Chief executives are descending on Davos with their confidence suddenly in high gear, despite a rising tide of threats menacing their bottom lines.
With economic growth strengthening around the globe, business leaders are finding it easier to stiff-arm worries over geopolitical conflagrations, cyberattacks, climate change-related events and the rest of the lineup of potentially destabilizing calamities that form part of the Trump era.
That’s according to the latest annual survey of nearly 1,300 CEOs by PwC, the professional services firm, released here as the World Economic Forum got underway under a record snowfall. The report found CEO optimism at a record high — with 57 percent predicting growth would accelerate worldwide this year — after lodging its biggest single-year leap, up from just 29 percent who predicted as much last year.
And while the cheer has spread to executives in every corner of the world, North American CEOs lead the pack. It’s the only region where business leaders expect their own companies’ fortunes to keep pace with the broader trend lines.
The sentiment amounts to a Trump-style thumbs-up of sorts for the president’s economic agenda — at least as far as CEOs are concerned — and a shrug in the direction of his hawkish trade rhetoric and chaotic style.
Significantly, CEOs from other countries appear to second the notion.
The United States pulled further away from China in estimates of the top market for growth prospects — with the United States the first choice of 46 percent of foreign executives compared to 33 percent who chose China.
There is no surprise here,” Bob Moritz, PwC’s global chairman, said Monday. “You’ve got a great consumer base, you’ve got a tremendous amount of innovation happening in the country, you do have rule of law … and the current administration is trying to figure out ways to make it easier to do business as they take regulation down and obviously the tax reform, which is beneficial to those companies.”
So could Trump get more cheers than jeers when he catches up to the shadow he’s casting over the conference in his Friday appearance here?
Moritz played the Davos diplomat in sidestepping a question about what notes Trump should hit. “I’m not sure the goal of anybody here should be to keep everybody happy,” he said. “I do think it’s important for us to make sure the world understands different points of view.”
Some other notable findings from the survey:
1. India rising.
Moritz calls it “the big story.” The emerging powerhouse announced its arrival in the survey this year by bumping Japan from fifth on the list of top spots for global investment. And Indian Prime Minister Narendra Modi is set to open the forum Tuesday with a keynote address, the first Indian head of state to do so in 21 years. He’s bringing the country’s largest-ever delegation to the conference, a retinue that includes two yoga teachers who will offer classes. The country is on the cusp: As China suffers a shrinkage in its labor supply, India’s is surging, with a projected 900 million workers by 2020.
2. The scary stuff is scary again.
In a sign that CEOs aren’t entirely pacified, they now list terrorism and cyber threats among their chief concerns, a year after those worries barely rated. And those dangers essentially swapped places with “uncertain economic growth” and “exchange rate volatility,” seeming yawns that nevertheless placed second and third last year. But the responses vary widely by region. Cyber threats top the list in North America. In Western Europe and Latin America, the leading concern is populism.
3. Things fall apart.
CEOs accept the premise of this year’s conference theme: “Creating a shared future in a fractured world.” They overwhelmingly see the world moving toward multiple belief systems, multiple rules of law, regional trading blocs, increased tax competition and nationalism. On only two fronts do they see forces converging: in corporate integration and open access to the Internet.
PROGRAMMING NOTE: I'm in Davos to cover all the action this week, so The Finance 202 will be hitting your inboxes at 6 a.m. Swiss time (12 a.m EST) today through Thursday, and Friday morning after Trump's speech. If you're attending, tell me what you're seeing and hearing -- and pass on any questions, concerns and complaints (and of course noteworthy sightings). Please email me at email@example.com. And if you're not signed up for my newsletter, please do so here.
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— Some context for Modi’s speech this morning. The Indian Express’s Sandeep Singh: “On Tuesday, Narendra Modi will become the first Indian Prime Minister to speak at the World Economic Forum in Davos in over two decades. In 1997, HD Deve Gowda, then head of a weak, eight-month-old coalition government, had assured the world of the reforms road that India had committed itself to — his speech was to be followed within a month by Finance Minister P Chidambaram’s pathbreaking ‘Dream Budget’, which set an enduring benchmark for economic reforms and liberalisation.
