Hugh Hendry on Mag-7, Bubbles, Inflation, Bonds, China & Bitcoin

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Recorded June 23, 2023 - In this conversation, Pierre Daillie talks with Hugh Hendry, Founder, Eclectica Macro, a.k.a The Acid Capitalist, about the current financial landscape. They discuss topics such as the debt ceiling deal, the fear of supply, the rise of tech stocks, the appeal of long duration treasuries, and the deficiency of demand caused by China's oversupply. They also touch on the impact of Xi Jinping's policies and the posturing between China and the US. Overall, the conversation highlights the potential risks and opportunities in the global financial system. In this conversation, Hugh Hendry discusses the wealth destruction caused by China's flat stock market and the country's growing debt problem. He highlights the symbiotic relationship between the Communist Party of China and Wall Street, as well as the conflict of interest with US capital markets, trade and balance of payments. Hendry emphasizes the importance of trend in trading and shares his investment strategy, including the allocation of assets such as stocks, treasuries, and Bitcoin. He also discusses the potential opportunities in long bonds and the glitch at Boeing, and a trade in Apple.


  • The fear of a synchronized global recession and the potential impact on the financial markets.
  • The appeal of long duration treasuries as a safe haven asset in a potentially weakening economy.
  • The concentration of market gains in a few mega cap tech stocks and the potential risks of a market correction.
  • The impact of China's oversupply on global markets and the deficiency of demand caused by their trade surplus. The stock market is flat, causing wealth destruction.
  • There is a symbiotic relationship between the Communist Party of China and Wall Street.
  • US capital markets have a conflict of interest that prevents them from addressing the real market problems.
  • Trend is crucial in trading and asset allocation.


[00:00] Introduction and Setting the Stage
[02:31] Debt Ceiling Deal and Liquidity Concerns
[03:44] The Fear of Supply and Risk Aversion
[05:29] The Rise of Tech Stocks and Riskless Securities
[07:02] The Appeal of Long Duration Treasuries
[07:36] Inflation and Real Rates
[09:36] Mean Reversion and Treasuries
[11:44] The Market's Dependence on Mega Cap Tech Stocks
[13:29] The Hated Rally and Missed Opportunities
[14:38] The Belief System and Valuation of Stocks
[16:09] The Coiled Spring and Potential Correction
[19:45] Debt Ceiling and the Chinese Economy
[20:34] Mutually Assured Destruction and Debt Ceiling
[24:35] The Deficiency of Demand and Chinese Oversupply
[29:18] The Impact of Xi Jinping's Policies
[37:57] China's Wealth and Posturing
[39:21] The Wealth Destruction
[40:35] The Real Problem with China
[41:39] The Symbiotic Relationship between China and Wall Street
[42:43] The Monetary Policy of the US
[43:50] The Conflict of Interest in Capital Markets
[44:45] The Search for Equilibrium
[46:33] Investment Strategy: Quadratic Expression
[47:52] The Role of Cash in Asset Allocation
[49:52] The Potential of Bitcoin
[51:39] The Relative Sizes of Gold and Bitcoin
[55:26] The Correlation between Bitcoin and NASDAQ
[57:19] The Importance of Trend in Trading
[58:47] The Decline of Hedge Funds
[59:23] The Glaring Opportunity in Long Bonds
[01:02:24] A Parallel with 2003
[01:03:39] The Conflict of Agendas
[01:06:22] The Glitch at Boeing
[01:11:27] The Most Glaring Opportunity
[01:13:49] Where to Find Hugh Hendry

Hugh Hendry Official - Youtube
Hugh Hendry on X - @hendry_hugh
Hugh Hendry on Linkedin
The Acid Capitalist Podcast on Apple


  • The Magnificent Seven Stocks:
    • Hendry notes that in every major bear market, certain stocks, referred to as the "Magnificent Seven," are perceived as being independent of broader market trends. These include companies like Nvidia and AMD, considered less economically sensitive within equity allocations.
    • He draws parallels between the valuation of these stocks and Bitcoin, suggesting that their market value is more influenced by belief systems than traditional financial metrics, similar to how art is valued.
    • Hendry discusses the valuation of the U.S. stock market, highlighting its size relative to the GDP and expressing skepticism about overly optimistic market projections.
    • He mentions a cautious investment approach, allocating about 15% of his portfolio to these specific stocks, emphasizing the importance of following market trends in his investment decisions.
  • On US Treasury Bonds:
    • Hendry addresses concerns about the U.S. Treasury issuing a large amount of bonds and its impact on prices.
    • He draws parallels with the 2008 financial crisis, noting the importance of confidence in collateral, which often includes U.S. Treasury bonds.
    • Hendry observes a mean reversion in Treasury prices, suggesting that current trading levels are relatively rare and could present buying opportunities.
  • On China:
    • Hendry discusses the probability of a confrontation between China and Taiwan, expressing concerns about the increasing likelihood of such an event.
    • He critiques China's economic growth, labeling it as 'fake growth' and pointing out that despite the appearance of progress, real wealth creation has been lacking.
    • Hendry also touches on China's role in global trade and economic imbalances, particularly how it redistributes wealth within its economy and buys financial assets in the United States.
    • We discuss the symbiotic relationship between the Communist Party of China and Wall Street, suggesting both have prospered in the current environment. As a result, there is no desire on Wall Street for the was the US manages its Capital Account.
  • On Bitcoin:
    • He talks about the changing correlation between Bitcoin and NASDAQ, suggesting that such correlations can be misleading.
    • Hendry expresses interest in investing in Bitcoin, particularly as its value had significantly decreased.
    • He discusses Bitcoin's potential for growth, considering its market size relative to the larger segment it belongs to.
    • Hendry likens Bitcoin's valuation to a belief system, similar to how art is valued.



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