The ACID Capitalist Discusses the "Terrifying" Yen Move, and Risk of "Mad Max" Deflation on Odd Lots
The world teeters on the edge of a jagged knife, my friends. From the looming shadows of Chinese deflation to the overbearing strength of the US dollar and the juicy carry trade, the financial landscape is fraught with seismic shifts that could very well redefine our global economic fabric. Ha, when is never like that I hear you say. In today's podcast episode, yours truly—Hugh Hendry, formerly the boss of the Eclectica global macro hedge fund and now the ACID Capitalist from the sun-drenched shores of St. Bart’s—me, yeah, I dive into the complexities of these pivotal times.
For as long as I've wrestled with markets, the rise of China has been the juggernaut tale, inflating asset values across the world. Yet beneath this tale lies a fractured narrative: a skyrocketing GDP that leaves domestic wealth and household incomes in the dust. The prospect of a yuan devaluation looms large, a desperate move to keep the export machine humming, to lower domestic asset prices in dollar terms, but potentially plunging the world into what I'd call 'Mad Max' deflation—an economic dystopia.
And as the plot thickens, we cast our gaze towards Japan, witnessing a currency in free-fall, a terrifying portent of what might come. Meanwhile, the US stands out as a peculiar beacon of growth in a world brimming with economic uncertainty. Tune in as we unravel these threads, shedding light on the risks that could sway the fortunes of nations and investors alike. Just promise me you’ll never stare at a spreadsheet on acid…