First David Rosenberg, then Jeremy Grantham, and now Hugh Hendry: one after another the bears are throwing in the towel.
As Investment Week reports,
speaking at Harrington Cooper's 2013 conference this morning, Hugh
Hendry said "he is no longer fighting the two-way feedback loop which is
continuing to boost risk assets." The reflexive feedback loop
envisioned by Hendry is the following and centres on the currency war
being played out between the US and China, "in which US QE prompts
dollar-denominated investment to head to China, and China fights the
resulting upwards pressure on its currency by manufacturing an
investment boom. Hendry said this creates a "global supply glut",
leading to falling US inflation expectations (as this supply far
outweights US domestic demand) - which in turn prompts the Federal
Reserve to loosen policy once again." Rinse. Repeat.
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