Posts Tagged ‘Hugh Hendry’
Hugh Hendry Interview: Invest in Long Government Bonds
Tuesday, November 11th, 2008
Hugh Hendry, the brilliant, brash and outspoken and eloquent CIO of Eclectica Asset Management, one of the UK’s most prolific asset managers discusses global markets and is investing in long-term government securities in the US and UK. Dominic Frisby, of Money Week and Commodity Watch Radio conducts this interview, which was recorded on November 1, 2008.
Here is a summary of some of Hendry’s thoughts:
- the present environment is all about the return of your capital, not return on capital.
- he is intrigued by government bonds and bets that interest rates will be cut further than people anticipate at the present time.
- interest rates will come down to unprecendented levels but it won’t make a difference.
- monetary policymakers will be pushing on a string.
- Hendry has been investing in long term US treasuries
- he is profoundly bearish on commodities, for now
- He believes that gold will drop further to below $600 as a result of the deflationary pressure that we are facing from the fixing of the system, then as a result of all the stimulus, we will face profound inflation. When long-term bond yields drop to around 2.5% that’s when you want to own commodities. That’s when he’ll back the truck up for gold, the big 16 oz. bars.
- For now Hendry will place his bets on deflation and falling long term interest rates.
If being leveraged means shorting cash, then deleveraging means buying cash, and he’s afraid the deleveraging is far, far, from over, because debt levels are still very high at this point. That means the dollar will continue to rally on the resultant repurchasing or short covering of the dollar. The rallying dollar, and ongoing asset liquidation is deflationary for now.
Hendry’s case and outlook is deeply compelling and worth taking seriously.
The second part of Dominic Frisby’s interview is with Dr. Francis Claessens of Peers, who tells us what the super rich have been doing with their money. Claessens leads WealthPeerGroup.com, a peer group that meets on a monthly basis to discuss financial issues. Minimum entry to this group is investable assets of £5-million ($8-million). This too is very interesting, i.e. if you’re interested in what’s worrying the very HNW investor these days.
Listen to the entire interview here:
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Tags: Claessens, Commodities, Commodity, deflationary pressure, Dollar, Dominic Frisby, Eclectica, government securities, Hugh Hendry, interest rates, Monetary Policy, UK
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New Audio Resource at GreenLightAdvisor.com
Saturday, November 8th, 2008
Now you can listen to the Investment Outlook and Commentary from Bill Gross (PIMCO), Vanguard Funds’ Portfolio Managers, and others on GreenLightAdvisor.com’s Audio Resources page.
This month, Bill Gross presents his latest investment outlook, Kenneth Volpert from Vanguard discusses the Credit Crisis, and Dominic Frisby, from MoneyWeek interviews Hugh Hendry of Eclectica Asset Management.
Enjoy!
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Tags: Bill Gross, Credit, Credit Crisis, Hugh Hendry, PIMCO
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Hugh Hendry: Don’t Bank on the Bailout
Sunday, November 2nd, 2008
Hugh Hendry, the brash, outspoken, and eloquent CIO, Eclectica Asset Management was invited to host Channel 4’s Dispatches, a UK TV program - “Don’t Bank on a Bailout”- a production that aired on October 27, 2008 about the fallout from this years credit debacle which adversely affected the UK and the US. Hendry travels throughout the City Financial District and then Wall Street.
Hendry has been one of the harshest critics of the lack of regulation in credit markets.
The three segments total about 15 mins. Its a must see:
Hugh Hendry, Part 1, Dispatches: Don’t Bank on the Bailout
Hugh Hendry, Part 2, Dispatches: Don’t Bank on the Bailout
Hugh Hendry, Part 3, Dispatches: Don’t Bank on the Bailout
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Tags: Credit, Credit Market, Hugh Hendry, Markets, UK, Value
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Hendry: 10-20 Years to Recover Thanks to ECB
Thursday, October 23rd, 2008
Hugh Hendry, CIO, Eclectica Asset Management told Power Lunch Europe that it will take 10-20 years to heal from the current turmoil in markets. This is a must see interview.
click image for video
Here is the summary of the interview:
Hendry has avoided risk the last few years. His hedge fund is up 20% YTD and 42% this month. He has been investing more heavily in long term US treasuries recently. Hendry is looking at increasing the risk exposure in his hedge-fund’s portfolio.
He pointed to Mervyn King’s hinting toward the “R” word as putting it mildly, that the big “D” is in the forecast.
“It’s not a question of losing out in a recession, I’m talking about 10 or 20 years before we recover from this. This is a catastrophe,” Hendry told “Power Lunch Europe.”
Hendry made an example of Hungary. He lambasted the Hungarian central bank governor, Mr. Andra Simor, who described the situation as akin to “the slower antelopes in a chase being devoured by lions one after the other.”
This stems from Hendry’s past involvement in discussions with European financial officials about European convergence.
Hendry specifically alludes to discussions he’d had with the Hungarian governor in particular regarding the integration of Hungary into the EU and that he warned against the way in which they planned to finance their move with Swiss Francs and Yen via the carry trade.
