Posted January 19, 2023
By Matt Insley
“The Davos Consensus”
As the rich and powerful gather for the World Economic Forum in Davos to stroke each others’ egos, Wall Street Journal alum Liz Hoffman, who has covered this group for a decade, issues a warning: “Don’t Bet on the Davos Consensus.”
Before we get to Hoffman’s laundry list of things the Davos crowd has gotten wrong over the years, let’s check in on some more armchair public opinion polling from Elon Musk:
The subtext of this tongue-in-cheek tweet is that the WEF does its best to act like an unelected, opaque world governing body. Billionaire corporate executives hob-knob with central bankers and finance ministers to form that “consensus” I mentioned.
So let’s take a look at some of the stand-out consensus views she’s taken away from the annual meeting in the Swiss Alps in the past…
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Your Rundown for Thursday, January 19, 2023...
Betting Against “Consensus” Narratives
Here’s a rundown from Hoffman, now writing at Semafor, of some of the big misses from Davos over the years. (As a reminder, Paradigm’s Jim Rickards got it right at the time when he disagreed with these calls.)
“In early 2008, as the mortgage crisis was unfolding, C. Fred Bergsten of the Peterson Institute for International Economics told attendees at Davos: ‘It is inconceivable — repeat, inconceivable — to get a world recession.’”
Fast forward to 2016, Hoffman recalls “the conference’s 96-page report on global risks didn’t even mention the two events that would define the turbulence of that year: Donald Trump becoming president of the United States and the U.K. leaving the European Union, despite the fact that both issues were live wires.”
In 2018, Michael Sabia, CEO of Canada’s second-largest pension fund, told Hoffman that “the consensus here is very, very upbeat,” a sentiment that followed two years of slowing growth.
Then another whopper of a miss in 2020…
“By the time that year’s conference kicked off, the coronavirus had sickened at least hundreds of people in Asia. The U.S. had confirmed its first case. But not only did the virus fail to prick the sterile gauze of optimism that surrounded Davos, it barely registered at all.”
If you’ve seen glowing coverage of the event in the mainstream media, despite all the valid criticism, there’s a simple explanation from former New York Times editor Jill Abramson.
“Of course, the coverage was a sweetener to flatter the CEOs by seeing their names in the NYT so that they would then speak at high-dollar NYT conferences and — of course — get phony news stories from the conferences into the paper,” she said, as reported by The Daily Mail.
Remember Sam Bankman-Fried’s appearance at the NYT’s Deal Book Summit last month? That was after his massive FTX fraud was uncovered, and followed another miss at a previous Davos summit, where SBF was featured as a rising star.
Another blind spot that we can add to the list of reasons to bet against the takes your hearing out of Davos this week.
Market Rundown for Thursday, Jan. 19, 2023
S&P 500 futures are down 0.77% after sliding 1.56% in trading yesterday.
WTI Crude Oil is up 0.78%.
Gold is up 0.43%.
And Bitcoin is up 0.45% to $20,767.60.
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