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‘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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In the middle ofCPI core inflation was running at 1. We are also more pessimistic on Chinese growth than ever. And the so far robust performance of the UK economy since the vote will do little to dissuade others from following suit.

Hugh Hendry, who closed his London-based global macro hedge fund Eclectica Asset Management last September, believes the hedge fund industry suffers from a chronic shortage of pirates. On nendry other hand we are short those nations which can be typified as being producers of increasingly commoditized goods dependent on world trade and vulnerable to a slowing China and its desire to capture more of the legter chain.

Subscribe to ValueWalk Newsletter. Thankfully Bernanke, a student of the great depression knew better.

And if hendru remotely close to the China bear scenario, or a political disaster in Europe stemming from Brexit or migration issues does play out, this spread will almost certainly explode to the upside.

So what is Hendry’s parting message to his investors and fans? After the crisis, Hendry was riding high. I suspect he would have made a fine macro manager. His biggest US investor pulled out just before the financial crisis: Surprisingly, perhaps, he disavows the original Hugh Hendry, and goes out long if not quite letterr strong.


The oil price collapse that we discussed in the last monthly newsletter and the inevitability of significant swathes of bankruptcies. All will now be out of jobs, along with Hendry himself.

Hugh Hendry Is Back – Full Eclectica Letter | Zero Hedge

Furthermore, the strategy accrues a positive carry should nothing alarming happen and the return series has been typically less correlated to the fortunes of global equities than orthodox hedges such as the dollar or the US Treasury eclectiica. He became a regular media figure during the crisis, even as his own business was buffeted by waves of volatility.

As you know, I have a proclivity to make money in a bear market. Is that something you would be interested in?

Eclectica Asset Management — Where to play lower rates for longer On the other hand, Mexican inflation recently dropped to all-time lows 2. And yet fixed income volatility resides on the floor… Looking at the one year implied volatility on 10 year swaps, the cost of entry seems reasonable even compared to the narrow trading range we have seen this year.

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.

However we view the present monetary policy as being undoubtedly the worst of both worlds — we have populist rebellions and bad banks.

When he first joined, he told The Hedge Fund Journal that he spent 12 months ‘paying his dues’, ‘keeping quiet’ and ‘soaking up what was going on. 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?


At the time, he saw politicians making a show of railing against the industry. He has since decided to move to Paris, and says his challenge is to find out what makes him happy. Looking at the one year implied volatility on 10 year swaps, the cost of entry seems reasonable even compared to the narrow trading range we have seen this year.

Hendry studied Accounting and Economics at Strathclyde. Odey was also no fan of how the industry has evolved, Hendry adds. 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.

This potentially leaves us in a strange environment.

Hugh Hendry’s Eclectica Letter: The rate of living theory and an enduring US economic recovery

Henfry tactically hedge against these more constructive positions given the recent reset to higher equity volatility and their periodic outperformance of the wider market.

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.

But of course this expansion has always seemed atypical with the differentiating factor of the private sector having deleveraged during the upcycle. It’s war, real-life drama, and you mistakenly think you’re going to die because you’re wrapped up in it, which is so preposterous.