Hugh Hendry, the eloquent, brash, and outspoken CIO at UK-based Eclectica Asset Management, comments on the today's worsening selloff in markets, appearing this morning on CNBC European Squawk Box with Geoff Cutmore.
"It feels like the blackest morning," Hugh Hendry, CIO & partner at Eclectica said Friday (today). "We've never really experienced a matter as grave as this."
Conditions like these are unmatched, except with 1930-32. He "slakes" regulators for this, making the following points.
- The short selling ban has been a fiasco, as it has removed an entire constituency of buyers from the market, so that on weak days there is no profit incentive to buy the market.
- The tremedous slide of the last two weeks has made the market completely oversold, therefore nobody is willing short sell the market.
- The VIX index is very high, so one can't (afford to) buy puts to protect their holdings
- Fundamentals have become an intellectual curiosity, and an outrageous luxury
- The only defense left to investors is to sell their assets, this is a liquidation
- People watch the market all day and are averaging their trades,
- and that's why in the final hour of trading you see a cascading of orders, and the market runs out in panic trying to fulfill those orders.
So far in the month of October, Hendry's hedge fund is up 40% on account of his levered positions in long-term government bonds.