Twenty-one years on, Modi will address the world’s financial and business elite as Prime Minister of one of the world’s fastest growing economies — and as head of a government that has taken far-reaching steps such as demonetisation and the introduction of the Goods and Services Tax (GST). Significantly, he will speak barely a week before Finance Minister Arun Jaitley presents his government’s last full Budget before the Lok Sabha elections of 2019.”
— “All things go” for U.S. delegation. After a delayed departure Monday amid the federal shutdown (which was abruptly called off), all plans seemed set for the U.S. delegation and for President Trump to travel to Switzerland later this week. The Associated Press: “President Donald Trump’s trip to the World Economic Forum in Davos, Switzerland, appears to be on. White House spokeswoman Sarah Huckabee Sanders said Monday that if ‘all things go as expected’ with reopening the government, the delegation will travel Tuesday and the president will go later in the week.”
— IMF provides some economic context for gathering. The Washington Post’s Heather Long: “The United States is projected to grow 2.7 percent in 2018 as [Trump’s] tax cuts boost growth, the International Monetary Fund said in a new report Monday, delivering more positive economic news as the president passes his one-year mark in the White House.
But deep inequality remains in the country and the IMF does not expect the growth to last long. ‘We certainly should feel encouraged by the strengthened growth, but we should not feel satisfied. There are still too many people who are left out of that recovery and acceleration,’ said Christine Lagarde, head of the IMF, on Monday.
The IMF had originally forecast just 2.3 percent growth for the United States but lifted its projection significantly after Republicans in late December passed the largest overhaul of the U.S. tax code in more than 30 years. The massive reduction in the corporation tax rate from 35 percent to 21 percent should stimulate business investment and growth, the IMF wrote in its latest quarterly World Economic Outlook, welcome news for the White House as it tries to boost growth, jobs and wages.”
TRUMP VS. THE WORLD:
— Trump is facing a decidedly mixed welcome here. The Associated Press: “As with most things Trump, there are stark contrasts between how attendees view his visit. Some are happy and hope for dialogue. Others unabashedly say they wish he would stay away and accuse him of a lack of compassion and vision for the world that are out of place in Davos…
Some have suggested it's ironic that Trump, a self-styled populist despite his penchant for the penthouse, is attending the elite event. Others speculated he could have felt a need to regain the Davos spotlight for the United States a year after Chinese President Xi Jinping stole the show by casting China as a champion of free trade and stability.”
— Anti-Trump protests foiled by bad weather: From the Press Association: “Swiss authorities have been accused of ‘bowing to global elites' by rejecting permission for protesters to demonstrate against [Trump in Davos] …The authorities said heavy snowfall had limited the space available for a demonstration in Davos on Thursday, the day before Mr. Trump was due to address the [forum]. Members of Switzerland’s Social Democratic Party and Green Party had requested permission to stage a protest on Thursday.”
Euronews’s Alice Cuddy: “Andreas Freimüller, president of Swiss campaign group Campax, told Euronews that activists had hoped to hold an ‘un-welcome rally for Trump to let the US president know ‘we don’t like who you are or what you do.’
A petition started by Campax earlier this month, titled ‘Trump not welcome — stay out of Davos’, has already garnered almost 17,000 signatures…. Activists are still waiting to hear back from a separate request to hold a protest in the city of Zurich on Thursday.”
— The question everyone is asking: What will Trump say? The New York Times’s Andrew Ross Sorkin: “Mr. Trump ... is drawing a mix of breathless anticipation, anxiousness and downright agitation among a crowd that has long considered him an outsider…
It is both speed-dating at high altitude for the cognoscenti and a cerebral affair filled with panel conversations about issues such as gender diversity, harassment, artificial intelligence and the environment. The official theme this year is ‘Creating a shared future in a fractured world.’ All of which makes Mr. Trump the anti-Davos Man.”
— Trump speech prep:
- FT’s Edward Luce: “Davos is just about the last place you’d expect to find [Trump]. It is, after all, the spiritual home for the sort of neoliberal global agenda that he loves to bash. But Trump has, once again, thrown the fox in the henhouse, not only by his late arrival date, reportedly Friday, when everyone usually has left the Congress Center and hit the ski slopes (argh!), but also with the speech he will be giving, which is likely to focus on the virtues of economic nationalism.
