03/2011 - 18:42 | 1843455 centerline
centerline's picture


Thu, 11/03/2011 - 18:43 | 1843460 moskov
moskov's picture

There you go. I could say the same to US jobs figures. So basically that's why there were Occupying everywhere these days. Not really a I gain - You lose situation.

Thu, 11/03/2011 - 18:40 | 1843444 centerline
centerline's picture

That's exactly the point Dormroom was making.  China (our creditor) gets hammered - particularly from within on wage side.  Or risk major civil unrest.  Not like they haven't been playing the wage arbitrage game all along anyhow.  Net result falls back on us anyhow.  Checkmate no matter how you slice it.  Welcome to the new battlefield.

Thu, 11/03/2011 - 18:46 | 1843466 Mike2756
Mike2756's picture

It remains to be seen if they can internalize demand given the overcapacity there.

Thu, 11/03/2011 - 18:55 | 1843482 centerline
centerline's picture

Good point.  That would be a real trick.  If they fail to internalize demand and allow a middle class to organically form as a result, they are toast.

Thu, 11/03/2011 - 19:42 | 1843568 donsluck
donsluck's picture

And if they succeed in creating a middle class, we are ALL toast!

Thu, 11/03/2011 - 18:49 | 1843471 moskov
moskov's picture

That results the lose of purchasing power of the dollar. How are the US companies would be able to afford rising prices of raw material or shrink work insurance for the American workers going back to work for less pay?

So the US companies never worry about losing their money?

Thu, 11/03/2011 - 18:59 | 1843490 centerline
centerline's picture

The point is simple.  For us peasants, there is nowhere to run.  The goal of these assholes in power is simply to crush the creditor and keep the game going so they can party like rock stars forever.  They dont give a shit about us or US companies.  They will simple move onto the next business opportunity, whatever it might be (or wherever it might be).

Thu, 11/03/2011 - 19:11 | 1843520 moskov
moskov's picture

I feel the pain for you and I can say the world right now is fucked every corner without exception. However, it's not about creditor would have the biggest gain or lose in this case, it's the fact that most of the US public fund or pension, social security net is also being funded by with the creditor under this giant house of cards, but I am not saying China in particular, I am saying the world's central banks and millions of private employers too.It's the financial side is mostly exposed. Considering US is having so many trade deficit with other countries via US companies' names to provide the goods and service. The Powers would be extremely stupid if they are shooting their organs in the name of saving themselves. Unless they have the guts of totally get rid of FED, I cannot imagine they have a shortcut of success to occupy the working people's lives any further.Even French at this point, would try to totally vote by their feet or even arms.....So complicated. Just Get your Gold fast and leave to a safer place.

Thu, 11/03/2011 - 20:21 | 1843621 WonderDawg
WonderDawg's picture

"Business opportunity" being a euphemism for "steal" or "pilfer".

Thu, 11/03/2011 - 19:49 | 1843580 blindman
blindman's picture

yes, steve keen said it. it is not wage inflation that results in
inflation, first comes credit expenditures due to systemic loan "money"
creation. people spend debt, causing
price increases first. what do wages have to do with it? (they are minimal
to be calculated to sustain interest payments and survival, nothing more,
that is the plan in the model ) this is the real
current model contrived by the lenders to maximize their interest in the game
that leads to now here. ... ( see compensation mostly from bonuses )
and it is meaningful. it just defies ones sense of temporal reality for the
sake of banker control of humanity. will not work !! kill the beast. !!
end the fed !!

Thu, 11/03/2011 - 19:55 | 1843588 bahaar
bahaar's picture

Huge wage inflation in BRIC might bring jobs back to the West, won't it?  Why pay extra for tranportation when there's no wage arbitrage?


The black swan event IMHO will be a war in Asia, probably intitiated by Pakistan and backed by China.  And I shudder.

Thu, 11/03/2011 - 20:15 | 1843612 Mike2756
Mike2756's picture

It is bringing some jobs back, it's going to be a very slow process, imo.

Thu, 11/03/2011 - 20:33 | 1843633 DormRoom
DormRoom's picture

jobs are never coming back here.  It's a global market.  Firms in China will move factories to vietnam or bangladesh, or some other deprived nation.  Capital will get funnelled back to Western banks from these ventures, but you and I are not going to see any benefits in terms of higher wages, better benefits, or more government spending.  The entire globe is being carved into have & have nots. 1% or 99%.


Think about this:  0.1% (top of the 1%) x 7B (world's population)= 7M!   That's the oglicarchy that run everything.

Thu, 11/03/2011 - 18:21 | 1843382 kengland
kengland's picture

Very entertaining but he's up against the system. He's going to lose more money with that mindset than working under the rigged system

Thu, 11/03/2011 - 18:24 | 1843383 Atomizer
Atomizer's picture

If we begin to debase, we can ride the petrodollar recycling revenue bubble. Starting a new war will create cash revenue inflows by 10x.


