“Eclectica hedge fund manager Hugh Hendry has said he has been forced to leave his bearish outlook behind as he faces up to a market ‘which only makes sense through the prism of trends’.  Hendry said he is no longer fighting the ‘two-way feedback loop’ which is continuing to boost risk assets.  That 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 –  leading to falling US inflation expectations, which in turn prompts the Federal Reserve to loosen policy once again.”

http://www.investmentweek.co.uk/investment-week/news/2308814/i-cant-look-at-myself-in-the-mirror-hendry-on-why-hes-turned-bullish

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