China Is Santa Claus - Hugh Hendry

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.” 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.

• Bearish on China and gold
• The Fed hasn’t done enough
• Bond bull, equity bear

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.

Comments

[Mad Hedge F...:]

It doesn't work when Santa Claus is a midget in GDP terms.

Jul 07 04:22 PM

[Pink Panther:]

Still, I'm more bullish on China than on any western market.
It's not that the Apples, Ferraris or the Rolexes are made in China, but the everyday neccessities, stuff that's sold at Wal Mart, not the nice-to-haves but things that the indebded middle class consumer needs.
My point is, that China is more part of the solution than part of the problem

Jul 07 05:08 PM

[whidbey:]

China has problems in its political/economics and eventually with social welfare issues. The pulls are between expectations and opportunities. China needs markets to exploit its labor pool, but the world (and Asia) have looked at America-China trade pairing and its consequences. China has stimulated its economy and expectations, but the next step permanent enhancements to life style is a long step. We do not need an unstable China, but neither should we over estimate its potential. Its. GDP < California. That is 12% of the USA GDP and its not going to change the world any time soon.

Jul 07 06:57 PM

[Sober Realist:]

China as Santa Claus? The real Santa has much better quality control, and his minions of elf workers enjoy better working conditions. Also, the real Santa is a little more discerning as to whom he unloads his gifts on. We've been "bad" and the China Santa is still trying/hoping to force-feed us his "goodies."

Jul 08 07:13 AM

[Ferdinand E...:]

China is part of the solution. China and Russia are the solution, if they are handled right. Handled right how? Given the respect that they deserve by staying out of their internal affairs.

Jul 08 09:37 AM

[coreopsis:]

This comment is fairly typical of the inert elements on this blog.


On Jul 07 06:57 PM whidbey wrote:

> China has problems in its political/economics and eventually with
> social welfare issues.

Of course, this comment doesn't apply to the US.

> China has stimulated its economy and expectations, but the next step permanent enhancements to life style is a long step.

Nor does this comment, as obviously American lifestyles continue to improve greatly and most Americans would say that, despite the current slowdown, this year's going to have many 'permanent enhancements to life style'.

> Its. GDP < California. That is 12% of the USA GDP and its not going to change the world any time soon.

This shows special insight, doesn't it? However, apparently he's not familiar with trends, growth rates, and what's happened over the last 30 years since economic reform began. He may be mystified what all the hullabaloo is about: it's called extrapolation.

Serious discussion of issues, in the US, is always hampered by a relentless inability to tackle the endogenous problems of the country --- and instead to blame the rest of the world. I feel great pity for the US. When the 'future' arrives, it will be the last to know.

Jul 08 01:03 PM