Thu, 11/03/2011 - 19:44 | 1843571 donsluck
donsluck's picture

War does not stimulate the economy, it destroys it. Witness the rationing, forced recycling and "doing without" rempant during WWII.

Fri, 11/04/2011 - 08:59 | 1844646 Bicycle Repairman
Bicycle Repairman's picture

War does keep the rabble in line.  Rationing introduces an economy ruled by state central planning even in countries that are imbued with a free market philosophy.  Then, ala Orwell, don't end the war ever.

Thu, 11/03/2011 - 18:25 | 1843386 Carlyle Groupie
Carlyle Groupie's picture

"Why China is Not 19th Century America"

Comparing 19th century America to current China is as foolish as comparing America to China at all.

Oh never mind, Carry on.

Thu, 11/03/2011 - 18:59 | 1843492 agent default
agent default's picture

I agree on that. My first argument is population density.  18th Century America had one of the lowest population densities in the world.  In other words there was virtually unlimited space to expand and resources to grab, as opposed to China which is pretty much packed.  The parallel between 18th century US and China fails immediately on this commonly overlooked fact.

Thu, 11/03/2011 - 20:00 | 1843594 Carlyle Groupie
Carlyle Groupie's picture

There are so many different variables.

China has a 4000 year history. 4 fucking thousand years.

The US will be lucky if they make it to ~240 (Declaration of Independence) years before they implode and melt to the core.

Of course Israel will make off with the spoils but who's counting.

Thu, 11/03/2011 - 20:21 | 1843620 DaBernank
DaBernank's picture

As for "history", there is a big difference between "The history of the various peoples who have inhabited the land mass currently known as China" and "The history of the Communist-party-owned state of China", the latter has a history of less than 70 years. Various regimes ruling in the land of China, as you think of it, have imploded and melted to the core many times, as has Europe countless times, as did the US during its Civil War and its Great Depression... Things fall apart once or twice a century and people rebuild from the ashes, flexibility is the key and if the CCP can be flexible enough, they will survive and thrive.

I wish the best for the people of all nations, the politicians can suck it.

Thu, 11/03/2011 - 20:29 | 1843631 Carlyle Groupie
Carlyle Groupie's picture

"China, as you think of it, have imploded and melted to the core many times".

You have not been paying attention over the last few ZH years. The Tyler's have promised us a meltdown leading to NWO. (buy gold, food, guns). Global homogenization. Where a nation completely loses it's identity. Global .gov, currency, law.

For the sake of clear definitions.

Thu, 11/03/2011 - 18:26 | 1843399 Zola
Zola's picture

OK guys what is the long term track record of HH ??? A legendary HF manager is someone exceeding 20%+ annualized over 20years. I dont think he falls in that category...

Thu, 11/03/2011 - 18:32 | 1843415 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

He sure talks a good talk, but his funds havent out performed gold over the past decade...maybe thats why he doesn't like it; buying gold is just too simple and easy; you have to trust a hedge fund or "someone who knows what they're doing" with money

Fri, 11/04/2011 - 09:01 | 1844661 Bicycle Repairman
Bicycle Repairman's picture

Gold cuts out a lot of investment professionals. economists and politicians.  It easy to see why it is easy to hate.

Thu, 11/03/2011 - 18:32 | 1843416 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

He sure talks a good talk, but his funds havent out performed gold over the past decade...maybe thats why he doesn't like it; buying gold is just too simple and easy; you have to trust a hedge fund or "someone who knows what they're doing" with money

Thu, 11/03/2011 - 18:44 | 1843463 High Plains Drifter
High Plains Drifter's picture

well the precious metals bull market will last forever in my opinion. the experts say 25 years. it started about 2001. so we have a ways to go. i look around i don't see anything being fixed. i don't see any progress. i see debts that cannot be paid. i see a nation dying in so many ways. gold and silver bullion take people like hendry out of the loop. these finanical advisers need your money in order to play with it. when you buy bullion, they are left holding the paper bag and you have your bank in your control and at your finger tips. the world does not understand metals, never did. the world only understands paper. that is all it understands. it has learned this by being trained in that way of doing business to the point where shear fraud vis a  vis paper instruments based upon promises have now over the last hundred years or so, been made into something that they never have been, authentic investments. everything worked until it didn't. now we have these pension fund bombs sitting around , with 8 percent per annum promises on the books to the baby boomers who are now at the age where they will start pulling on these funds in order to live in their retirements. but , a bad thing happened on the way to the party. the money is not there. now these funds double down in this market hoping that they can recoup the money they lost in 2008. that has not worked too well for the most part. the weird part about it, is that they are not allowed to purchase bullion. such is life in the world of paper. so now the baby boomer pension funds wait until the day when the sheerers come again to sheer some more sheep ......and they are coming......because it is like george carlin said one time, ladies and gentlemen, they want it all............they want it all...............