Such a speech will find no fans in Davos. But it will also be a stupid message to give in the same week that the next round of NAFTA negotiations will begin. Trump has been threatening to bail on the deal, something that would be incredibly stupid, but also out of keeping with his more bark than bite approach so far to trade. Pulling out of NAFTA would have real economic impact. The Mexico-US supply chain relationship is hugely important, and interruptions to it would have a real effect on growth at a time when the President needs to keep a steady hand on the tiller in advance of the mid-term elections.”
- Larry Summers in the FT says that Trump will take too much credit for the economy: “While [Trump] will probably try to take credit for all the economic good news, it is unlikely that he deserves it. He is president of the US, not the whole world. And the economic surprises in the rest of the world have been more favourable than those in America.
The scale of upwards revisions of growth forecasts for 2017 and 2018 is higher in Europe, Japan, China and emerging markets broadly than it is for the US. Many other stock markets have outperformed those in the US. If Mr. Trump’s pro-business policies were driving the global economy, one would have expected an increase in net capital flows into the US, and so a stronger dollar. In fact, the dollar has weakened significantly in the last year, despite more Federal Reserve tightening than was anticipated at the beginning of 2017.”
— Klaus Schwab hopes Trump critics keep an open mind: The Associated Press: “The founder of [WEF][ says he hopes [Trump's] planned visit to Davos this week will ‘provide him even better with a global perspective,’ and says critics of the U.S. leader should hear him out….
‘Let's not forget he is the democratically elected president of the most powerful nation in the world,’ Schwab said. ‘Without the co-operation, without the positive approach of the United States, we will not make very much progress in finding solutions. So his participation is very important.’ ”
— Here’s what the business world thought of Trump last year: Bloomberg News's Simon Kennedy and Javier Blas: “If there was one message that echoed through the mountains ringing Davos a year ago, it was that the business world could ignore Donald Trump’s tweets. Once in office, Trump would act more like a conventional American president and his torrent of Twitter taunts would surely slow, according to many of the executives who gathered in the Swiss town for the World Economic Forum just as he was inaugurated in 2017.
The thousands of 140-character rants Trump has sent since then — including one calling himself a ‘very stable genius’ to defend his mental health — show how wrong they were. The mostly male corporate and political personalities who descend on the Alpine resort each year don't have a great track record at foretelling the future.”
WHO'S IN DAVOS?
— Just about anyone and everyone. From world leaders, actress and activist Cate Blanchett, Elton John and the IMF’s Christine Lagarde, CNBC has a breakdown of the top names making an appearance this week.
— Biopharma elites trek to Davos, too. Stat’s Rebecca Robins: “A who’s-who list of biopharma royalty is headed to the Swiss ski resort town of Davos for four days of hobnobbing this week with politicians, CEOs, and one-percenters from around the globe. There will be big names like Pfizer’s COO Albert Bourla, Novartis’s incoming CEO Vasant Narasimhan, Roche Chairman Christoph Franz, Illumina’s executive chairman Jay Flatley, and Medtronic’s CEO Omar Ishrak. FDA Commissioner Scott Gottlieb will be there, as will the director of the National Institutes of Health, Francis Collins. But why?
…It’s a meeting about ideas. This year’s agenda features panel discussions on topics like precision medicine and health care technologies. On Tuesday, a project will be unveiled to track where 30 drug makers are succeeding — and where they’re falling short — in tackling the threat of antibiotic resistance.”
— Populism is waning, so that means party time. The New York Times’s Peter S. Goodman: “The last time these putative guardians of civilization convened for this festival of internationalist concern, they found themselves in an uncustomary position: in the cross hairs of a global insurrection… A year later, anxieties over populism have largely subsided, and the global economy appears healthier than any time in years. American participants will arrive only weeks after Washington showered wealthy households and corporations with generous tax cuts. And the man who bestowed that windfall, President Trump, now plans to attend Davos, as if to underscore fraternity with his billionaire brethren. The Davos crowd had plenty of reasons to feel fortunate before. Now, they have more.”
— But don’t get too excited. Bloomberg’s Enda Curran and Alessandro Speciale: “Enjoy the party while it lasts: That was the opening day message for the corporate and political leaders attending the [WEF's] annual meeting. Booming stock markets and the best global economic growth in seven years are fueling record levels of optimism among chief executives,” according to the PWc survey I mention above.
