Hendry thinks that Asia will be the next global market to hit the skids after the subprime collapse in the U.S. and the sovereign crisis in Europe. He envisions severe problems for Japan, when currency strength will for the country to engage in another, more aggressive round of quantitative easing, debauching the country’s currency.
So he is making a bet worth $2 billion against Japanese credit, notably in corporations. He sees overconfidence and over reliance on the growth of China as a reason for this position.
He even compared China to Starbucks, noting that they are now investing money in manufacturing the same way Starbucks did in new stores: accepting a negative marginal return on invested capital.
But Hendry reminds listeners, “I have no monopoly on the future.”
On the subject of a bond bubble, Hendry says that there, “is one going on,” and he thinks markets are experiencing a simultaneous “melt-up” in gold and U.S. treasuries.