Thu, 11/03/2011 - 18:58 | 1843491 Old. No. 7
Old. No. 7's picture

He can't believe there will come a day when no one believes in fiat currency. That is hyperinflation.

Thu, 11/03/2011 - 21:26 | 1843695 GoinFawr
GoinFawr's picture

Fiat will sing the same old song it has sung so many times before:

"There will come a day, when youth will pass away; what will they say about me? When the end comes I know, I'm just a gigolo; life goes on without me. 'Cuz..."

Thu, 11/03/2011 - 18:41 | 1843452 JesusUp
JesusUp's picture

like madeoff

Thu, 11/03/2011 - 18:27 | 1843405 ouchtouch
ouchtouch's picture

Nice analysis but who are his counterparties and what makes him think that they will be around to pay off on his bets?

Thu, 11/03/2011 - 18:28 | 1843406 High Plains Drifter
High Plains Drifter's picture



He sees society’s current mood as “dark” (Tea Party, Occupy Wall Street, and social unrest in Europe to name a few), and believes this makes bailouts and money printing very hard.  The only environment that makes hyperinflation possible is “the mother of all depressions” he says<<<<<<<<


what does society and any protest  or the desires , wants and needs of anyone in this world for that matter , out in flyover country have to do with financial and monetary policies of any nation on this earth?   none whatsoever. mr hendry does not understand the kind of people he is dealing with or else he does and is afraid to say it because he swims in the shark infested waters of world finance and we all know who runs that show........and so does he.......

Thu, 11/03/2011 - 18:47 | 1843468 centerline
centerline's picture

Agreed.  But my take away is that the sting of deflation needs to be felt in order to print.  Such is about placing blame.  Ultimately the politicians and even the public are the patsies for this.  The stage is being set now.  The big question is whether or not they pull it off.

Thu, 11/03/2011 - 19:09 | 1843514 High Plains Drifter
High Plains Drifter's picture

imho, they are going to do what they want when they want. it is a sign of the times we live in. the contract has always been there. they offered and we accepted. it takes two to tango. the founding fathers distinctly mentioned the usage of silver and gold as our currency. they knew these bastards like they know themselves. perhaps they were conflicted men and complex men who had struggles within themselves about doing the right thing for the people. one of our last great presidents, president jackson, old hickory said by the Eternal God i will route you out of this land and he worked hard to do that. but if a nation is full of people who do not understand what good citizenship is and that it requires constant and fervent vigilence, then all of his work was for naught. john adams said one time that a democratic republic will not work without good Christian principles at work. for too long the moneylenders came with their sirene songs of money created out of thin air and we absorbed it like it was something good when it was bad. it went down sweet but made our stomachs sick. but we came again and again to the table requesting more and more and so now we see the final destination of this soul train. the station is in sight. most americans are not paying much  attention and when you talk to them about such things they give you this blank stare. who are you sir?  what planet are you from?  what are you talking about? let talk about good things like jersey shore or the kardashian divorce or some stupid television show  but never do i want to hear about real issues and real life or anythings that will affect my lives and the lives of my children. no, these americans did not listen then and they do not listen now and nothing will ever change for them i say. so what to do for this miserable one percent who refuse to bow the knee to moloch.......

Thu, 11/03/2011 - 19:53 | 1843585 donsluck
donsluck's picture

My rebuttal:

"then all of his work was for naught" I wouldn't call America up until we went off the gold starndard "naught".

"will not work without good Christian principles at work" We are, and always have been, the most highly churched industrial country in the world. Our true problem is our RELIANCE on faith.

Who is moloch?

Thu, 11/03/2011 - 21:56 | 1843742 giddy
giddy's picture

ummm... "faith is the substance of things hoped for, the evidence of things not seen..."  On what do you depend?  Jefferson didn't go to church -- but he considered himself a Christian in that he followed the principles described in the new testament:  Sermon on the Mount, Beatitudes, parables, etc.  Going to church doesn't prove faith or understanding any more than brunching + reading the NYTs on a Sunday morning proves intelligence.  

Thu, 11/03/2011 - 22:44 | 1843818 Bolweevil
Bolweevil's picture

Thank you.

Thu, 11/03/2011 - 18:28 | 1843407 I am a Man I am...
I am a Man I am Forty's picture

Hugh Hendry => Fucking Awesome

Thu, 11/03/2011 - 18:35 | 1843428 I am a Man I am...
I am a Man I am Forty's picture

"He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year."

