Barron’s got a hold of Hugh Hendry to chat about his favorite topics – namely deflation, and shorting Asia!
If you read our previous coverage of Hendry’s economic outlook, there’s not much new here, but it’s still probably worth a quick read.
In summary, Hendry remains biased towards “hyperdeflation BEFORE hyperinflation”:
The road to hyperinflation is via hyperdeflation. That is why it’s proving so difficult for hedge funds to make money. How does the rational mind that anticipates hyperinflation own 10-year government Treasuries yielding less than 2%? It can’t. That’s why people are struggling. To lay the seeds of hyperinflation, you need really, really bad things to happen.
He’s still shorting highly leveraged Japanese businesses:
Do you seriously believe Japanese corporations are going to fail?
Clearly, they can and do go bust. I’m buying the CDS on investment-grade Japanese corporations because of the overpricing anomaly. Japan had a bust 20 years ago, and yet today the banking stocks, relative to [Japanese bourse] Topix, are making fresh lows.
And finally one new and heartwarming piece of information – Hendry is bullish on ag!
We are very bullish agricultural commodities and agricultural equities, and hold a global basket of businesses—with interests ranging from fertilizer to farm equipment.
Recommended further reading: Hugh Hendry Channels Irony and Paradox in his Latest Financial Outlook