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Davos ’19: Trump, Trade, Dalio, Brexit, Currency

As Davos ’19 opens, here are the top ideas being discussed:

Trump and Trade

Washington Post: “Calls are growing louder for President Trump to end the trade war and government shutdown as fresh evidence pours in that businesses and consumers are losing faith in the global expansion.”

“Chief executives ranked a global recession as their number one concern for 2019, according to a survey of nearly 800 top business leaders around the world released Thursday by The Conference Board. Global trade threats came in second. Even consumers, who power the U.S. economy, are on edge. Consumer confidence has fallen to the lowest level of Trump’s presidency, according to the University of Michigan Consumer Sentiment survey out Friday.”

“The mood is noticeably more somber as government, business and non-profit leaders from around the world are gathering this week here in Davos, Switzerland, for the annual World Economic Forum.”

Bloomberg: “The number one question in the mind of leaders in Davos now is what on earth is Donald Trump up to?” said Tina Fordham, chief global political analyst at Citigroup Inc. and a WEF regular. “We’ve very clearly moved in terms of investor sentiment from the Trump bump euphoria surrounding tax cuts and deregulation to fears of a Trump slump.”

What Scares Ray Dalio

Yahoo! Finance: “Ray Dalio, who runs $150bn (£116.7bn) Bridgewater Associates, told an event at the 2019 Davos summit that he feared central banks’ limited ability to cut interest rates in the next downturn.”

“The hedge fund titan warned of a ‘substandard growth rate’ in the US, Chinese and European economies next year, which would warrant easier monetary policy.”

“Speaking at a panel discussion on the first day of the World Economic Forum (WEF), Dalio said: ‘The US, Europe, China – all of those will experience a greater level of slowing, probably a greater level of disappointment.”

Yahoo! Finance further quotes Dalio:

  • “I think there’s a reasonable chance that by end of that, monetary policy and fiscal policy will have to become easier relative to what is now discounted in the markets.
  • “What scares me the most longer-term is that we have limitations to monetary policy, which is our most valuable tool, at the same time as we have greater political and social antagonism.
  • “So the next downturn worries me the most. There are a lot of parallels with the late 1930s.”


The Guardian: “Michael Corbat, chief executive officer of Citigroup, has told Davos that Brexit means his firm will be doing less work in London.”

“Speaking at a lunch organised by Bloomberg, Corbat explained that Citi have already taken precautions for Britain crashing out of the EU without a deal – but wouldn’t say how much it will cost: ‘From Citi’s perspective, from the industry’s perspective, as for many businesses, we’ve had no alternative but to prepare for a hard Brexit, as its likely we will come down to the wire. Hopefully reason will prevail and we’ll strike a balanced outcome for each of the parties, but in some ways it’s a difficult situation.'”

Q: Do you think less of London than you used to?

Corbat: “The outcome is that we will be doing less there. If you look at our business there, a third of our business is UK related. About a third is Europe-related, and about a third is rest of world. Without a doubt it’s likely we will be forced to move our European piece to the continent, and we’ve prepared for that. Obviously we’ll continue to do the UK piece in the UK, and over time we’ll see what happens to the other third.”

Currency: Euro v. Dollar

Bloomberg: “Trump’s attacks on allies and persistent questioning of the value of the transatlantic alliance have accelerated European efforts to gain greater autonomy, including moves to boost the role of the euro and reduce dependence on the U.S. dollar. Until that happens, however, allies in Europe remain vulnerable, said Erik Brattberg, director of the Europe Program and a fellow at the Carnegie Endowment for International Peace in Washington.”

“They talk the talk of becoming more strategically autonomous, more sovereign in their foreign policy,” said Brattberg. “But the answer from Europe will be passive. They will not be able to assert themselves.”

Key Quotes

The (Singapore) Straits Times offers key quotes:

  • “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising. Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.” – International Monetary Fund managing director Christine Lagarde
  • “Brazil is taking measures so that the world re-establishes confidence in us, that our business returns to flourishing between Brazil and the world, without being guided by ideology. We will show that we are a country that is safe for investments, especially in the area of agri-business, which is very important for us.” – Brazil President Jair Bolsonaro
  • “There are so many variables and so much uncertainty globally, from the trade tension to geopolitical changes, so a lot of market activity and market sentiment are out of our control… Sometimes we spook ourselves, so it remains to be seen how slow is slow, how bad is bad, let’s see how the first quarter looks” – Hong Kong Exchanges and Clearing chairman Laura Cha