Uhhh, that's a good bet, I like those odds.

Thu, 11/03/2011 - 18:38 | 1843436 wisefool
wisefool's picture

I think they will too. Ready for my first trade, what symbol would that be?

Thu, 11/03/2011 - 19:27 | 1843541 Careless Whisper
Careless Whisper's picture

...champagne socialists   (hugh hendrey)


Thu, 11/03/2011 - 19:45 | 1843573 wisefool
wisefool's picture

Thats the liars paradox right? If those bullies print money, you get to hold value in gold. But then they will confiscate it. Then when they have it they will hoard it (generally amonsgst themsevles power de jour). Or they will just tax it. Same with real estate.

Seems like the only solution is to go gault & grub. Leaving out the guns and gold part, which is basically the vibe I am getting from this guy after reading the ZH threads about him (self loathing mentioned in the last ZH post). And thats kinda the whole bhuddist monk thing too right? Explains why he likes Japanese culture (yes I know bhuddism is not the predominant religion there, but it influences all of asia)

Thu, 11/03/2011 - 21:30 | 1843703 GoinFawr
GoinFawr's picture

Ever since puberty I've always been fond of the Zen Koan, "What is the sound of one hand fapping?".

Thu, 11/03/2011 - 21:42 | 1843722 wisefool
wisefool's picture

heh. But in this context  I have been hearing on ZH and the MSM about europe and japan about the declining birth rate. And how most econ projections require replacement of every 2 middle class people with two upper middle class people to pay the retirements of the previous generation. 

Thats a expected response for a "Koan", right great master?

Thu, 11/03/2011 - 22:30 | 1843759 GoinFawr
GoinFawr's picture

well fit!  But don't worry, the frogs will be boiled slowly enough they won't even notice they've dropped a social strata  or two. Oh and portable property is not the same as Real Estate at all, it's portable. And liquid. Kinda hard to hide/move/spend a quarter section of land if one was so inclined, no?

FWIW: i didn't thumb you down.

Thu, 11/03/2011 - 23:04 | 1843865 wisefool
wisefool's picture

Well thats what I am starting to understand about the macro. Tom Brokaw was on charlie rose last night, pitching his book about "The time of our lives" talked about how he was in touch with america, cause he has a ranch somewhere in the western US, and some famous photographer took the picture on the cover, and that the land was orginally a Crow reservation, and that he knew other people out there like him and charlie that were apart of the 1% and profit immensly from wall street, but he also knew local cowboys who know something isn't right with the country.

Dude. You have an expansive ranch in the west. You brag about having a picture of you infront of it taken by a famous photographer. You know what OWS is about, and admit it is about you, and people know you are in NYC starring on MSNBC 3 days a week? How exactly is that going to work out if TSHTF? You gonna put those 10,000 acres in your pocket and run? You support many of the people like corizine when they are in political office, and probably get hundreds of thousands of dollars in ag subsidies like your good buddy Sam Donaldson, and you think that $20k/yr farmhand you hire cant afford a TV to see the whole picture?

At least this hendry guy admitts he is part of the moral hazard and is atleast trying to figure out exactly how. Brokaw couched in that he said "I should have been a medical doctor, thats kinda like a journalist/pundit right? what is done is done. This is me paying the indulgence, cool. we are cool america."

Back on topic. I hear what you say about gold. but when you show up in a new place and break out that first eagle, I am not sure if it will be much different than Tom Bringing Charlie on the last flight out of NYC. And as far as how this story fits with the Koan, basically steve jobs probably deserves to be part of the .1%. Tom brokaw, charlie rose, Corzine, Italy's Bunga Bunga Boy, etc. not so much. but them being in there took the wealth that would have created 6 upper middle class people for the econ formulas to work out.

Fri, 11/04/2011 - 05:51 | 1844232 Apostle of Unknown
Apostle of Unknown's picture