“But just hours earlier, the [IMF] used the gathering to argue that while the outlook for this year and the next was better than previously anticipated, a recession may be closer than many acknowledge and that investors and policy makers should guard against complacency.”
And Heather writes there is “growing unease among the world’s millionaires and billionaires that this gilded age could soon be cut short by the rise of populism and the deepening inequality fueling it:” “The Conference Board, which surveys more than 1,000 top executives in 50 countries about their biggest concerns, found in its latest report, released Thursday, that inequality ranks seventh on the worry list, up from 18th last year…Such anxieties that the global economic surge could be too good to last are manifest in the official theme for this year’s Swiss gathering — how to come together in a ‘fractured world.’ ”
— Is there a generational gap when it comes to perceptions of the WEF? United Kingdom-based investor Guy Hands says so. CNBC’s David Reid and Joumanna Bercetche: “Hands, who is the founder and chairman of Terra Firma Capital Partners, said Monday that the most difficult topic for people in Davos to ask themselves was why is there such a disconnect between society and the world elite?
‘When I meet the sort of people that attend Davos, I look at them and look at myself, and think are we actually toads being boiled slowly in hot water?
‘We seem to be becoming less relevant. We make more and more noise but actually, most people under 40 aren't very interested in what we have to say or are taking any notice of us,’ Hands said.”
— And inequality persists: Tech jobs will widen pay gap. The Guardian’s Jane Martinson: “The gulf between men and women at work — in both pay and status — is likely to widen unless action is taken to tackle inequality in high-growth sectors such as technology, say researchers at this [summit]. A new WEF report on the future of jobs finds the dominance of men in industries such as information and biotechnology, coupled with the enduring failure of women to rise to the top even in the health and education sectors, is helping to reverse gender equality after years of improvements.”
DAVOS NOTEBOOK: Our reporters on the scene — Heather Long and Danielle Paquette — were out and about the snowy town on Monday and had plenty to report, even before things got officially up and running.
Outside a coffee shop on the Davos main drag, a bus doubled as a promotion for Maharashtra, India. The rolling billboard featured Mumbai’s skyline and bullet-point reasons to build a business near the heart of Bollywood: “Well-connected by road, air, rail & sea”; a “Progressive government”; and “Availability of skilled professionals and manpower,” Danielle notes.
This year marks the first time an Indian prime minister has visited Davos in two decades — Narendra Modi landed here on Monday evening, wearing snow-white pants — and Indian leaders have purchased advertisements all over the city, asking global business leaders to invest in their country, Danielle continues. A three-story poster of Modi on a Hilton Garden Inn towers over the Congress Centre, where executives from Google, Microsoft and Facebook, among other firms, are expected to gather. Below his crossed arms reads the not-subtle message: “INDIA ROLLS OUT THE RED CARPET.”
Pepsi CEO Indra Nooyi and former U.S. vice president Al Gore enjoyed a warm hug on Monday. Nooyi told Heather this is the year of “empowered women” in politics and beyond. The business executive certainly had a long line of admirers, young and old, waiting to meet her.
Davos founder Klaus Schwab, who started the conference in 1971 that became the [WEF] in 1987, asked Davos first-timers to stand up, Heather writes. Actress Cate Blanchett, sitting in the front row in an Asian-inspired dress, was one of them, and also accepted a special award for her work with refugees. The actress used her acceptance speech to berate Trump, although not by name, lamenting rhetoric that “gnaws away at our empathy and compassion” for others around the world.
Sir Elton John was also honored for his work combating HIV/AIDS, Heather says. In his trademark rose-colored spectacles and polka-dot suit, John told the crowd of global business and political elite: “You’ve all made it, baby! But what are you making? ... The inequality in this world is, to be honest, disgraceful.”
Lynne Doughtie, chief executive of KPMG, one of the big four U.S. accounting firms, fired off a response to men who say they feel uncomfortable meeting alone with women at work in light of the #MeToo movement, Danielle reports.“You know what I say to them? That statement implies that you think women are not telling the truth,” she said.
Doughtie, a rare female CEO in the United States where 5.4 percent of such titles are held by women, said avoiding female colleagues is not only the wrong approach to ending sexual harassment — it hinders their advancement, Danielle says. “When men are saying that, we have to call them out,” she said. “If you are having an important mentoring session with a woman, whether it’s over lunch or in your office, there is absolutely no reason to not continue doing that.”
