‘It wasn’t meant to be like this’: Hugh Hendry’s farewell letter than three years later he quit Odey to set up his hedge fund boutique Eclectica. Below we repost his full final letter in its entirety, and wish Hendry good luck in his next endeavour. * * *. CF Eclectica Absolute Macro Fund. Hugh Hendry is back with a bang after a two year hiatus with what so many have been clamoring for, for so long – another must read letter from.

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This makes us bearish on most Asian stocks, bearish on industrial commodity prices, interested in some US stocks, a seller of high variance equities and deeply concerned that Japan could become the focal point of the next global leg down. He was really not a nice guy and he definitely had an agenda off-camera”. In a curious sort of way the cause of these recent problems seems analogous to those of the renminbi, in that too many speculators were lured in by an attractive, high carry fixed income market.

And for several years we have studiously avoided investing in companies exposed to industrial commodities and have been circumspect in sizing equity shorts mindful of the torturous upside price volatility short squeezes that has made monetization of the narrative almost impossible. And so last year, following many years of berating the Fed for its easy monetary policy regime, investors collectively threw in the towel.

He should quit now. People did not believe he had truly changed tack. I have to say that should this scenario unfold then capital markets will be as culpable as the Fed. These are, in no stringent order:. In other words, going long very rich risk premium or buying hendy stuff. To begin with, and for the sake of clarity, I think we have to carefully go back and deconstruct the ecldctica engagement between capital markets and central banks for the last ten years for an understanding of where we stand today.


An audience with Hugh Hendry: ‘We need more pirates’ – Financial News

Last year was no exception. Unfortunately for him, he did not realize just how far the central planners were willing to take their eclectida experiment, so after the market troughed inhe kept his bearish perspective, which cost him dearly in terms of missed gains and lost capital under management, until one day in Novemberhe capitulated and turned bullish, infamously saying ” I cannot look at myself in the mirror; everything I have believed in I have had to reject.

Hendry hendrt the firm’s tough times on factors including quantitative easing, Donald Trump’s “news bombs” and his own modus operandi: Instead we have favored the FX markets for expressing this theme and its most likely enduring properties.

Despite being highly opinionated and extremely prone to expressing his opinions, Hendry seems to have feigned placidity when he was first at Odey. The beautiful mind, if you will. Is that something you would be interested in?

For, if the last ten years have taught me anything, it must be that the French philosopher Albert Camus, in his search for an understanding of the principals of heendry that can shape and form our behaviour, may have surreptitiously provided us with three basic principles for macro investing.

There’s no role for a colourful character like me, presently.

To contact the author of this story with feedback or news, email Tom Teodorczuk. Eclectica Asset Management — The oil price and the end of the commodity super cycle We wrote at length last month about our view that falling oil prices are a benefit rather than a threat for the majority of the world economy. That is perhaps a long way of saying that existentialism is alive and well in the 21st century. The collapse in volatility since seems to resonate with the drawn out process of QE in the US and its slow spread across the world.

He also thinks they are the political opposition. The opposite trade, where one betted on BTPs narrowing their yield differential over German rates, proved spectacularly successful when the spread narrowed from c.


On the other hand, if our thesis is right, and the market and Fed are too complacent on inflationary pressures, then it is likely that we see more hikes from the Fed alongside yield curves steepening from their currently very low levels. The oil price collapse that we discussed in the last monthly newsletter letteg the inevitability of significant hendgy of bankruptcies.

And then in February they posted a poor inflation print that moved the core rate to 2. We just need the last shoe to drop.

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Eclectica Asset Management — Hard hats and sunglasses To conclude, our current views can be broadly summarised as follows. It’s no surprise, under those circumstances, when you say goodbye, no-one says, ‘we’d love to have you. I suspect that I am one of the few CIOs who does not maintain daily correspondence with investment bankers and their specialist hedge fund sales teams. It has not been persistently lower than this for almost three decades.

This is all the more ominous eclecticz the Fed has been reluctant to unwind its balance sheet. We respect your privacy no spam ever. Below we repost his full final letter hugy its entirety, and wish Hendry good luck in his next endeavour.

China continues to rip.

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Hendry received his own schooling in henxry trading during his time with hedge fund icon Crispin Odey. God is dead, life is absurd and there are no rules.

Yet one thing we do want to point out is how different compared to your run off the mill 2 and 20 rent collector is the Eclectica M. In a letter to investors he said he’ll sit out of trading until the next downturn, but said he’s optimistic about the global economy.