‘Responsive Leadership’
Former U.S. Treasury Secretary Larry Summers said he’s "very troubled" by the turnaround, and the possibility it will "enable whatever the instinct of this new administration is." Business leaders who "two, three months ago were saying he was a man they’d never do business with are now hailing him as a great economic statesman," he said in a Bloomberg Television interview.
The capitalists at Davos are trying hard to sound sober this year. The official theme is “Responsive and Responsible Leadership,” and attendees keep pledging to heed the lessons of Trump’s victory as well as the U.K.’s surprise Brexit vote. Still, there’s little sense that the Magic Mountain has been humbled.
On Wednesday an A-list crowd packed the famed Belvedere Hotel late into the night. Ousted U.K. Prime Minister David Cameron appeared at a dinner hosted by Pricewaterhouse Coopers, and the dance floor was jammed at an annual party thrown by McKinsey & Co., with guests sporting hot pink glasses handed out for the occasion. JPMorgan Chase & Co. CEO Jamie Dimon held court at the bar.
Finance Barons
Few seem more confident in their ability to profit from Trump’s rise than the barons of finance. Fixed-income trading, the traditional engine of Wall Street booms, is up sharply. JPMorgan’s shares have gained 19 percent since the election; Goldman’s fourth-quarter earnings tripled from a year earlier.
Some traders have more esoteric ideas about how to squeeze the last dollar out of the Trump rally. One possibility: riding the swings caused by his pronouncements on pending mergers like AT&T Inc.’s $85 billion purchase of Time Warner Inc.
“He’s pontificated a lot on what deals he thinks should go through and should not go through,” Canyon Capital Advisers co-CEO Mitch Julis told Bloomberg Television. “So arb spreads are one area where you can actually lay bets,” he said, referring to trades that exploit the gap between offer prices and the current value of shares. “And we have.”
However rosy the immediate future looks for the Davos crowd, an undercurrent of unease about Trump is never hard to detect here -- even among those who say they’re optimistic.
Trump is unpredictable. He railed against “elites” during his campaign. He’s suggested that hedge-fund managers are “getting away with murder” thanks to the so-called carried interest tax break for their earnings. And he’s threatened to tear up longstanding trade and security arrangements that are almost sacrosanct in Davos -- raising the worst-case scenario of a confrontation with China that would rupture the world’s most important economic relationship.