Guys like Hugh Hendry are all about expressing their views by being long gamma. They take their positions through derivatives that allow them to loose small for long, dry periods while winning the jackpot very occasionaly. For the Asia bear trade, he uses Credit Default Swaps that are amazingly cheap in Japan. These Japanese banks that underwrite his CDS'es are apparently happy to receive a steady but tiny income stream in exchange for shouldering disproportionately large risks. HH is happy to pay it to them. He can wait and be wrong for years, loosing small amounts of money until the companies whose credit he shorted start to go under, either because China GDP implodes or because of these companies' own insane leverage. Also, note that he doesn't necessarily intends to keep the CDS until a credit event occurs. (Same with taking on US treasuries; you don't need to hold them for 30 years to benefit from the risk-on-risk-off herd flocking back to them time and again.) For his views on ECB rate decisions, he probably expresses those using swaptions. 40-to-1 is not the leverage on his fund (which is very small because he bets fairly small amounts, similar to Nassim Taleb's barbell strategy), they are the odds on the euro rate position. Finally, HH has no problem with gold. He has clearly stated on multiple occasions that he can envision monetary collapse as an outcome of where this is going. But HH is a hedge fund manager... it's his job to ride some of the complex, "unexpected" stuff that comes between today and this hypothetical "endgame". And this includes deflationary shocks (because credit IS money and yadda-yadda-yadda) and therefore being (cynically) bullish on the dollar for as long as people conduct trade and track portfolio performance using the greenback. For better or worse, holding on to a bunch of gold bars is just not what he does, at least not now. Even though I myself do hold gold, I think he's right and the not so distant future might bring further disappointment for gold holders before all is said and done. But then, ultimately I'm sure he'll try to pick some up when the time is right.

Thu, 11/03/2011 - 20:38 | 1843642 Carlyle Groupie
Carlyle Groupie's picture

"He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year."

HH DOA The Lister Hospital, Chelsea Bridge Road, London. Next year sometime.

Anyone can profit during bull markets. Only pro's profit otherwise.

Thu, 11/03/2011 - 18:29 | 1843410 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

massive deflation followed by hyperinflation - bet everything you have on it...oh wait I already did...!

Thu, 11/03/2011 - 18:30 | 1843411 MSimon
MSimon's picture

US Mfg is good. We do about the same amount as we did in the 50s. What is different is that machines are doing most of the work.


Mfg labor is going the way of farm labor.

Thu, 11/03/2011 - 19:07 | 1843510 Seer
Seer's picture

Well, for the first time ever (since the decline back in the early 1900s) there's been an INCREASE in the number of small farms in the US.  This baby is turning around, and I'm glad to be following it...  It's the one thing that Jim Rogers has been correct on.

The problem with today's manufacturing is that the volume cannot be sustained.  The price breaks on volume -economies of scale- are going to start failing as volume drops (no one can buy or has the need to buy as in the past)- reversal of economies of scale.  Yes, things CAN unwind very quickly.

Thu, 11/03/2011 - 20:41 | 1843646 MSimon
MSimon's picture

You are talking about twitches in a trend. You think farm labor is ever going back to 20% of the population? So it is going from 3% to 4%. Whoopie!!!!!!!!!!!!!!!!!!


An opportunity to be sure. Not the next big thing.

Thu, 11/03/2011 - 21:41 | 1843709 GoinFawr
GoinFawr's picture

I'm not agreeing or disagreeing with anyone here, but a 1% change, out of 80mil doing something pales in comparison to a 1% change, out of 310 million.

Thu, 11/03/2011 - 18:32 | 1843417 Sequitur
Sequitur's picture

O.K. so what investment gives you 40 to 1 return on the ECB if rates < 1%? Anyone know?

Thu, 11/03/2011 - 18:34 | 1843425 Mike2756
Mike2756's picture

Levered bet against the Euro?

Thu, 11/03/2011 - 18:41 | 1843447 wisefool
wisefool's picture

I have the same question. I think the answer is going to be "that means money printing, buy gold"

Thu, 11/03/2011 - 20:14 | 1843610 zorba THE GREEK
zorba THE GREEK's picture

What bet produces a 40 to 1 return without a huge counter risk is what I would like to know.

A bet on the ECB lowering rates below 1% next year which would yield 40 to 1 only risking

the 1, is a no brainer and I don't see how any party would take the other side of that.

If it sounds too good...........

Thu, 11/03/2011 - 18:41 | 1843450 NOTW777
NOTW777's picture

inquiring minds want to know

euro was up after the cut today

Thu, 11/03/2011 - 18:47 | 1843470 Mike2756
Mike2756's picture

Looks like it's getting ready to take out 138 again.

Thu, 11/03/2011 - 20:54 | 1843653 chump666
chump666's picture

The markets are trading on news headlines via the insane 'officials' over in Europe.  USD actually went bid too, Gold went bid then sold off.  The meltup on equities have now pushed through the aug/oct resistance.  Markets are still thin, and we have a tighter trading range.  The 40:1 leverage play on a ECB interest cut below 1% signal is most probably an option bet on the EUR.  It's like the Copper short, a 1% below cut would indicate that Europe is done and that there is no white knight i.e China.  In fact China would be done and dusted at the same time.  So extreme leveraged shorts would factor EU collapse + the China collapse.

So you would short everything except for the USD. 


Thu, 11/03/2011 - 21:05 | 1843668 wisefool
wisefool's picture

Why would this make the Euro done? Ben has rates at zero and basically said he would keep them at zero 'till the end of his term in 2013. This gives the ECB guy the ability to pop headlines and still have .75% on USD.

