More than 300 finance, public policy experts, and institutional investors gathered together in mid-November at the inaugural Greenwich Economic Forum in Greenwich, Connecticut to discuss the opportunities and challenges facing global markets, public and private investments, pension plans, institutional investors, and the broader economy. Ray Dalio, Afsaneh Beschloss, Paul Tudor Jones, and Dmitry Balyasny led various discussion groups to address and offer commentary on many of these global challenges, share insights and suggest innovative solutions.
The Forum was organized by the Connecticut Hedge Fund Association (CTHFA) and the Greenwich Business Institute (GBI). Topics addressed include the global pension crisis, the latest private market and venture capital investment strategies, the opening of China’s financial markets, the likely impact of global trade wars, lessons learned from the ten-year-old global financial crisis, and other key topics.
The Current State of the Global Economy
Growing fears of a bear market, rising interest rates, issuer quality in the private credit markets, a sharply divided political climate in the United States following the November midterm elections, and uncertainty concerning the outcome of the Mueller FBI investigation weighed heavy on the minds of attendees, just as these factors have contributed to market volatility over the past several months. Global concerns expressed over the course of the two-day Forum included lingering uncertainty over the impact of Brexit, how the renewal of sanctions against Iran may affect the Middle East, Russian aggressiveness in Crimea and Syria, the stability of economic and political reforms in Saudi Arabia following the Kashoggi assassination, and more.
Ray Dalio, Founder, Co-Chief Investment Officer & Co-Chairman, Bridgewater Associates, struck a cautionary tone, a theme echoed by several other speakers. “The world, by and large, is leveraged long. When there is a downturn, I don’t think there’s much to protect investors.”
“The ratio of debt in the world relative to the gross domestic product is at an all-time high, but the reason no one talks about it or gets alarmed is you could have said that virtually every year for the past century. I don’t know whether we’re supposed to run for the exits. However, we are at a point in time that’s really challenging to that paradigm of ever-growing debt relative to the carrying capacity,” said Paul Tudor Jones II, the billionaire founder of the Stamford-based Tudor Investment Corp., and the anti-poverty nonprofit Robin Hood Foundation.
“Since the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, in 1944, debt levels have expanded because of an economic circle of trust. That persisted through the financial crisis. However, those foundations are cracking,” Jones added.
“Zero rates and negative rates encourage excess lending. That’s of course why we’re in such a perilous time… Wealth disparity is the single most threatening social problem we face as a country,” Jones said.
“When I look at the current state of the global economy, I think ‘winter is coming,’” said Braxton Amundson, founder of Academia Book Buyers, motivational speaker and angel investor, “in the U.S., Baby Boomers reaching retirement age will be looking to sell their businesses and liquidate investments, precipitating a market downturn. The low interest rate era is over and the bull market seems to be at an end, but when people think lower-growth or a possible recession, typically, they panic, but I think it will be a once in a generation investing opportunity.”
The Rise of China
Several panelists remarked upon China’s growing role in the global economy and the impact of ongoing, contentious trade discussions and how the outcome of those discussions will affect the relationship between China and the U.S.
“The New China has an energy to it,” Dalio said. “They have changed what the environment is. The old Communist environment, and state control, is no longer the case.”
“China’s been tremendously successful and continues to be in many different ways,” said Dalio. “The new China has an energy to them. In terms of entrepreneurship and energy, it’s a very exciting place. I’m excited about China — I can’t understand how anybody couldn’t be excited about China.”
Conference attendees discussed Made in China 2025 (MIC 2025), a ten-year, comprehensive blueprint aimed at transforming China into an advanced manufacturing leader, outlines the country’s strategic plan for dominance in AI, Internet of Things (IoT), Big Data and blockchain technology.China is providing access to capital to domestic companies in order to promote their indigenous research and development capabilities, support their ability to acquire technology from abroad, and enhance their overall competitiveness.
Other conversations overheard during the Forum included thoughts about China’s ambitious Belt and Road Initiative (also known as One Belt One Road) is a 900-billion-dollar project promoting cooperation, interconnectivity, and openness across continents. The One Belt One Road initiative aims to strengthen infrastructure, trade, and investment links between China and approximately 65 other countries that account collectively for over 30 percent of global GDP, 62 percent of the population, and 75 percent of known energy reserves.
“If China can resolve its trade issues with the United States over the next several months, continue its crackdown on shadow banking and speculative investing, implement its promised targeted tax cuts, increased infrastructure spending and monetary loosening by extending credit to private sector companies, this will revive the moribund domestic manufacturing sector, encourage foreign bond investment and lead to multi-year sustainable growth,” explains Yuri Vanetik, founding partner of Dominion Partners, a technology-driven opportunity real estate investment fund and Vanetik International LLC, a capital acquisitions and M&A advisory firm, “the motivation seems to be there, so there is great opportunity in China right now.”
Baidu BIDU, Alibaba
“This inaugural, Davos-style event in Greenwich, Connecticut, was a tremendous success, thanks to Ray Dalio, Paul Tudor Jones, Bruce McGuire, Jim Aiello, Peter Tesei, and so many industry leaders from around the world.The conference was unique in its overall style, physical setting, global guest list, as well as agenda,” said Jay Madia, Managing Director, Head of Risk Assets at AXIS Capital, a Bermuda-based insurance and reinsurance company, a member of the First Selectman’s Economic Advisory Committee (EAC) for the Town of Greenwich, and a member of the Steering Committee for the Greenwich Economic Forum.
The Greenwich Economic Forum brought together managers and investors in hedge funds, private equity, real estate, and venture capital, with a combined $4 trillion+ in AUM, who were eager to share their best practices and current thinking on a diverse range of topics. The inaugural event saw a sizable contingent of institutional investors, with impressive representation from Asia, Europe, the Middle East as well as North America. The Greenwich Economic Forum organizers are planning for this to be an annual event and preliminary discussions are already underway for Fall 2019.