In talking to the FT’s Gillian Tett, Hugh Hendry of The Eclectica Fund makes the hilarious metaphor of China as Santa Claus bringing gifts to a world constrained by excessive Western government debt issuance. But, Hendry thinks the Asian surplus countries are the most exposed and most vulnerable because they are excessively dependent on foreign demand for economic growth. Basically, Hendry sees China as a “deep out-of-the-money call option on America.” In Hendry’s view, Santa is not coming to town. And, if he is, he’s bringing lumps of coal.
Below is the video and two others of Hendry talking China, the Fed, Bonds, and Equities. By the way, Hendry is bearish on equities, bullish on bonds.
Read his June newsletter and comments about deflation here at Zero Hedge. His view puts him in the deflation camp with David Rosenberg, but Rosenberg is more bullish on Asia.