While in violin-playing posture, Hendry claimed,”It’s tragic.”
“What it [the reel] doesn’t reveal is that I sat there, he just said, you’re rubbish. I’m Hungary. I’m going join the EU. My interest rates are 8% and they’re going to be 4%. You’re a fool, You can’t catch me Mr. Lion, I can outsmart you, I can outrun you. And I said “I dare you.”
I said, “I’ll give you a head start.”
They suspended all economic rationality. Mortgages were given to poor people in Swiss Francs and Japanese Yen. They took on an enormous foreign exchange risk, because they thought that the little antelope could outrun the lions of economic intelligence. And you can’t.
Hendry said, “You can game the system, but you can’t beat it.”
There’s nothing crude, there’s nothing moral here. They were wrong.”
Dominoes. Iceland, Hungary, Latvia, Bulgaria, Eastern Europe, the dominoes are crashing. There’s economic disequilibrium. The economic chaos which we ignored for 5 years because we were bribed to ignore it, because they paid high interest rates. It was a bribe to ignore reality. But in a world where everything is falling down, the dominoes just crash. There is no answer.
Hendry’s beef is with EU and UK regulators and officials.
“I’m the heretic. I was laughed at, scoffed at, dismissed, ignored, at a time when investment bankers who advise governments, and who manage money, took reckless risk upon reckless risk.
We reached a point at which the Royal Bank of Scotland had a bigger balance sheet than the economy. Everyone looked the other way. Its not a question of losing out in a recession. I’m talking about 10 or 20 years before we recover from this. This is a catastrophe.
Forget about Mervyn King, UK Finance Minister, saying the “R” word. You wait until he says the “D” word.; depression. We had interest rates in the UK at 5% for a year as everything collapsed.
There’s a notion of stall speed. Never allow an aircraft to reach stall speed. That is the pledge central bankers must make. ” We won’t allow the economy to reach stall speed,” because everything below that you’re pushing on a string.
Interest rates in the UK will be 2% at the end of next year, and they’ll be 2% at the end of the year after that.
The ECB, the most hideous, intellectually conceited group of bankers, raised interest rates this summer; history will send the ECB to damnation because they have sent us to damnation. That’s the reality.
Thank you Mr. Hendry.
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Tags: Carry Trade, COT, ECB, Economy, energy, Euro, Fed, Hugh Hendry, interest rates, Japan, Markets, Mortgage, Recession, SMI, UK, Video
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Hendry: Short Selling Ban a Fiasco
Friday, October 10th, 2008
Hugh Hendry, the eloquent, brash, and outspoken CIO at UK-based Eclectica Asset Management, comments on the today’s worsening selloff in markets, appearing this morning on CNBC European Squawk Box with Geoff Cutmore.
click on image for video
“It feels like the blackest morning,” Hugh Hendry, CIO & partner at Eclectica said Friday (today). “We’ve never really experienced a matter as grave as this.”
Conditions like these are unmatched, except with 1930-32. He “slakes” regulators for this, making the following points.
- The short selling ban has been a fiasco, as it has removed an entire constituency of buyers from the market, so that on weak days there is no profit incentive to buy the market.
- The tremedous slide of the last two weeks has made the market completely oversold, therefore nobody is willing short sell the market.
- The VIX index is very high, so one can’t (afford to) buy puts to protect their holdings
- Fundamentals have become an intellectual curiosity, and an outrageous luxury
- The only defense left to investors is to sell their assets, this is a liquidation
- People watch the market all day and are averaging their trades,
- and that’s why in the final hour of trading you see a cascading of orders, and the market runs out in panic trying to fulfill those orders.
So far in the month of October, Hendry’s hedge fund is up 40% on account of his levered positions in long-term government bonds.
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Tags: Euro, Hugh Hendry, Markets, Short Selling, Trading, UK, Video
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Euro Down Against Dollar
Friday, October 3rd, 2008
As pointed out by one of our favourite commentators, Hugh Hendry, CIO, Eclectica Asset Management, Ireland’s plans to guarantee all bank deposits could have a destructive impact on the value of the Euro. |Take a look at the chart. At the time of this posting the Euro has dropped against the USD from $1.41 to $1.38. Despite the fact that EU central banker, Trichet, has opted to leave rates alone, the market appears to be paying attention to the toll that Ireland’s guarantees may have on the Euro if they are allowed to go forward with this.
Relative to this development that has arisen out of the widening of spreads and the tightening of credit in the UK and Europe (as well), the US dollar is enjoying the illusion of being stronger. Given the differences in monetary policymaking, it appears that in the near term, the strength of currencies will depend on the winning moves of some policymakers and the losing moves of others.
In this vein, it appears the Fed and the Treasury are making the winning moves. It remains to be seen what the EU will do. Take a look at the Daily and 3-day charts of EUR vs USD.
