While You Were Working - January 26

Donald the Davos Man

Well, that was a very Davos speech from a president who likes to talk like he is the antithesis of Davos.

In his prepared remarks before the World Economic Forum, President Donald Trump hit almost all the right notes to appeal to the Davos crowd. While touting the success of tax reforms and regulatory rollbacks, Trump’s tone was one of humble pride rather than over-sized braggadocio. Trump knows the people in Davos, with their deep pockets, are the kind of people who can help him power the US economy.

"Now is the perfect time to bring your business, your jobs and your investments to the United States. ... America First does not mean America alone."

The speech was reportedly written by chief economic adviser Gary Cohn, so it should come as no surprise that it alluded to at least a small amount of globalist thinking. In fact, aside from his comments on immigration reform, it is not hard to imagine a very similar speech being delivered by Trump’s predecessor.

“Only by insisting on fair and reciprocal trade can we create a system that works not just for the US, but for all nations,” Trump said.

Regarding immigration policy, Trump called for a “merit-based” immigration policy that “selects” who can enter the US. While this would mark a huge shift in US policy, these comments drew no boos from the Davos crowd as many delegates hail from countries that already embrace merit- or skills-based criteria when they select which immigrants to welcome.

Here are some of the other highlights from Trump’s appearance in Davos:

  • Trump told the story of urging Apple CEO Tim Cook to build plants in the US. When Trump first heard the recent announcement that the company would indeed be investing in America, he thought the figure was $350 million, not $350 billion.
  • When a business leader at a dinner Trump attended last night vowed to invest $2B in the US, Trump thought, “He’s actually the cheap one.”
  • Trump claims the stock market would have dropped 50%, instead of climbed 50%, if Hillary Clinton had been elected president.

Ultimately, Trump’s speech worked to assuage the fears of Davos delegates who a year ago might have feared his election would upset the apple cart. It did not. And today he made the case for them to trust him even more.

Trump is the first sitting president to visit Davos since Bill Clinton in 2000. One thing I hope he and future presidents recognize from this week is the enormous influence the US can wield in Davos when the White House sends a large contingent of senior advisers and cabinet-level delegates. Despite the kerfuffle over Treasury Secretary Steven Mnuchin’s comments about the dollar, Team Trump was on message all week. Their message was that America is open for business. And President Trump most certainly stuck to that message today.

On digital services and that JPMorgan $20 billion investment plan

Part of the $20 billion plan touted by Jamie Dimon to reinvigorate JPMorgan’s operations includes expanding its footprint of branches. Think about that and watch this interview with Rune Bjerke, the CEO of Norway’s DNB Group.

DNB Group got rid of half of its branches in 18 months and still saw increased mortgage volumes. “The young generation today, they do not ask for branches. They ask for sophisticated digital services,” Bjerke said.

It should also serve as a wake-up call to American bankers that when Bjerke talks about which banks currently lead the way on digital services, he references Chinese banks, not US banks.

Central bankers take victory lap

Given all the ebullience in Davos, it makes sense central bankers would enjoy a bit of credit. IMF Managing Director Christine Lagarde seized the opportunity during the closing panel, “Global Economic Outlook”.

“We should celebrate the policies that have been implemented by policymakers; and in particular by central bankers. … Monetary accommodative policies that we had no idea about 10 years ago,” Lagarde noted.

That was music to the ears Bank of England Governor Mark Carney and Bank of Japan Governor Haruhiko Kuroda, who were sitting on the panel with Lagarde. Nevertheless, Lagarde warned about the long-term threats posed by US tax reforms and the central bankers all cautioned that it is always best to fix the roof while it is sunny outside.

Everything is awesome!

JP Morgan Asset Management CEO Mary Callahan Erdoes, one of the few women CNBC found the time to interview at the World Economic Forum, is “unquestionably bullish” on just about everything. She credits the Davos crowd with finding a way to power things like global GDP growth north of 3% and global unemployment at a 40-year low, without boom-bust cycles.

It sounds like Erdoes should spend a few minutes talking to…

But, but, but…

For my last little blurb about this year's Davos, I leave you with my favorite new catchphrase from this year’s event: “irrational complacency.”

It is an important phrase to remember because the guy who coined it is Jeff Greene. The same Jeff Greene who made a bundle by predicting the housing crash in the US.

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Beyond Davos