ZeroHedge has just posted Hugh Hendry’s latest letter. Here are some of Hendry’s most compelling insights.

Hendry hasn’t written a letter for a while, because frankly not much has changed:

“I have not written to you at any great length since the winter of 2010. This is largely because not much has happened to change our views. We still see the global economy as grotesquely distorted by the presence of fixed exchange rates, the unraveling of which is creating financial anarchy, just as it did in the 1920s and 1930s. Back then the relevant fixes were around the gold standard. Today it is the dual fixed pricing regimes of the euro countries and of the dollar/renminbi peg.”

But it turns out that Hendry is much more bullish on the United States than on China:

We are, as a result, long the debt saddled west and short the vastly over vaunted and over owned BRICs...There is a near consensus that China will supplant America this decade. We do not believe this. We are more bullish on US growth than most. The momentous nature of recent advances in shale oil and gas extraction and America’s acceptance of the unpleasantness of debt and labour price restructuring looks to us as if it is creating yet another historic turning point. By embracing his inadequacies and leaping on his luck, the strong man may have finally broken the binds that had previously held him back. We are also more pessimistic on Chinese growth than ever. This makes us bearish on most Asian stocks, bearish on industrial commodity prices, interested in some US stocks, a seller of high variance equities and deeply concerned that Japan could become the focal point of the next global leg down. On the plus side we also believe that we are much closer than before to the beginning of a bull market of perhaps 1982, if not 1932, proportions. We just need the last shoe to drop.

Could the massive boom in natural gas production trigger an economic windfall much like the discovery of oil in the North Sea did for the U.K. a number of years ago?

As for China, Hendry expects a massive slowdown, but is actually utilize CDS on Japanese companies to bet against China.

So what is the main point that Hendry is trying to make?

Today the key contrarian point I am trying to make is that hyperinflation is not possible without short periods of hyperdeflation, in this case possibly as a result of the death of Asia’s mercantilism.

Hendry goes on to say that the ability to deal with massive volatility is the key to being a great macro hedge fund manager. You can be 100% correct, but if you can’t tolerate the swings from the highs to the lows without blowing up, you will not survive to reap the rewards of your insights.

A great fund manager may even be positioned wrong, but with appropriate stop losses, he will live to fight another day.

Another important trait is the ability to forecast the flight path of future prices. Seldom do prices move in a straight line, but they often fluctuate up and down on the way to their final destination.

I’m sure many of you have seen companies that were on their way to bankruptcy experience massive short squeezes that wiped out many who were betting against them. You have to know the final destination, but be prepared for the detours along the way and survive with enough capital intact to be rewarded for your positioning.