The snowstorm continued. Brad Jakeman, former president of PepsiCo's global beverage group, has settled in:
From CNN Money's Martina Fuchs:
From Bloomberg's Javier Blas:
Thanks for pointing it out Javier. It’s not intended to be «tone deaf» The signage is to help direct people - the pick up point is for people without Forum vehicles, some of whom are local. Hope you get to visit the refugee experience during your time in Davos.— Adrian M (@amonck) January 22, 2018
— More on security. CNBC’s Holly Ellyatt: “Security is conspicuous in Davos and it's meant to be. Soldiers and snipers can be seen patrolling the streets and security checks take place throughout the town — on its transport routes, outside its hotels and at the Forum's venues, most prominently, within the main Congress Center itself…. Security measures put in place for the Forum in 2018 are estimated to have cost around 9 million Swiss francs ($9.37 million), according to the Grisons government…. The aforementioned cost of around 9 million Swiss francs is applicable if the security deployment for the Forum is ‘normal,’ and costs increase substantially if the threat level is raised to level 2 (a ‘raised threat level’) or an ‘exceptional’ level 3.”
From the New York Times's Patrick Chappatte:
— The shutdown is over — for now. After 60 hours, the Senate voted to reopen the government for another couple of weeks. But this could all happen again shortly. The Post’s Robert Costa, Erica Werner, Ed O’Keefe and Elise Viebeck: “Congress voted late Monday to reopen the government after a three-day shutdown, sending President Trump a short-term spending bill that passed after Senate Republican leaders pledged to act on immigration policy next month.
The House joined the Senate in passing the bill to fund the government through Feb. 8, reauthorize the Children’s Health Insurance Program and roll back several health-care taxes. It passed 81-to-18 in the Senate and 266-to-150 in the House.
“I’m glad we can finally get back to work here,” Senate Majority Leader Mitch McConnell (R-Ky.) said after the vote. He called the shutdown a “manufactured crisis” characterized by “damaging partisan theatrics.”
Trump weighs in: “President Trump welcomed Democrats’ decision to relent and said the administration would ‘work toward solving the problem of very unfair illegal immigration.’
‘I am pleased that Democrats in Congress have come to their senses,’ he added in a statement.”
— Quickie analysis: Democrats caved: The Post’s Aaron Blake says that “you don’t need me to tell you that Democrats just caved when it comes to ending the government shutdown”: “What's clear is that on the very first day of the shutdown on which the federal government was actually supposed to be open, Democrats pretty quickly took a deal that was well shy of what they were demanding. They seemed to be losing leverage as Republicans like Sen. Jeff Flake (R-Ariz.) who had opposed the continuing resolution seemed to be warming to it, and if just a few Democratic senators followed suit, the whole thing would have blown up.”
The winners and losers: The Post’s Amber Phillips writes that although "no one really truly wins" during a government shutdown, it’s the congressional Republicans, moderate senators and President Trump who come out on top, while Democrats, "dreamers” and all other spending deals come out on the bottom.
— How Republicans used the shutdown against Democrats. Axios’s Stef W. Kight: “The Republican National Committee launched a six-figure campaign this weekend targeting 2.6 million voters in midterm battleground states with Democratic senators — Florida, Michigan, Ohio, Pennsylvania and Wisconsin. The campaign blames Democrats for the government shutdown…. The GOP has raised a record amount of money, and is already using it to get involved in a few specific, crucial midterm races. This comes after Republicans lost ground in special elections last week in Wisconsin, Idaho and South Carolina, on top of the Virginia and Alabama losses last year.”
Via The Post's Amber Phillips and Darla Cameron, here's how senators voted to end the shutdown:
Here are some of the highlights from Davos of events you might want to attend (all times local):
- Indian Prime Minister Narendra Modi is scheduled to deliver the opening plenary address on Tuesday.
- Canadian Prime Minister Justin Trudeau is scheduled to speak on Tuesday.
- Brazilian President Michel Temer is scheduled to speak on Wednesday.
- French President Emmanuel Macron is scheduled to speak on Wednesday.
- German Chancellor Angela Merkel is scheduled to speak on Wednesday.
