Boom or Bust?: Davos Diary

Simon Kennedy

23 Jan 2020, 10:49 PM IST

(Bloomberg) --

The World Economic Forum’s annual meeting is coming to an end with the global elite getting ready to head home on Friday.

Before they descend from the mountains, the economy takes center stage, with European Central Bank President Christine Lagarde and Bank of Japan Governor Haruhiko Kuroda starring in one of the closing panels.

For the most part, delegates are happy that monetary policy was eased around the world last year given the global economy now seems to be on a firmer footing and markets are rallying.

“I’d say I see and I hear what I call kind of a confident, middle-of-the-road view of the current economic environment,” Goldman Sachs CEO David Solomon told Bloomberg Television. “The overwhelming likely scenario is that the economy chugs along this year.”

Bridgewater Associates co-chief investment officer Bob Prince went as far as to suggest “we’ve probably seen the end of the boom-bust cycle” in markets.

But there is some grumbling. European bankers are fed up with the ECB’s negative interest rates. ABN Amro CEO Kees van Dijkhuizen said yesterday they were “not a good place to be.”

Scott Minerd of Guggenheim Partners began the week complaining loose monetary policies had led to a “Ponzi scheme” in credit markets that would ultimately collapse.

How will the central bankers respond? Likely by arguing that they’ve been acting in a bid to ignite inflation that runs beneath their targets. Don’t expect any change in monetary policy for a while is their message.

But with rates so low, they’re also likely to intensify their push for governments to do more to spur demand.

“Monetary policy has served us well,” International Monetary Fund Managing Director Kristalina Georgieva said in an interview. “It can’t be the only savior of global growth. We are keen to see governments stepping up on the policy front.”

Who Is Talking Friday

Temperatures predicted to be between -6°C and 7°C; depth of snow: 51 centimeters.
All times are local in Davos. Click here to watch the live broadcast.

10:30 a.m. | Central Banks panel with ECB Governing Council members Francois Villeroy De Galhau and Klaas Knot
10:30 a.m. | QuickTake panel: How can the world break free from single-use plastics? Join us for a discussion and DM us questions: @QuickTake
11:30 a.m. | Global Economic Outlook panel with ECB President Lagarde, BOJ Governor Kuroda, IMF’s Georgieva, U.S. Treasury Secretary Steven Mnuchin, German Finance Minister Olaf Scholz
11:30 a.m. | Austrian Chancellor Sebastian Kurz gives special address
Be on the lookout for Bloomberg Television’s interviews with
- Volkswagen CEO Herbert Diess
- Bank of France Governor Villeroy de Galhau
- Austrian Chancellor Kurz

Catch Up

‘Matter of survival’ | Germany’s Angela Merkel called on world leaders to work together to fight global warming and take the views of concerned young people seriously, saying time is running out to protect the planet. Meanwhile, the head of Merkel’s party said Germany needs to speed up the process of spending government funds.
Back to school | U.S. Treasury Secretary Mnuchin questioned whether Swedish activist Greta Thunberg is qualified to talk about economic issues linked to climate change and told 17-year-old to go and study the subject in college.
Trade flare-up | The U.S. and Europe looked set for a renewed clash over everything from car tariffs to digital taxes in a sign that a new American focus may be emerging following Donald Trump’s trade truce with China.
Waste-free economy | When British yachtswoman Ellen MacArthur was promoting the idea of the circular economy on the sidelines of Davos in 2012, the big attraction was curiosity about what she was up to after her sailing career. Eight years on, MacArthur’s vision is taking hold at the WEF, and firms such as Adidas, Unilever and BlackRock are embracing it.
Davos laggards | The global 1% once again have ascended the Swiss Alps to breathe the rarefied air in Davos, but in the stock market they’re anything but elite.
Speed read | Turkey says central bank as independent as the Fed | Standard Chartered says few have left Hong Kong | Formula One says overhaul deal talks in final stages | NATO chief says Europe, U.S. should stick together on China | Maersk sees flat trade in 2020 | Facebook says Bezos hack highlights vulnerabilities

QuickTake

Podcast

Economy. Labor. Climate change — these are the issues that are front-of-mind for attendees of this week’s World Economic Forum. On a special episode of the Stephanomics podcast directly from Davos, Stephanie Flanders dives in with a leader from each field.

Davos Data Download

Women comprise 24% of the attendees at the World Economic Forum’s annual meeting in Davos this year, little changed from 22% last year. Still, it’s a marked improvement over 2014, when women made up just 15% of delegates. In many ways, the WEF breakdown mimics the broader global opportunity for women, where gender parity in pay and power is still probably a century away, according to an annual WEF study released last month.

Quote of the Day

“You need laws and structures that lead the way to gender equality,” Finnish Prime Minister Sanna Marin said. “It doesn’t just happen by itself.”

One Last Thing...

The fabled Davos Piano Bar has a new home this year. Barry Colson is still at the keys, still cracking jokes. But he’s no longer at Hotel Europe, where he had a 25-year run playing for Wall Street moguls and central bankers. Instead, Matthew Prince, the co-founder of software maker Cloudflare Inc. is paying him a higher rate to perform at a pop-up location 10 minutes from his old venue.

--With assistance from Chris Reiter, Iain Rogers and Gem Atkinson.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net, Lucy MeakinBrendan Murray