Anything else that ben does would just make the "effective" rate even lower than zero with the balance sheet mumbo jumbo, including figuring out a way to make some of the really toxic paper just disappear.

Again, I am not as smart as you guys, but what prevents the ECB from getting to hog headlines and look important by giving cheap credit to the masses, but still making Europe money relative to USD?.

Thu, 11/03/2011 - 21:25 | 1843697 PeterB
PeterB's picture

You have my full respect ol' chump. Keep up the great insight.

Thu, 11/03/2011 - 21:40 | 1843718 chump666
chump666's picture

Hey thanks brother.

Thu, 11/03/2011 - 22:40 | 1843745 GoinFawr
GoinFawr's picture

O it's nice to see you two again too. Your acrobatic synchronized back patting and dollar pumping always seems to be bullish for the PM's.


"Thu, 07/08/2010 - 20:24 | PeterB

Let the scramble for cash commence. USD denominated debt is the reason."


Fri, 11/04/2011 - 00:20 | 1844015 PeterB
PeterB's picture

The race is not to the swift nor the battle to the strong. GL fossicking in coin shops. But yes, ouch for now.

Sat, 11/05/2011 - 03:36 | 1846304 GoinFawr
GoinFawr's picture

Coin shops, farmer's markets, private auctions; anywhere honest trade occurs you don't need that much luck.

GL playing musical chairs on the USS Liberty. Assuming you weren't leveraged, you only have to stay in the game until gold drops around 550 US bitz and bytes from here before you can break even.

Mon, 11/07/2011 - 01:36 | 1852134 PeterB
PeterB's picture

It's all relative really IMO. Fossickers to be ahead will need to cash in their bullion which judging by the fanaticism shown on this site is deemed sacreligeous. On the other hand, the cash hoarders might not want to buy the shiny relic at what they may construe as exhuberantly priced. So unless gold does become the new medium of exchange which last time I checked was only a proxy for fear it doesn't really matter. As a trade, gold has been fantastic & I admit it was a great opportunity missed but how many are trading & how many are clutching thinking it alone will save them from economic ruin. Anyway, I for one am forever greatfull for this true democracy of a site but have grown frustrated of late of the one eyed cheer squad behind the goals.

Mon, 11/07/2011 - 17:02 | 1854340 GoinFawr
GoinFawr's picture

"It's all relative really"

It is, that's my point in our exchange too.

"IMO. Fossickers to be ahead will need to cash in their bullion which judging by the fanaticism shown on this site is deemed sacreligeous"

 No, the bullion is their store of wealth, their final currency of choice for saving. Some build oz's by doing exactly what you do (I assume) in the paper markets. Most of the rest earn paper somehow and exchange it for bullion.  Late 2008 was an excellent example of why to do that, rather than why not to; when the market crashed gold went down in fiat terms, but so did everything else required for survival. Gold held it's value quite well in terms of real, actual things. Fiat strength is temporary/illusory and at the whim of someone else. Has the 'almightly dollar' gained any real value in the last 40 years, in your opinion? Savings accounts have been paying less than real inflation for how long now? Do you honestly think that that is going to change anytime sooner, or even later? PM's may well save them from economic ruin.

So PM's are not a `religion contingent on fear' at all, they are the strongest type of inductive argument going based on historical record that shows what has happened to every single fiat currency ever introduced; eg. you do not need to be an astrophysicist to see that it`s a pretty safe bet that the sun will rise tomorrow. I`d take that wager any evening, especially when the other guy is giving stupid odds that it won`t. Would you really invest your labour against that event, rationalizing that "this time it's different"?

The more people that get on board the PM train the more people there are who will eventually be willing and able to exchange goods/services for bullion. That number is definitely growing. Would refuse to show up for work if you knew you were going to be paid in philharmonics?

 "On the other hand, the cash hoarders might not want to buy the shiny relic at what they may construe as exhuberantly priced"  Maybe, but they've been misconstruing themselves out of a massive opportunity since Au400USBitzBytes, and you have too because you followed along with them at least since the date I've noted. Paul Van Eeden, is that you?

'One-eyed cheer squad', heh, sure.  C'mon, aren't we all a little tempted to utter a little 'I told you so' or two when we get it right year after year after year? You have to expect a certain amount of arrogance and schadenfreude to surface in the PM'ers after they've endured decades of being incessantly denigrated as conspiracy theorist loonies and barbaric relic luddites, only to have their views substantiated by fact, no? 

Granted, considering how well you face owning up to a loss maybe you yourself don't deserve a lot of derision... so I hope I haven't offeneded you too much. And I will take your good advice to keep my mind open, thanks.


