‘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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But any lftter of the curve sufficient to raise bank profitability would tighten policy in the real economy, kill off any nascent recovery and condemn the continent to further penury and the resulting surge in populism that a lack of economic hope engenders.
Put simply, keeping rates low enough to fix the economy under the current framework seems to consign the banks to the dust heap of meagre earnings in perpetuity. Last year was no exception.
Europe A euro break up does not feature remotely in our projections nevertheless we seek to prevail should such unforeseen cataclysmic scenarios come to pass. If we are right then by some point international fixed income managers will have hedged their exposure making the system less brittle and with a credible austerity-driven finance ministry and the tantalising prospect that the oil price is stabilizing, Mexican fixed income would become yet more appealing. His biggest US investor pulled out just before the financial crisis: I spent a year doing this, a year doing this, whatever, and so I was a generalist.
The momentous nature of recent advances in shale oil and gas extraction and America’s acceptance of the unpleasantness of debt and labour price restructuring looks to us as if it is creating yet another historic turning point. 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.
Hugh Hendry Eclectica Fund Investor Letter ~ market folly
However, in the fourth year of his four year course he realised that he had absolutely no desire to become an accountant and returned the sponsorship money he’d received from the accounting firm. If we do I see my job as putting in the punctuation. We just need the last shoe to drop. Typically these currencies offer attractive positive carry. QE rescued the financial system but the liquidity created was distributed to the very rich who have a very low monetary velocity and so the expected inflation fillip never materialised as the liquidity injection came to be stored rather than multiplied by the banking system.
But regardless of who the parties choose to run, both are likely to hugb pulled towards the distinctly anti-European nationalist agenda of Marine Le Pen who seems almost assured of reaching the second round run-off in the Presidential election next May. With inflation still weak and government bond prices unlikely to crack just yet it is too early to seek a short fixed income trade in disguise.
And we can clearly sense the seeds of another popular political revolt in other member countries; a flurry of upcoming elections and referendums provides an immediate catalyst. The joy of life is partly in the strange and unexpected. He compares his investment philosophy to the famous quote from iconic footballer Eric Cantona: What if the hyper but short lived shrew like performance of previous US expansions has metamorphosed into the slothful giant tortoise that can live for years?
And now the European hemdry is recovering. Maybe that was the easy bit. eclectiva
Instead we have favored the FX markets for expressing this theme and its most likely enduring properties. In other words, going eclectiac very rich risk premium or buying cheap stuff. To contact the author of this story with feedback or news, email Tom Teodorczuk. Why should you fight it?
10 things you didn’t know about Hugh Hendry, whose Eclectica hedge fund just closed
Risk assets should continue to trend positively. He became a regular media figure during the crisis, even as his own business was buffeted by waves of volatility. At the time, he saw politicians making a show of railing against the industry.
Not one buddy, not one phone call, not one instant message. Unfortunately for him, he did not realize just how far the central lettet were willing to take their monetary 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 November hensry, he capitulated and turned bullish, infamously saying ” I cannot look at myself in the mirror; everything I have believed in I have had to reject.
In the absence of any recognisable asset bubble set to burst, and the Fed grounded, the US economy is unlikely to slip into recession. Equities represent just over half of our risk allocation. According to the Independenthe was ‘labelled a troublemaker.
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And so last year, following many years of berating the Fed for its easy monetary policy regime, investors collectively threw in the towel. After this ‘fortuitous encounter,’ Hendry moved to Odey Asset Management inaged Mexico has proven a big draw to the largest fixed income managers in the world.
I suspect that I am one of the few CIOs who does not maintain daily correspondence with investment bankers and their specialist hedge fund hendrj teams. Eclectica Asset Management — Where to play lower rates for longer On the other hand, Mexican inflation recently dropped to all-time lows 2. Popular job sectors Popular job sectors Loading Editor’s Picks Bitcoin peaked one year ago: As it turns ,etter, renting his island property was as taxing as running a hedge fund: A best in class risk technique eclextica stop losses the narrative and responds early with loss mitigation procedures i.
Moreover, the anti-immigration mood seems to be fuelling the rise of the right wing Alternative for Germany party, which is seeking amongst other things a referendum on going back to the fabled Deutschmark.
This year, bond investors have aggressively flattened the US yield curve.