Byron Wien spent the summer meeting with power players in US finance, real estate, technology, and politics.
And the mood was summed up by one word: complacency.
“As I reviewed my notes for the four lunches, I noted a mood of complacency,” Wien writes in his latest market commentary.
“The setting was pleasant, the food good and the weather agreeable. All of the attendees had done well in their careers. Some truly frightening possibilities were looming out there, but they didn’t seem imminent. The intermediate future was likely to be like the recent past: lower but positive returns.”
Each summer, Wien hosts lunches with luminaries from across the US business and political spectrum, events Wien notes that have evolved from having just a few attendees to rooms of closer to 100. In short, these are places to see and be seen. This is where you capture the consensus of what elites are thinking.
Wien said that three major narratives emerged from these meetings.
The first is that populism is rising in developed markets, as evidenced by the UK’s Brexit vote and the rise of Donald Trump and Bernie Sanders.
The second is that productivity continues to disappoint, meaning that profits and standards of living are likely to stagnate, or worse, drop.
Which leads to the third theme: secular stagnation.
The causes of this, in the view of those Wien met with, seem to be technology and globalization sort of flattening the earth. Wien’s discussion of the issue reminded me of Josh Brown’s argument that we have “too much of everything and it’s not good for anyone.”
“The U.S. was still considered the best place to invest in spite of all its problems,” Wien writes, “but there was nobody who expressed table-pounding enthusiasm about an investment idea.”
These are people paid to have ideas, to act on those ideas, and to get those ideas right.
And no one was excited about anything.
The real estate folks weren’t optimistic, a change in character.
The politics discussion didn’t seem all that much fun — Hillary Clinton is expected to win, not much is expected to change in Washington, and, as Wien wrote, “One strong Trump supporter suggested that I not take The Donald’s statements literally.”
No one thought China was experience a so-called “hard landing.”
And, over all this, it’s the theme of complacency, which we’ve seen in research commentary all summer, that really captures where we’re at and what “smart people” are thinking right now.
“As you might expect, the conclusions of a group like this might serve as a contrary indicator, and sometimes they do,” Wien writes. “But in August 2001, one participant had warned of a major terrorist attack in the United States during the following year, and last summer a number of attendees thought the appeal of Donald Trump’s message was underestimated and he had a good chance to be the Republican nominee.
“In any case, those who came to the sessions this year were sufficiently confused that they listened carefully in search of an insight that would help them find clarity in the outlook.”
For better or worse.
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