Thursday, December 29, 2016

Crispin Odey Doesn't Sound Crazy But...

But he's doing crazy stuff.

From ZeroHedge, Dec. 23:

In His Latest Letter, Odey Refuses To Throw In The Towel
With his fund down ~50%  YTD, one wonders if Crispin Odey should be thinking about quietly exiting stage left after a long and mostly illustrious career. However, as his latest letter suggests, Odey is just getting his second, or maybe third, wind and is confident that he will ultimately win the war against central bankers, although as he himself points out, the risk is not so much his own fund blowing up as much as LPs saying enough to active investing altogether, and cautioned that "skilled investors are being driven out by mindless (passive) investing."

Putting it mildly (especially for his own fund), Odey said that “this has been a difficult year for active managers,” and added that “passive investing has taken money which typically would have been in the bond market and deposited it in the equity market.”

While it remains to be seen if active management is on the endangered list, Odey has bigger troubles with his own LPs in the coming weeks, although his fortune may change in 2017 when as he warns, “central bankers will have to respond to what their governments are doing fiscally, rather than bolstering asset prices with low interest rates. There could be trouble ahead.”

There could, indeed, which simply means the cycle starts from scratch and central banks LBO even more of the global capital markets, until the 0.01% own all the assets while the rest "own" the debt.
His full November letter below:
This is not the beginning of a new cycle. This recovery which began in 2009 on the back of zero interest rates is long in the tooth. After 7 years, the benefits of low interest rates – cheaply financed cars and houses – are played out, whilst oil is now a conundrum. For half the world, the problem is that oil has fallen 50% and for the other half the problem is that the price of oil is up 50%.

What is true is that there are two problems for the developed world that have not gone away. They are that house prices, and assets in general, are too expensive to be bought out of income. The disparity between the “Haves” and the “Have-nots” is too great. Secondly and relatedly is the brutal difference in lifestyle of the young and the old.

QE has resulted in very high asset prices and ushered in weaker and weaker productivity gains. Low growth cannot sit alongside rising inequality.
Brexit, Trump, the Italian referendum came about because the problems seem impossible to solve. Everyone is now looking to any individual who believes he can solve the problem....MORE
There is one scary explanation for Odey's seemingly intelligible mutterings.
From the Journal of Near-Death Experiences:

Terminal Lucidity in People with Mental Illness and Other Mental Disability: An Overview and Implications for Possible Explanatory Models 
Michael Nahm, Ph.D. Freiburg, Germany
The (re-)emergence of normal or unusually enhanced mental abilities in dull, unconscious, or mentally ill patients shortly before death, including considerable elevation of mood and spiritual affectation, or the ability to speak in a previously unusual spiritualized and elated manner.
Is Mr. Odey dying?

Dec. 9
In Which FT Alphaville's Bryce Elder Shreds Former Big Wheel Hedgefunder Crispen Odey
Nov. 3
Follow-Up: "Odey Hedge-Fund Assets Dip 60% as Clients Shun ‘Bitter Pill’"
Nov. 2  
The Stress May Be Getting To Hedgie Crispin Odey--UPDATED
Oct.4 ZeroHedge
For Crispin Odey This Is The Endgame: Hedge Fund Billionaire Goes All In Betting On "Violent Unwind" Of QE Bubble
Sept. 16 
Crispin Odey Is Getting Crushed
Aug. 13 Zerohedge
Billionaire Crispin Odey, Who's Had A Pretty Terrible Year, Is Betting Everything On Gold
May 23 
Hedge Funder Crispen Odey Has Become a Parody of.....Crispen Odey