Hendry, a foremost name in the hedge fund world and manager of CF Eclectica Absolute Macro Fund, sees the UK as having “returned to the dysfunctional logicality that reigned prior to the crash of 2008”.
He said: “If you think the future is inflation, prepare to profit now from the deflationary-like catalysts. For the latter scenarios appear the most likely within our investment time horizon.
“Our current enthusiasm is predicated on the notion that the investable universe has just expanded greatly as certain events have moved from the uninvestable shadows of tail-like probability into the realms of investable profit opportunities.”
Hendry believes the UK will endure a recession, as productivity gains are held back by a lack of public and private investment. However, he points to markets making “peace with this more nuanced reality far sooner than the political pundits”.
He added: “Just as the wisdom of the crowds led the way and more rational minds were forced to follow in the vote, the markets will undoubtedly confound the many in the weeks and months to come. It is an investment environment ripe for barbell strategies.”
Hendry also remarked on the “hysteria” concerning the drop in sterling: “People forget that the pound dropped 36% in the wake of the collapse of Northern Rock in 2007 and by 15% in 2014 on fears of a triple-dip recession, and the world didn’t come to an end.
“Again, plus ça change…it appears that the prevailing glut of global liquidity seems to act as a shock absorber; the money simply has to go somewhere, typically sovereign bonds and bond like equity proxies.”