Mon, 11/07/2011 - 19:37 | 1855078 PeterB
PeterB's picture

Not at all GF point well taken. +1 for your gentlemanly response.

Thu, 11/03/2011 - 20:13 | 1843608 Thisson
Thisson's picture

Out of the money options?

Thu, 11/03/2011 - 21:01 | 1843663 unununium
unununium's picture

Warrants expiring in 2013 on Silver Wheaton (SLW)


and Franco Nevada (FNV)



Thu, 11/03/2011 - 18:32 | 1843418 smoked
smoked's picture


Thu, 11/03/2011 - 18:39 | 1843442 NOTW777
NOTW777's picture

"Hendry’s favorite sacred belief – which he’s betting against, of course – is the fact that no one believes the ECB will ever cut rates below 1%."

so he was positioned for todays cut?

Thu, 11/03/2011 - 18:41 | 1843454 Shizzmoney
Shizzmoney's picture

I like this bet.  Low risk, high reward at the appropiate volume (unles he is going all-in on a gutshot straight draw).

The Eurozone is only experiencing what happened the USD due to its 60+ years of Debtmanian Devil policies.

Thu, 11/03/2011 - 18:42 | 1843458 Scalaris
Scalaris's picture


"Our society today is confronted with a bleak future due to poor policy decisions; the truth today has become unpalatable, and these jokers don't want to hear it"


- Hugh Hendry (= Bromance)


Thu, 11/03/2011 - 19:21 | 1843536 Seer
Seer's picture

This is where he's wrong: yes, and I'd be happy to debate him on this point.

It's NOT policy decisions.  This head was always built in.  Slam him all you want, but Karl Marx was correct in saying that capitalism would end up drowning in excesses, that it required markets to mop up he excesses of industry.  When the entire world went nuts manufacturing we ended up creating such a surplus that we're drowning in it: Adam Smith said that we shouldn't trade "like goods," and, that we shouldn't trade with countries that aren't on equal economic footing- oops!  Yes, shitty policies heightened this flaw, but the flaw was always there.

I don't subscribe to Marx's belief that having workers control the machinery would make this flaw go away.

We've created (mostly due to the "economies of scale" mentality) BIG SHIP syndromes.  Our infrastructure becomes so important to yesterday's ideals that we cannot break away, the status quo is defended at ALL costs.


Yes, they may appear to be jokers, but they're only doing what TPTB require.  HH states that these folks don't have to worry about screwing up, not like he does; I disagree here- HH can screw up, blame the jokers, and be back in business with another "firm" in quick order.  The jokers, however, face pitchforks: they serve the BIG HHs of the world.

Don't get me wrong, I like HH.  I like his pointing out how fucked up the others are.  But, I don't think that his "solutions" would play out any differently in the end.  They're all operating with a loaded deck- the game is rigged, and it's rigged to blow up.

Thu, 11/03/2011 - 18:44 | 1843461 PulauHantu29
PulauHantu29's picture

You can't eat gold. At least this fellow gets THAT right!

Thu, 11/03/2011 - 18:59 | 1843494 devo
devo's picture

You can't eat stocks or paper, either. What a dumb argument. You want a hamburger as currency??

Thu, 11/03/2011 - 18:56 | 1843474 RobotTrader
RobotTrader's picture

Hendry must look at a chart of SBUX and kick himself.

He could have rode the road to riches.

By buying SBUX below $10 3 years ago and ridden it up to $42.  With nary a pullback of any consequence.

Basically a great "buy and hold" investment during 3 years of the worst economy in decades and the worst financial crisis Europe has ever seen in 100 years.

And don't even get me started on Groupon.

Now worth billions even after losing huge amounts of money year in, year out.

And that company was started from bone scratch in November 2008, right after the total and complete collapse of the financial markets.  After Lehman and Bear Stearns went flat broke.

"Hey, let's start up an Internet company!!!"

Who would have thought that the same consumer and Internet bubbles keep repeating themselves, over and over again?


Despite the worst financial crises ever seen?

Thu, 11/03/2011 - 18:58 | 1843489 homersimpson
homersimpson's picture

"By buying SBUX below $10 3 years ago and ridden it up to $42.  With nary a pullback of any consequence." You can quit now - you've already won the ZH Monday Morning QB award for 2011, 2012, 2013, 2014....

Thu, 11/03/2011 - 19:13 | 1843524 lolmao500
lolmao500's picture

Groupon... just like NETFLIX. I hope you get bankrupt on this one.

Thu, 11/03/2011 - 19:36 | 1843542 somethingisrotten
somethingisrotten's picture

You are such a momentum chasing buffoon. Several of these names have had, and every one of them will have a boom / bust cycle.  [SBUX 10 to 40 to 10 to 42; PCLN 200 to 20 to 140 to 50 to 550 to ?; and so on.] Best of luck getting on and off  your surf board in time to make money over the long term.  You remind me of a former good friend who has been a multi-millionaire twice in the last 20 years and lost almost all of it both times; today he is borderline loony.  His wife may have him committed at any time.

