Fomo is pervasive at Davos — there’s always a more exclusive party or powwow. But as the so-called global elite descended on the Swiss mountain resort on Monday for the World Economic Forum, the overwhelming feeling was that the real action was far away in Washington.
Goldman Sachs boss David Solomon, Uber chief executive Dara Khosrowshahi and investment banker Ken Moelis were among those who attended events in the US capital to mark the inauguration of Donald Trump and then hotfooted it to Switzerland.
This year’s theme at Davos — the annual jamboree where world leaders hobnob with corporate titans and a smattering of celebrities, and an elite badge costs SFr27,000 ($30,000) — was nominally “Collaboration for the Intelligent Age”. But the talk of the town was Trump, tariffs and what one senior US banker called “peak pessimism” on Europe.
“Dominating the agenda at Davos this year is Trump 2.0 and what . . . Europe needs to do in order to ensure that it is competitive and frankly secure,” said Kasim Kutay, chief executive of Novo Holdings, the $187bn investment arm of Danish drugmaker Novo Nordisk’s philanthropic foundation. European Central Bank president Christine Lagarde declared that the continent was facing an “existential crisis”, while one top bank executive put it even more bluntly, saying “it’s five minutes to midnight for Europe”.
Hours after Trump unveiled a blitz of executive orders, the same banker proclaimed that “everyone is all-in on America”. Summing up the prevailing mood, he said the next four years would be characterised by a “bonfire of regulations, ‘drill baby drill’, and the end of [environmental, social and governance] standards”.
The main tenets of the Davos agenda — diversity, equity and inclusion, free trade and climate change — were drowned out by US exceptionalism, artificial intelligence and a cryptocurrency frenzy, even as wildfires raged in California and daytime temperatures in the ski resort rarely fell below zero. Several executives breathed a sigh of relief that cancel culture was over and DEI no longer a feature, while Argentine president and Trump ally Javier Milei attacked the “cancer” of “wokeism”.
At JPMorgan’s cocktail party at the Kirchner Museum on Wednesday, guests queued for selfies with its chief executive Jamie Dimon, his lieutenants and former UK prime minister Tony Blair. The buzz prompted one insider to observe that the bank would have an issue when its “celebrity CEO” finally decides to step back.
Rumours swirled at the shindig that Trump would turn up at Davos with his “First Buddy” Elon Musk in tow. “Why not? It’s a big fuck you to all these people,” said one attendee. But in the end the US president appeared only by video link on Thursday for a Q&A with chief executives in which he accused Dimon and Bank of America boss Brian Moynihan of not providing banking services to conservatives. Musk-watchers had to make do with Elon’s restaurateur brother Kimbal, who was rocking a Stetson at the JPMorgan party.
Masters of the universe were out in force, including Blackstone’s Steve Schwarzman, hedge fund titan Ray Dalio and BlackRock CEO Larry Fink. Former Manchester United footballer David Beckham rubbed shoulders with former UK finance minister George Osborne at a late-night after-party hosted by PR man Matthew Freud.
Sitting on stage next to Dalio and IMF head Kristalina Georgieva, rapper Will.i.am observed that “AI is like, wow . . . The latest version 5 of Waymo is ‘way mo’ better” — referring to San Francisco’s self-driving AI taxis. Arsène Wenger, the former manager of London football club Arsenal, spoke at an event for top Barclays executives.
Meanwhile, there were private musical performances by Wyclef Jean and Aloe Blacc, and Duran Duran played at Salesforce’s closing party on Thursday — one of the hottest tickets in town.
UK chancellor Rachel Reeves was among those who came to Davos on a charm offensive, to re-set her relations with big investors and declare that Britain was open for business. The feedback? “Rachel Reeves is thinking the right way but she’s in a difficult position,” said one senior UK bank executive, pointing to the country’s lack of economic growth.
Reflecting the continued shift in corporate power and influence, the most prominent pop-up presences on Davos’s main promenade were those of big tech companies Salesforce, Meta, Cloudflare and Microsoft. Even Mongolia House, where the Asian nation was promoting itself as a destination for investment, had an AI-themed branding.
Trump’s election put the tech and crypto sectors in an elated mood ahead of Davos, with hype around AI’s investment and business potential near universal. Commercial interests and geopolitical rivalries seemed to triumph over stark warnings about the threat of AI from pioneers including Google DeepMind chief executive Sir Demis Hassabis, Anthropic co-founder Dario Amodei and “godfather of AI” computer scientist Yoshua Bengio.
The mood among the tech community at Davos reached “peak Trump” this week, according to one investment banker, boosted by the new president’s rash of executive orders and deregulatory moves.
Rescinding Joe Biden’s AI bill, Trump removed the guardrails on the development of the technology. He also signalled he would develop a regulatory framework for digital assets — a major boost for cryptocurrencies in their quest for legitimacy — and announced OpenAI and Oracle would start a $100bn AI mega-infrastructure project.
In a sign of the times, a meme coin called “Sorkincoin”, named after American journalist Andrew Ross Sorkin, emerged after BlackRock’s Fink joked at Davos there should be one.
Meanwhile, investors hoped that Trump’s “America First” tech boosterism would galvanise European politicians, who have been restricting the growth of AI in the region with strict rules governing data use and dealmaking, to get their act together.
“Europe is underinvesting and over-regulating,” said Fabricio Bloisi, CEO of Prosus, one of the world’s largest tech investors. “The US has made a big push this week — hopefully this will be a wake-up call to Europe to move out of discussion, soften their stance and act.”
But Trump fatigue was already setting in among some Europeans, and executives articulated a wave of concerns. The top banker feared that the continent’s lenders were “bitesized morsels” vulnerable to US takeovers; investors in private equity lamented the lack of exits; and bosses of both traditional and alternative asset managers jostled to position for the wave of consolidation that is already reshaping their industries.
“People are worried about everything related to ESG, diversity and disclosure,” said Ronald Wuijster, chief executive of APG Asset Management in the Netherlands, one of the world’s largest pension funds.
Katie Koch, chief executive of asset manager TCW, said: “We need to balance the extreme optimism about America with current valuations,” noting that this week the S&P 500 index soared to new highs and corporate credit spreads are already tight.
Nicolai Tangen, head of Norway’s $1.8tn oil fund, warned of high sovereign debt levels and the “real threat” that inflation expectations would be revised upwards, a view shared by Dalio, who repeatedly told investors behind closed doors that they were too complacent on rates. “If interest rates and inflation go up, people will get super spooked,” said Jo Taylor, chief executive of Ontario Teachers’ Pension Plan.
Privately, some foresaw darker times ahead. The head of one sovereign wealth fund warned that “we’re moving towards a kleptocracy in the US that we’ve never seen before”, describing the memecoins launched by Trump and his wife Melania days before his inauguration as “daylight robbery”. A second sovereign wealth fund boss added that “Trump is weaponising everything: trade, tax and energy. I’m worried that finance will get weaponised too.”
And as attendees questioned whether — and where — the animal spirits might backfire, there was a gnawing feeling that historically, the event most likely to happen is the opposite of whatever is the Davos consensus.
The head of a big private equity firm said simply that “so much optimism makes me nervous”, while a senior banker said many of those in attendance this year had “come to the realisation that the outside world looks at this crowd and doesn’t drink the Kool-Aid any more”.
https://www.ft.com/content/f4aaa13e-ded4-4e45-852d-3a9ca62ae531
