Trump is going to dominate Davos – even though he won’t be there
President Donald Trump and his cabinet are skipping out on Davos this week, but he’ll still be the biggest presence at the annual gathering of the world’s richest and most powerful people.
Whether it’s the U.S.-China trade dispute, Trump’s reported wish to withdraw from NATO, or the government shutdown threatening the world’s biggest economy, it’ll be hard to avoid discussing Trump at the World Economic Forum’s meeting in the Swiss ski town of Davos.
“Donald Trump will be a predominant voice at Davos regardless of whether he’s there,” Tom Nides, a Morgan Stanley vice chairman and former deputy secretary of State, said in an interview.
“The most important thing people are worried about globally is the U.S.-China trade relationship and the health of the global economy,” Nides said. “The reality is, the U.S. is a massive player in all conversations around Davos, and because Donald Trump has decided to be relatively controversial, that increases the likelihood that the conversations in the hallways are about Donald Trump.”
As 2019 begins, uncertainty is the only certainty. Trump, in the midpoint of his term, is grappling with showdowns at home and abroad, and repercussions are being felt around the world. His games of brinkmanship top the list of potential risks, along with Brexit, that could cripple economic growth.
Anxiety about the end of the old world order is sure to be on the minds of the Davos set – a list of attendees including billionaires Bill Gates, Ray Dalio and George Soros – a group who have been huge beneficiaries of the stability of the previous era.
“The American order is over, and we don’t know what the next order will be yet,” said Ian Bremmer, founder of consultancy Eurasia Group. “It’s a much more dangerous, chaotic period we are entering, and what people attending Davos need to think about is how to ensure resilience given the coming shocks.”
When Trump attended Davos last year to articulate his “America First” worldview and boast about the virility of the U.S. economy, he had a surging stock market and recent corporate tax cut to crow about. “America is open for business, and we are competitive once again,” he told the Davos crowd in 2018.
Now, with swaths of the U.S. government literally closed and 800,000 federal employees going without pay, economists are increasingly alarmed at the fallout, saying that if it persists, the longest shutdown in history could wipe out economic growth.
Even before the shutdown took center stage, markets around the world were flashing red that slowing growth, and possibly a recession, are on the horizon.
Concerns about the trade war and central banks’ actions sparked a stock selloff late last year. The riskier parts of the corporate debt world seized up, with some companies unable to borrow for the first time since the financial crisis. While market conditions improved greatly in January, it’s hard to tell if this is a reprieve or a fakeout.
So once again, the world will pay close attention to what the Davos set has to say, from business leaders including Goldman Sachs CEO David Solomon and Uber CEO Dara Khosrowshahi to politicians such as German Chancellor Angela Merkel and Japan’s Prime Minister Shinzo Abe.
But the 3,000 or so elites who convene at Davos to chart out a future of increasing prosperity and connectedness have a spotty record at making predictions. They dismissed Trump’s chances before he rose to the world’s most powerful job; they didn’t see the 2008 financial crisis coming.
The single best quote about Davos, attributed to perenniel attendee J.P. Morgan CEO Jamie Dimon is: “Davos is where billionaires tell millionaires how the middle class feels.”
As populist uproar continues to rip through democracies from France to Brazil, and the U.S. debates whether to erect a wall on its southern border, Davos men and women have come to symbolize the elites who have benefited most from globalization while the salaries of middle class workers stagnated.
The theme for Davos this year grasps for some sense from the chaos: “Globalization 4.0.” What nobody says is that the attendees are unlikely to be part of the solution because they have been the biggest winners from the past regime.
There will be high-minded sessions on global climate change and gender equality, but the real value of Davos is for attendees to form relationships and seal deals, surrounded by their peers and basking in the glow of celebrities like Prince William and musician Will.I.Am.
“The vast majority of people attend because it’s the world’s most powerful watering hole,” Bremmer said. “They spend most of their time there doing business, and they are pretty single-minded on that.”
Despite the event’s cachet, one long-time attendee who declined to be named says 2019 is likely to be his last year.
“It’s not like going to Palm Springs,” he said. “It’s annoyingly cold and the food sucks.”