Thu, 11/03/2011 - 19:51 | 1843583 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Does any of this shit really matter?  One day equities fall off of a cliff, and the next NKE is back to what it was before the US Debt Disaster.  The Algo Machines from Hell are running this show, and the little men in the sky high buildings tell them what to do. 

"Tell the machines to use leverage!  Risk on!" 

A few weeks later.....

"It's time to take gains!  Tell the machines, risk off!"

It's all a joke Robo......

Thu, 11/03/2011 - 19:59 | 1843593 somethingisrotten
somethingisrotten's picture

I totally agree.  It is a sick joke on anyone providing money to these jerkoffs!

Thu, 11/03/2011 - 18:53 | 1843477 devo
devo's picture

Here he says hyperinflation is inevitable.

Anyway, I think he's right on ECB interest rates and wrong on gold/silver. His logic that gold is bad because it's "no longer contrarian" is silly. Not a single person I know owns gold or silver. If he thinks interest rates are going that low, he should be bullish on PMs. I don't know. Interesting, but not advice I'd take too seriously. He's made a reputation being contrarian, and so there's probably pressure to keep said reputation. That's how this comes off to me.

Thu, 11/03/2011 - 18:56 | 1843486 chump666
chump666's picture

He is awesome!  Kick ass Hendry... "champagne socialists" hahahaha

100%  EU/ECB/IMF/BoE/UK/Germany/France all are going to send Europe into the sh*tstorm this winter.  ECB cuts rates.  Great call brainacs, you just send oil inflation to Germany and France.  Nice thank you to the Germans who are underwriting the whole EZ.  So now the Germans get stagflation kicking in, nice.

And Greece...speechless.

All eyes on Italy though.


Thu, 11/03/2011 - 19:26 | 1843543 chump666
chump666's picture

...Oh and all eyes China,  Iron Ore prices, Copper, and Gold very bearish selling on EUR bids, if the YEN is bought up Asia session andother bearish signal.


Thu, 11/03/2011 - 19:01 | 1843497 chump666
chump666's picture

...Asia should be neg this session.  If Japan gets frisky on their YEN intervention insanity. What did the ECB rate cut cost the Japanese goverment in FX losses? A sh*tload

They are all idoits.

Thu, 11/03/2011 - 19:11 | 1843517 lolmao500
lolmao500's picture

Hendry’s favorite sacred belief – which he’s betting against, of course – is the fact that no one believes the ECB will ever cut rates below 1%.

He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year.

And how does he do that? And how can we do the same?

Thu, 11/03/2011 - 19:13 | 1843522 devo
devo's picture

A bookie.

Thu, 11/03/2011 - 19:12 | 1843521 OutLookingIn
OutLookingIn's picture

The contrarian 'schtick' can carried just too far and HH carries it to the extreme.

I like some of his 'calls' but as another poster noted, connecting the dots in the middle to far ground is not his strong suit.

He sometimes sticks to his contrarian point of view to his own detriment, in an attempt at being true to his convictions and damn the torpedoes!

Thu, 11/03/2011 - 19:20 | 1843530 devo
devo's picture

Yep. Also, I've heard him damn the banks for risky assets while acting level-headed, yet he's out there leveraging 40:1 (possibly via CDSs)?? Just seems like an entertaining, confused gambler to me.

Thu, 11/03/2011 - 19:13 | 1843525 Glasgow Gary
Glasgow Gary's picture

Actually, Hugh has been wrong on a bunch of issues. And his bad behavior on TV--which even he now acknowledges--didn't help. To put it mildly. He has not had a good record the past two years, and continues to trumpet hsi 2008 performance. Worse, he completely missed the gold run, and totally whiffed in his early 2009 call that there was "nothing central bankers could do." Yeah, right.

Now is Hugh correct overall? Yes, no question. Will central bankers fail? You bet. Did he make Sachs and Stiglitz look like idiots? That was great! I wish Hugh the best. But he should get his ego under wraps.


Thu, 11/03/2011 - 19:15 | 1843526 GenXer
GenXer's picture

He's a bit like that annoying/cool guy aways at the coal face in the music scene. That hip trendy indy band with a fesh sound that is starting to get a following is now "no longer cool" because a few hundred people now go the gigs (PM's). He's already on to the next band that no-one knows about that may or may not make it.

In saying that I really enjoy his stuff. Deflation followed by hyperinflation is a good case for keeping the gun powder dry (holding cash till the intial  deflation hits PM)?

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