I’ve been attending the World Economic Forum in Davos for more than two decades, and I can’t recall a time when the meeting ended with attendees as optimistic about the economic outlook as last week. Their reasons:
- The global economy is enjoying unusual synchronicity, with every major region expanding at the same time. Even The New York Times elevated this theme to its front page this weekend.
- With unemployment low and inflation dormant, we face the possibility of several years of “high pressure” growth, in which wages and other rewards to workers will rise, after a decade of anemia. The unusual bonuses paid by some companies to workers in the wake of the tax bill are partly an acknowledgement of that trend.
- Trump’s hard line “America First” trade agenda was retrofitted at Davos into a more reasonable “America First, but not America alone.” It remains to be seen what that means in practice—as The Wall Street Journal’s Greg Ip wrote this weekend—but the cooler rhetoric has reduced fears of a trade fiasco.
- The rapid advance of technology—and, in particular, the increasing ability to take proliferating pools of digital data and turn them into useful intelligence (AI)—carries the promise of a sea change in business productivity, as well as potential solutions to a host of difficult social problems. U.K. Chancellor Philip Hammond said in Davos that AI could “double the rate of economic growth in advanced economies by 2035.”
- A new generation of global business leaders are rethinking their companies’ obligations to society—a healthy development fueled by rising populism, declining trust, failing governments, and a generation of workers who want to know their employers are doing good in the world.
- As for the U.S., it ranks as the most attractive location in the world to invest, after losing that honor to China earlier in the decade, and the new tax law makes that even more true.
None of that is to minimize the geopolitical threats facing the world, which my colleague Clay Chandler covered in Saturday’s newsletter. Nor is it to ignore the huge challenge of preparing the global workforce for the new technology world.
Still, it’s worth savoring the moment. All may not be right with the world. But all is not bad. Indeed, the main negative economic sentiment heard in Davos was that with all the good news, complacency may set in. As Larry Summers wrote last week—in a column that compared the current economy to the 1990s and to 2006—“The only thing we have to fear is the lack of fear itself.”
More news below.
Brexit Tensions Flare Up
The European Union will reportedly demand today that the U.K. should apply EU laws in full during the Brexit transitional period. This comes as Prime Minister Theresa May is yet again facing factional fighting within her Conservative Party, with some suggesting she should describe her Brexit strategy more clearly or face a no-confidence vote. Financial Times
Mueller Protection Split
Congressional Republicans are split on whether there should be new legislation to protect special counsel Robert Mueller from being fired by President Donald Trump. Senators Lindsey Graham and Susan Collins favor a new law, but House Majority Leader Kevin McCarthy says such a move would be unnecessary. Washington Post
Prince Alwaleed bin Talal, arrested in November in the midst of a Saudi corruption crackdown, has described his arrest as a “misunderstanding” following his release Saturday. “Everything’s fine,” the billionaire said from the Ritz-Carlton hotel in Riyadh, where he had been detained along with many other prominent businessmen. He had not been tortured as was reported, he said. CNBC
Biel Delays IPO
Biel Crystal Manufactory, the biggest producer of smartphone touchscreens, is postponing its $1.5 billion IPO on the Hong Kong stock exchange. According to reports, Biel has not yet submitted an IPO application, so it’s unlikely that it will float in the second quarter as anticipated. South China Morning Post
Around the Water Cooler
Fitness Tracker Insecurity
A fitness-tracking “heat map” published by app firm Strava appears to betray the locations of U.S. military personnel around the world. Although the map shows an overwhelming mess of activity from Fitbit users in developed areas, it gives away much more detailed information in places where only soldiers and aid workers are likely to be wearing fitness trackers. Fortune
Chipmaker Intel reportedly told Chinese technology companies, among others in a small group of customers, about critical security flaws in its processors before it informed U.S. authorities. The “Spectre” and “Meltdown” flaws allow for the exfiltration of sensitive data from desktop computers and potentially cloud servers, so the fear is that Chinese intelligence may have gotten a head start on their American counterparts in being able to exploit the flaws. Wall Street Journal
Ikea Founder Dies
Ingvar Kamprad, the founder of Swedish furniture behemoth Ikea, has died at the age of 91 following a short illness. Although he was the world’s eighth-richest person, Kamprad was known for his frugality—an ethos that translated into the company’s corporate culture. He was also a member of fascist organizations when younger, though he later regretted that element of his history. Bloomberg
Fake Follower Probe
A report into the activities of Devumi, a company that allegedly purloins real people’s identities in order to sell “fake followers” to celebrities and anyone else who’s willing to buy them, has resulted in an investigation by New York State attorney general Eric Schneiderman. The prosecutor says the company’s activities, as reported by The New York Times, constitute illegal “impersonation and deception,” while undermining democracy as well. BBC