Hugh Hendry, the bril­liant, brash and out­spo­ken and elo­quent CIO of Eclec­tica Asset Man­age­ment, one of the UK's most pro­lific asset man­agers dis­cusses global mar­kets and is invest­ing in long-term gov­ern­ment secu­ri­ties in the US and UK. Dominic Frisby, of Money Week and Com­mod­ity Watch Radio con­ducts this inter­view, which was recorded on Novem­ber 1, 2008.

Here is a sum­mary of some of Hendry's thoughts:

• the present envi­ron­ment is all about the return of your cap­i­tal, not return on capital.
• he is intrigued by gov­ern­ment bonds and bets that inter­est rates will be cut fur­ther than peo­ple antic­i­pate at the present time.
• inter­est rates will come down to unprecen­dented lev­els but it won't make a difference.
• mon­e­tary pol­i­cy­mak­ers will be push­ing on a string.
• Hendry has been invest­ing in long term US treasuries
• he is pro­foundly bear­ish on com­modi­ties, for now
• He believes that gold will drop fur­ther to below $600 as a result of the defla­tion­ary pres­sure that we are fac­ing from the fix­ing of the sys­tem, then as a result of all the stim­u­lus, we will face pro­found infla­tion. When long-term bond yields drop to around 2.5% that's when you want to own com­modi­ties. That's when he'll back the truck up for gold, the big 16 oz. bars.
• For now Hendry will place his bets on defla­tion and falling long term inter­est rates.

If being lever­aged means short­ing cash, then delever­ag­ing means buy­ing cash, and he's afraid the delever­ag­ing is far, far, from over, because debt lev­els are still very high at this point. That means the dol­lar will con­tinue to rally on the resul­tant repur­chas­ing or short cov­er­ing of the dol­lar. The ral­ly­ing dol­lar, and ongo­ing asset liq­ui­da­tion is defla­tion­ary for now.

Hendry's case and out­look is deeply com­pelling and worth tak­ing seriously.

The sec­ond part of Dominic Frisby's inter­view is with Dr. Fran­cis Claessens of Peers, who tells us what the super rich have been doing with their money. Claessens leads WealthPeerGroup.com, a peer group that meets on a monthly basis to dis­cuss finan­cial issues. Min­i­mum entry to this group is investable assets of £5-million ($8-million). This too is very inter­est­ing, i.e. if you're inter­ested in what's wor­ry­ing the very HNW investor these days.

Lis­ten to the entire inter­view here:

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