“Something is going to break,” says Hugh Hendry, “and it’s going to feel really, really scary and there’s going to be a big correction.” The famed former global macro hedge fund manager, in a discussion about the yen, raises the red flag on the money system of the world.
Hendry shares his insights with Yahoo Finance’s Jared Blikre and Sydnee Fried on “Stocks in Translation.” Listen to the full episode here, or wherever you get your podcasts.
This post was written by Jimi Corpuz
Video transcript
This episode brought to you by the number 162 which is the dollar value.
So you got 100 62 yen to the dollar right now.
This is what, a 3540 year low for the yen.
But the the Bank of Japan has kind of painted themselves into an interesting situation.
What?
What do you think about what’s going on?
OK, so again, I’ve got to correct your language.
OK, so, like, so we’re going to again pretend we’re like smart global micro hedge funds, right?
Uh, things are not cheap.
The lowly rated right.
They sell at a price which reflects heightened risk and and the risk concerning the Japanese yen in terms of being a store of value.
Uh, because it’s it’s had an abysmal and and a very remarkable failure over the last 18 months, those Japanese citizens, uh, 18 months ago, they only required 115 yen to buy $1.
And now, of course, they require 100 and 62.
So you’ve got to work more if you will to earn earn a dollar, and that is that is an exceptional event, and it and so I would say the the yen is not cheap, that the yen is trading at a level that says it is in such a precarious position, fiscally and with their room to manoeuvre that it could trade 202 150.
So the only good news is like a higher a lot lower, depending on how the yen would devalue more.
But the devaluation to date is of historical like importance.
And it, to my mind, is Harbinger.
It’s a red red flag that’s telling you that there is something profoundly wrong in the in the money system of the world.
Japan actually would go bankrupt if they raise interest rates.
So, um, the financial markets, smart people like me know that Japan really, really is, is is in a bind.
Um, and we know that when you’ve got very, very high interest rates, something breaks.
We mentioned LTCM from like 30 years ago.
We’re in the environment that something’s going to break, and it’s going to feel really, really scary, and there’s going to be a big correction.
The money system is dying and is, and it’s going to come to light.
The end is just the first is the first warning, so watch out