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Tags: Chart, Credit, Dollar, Euro, Fed, Hugh Hendry, Monetary Policy, spreads, UK, US Dollar, usd, Value
Posted in Markets | 1 Comment »
Hendry: Ireland’s Guarantee will Destroy Euro
Thursday, October 2nd, 2008
Click image to view video
We are huge fans of Hugh Hendry, the outspoken and brash CIO of UK based UK-based Eclectica Asset Management. In today’s episode of European Squawk Box, Hendry discusses how Ireland’s guarantee of all deposits, which are two times Ireland’s GDP will destroy the Euro, if it is allowed to go ahead.
He goes on to make the point that the market is pricing McDonald’s (MCD) as a lower default risk than Ireland or UK government debt, as witnessed by the huge spike that has occurred in the Ireland 5 year Senior CDS spread, an amazing development.
Hendry has been one of the most candid and accurate commentators on the severity of the risks that have gripped the markets during the last year.
This is yet another highly relevant interview and point of view to absorb, as it presents the view of global credit from the other side of the Atlantic. A must see interview!
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Tags: CDS, Credit, Euro, Hugh Hendry, Markets, UK, Video
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Hendry: Speculation is Dead, Gold is Heading to $600
Saturday, August 30th, 2008
As you know, GreenLightAdvisor.com is a huge fan of the outspoken Hugh Hendry, CIO, Eclectica Asset, who has been a unique, eloquent, and brash voice in this market. Its our sense that Hendry is also uniquely alone, and lucid, in the marketplace in terms of his outlook, and for this reason should be added to your must see/must listen to list.
click image to watch
The segment which aired August 19, 2008 on CNBC Europe, also contains midway, a terrific interview with GE CEO Jeff Immelt.
“There is no role for speculation or speculators today. This is kaput,” Hendry said. “If we were Second World War generals, we’ve exposed our flanks. We’ve been wiped out. This is about fundamentals … this is about losing money.”
As the crisis unfolds, the policymakers’ focus should shift from the threat of inflation to that of the world economic downturn, which could be more severe than economists anticipate, he said. (Watch Hendry’s interview below for more on the economy, inflation and commodities).
China, which many believe will balance out slowdowns elsewhere, will struggle if difficulties in the U.S. continue, while the current spike in producer prices is just a hangover from rising oil prices earlier this year, Hendry said.
“I fear that the central bankers of the world are fighting yesterday’s battle,” he said.
As for the banking sector, it is “insolvent,” Hendry said, adding he can’t tell just how low those stocks will go.
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Tags: Banks, Commodities, Economy, Hugh Hendry, Monetary Policy, Recession
Posted in BRIC, Banks, Brazil, China, Commodities, Credit Markets, Crude Oil, Economy, Emerging Markets, Financials, Fixed Income, Gold, India, International Markets, Markets, inflation | No Comments »
Hendry: De-flation is Contrarian
Sunday, August 10th, 2008
Hugh Hendry, CIO, Partner, Eclectica
“Bonds! The credit crunch – you’ve got to go back to 1942 to last observe the contraction in lending in America to the corporate and industrial sector. You can’t go back far enough to find a period in the UK where mortgage loan growth has just stopped. There are queues outside banks to get mortgages. That is profoundly deflationary. This spike that caught everyone out in oil - when it went from 100 to 140 - got all the experts pointing the wrong way, and saying “inflation inflation”. When the banks are as insolvent as they are today, there is no dissemination. There is no ability to carry higher prices from the specific sector of commodities into the general and into general wages. You have to be willing to be contrarian at this point and own government bonds. And it’s hardly contrarian because — would you believe — if you had a portfolio that was solely comprised of 10-Year US treasury bonds then in the year to June this year you would have returned 15 percent. Ross, the market fell 20 percent, so you would be up 35 percent vis-à-vis the average stock. It’s ironic that we have this obsession with something, whereas the reality – the litmus test – is the Treasury bond, and it’s recording gains of 15 percent, and that’s telling you of the turmoil in the equity markets and the turmoil in the real economy.”
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Tags: Banks, Commodities, Credit, Economy, energy, Hugh Hendry, inflation, Markets, Mortgage, UK
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Hugh Hendry:10-year Treasury Signals Deflation
Wednesday, August 6th, 2008
We’ve recently become huge fans of anything that Hugh Hendry, the cutting and brash CIO, Eclectica Asset Management, has to say. On August 1, 2008, Hendry appears on CNBC’s powerlunch europe opposite Lloyd’s Nick Hodson. Each takes turns discussing the state of the market and opportunities, and if you watch at least half way through you’ll get to see what it looks like when someone gets harpooned for what seems to be sycophantic commentary.
Hendry is a regular on CNBC, known mostly for his incisive and blunt force commentary. Besides being entertaining, Hendry is enlightening and speaks to the heart of what is wrong in the market, and what to do in this confusing, tumultuous time.
Among other things said in this segment, Hendry points out that investors in 10-year treasuries would be up 15% YTD vs. -20% for stocks, and that the 10-year US treasury is signalling deflation while everyone else seems to still be hung up on inflation. On this front, he would rather own bonds than gold.
This is must see commentary:
Click on image to watch segment.
Source: CNBC, August 1, 2008 - Hugh Hendry, PowerLunch Europe
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Tags: Euro, Gold, Hugh Hendry, inflation, Video
Posted in Markets | 2 Comments »
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