Watch Hugh Hendry And David Einhorn Discuss The Markets - Live Webcast Of Buttonwood Gathering

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Everyone's favorite outspoken critic of everything that is broken, Hugh Hendry, is currently speaking at The Economist's Buttonwood gathering. Watch him contemplate macro and micro issues live in the webcast below. And for desert, everyone's favorite poker player, David Einhorn will follow Hendry.

Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."

Views from Hugh Hendry's 2012 Letter

Hugh Hendry is back once again with a shareholder and investment letter that basically explains what he thinks about World Business. Businesslender has summarized that letter into the following points.

Hendry is skeptical that China will take over US for having the highest GDP in the world. He is fairly confident about the booming energy business in the US and highlights the fact that Natural Gas is very cheap inside the US and that very soon the US could reach a point where it becomes energy independent.  

The issue with China's success is that it was based too much on the depreciation of their currency which was brought about by artificial means. It prevented banks and other financial institutes from raising interest rates on saving accounts. People who used to save their money in banks would usually get their estates crushed and that is why more and more people started buying houses which created a housing bubble. The scope of the housing bubble in China has never been this wide. Underground credit has also reached very high values and the trillions of dollars originating from different firms like shipbuilding and house building are ending up in mortgage credit. Hendry believes that when the market collapses, countries as far as Japan might get affected.

China is worried about this situation and this is why it has removed plenty of underground companies from the setup.
Hendry predicts a Weimar kind of situation for people of China. This is because the Chinese government took different measures to ensure that they got a lot of money printing done as compared to their economy side and the financial weakness abroad means that China cannot simply have a better economy on the back of exports alone.
The Chinese market resembles more like a casino as there is no benefit to invest in China. It only benefits the people in the inside.
Japanese Corporate companies falling to credit default swaps are exposed to the Chinese market. Japanese companies have to worry about the different issues that arise with high debt loads. That is why Japan still manages to attract fools who think that the stocks are priced too low.
The situation in Japan is peaceful says Hendry and this peace could rock the entire world in coming years. Japan is not expected to depreciate the value of Yen anytime soon. The central bank of Japan and other authorities will most probably do it after a phase of corporate losses and yen appreciations.
In the end, Hendry closes off by saying that another washout for the market is imminent and that the VIX figures could touch 80 with Treasury yields falling to 2.5% from their current figure of 3.12%. In the coming years, people will be presented with a very good chance of buying some of the valuable risk assets. Hendry isn't too confident about the effectiveness of bonds as compared to VIX but the question is how much the stocks will fall to allow VIX to go up to 80.

Hugh Hendry 2012 Letter and Views 

Ultimately, he thinks we'll see one more washout in the market, with 30-year Treasury yields hitting 2.5% (they're currently at 3.125%) and the VIX surging to 80, at which point we'll have a truly 'generational' opportunity to buy risk assets. It is really interesting view because he is not overly bullish on bonds compared to VIX. I wonder how much stocks must go down so the VIX go to 80. Probably his view on the bonds expresses that even though bonds are safe heaven they are at their last stage of a bubble.

Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."

The State of Present Day Europe from the words of Hugh Hendry

Hugh Hendry was present at the Milken Institute Conference that was held recently and Hendry was in fullform as he delivered another one of his usually expressive speeches about the state that Europe is at the moment. The young and shrewd Hendry started off his talk with the statement that "All of Europe has defaulted" and that,

"The political economy in Europe is such that the politicians chose to default on their spending obligations to their citizens in order to honor the pact with their financial creditors and so as time goes on, the politicians are being rejected".

Throughout the time he took stage, he went through the different consequences of Mr. Hollande's election as France's premier, the tough policies adopted by Luxembourg and the fact that Europe is left with only one inspiration and that is fiction since no one can really make out how bad the situation in Europe actually is. He discusses a new method for going forward, talks about the failures of fixed-rate exchanges, why the Weimar tragedy took place, why a union transfer can never happen and what was the reality behind Ayn Rand's story. You will get a very good idea of the situation in Europe when you watch this discussion.

Hendry goes on to tell what the underlying reality is,

"The underlying reality that what the European monetary union is about is not about preventing a third so-called European civil war, it is essentially about making someone (France, Germany or both) a Great Power, a European Hegemon, and a global player."

Hendry takes stage around the halfway mark of the discussion and starts talking about the British point of view about the flawless German mind and why a union transfer cannot take place in Europe. Fifteen minutes later, he is having a go at Germany again as he explains why its housing bubble will never take place. Furthermore, at 52:00 he tells about his expectations for a strong US dollar. At the start of the hour mark, he recollects why he could not finish Ayn Rand's Atlas simply because it was just too much a close description of the world that we inhabit today.

He was quoted as saying,

"We have reached a profound point in economic history where the truth is unpalatable to the political class - and that truth is that the scale and magnitude of the problem is larger than their ability to respond - and it terrifies them."
Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."