Hugh Hendry On Why The World Still Can't Get Enough Dollar Assets

Joe Weisenthal (0:05)

Hello, and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal.

Tracy Alloway (0:11)

And I'm Tracy Alloway.

Joe Weisenthal (0:13)

One of the questions, and of course, that I would say in part due to one of our recent episodes that people are debating is the role, the future of the dollar. And of course, people love to debate this for our entire lives. People are like, oh, this is the dollar doom, is the UN gonna replace it, it's gonna be replaced by gold or Bitcoin or something.

But with the sanctions, with Russia's loss of it, loss of its FX reserves, I feel like this debate has gotten new energy.

Tracy Alloway (0:40)

I distinctly remember my dad sending me articles about Iraq switching to euros for oil payments from many, many years ago. So yes, this is an ongoing debate, but you're entirely right. New life has been breathed into it. And most recently, we're recording this on March 24th.

And just yesterday, we saw Russia saying that it was going to start to demand gas payments in rubles.

So there are things happening on this front, but even something like that, you see people portray it in two different ways. So on the one hand, there are people out there saying, oh, look, this is the end of the petrodollar. Russia has kicked off this entire process. And then other people are saying, well, no, that's not what it is at all. In fact, this is a sign of Russian weakness. Basically, they can't get foreign currency at the moment, so they have to do this. So there's so much debate on this particular topic.

Joe Weisenthal (1:31)

Yeah, it's like a big, I would say it's also just a big ideas moment.

Earlier in the week, we recorded that interview with Victor Schwartz talking about the world dividing into two. So it's kind of a moment for big picture sort of reassessments of everything. And the dollar is sort of the key icon of the existing world, the Gorser currency, but all kinds of like, it's a moment to sort of step back and think about sort of things that we take for granted and what could change.

Tracy Alloway (2:01)

Yeah, and also I think whenever you get this level of uncertainty, people try to fit their own narratives onto it. And so things that they've been talking about for many, many years, suddenly this is the thing that is going to propel those into existence or into life. But yes, big picture, big moment.

Joe Weisenthal (2:17)

So I'm very excited about our guest today, someone who has always had very provocative ideas in the world of global macro, all kinds of things, things related to currencies, China, gold, et cetera. One of the most interesting people in this space for a long time. We're going to be speaking with Hugh Hendry. He was the founder of Eclectica Asset Management.

And now he is a luxury hotelier on the island of St. Bart. And he seems to be living a life that's much better and more interesting than ours. His website, go check it out. Hugh, thank you so much for coming on. What have you been up to? Because I first became aware of you probably over a decade ago, watching videos you made on YouTube about Chinese ghost cities. But what have you been up to?

Hugh Hendry (3:04)

Hey guys, great to be on.

Joe Weisenthal (3:06)

Thank you.

Hugh Hendry (3:07)

I have been, I've been recovering. I've been rehabilitating my weary mind. You know, I had many years of active intellectual combat.

The Eclectica Macro Fund ran for 15 years. Very tenure that I achieved. It's not the tenure you get as a professor at some of these baloney economic universities where you can proclaim whatever and never be called for it, but 15 years. But at the end, and the end was 2017, I was exhausted. I mean, the thing you have to remember is we have this amazing organ inside our head, this brain.

But the thing is, it lives in a dark chamber. There ain't no light getting into that brain. And it relies on the idiot on the outside to tell it what's going on. And I spent, I swear, I spent 15 years thinking I was gonna die. Not every day, not every day, but there are moments in investment campaigns and you think, oh my God. Remember, I see things and it's a curse because I normally see things before other people because I've got to deal with other people catching up.

And as a consequence, there are days when you're out of sync with the world and your P&L bleeds and you convince your brain. Brain doesn't know. Your brain's like, oh my God, this is a flight moment and you get flooded with all this toxic chemistry to get you out of the hole. So 15 years of all that nasty chemical reaction, I needed five years to recuperate. And what a better place, I can't think of anywhere than this beautiful island in the middle of nowhere, this tiny little volcanic rock where it's a bit like gulch, where all the successful people come and they're like peacocks. They're like, look at the size of my super yacht. You know, I'm making hay and I sit, I watch it.