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In Interview, Hugh Hendry Embraces Central Market Planning

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“When I look back in the last three years it feels as if the sun only rose each day to humiliate me after that point,” Hugh Hendry said as he looked at paltry performance that has led investors to pull funds from the once high flying London hedge fund manager.

Hugh Hendry doesn’t here the the sound of music today

Hugh Hendry says when he was delivering huge returns in the glory days of 2008 and other periods, trading to him appeared “like sheet music.  When I read it, I could see the trades appear in front of me, and I just don’t hear the sound of music today,” he said in a MoneyWeek interview published today.  “So I really feel very, very isolated from their view of the world.”

Also see Hugh Hendry: ‘Would you rather upset God, or have Him just ignore you?’

A discretionary macro hedge fund manager, like a streaky baseball player, knows when they have that certain something where they “can see the ball” almost in slow motion, making decisions easy during those magical periods of time. This gift is said to come and go, and while Hugh Hendry acknowledges it might have left him, with his asset base now dwindling to 77 million euros, he may have found that mojo again.  And the source for his new found inspiration is an odd one that he was very critical of: central banks.

In the interview, Hugh Hendry addressed comments made in his recent investor letter, where he said the central banks had his back and he would no longer use protective stop loss orders with stocks. Trades need to be given room to breathe, he said, while noting positive performance in August, September and October.

Hugh Hendry embraces centrally planned markets

Talking like a liberated man who came out of the closet and just shed his old ideology, he begins to question the role of “disaster insurance” in a portfolio and embrace centrally planned markets that go no where but up.

“In 2008, all the good macro managers, they made you money. That’s what you pay them for. The world became profoundly unsettling and you cashed in your insurance policy,” he said, but then began to question what made him unique. “Today, I question the relevancy of that disaster insurance. In a world where the central banks seem to have your back, seem to be underwriting risks and global asset prices, do you require that intense scrutiny of risk?”

Listening to Hugh Hendry, obviously an astute observer of central banks and at times harsh critic of what many think are the creators of a set of market conditions that will ultimately implode, one can’t help but drawing a comparison to basketball legend Michael Jordon giving up a basketball career in the prime of his athletic life to play minor league baseball.

Eventually Hugh Hendry and his bearish old-school notions of market vengeance having its way over control and manipulation are likely to return. Being a piece of a portfolio that provides disaster relief for such an event is an important role, one that might be needed sooner rather than later if predictions from hedge fund managers such as Carl Icahn and others are to be believed. Watching Hugh Hendry embrace the perma-bull mantra and not just accept but embrace central bank market manipulation is as discomforting as watching Michael Jordon strike out at the plate.

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Sheeraz Raza

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