Billionaires, world leaders and investors are gathering in Davos, Switzerland, for the World Economic Forum’s annual meeting to hobnob and discuss topics ranging from the global economy and sexual harassment, to the risks and opportunities of artificial intelligence. Not to mention hear a speech by President Donald Trump.
Here are the latest developments, updated throughout the day. (Time-stamps are local time in Davos.)
Europe’s revival drew widespread praise in Davos. Even with the challenges posed by populism and Brexit, the EU has the opportunity to become a trade leader and counter Trump’s protectionist policies. “The EU has an important chance at this moment, which is to reaffirm itself as a leading region in the world, and a leading region that believes in open trade,” said Manuel Caldeira Cabral, Portugal’s economy minister.
European Central Bank President Mario Draghi, who will retire in October 2019, was singled out for his job in stabilizing the region. “When he goes, a real giant will have gone because he’s done an incredible job,” said David Rubenstein, co-founder of the Carlyle Group.
Complacency Spooking Bank Chiefs (12:59 p.m.)
The bosses of Barclays Plc, Citigroup Inc. and the Carlyle Group voiced worry that the strongest global economy since 2011 was leaving financial markets complacent. Barclays CEO Jes Staley said the upbeat environment reminded him of the eve of the last crisis a decade ago and that the combination of stocks at record highs and volatility near all-time lows wasn’t “sustainable” in the long term.
India Warns About Risks to Civilization (12:21 p.m.)
Climate change is one of the three key challenges facing human civilization, India’s Prime Minister Narendra Modi said in a speech. While the impact of extreme weather is on the rise, few countries are backing promises to curb carbon emissions with action, he said.
The other risks are protectionism and terrorism, said Modi, the first Indian prime minister in two decades to attend Davos. Meanwhile, nationalist policies are on the rise and “globalization is slowly losing its luster,” he said, adding that most areas of India’s economy have been opened to foreign investment.
Trump’s Tariffs Threaten Jobs, Environment (11:58 a.m.)
The U.S. president’s decision to impose tariffs on solar panels and washing machines won’t help the American economy, Nobel laureate Joseph Stiglitz said. “It’s bad for the global environment, it’s bad for the American economy, it’s bad for jobs in the United States,” the Columbia University economics professor told Bloomberg Television. “You can’t build the world that we had in 1950, 1960—that’s not going to come back. So what we have to do is find new industries, like installing solar panels. And what are we doing? We’re making it more difficult to install solar panels.”
Default Risk Looms on Higher Interest Rates (11:20 a.m.)
Anne Richards, chief executive of M&G Investments, also sees room for concern. “If interest rates go up meaningfully over the next 12 months, there will be a bunch of people who have borrowed money who will not be able to pay it back,” she said during a panel discussion moderated by Bloomberg’s Tom Keene. “Those people are out there, and the markets are not in aggregate pricing that.”
China Is Not on the Bitcoin Bandwagon (10:55 a.m.)
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, isn’t a crypto currency convert. “Our attitude is that this is something whose real value to the economy still has to be proven. In that sense, we do not want them to get too big and too widely traded in China and that’s why the central bank has actually ordered the closure of trading of bitcoin in China.”
Cheers for Europe (10:52 a.m.)
Financiers in Davos are liking the European expansion. It was “the biggest story of 2017 in terms of the economy,” said David Rubenstein of the Carlyle Group. “Europe, many thought was dead and gone years ago. Despite Brexit, the problems in Spain, the weakened German government, a new French government, Europe has done quite well economically. It’s a very attractive place to invest.”
That was echoed by Blackstone CEO Stephen Schwarzman. “Europe’s doing really well,” he said. “The Europeans in the areas that we invest basically had lost confidence. Now Europe has awakened.”
Uncomfortably Numb (10:33 a.m.)
“There is a numbness out there, there is an ambivalence out there that’s concerning,” Citigroup CEO Michael Corbat said on Tom Keene’s panel in Davos. “When the next turn comes—and it will come—it’s likely to be more violent than it would otherwise be if we let some pressure off along the way.”
He also said there are risks from an end to the “science fair project” of quantitative easing, noting that markets had rallied despite the U.S. government shutdown just as they had after votes for Trump and Brexit.
More from Harvard’s Ken Rogoff, who is concerned by what could happen if interest rates jump in reaction too faster inflation: “It’s not hard to imagine a stock price collapse,” he said. “I don’t know how everything from art and bitcoin to stock prices will react as stock prices go up.”
The Risk of Being Happy (10:23 a.m.)
Add David Rubenstein to the camp concerned about complacency. “The biggest concern I have is that most people think there’s no problem of a likely recession this year or early next year,” the co-founder of the Carlyle Group said on Tom Keene’s panel in Davos. “Generally, when people are happy and confident, something wrong happens.” He worries governments have too much debt and that there is the potential for unanticipated geopolitical shocks.
Solar Adjustment (10:23 a.m.)
The solar industry in the U.S. and elsewhere will adjust to President Trump’s move to impose duties on equipment imports, according to IEA Executive Director Fatih Birol. “I am certain that the U.S. solar push will continue in the next years to come,” Birol said in a Bloomberg Television interview.
