HUGH HENDRY, CEO OF ECLECTICA ASSET MANAGEMENT, TALKS ABOUT THE EURO AND ASIAN CURRENCIES ON BLOOMBERG WITH BLOOMBERG'S ERIC SCHATZKER.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
JUNE 23, 2010
7:48 A.M.
ERIK SCHATZKER, BLOOMBERG NEWS: Well, John, speaking of hedge funds, his macro hedge fund is up 10 percent year-to-date and he says the euro is "finished." How is that for a calling card? Hugh Henry is CEO and Chief Investment Officer at Eclectica Asset Management, a $450 million hedge fund.
Hugh has 18 years of experience in money management and he is participating in Bloomberg's sovereign debt summit here in London today, Hugh, very good to have you. Let's start off with that provocative statement, the euro is finished. What do you mean? The euro is going to parity or less, or the Eurozone is going to self-destruct?
HUGH HENDRY, CEO, ECLECTICA ASSET MANAGEMENT: I can't believe I quoted Tolstoy, I quoted John Buchanan, I quoted T. S. Elliott and I heavily nuanced the comment about the euro. I gave big qualifications for the notion of the euro being finished, but the euro does strike me as being analogous to the gold standard in the 1920s, and of course we are now seeing a conflict between domestic stability, domestic prosperity and the need for external balance. And that typically rings the bell for such a system.
SCHATZKER: Well, a subject of much debate, clearly, between President Obama and Chancellor Angela Merkel and it was the subject of an op-ed by George Soros as you might have seen in today's Financial Times. Do you side with Soros? Is Germany the protagonist and possibly the antagonist here? Is it all going to come down to what Germany does or doesn't do?
HENDRY: George is someone that we all have aspired to match his brilliance, but I have to tell you, you have to remember something that the richest people on the planet become socialists. Socialism is a great thing for George. I want to bring George down. I want George's reputation, but George is now embracing socialism.
What is socialism? Socialism is when you build a moat around the castle. I am spending all of my time trying to decide where I am going to live, because taxes are so high in this country, and less of my time trying to work out how I surpass Soros and his reputation.
SCHATZKER: Well, let's talk about how you are investing. We talked about the nuance comments referring to the euro. How about what else you are looking at? Let's talk about where you are short? Where do you see calamity and how do you profit from it right now?
HENDRY: Well, shorting is a precarious business, and we would rather entertain the more certain world of fixed income and credit, okay? But what I would say to you is whilst Europe is the epicenter, the ball has become very large. It is obvious the problems are very apparent.
I would say to you what are the implications of those problems? And the implications could be felt more profitably for a speculator in Asia because Asian currencies of course now have been revalued 20 percent vis-a-vis the euro. And wages in Europe are falling and wages in China are now going up. So the noose is getting tighter and tighter not in Europe, but I would argue, in Asia.
SCHATZKER: All right. I need to find out how you are expressing that view. Hugh, I want you to sit tight for two minutes. We are taking a quick commercial break. And then we are coming back with Hugh Hendry. He is the CEO and CIO of Eclectica Asset Management, a hedge fund manager with 18 years of experience. He says there is opportunity in Asia, but it is not the kind of opportunity that may make you feel comfortable. Stay tuned for more with Hugh Hendry in two minutes.
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