- Italian Prime Minister Paolo Gentiloni is scheduled to speak on Wednesday.
- British Prime Minister Theresa May is scheduled to speak on Thursday.
- Argentinian president Maricio Macri is scheduled to speak on Thursday.
- President Trump is scheduled to speak on Friday.
- An interactive panel on infrastructure and development will take place at the Congress Centre, Jakobshorn at 8:15 a.m.
- An interactive panel on The Power of Economic Narratives will be held at 8:15 a.m. At the Congress Centre, Salon.
- An interactive panel on a strategic outlook for the future of energy systems will be held at the Congress Centre, Aspen 2 at 8:30 a.m.
- A televised session on global markets will begin at 8:30 a.m. in the Congress Centre, Sanada.
- An interactive panel on the next financial crisis will start at 9:45 a.m. in the Congress Centre, Aspen 1.
- An interactive panel on global production systems will begin at 9:45 a.m. in the Congress Centre, Parsenn.
- A televised session on automation, privacy and misinformation will start at 10 a.m. in Congress Centre, Sanada.
- A session on class privilege will start at 2 p.m. in The Loft, Hub A.
- A session about beyond basic income will start at 2:30 p.m. in the Congress Centre, xChange.
- An interactive panel on gender, power and stemming sexual harassment will start at 4 p.m. in Congress, Centre, Sanada.
- A televised session on saving economic globalization will start at 4 p.m. in Congress Centre, Aspen 1.
- A televised session on capitalism will begin at 5:30 p.m. in Congress Centre, Sanada.
- An interactive panel on global arms markets begins at 9 a.m. in Congress Centre, Situation Room on Wednesday.
- A lunch session on “China: Open Up for Prosperity” starts at 12:30 p.m. in Hotel Derby on Wednesday.
- A lunch session on disaster resilience in infrastructure will start at 12:30 p.m. in Morosani Schweizerhof, Arvenstube on Wednesday.
- A session on big data in policy making in Congress Centre, Science Hub starts at 12:45 p.m. on Wednesday.
- A workshop on building sustainable economic systems will begin at 2:30 p.m. in Congress Centre, Atelier on Wednesday.
- A session on life-work balance will begin in The Loft, Sayaban at 3:15 p.m. on Wednesday.
- An interactive panel on a shared vision for financial inclusion will begin at 3:30 p.m. in Congress Centre, Jakobshorn on Wednesday.
- A televised session on systemic trade collapse will begin at 4:45 p.m. in Congress Centre, Aspen 2 on Wednesday.
- A session on shaping the fourth industrial revolution will begin at 5 p.m. in Congress Centre, Forum Hub on Wednesday.
- A televised session on the global impact of “America First” will begin at 6 p.m. in Congress Centre, Aspen 2 on Wednesday.
- An interactive panel on the intelligence market will begin at 9 a.m. in Congress Centre, xChange on Thursday.
- A televised session on the remaking of global finance will begin at 11 a.m. in Congress Centre, Sanada on Thursday.
- A televised session on new avenues for global trade will begin at 1 p.m. in Congress Centre, Aspen 2 on Thursday.
- A session on the big picture on trade will begin at 2:45 p.m. in Congress Centre, Global Situation Space on Thursday.
- A dinner session on “The State of the World with Nobel Laureates in Economics” will begin in Central Sporthotel at 8 p.m. on Thursday.
- An interactive panel on famine and food security will begin at 9 a.m. in Congress Centre, Situation Room on Friday.
- A televised session on the future of Asian economics will begin at 9:15 a.m. in Congress Centre, Aspen 2 on Friday.
- An interactive panel on the state of startups will begin at 9:15 a.m. in Congress Centre, Aspen 1 on Friday.
- A session on the rise of women entrepreneurs will begin in Congress Centre, xChange at 10:45 a.m. on Friday.
- A lunch session on the business of Brexit will start at 12:30 p.m. in Morosani Posthotel, Davoserstube on Friday.
- An interactive panel on the global economic outlook will begin at 1 p.m. in Congress Centre, Congress Hall on Friday.
- The closing concert in Congress Centre, Congress Hall will begin at 5:30 p.m on Friday.
See Congress vote to end the shutdown:
See Europe ready its response to Trump's "America First" ideas:
Oxfam says the world's richest 1 percent get 82 percent of its wealth: