Hugh Hendry has been bearish for years. Rattled by the debt build-up before the global crash, the founder of Eclectica Asset Management cashed in on his scepticism as his contrarian strategy gave him a 30% return in 2008.
So this week's news that the self-styled "last bear standing" has thrown in the towel raised eyebrows. But he hasn't suddenly decided that everything is fine. "It will all end badly," he says of the current market rebound, because the fundamentals remain lousy.
But he is "tactically bullish" for now, because it's become increasingly clear that the world's central bankers will keep this party going for as long as possible. That gives equities plenty of scope for further gains.
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"Stronger growth in one part of the world will be countered by even looser policy elsewhere." Overall, then, tighter policy will keep getting postponed.
This macro environment, along with the recent pattern displayed by US stocks, means that "markets look to us much as they did in 1928 or in 1998" a major spurt away from the top.
Japan could be especially promising, Hendry reckons, not because Abenomics will work, but because it won't. That would imply panic-stricken "money printing without limit". Hendry is betting on the Nikkei hitting 40,000 by April 2018.
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