Are Markets Heading for a Crash? (9:58 a.m.)
“I do feel it’s a little bit like 2006 when we were all talking whether we’ve solved the riddle of economic crises,” Barclays CEO Jes Staley said during a panel discussion moderated by Bloomberg’s Tom Keene. “It seems we’re in a pretty good place right now economically. But we’ve got a monetary policy that’s still in the remnants of the depression era,” he said.
Harvard University’s Kenneth Rogoff also sees risks and is worried about a potential rebound in inflation-adjusted interest rates. If that was to happen, then countries with weak growth and high debt such as Japan and Italy could suffer, he said on the same panel.
Meanwhile, global markets could suddenly turn without a specific trigger, according to Nobel laureate Robert Shiller, a professor of economics at Yale University. “Dynamics of bubbles make them come to an end,” Schiller tells CNBC.
Trump Plans ‘America First’ Address (9:42 a.m.)
The U.S. president will outline his administration’s economic agenda at this week’s World Economic Forum, Vice President Mike Pence said in an interview in Jerusalem. Trump will explain why the U.S. economy “is taking off: regulation, tax cuts, expanded access to American energy.” The presentation “is going to be a great message. It’ll be America First.”
‘America First’ Poses Global Trade Risk (9:22 a.m.)
President Trump’s protectionist U.S. trade policy is the biggest risk to a global economic recovery, according to BlackRock Vice Chairman Philipp Hildebrand. “It all depends on what ‘America First’ means,” Hildebrand said in an Bloomberg Television interview. “If it means to fundamentally unravel and destroy the global trading order in a highly complicated supply chain world that would be bad news for the global economy.”
Trump’s Coal Shift Worries Petrobras (9:18 a.m.)
President Trump’s decision to apply import tariffs as high as 30 percent on solar equipment made abroad is a cause for concern, says Petrobras CEO Pedro Parente on Davos panel. Trump’s move when “linked to the fact that they are actually stimulating coal in the U.S. again—so it’s something that concerns because probably we’ll see again coal increasing and probably the numbers will be even worse.”
U.S. Trust ‘Implodes’ (9:13 a.m.)
A year into Trump’s presidency, a survey by public relations firm Edelman shows Americans’ trust in their institutions has drastically deteriorated. “Trust in America, of American citizens, has imploded,” according to Chief Executive Officer Richard Edelman.
Portugal Gets Brexit Bounce (9:13 a..m.)
Because of Brexit, “we are attracting more shared services that are moving part of their activity to Portugal, that is happening with Britain, but it’s also happening with French companies and German companies,” Portugal’s Economy Minister Manuel Caldeira Cabral said in an interview with Bloomberg Television’s Francine Lacqua. Portugal is attracting investment from France, Germany and even China and India. Still, Brexit is “not a good movement for overall Europe, but we should manage it in a way to contain the damage.”
The Good and Bad Views on Trump’s Tax Cuts (9:08 a.m.)
Trump’s tax revamp is getting a mixed response from Davos delegates. On the positive side, Blackstone’s Stephen Schwarzman said: “There are companies around the world looking at the U.S. now and saying ‘this is the place to be.”’ He added he expected companies to shift work to the U.S. Adena Friedman of Nasdaq said “the impact on companies was positive for the most part. It’s definitely a growth driver for the United States.” Tidjane Thiam, chief executive of Credit Suisse, also predicted greater investment in the U.S., saying “I’ve learned over time never to bet against the U.S. economy.”
But Bank of America Corp.’s Brian Moynihan said low unemployment in the U.S. meant the “reality of bringing a lot of jobs back is difficult. Where are the people to do the work?” Frank Appel of Deutsche Post said the tax cut would deliver a “limited short-term impact” but would swell the budget deficit and didn’t do anything to boost productivity.
Russia Fund Warns Trump (8:45 a.m.)
“Any attack on sovereign wealth fund is a very dangerous thing,” Kirill Dmitriev, chief executive officer of Russian Direct Investment Fund, said in a Bloomberg TV interview in Davos. “It would set a precedent when a nation’s wealth is under attack, and frankly sovereign wealth funds would move away from dollar and will find a way to reduce this risk of being sanctioned any time.”
Adecco Sees Brexit Backlash (7:40 a.m.)
Customers are cautious about recruiting permanent staff in Britain, showing Brexit impact, and investment has decreased in sectors including financial services in London, Adecco CEO Alain Dehaze said in an interview with Bloomberg TV. “Everybody is waiting for clarity,” he said.
Here’s What Happened Monday:
- The International Monetary Fund raised its forecasts for global growth this year and next to 3.9 percent, but warned against complacency and said Trump’s tax cut would only give a short-term boost.
- Fifty seven percent of about 1,300 CEOs polled by PricewaterhouseCoopers said the worldwide expansion will improve in 2018, a jump from 29 percent a year ago.
- The start of the meeting was disrupted by the heaviest snowfall in almost half a century. “In the past 48 hours came more than 2 meters of snow and that’s a big problem,” said Davos Mayor Tarzisius Caviezel.
