Economy

The Best Takeaways from Davos

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Roundtables, back-to-back private meetings, negotiations to choose the best parties: the World Economic Forum in Davos, Switzerland, returned to its pre-pandemic form this year, as leaders agreed to discuss the state of the world .

This is the first Davos gathering since 2020 without any Covid restrictions, with fears about the pandemic almost completely gone. But many participants had thoughts. Here are some of the key takeaways from the five-day conference, which concluded Friday.

We were talking about artificial intelligence everywhere. Many meeting spaces on the main street of Davos presented themselves as places for AI learning; dozens of official technology-focused panels (including “Generative AI: Steam Engine of the Fourth Industrial Revolution?”); and the rock stars of the gathering were AI leaders like Sam Altman of OpenAI, Mustafa Suleyman of Inflection AI, and Aidan Gomez of Cohere. While the official theme may have been “rebuilding trust,” the unofficial theme was almost undoubtedly “artificial intelligence will reshape everything.”

At times, the excitement surrounding discussions of AI’s potential uses has outpaced the technology’s current reality, and many admit it was too early to accurately predict its future. Participants also discussed the potential risks of AI, including job losses, worsening social inequality and the rapid spread of misinformation. An industry executive wondered in a private discussion whether the cost of retraining workers whose jobs have been changed by AI will eat up much of the savings created by technological efficiency, although others said they always planned to reinvest those savings into their business. businesses.

ESG may be on the back burner, but it’s still on fire. As DealBook’s sister newsletter, Climate Forward, wrote this week, climate change wasn’t a big talking point at Davos, although 2023 was the hottest year on record.

Despite this, leaders in the financial and industrial sectors spoke positively about financial opportunities linked to the climate transition, including electric vehicles and loans for decarbonization projects.

Optimism prevailed, albeit cautiously. Although participants were quick to point out geopolitical risks such as the rise of populist politics and two wars, the outlook in Davos seemed mostly positive.

The leaders noted that the macroeconomic situation in much of the world looked promising, with the Fed and other central banks appearing ready to cut interest rates and inflation appearing largely under control. While some admitted that emboldened regulators could put the brakes on deal-making, almost all said companies were ready to get to work, through mergers and acquisitions, initial public offerings and more.

That said, many – perhaps mitigated by Davos’ collective coronavirus blind spot at the 2020 conference – said businesses need to prepare for potential challenges, including a widening war between Israel and Gaza , an exacerbation of US-China tensions over issues such as Taiwan and surprise jolts to the economy.

And here is a final series of things seen and heard at Davos this year:

  • At an annual luncheon hosted by Washington Post deputy editor Lally Weymouth, attendees had time to talk, but some went on so long that OpenAI’s Altman — arguably the economic celebrity of the event of this year – only had a few moments. to speak, DealBook hears. (Blackstone’s Steve Schwarzman offered to give up his time to Altman.)

  • A party game between participants involved comparing scores generated by their Oura Ring health trackers, which were generally low given back-to-back meetings during the day and late-night parties. (Andrew’s “readiness score” – Oura’s measure of whether “you are ready to face greater challenges or need recovery and rest” – hovered between 50 and 60, out of 100 .) Less hypercompetitive forum participants said they were too scared. to view their scores. —Michael J. de la Merced

Stocks hit a new high. The S&P 500 index closed at a record high on Friday, surpassing its previous high reached in early 2022. Investors have picked up on signals that the Fed is done raising interest rates and are betting that it will help boost profits companies.

Apple lost the patent battle. The company is removing a blood oxygen sensor from its Apple Watch Series 9 and Watch Ultra 2 after the International Trade Commission ruled that the company violated patents owned by Masimo, a medical technology company. Apple lost an appeal this week to delay the ITC’s device import ban

Donald Trump won the Iowa caucuses with a landslide, and now all eyes are on Tuesday’s New Hampshire primary, where he’s expected to face a strong challenge from Nikki Haley in a state where independent voters can also vote. Trump’s victory came as he faces 91 charges and four criminal trials.

Dick Bove has announced that he will retire after 50 years of career. A banking analyst whose contrarian and anti-bearish remarks won him few fans in the offices of Wall Street executives, the 83-year-old remained a media fixture until the last possible moment; he was quoted Thursday in Bloomberg about Trump’s impact on stock prices.

A federal judge pushed JetBlue Airlines toward turboprop this week by blocking its $3.8 billion deal to acquire Spirit Airlines. Overseeing the appeal of that decision will be the first of many pressing challenges facing new JetBlue CEO Joanna Geraghty when she takes office next month.

A longtime JetBlue executive, 51, Geraghty will succeed Robin Hayes, who cited health issues and “the extraordinary challenges and pressure of this job” when he announced this month his intention to resign.

Geraghty has worked at JetBlue for nearly two decades, holding roles spanning legal, operational and human resources, and has served as chief operating officer since 2018. A lawyer by training, she worked at the firm Holland & Knight lawyers before JetBlue. She will the first woman to lead a major American airline.

And she’ll have a tough mess to sort out when she takes the helm.

First big task: supervise the call. JetBlue and Spirit announced Friday that they filed a notice of appeal with the U.S. Court of Appeals for the First Circuit. Such a decision is risky because it increases both costs and uncertainty.

The Justice Department had argued that there was a “Spirit effect,” whereby the existence of Spirit forced other low-cost airlines to lower their fares. Paul Denis, who represented US Airways in its merger with American Airlines a decade ago, said he believed the trial judge who blocked the merger wrongly assumed that Spirit would remain a competitor as well. powerful as he had been. The airline, which has not made a profit since before the pandemic, has cut routes and is struggling with heavy debt. Spirit said about Fridaand that it was evaluating refinancing options for 2025 maturities.

“It’s not clear whether the Spirit effect will last in two years,” Denis said.

Nonetheless, the judge rejected the notion that Spirit was so weak that it needed to make a deal (the “failing firm defense”), arguing that the airlines “presented no evidence that Spirit was in such a dire financial situation that it had no hope of reaching an agreement.” “And as long as Spirit is in business, it will go after low-cost flights, said George Hay, an economics professor at Cornell University who previously worked at the Justice Department.

“The only thing they have to offer is low cost,” Hay said. “Until they literally go bankrupt, they will remain a competitive force.”

If it lost its appeal, JetBlue would likely have to compete on its own with the big four airlines. The four have a combined share of 66 percent of the internal market. Doing a deal with Spirit would have given JetBlue additional power over plans, gates and staffing. Other attempts to expand the company have also been thwarted: a previous partnership with American Airlines was blocked due to its own antitrust concerns. And the carrier lost its bid to buy Virgin America to Alaska Airlines.

JetBlue is also still grappling with post-pandemic changes. More and more air travelers are travel internationally, and the shortage of air traffic controllers persists, contributing to a clogged system. On Friday, the airline announced that it cut more roads to improve profitability and reliability. (The airline told CNBC the plans were in the works before the judge’s ruling.)

We may soon know how Geraghty seeks to address these challenges: JetBlue will report its results next week.

China has released a series of bad news this week, but one thing stands out clearly: the population has declined for the second year in a row, according to government statistics. The country’s demographic crisis is not improving. The rapid aging of the population is already straining health care and pension systems, while making it much more difficult for President Xi Jinping to boost domestic consumption and reshape the economy. The decline in the number of births of future workers also threatens growth in the medium and long term.

Some hope the Chinese lunar calendar could help. The Year of the Dragon, which begins next month and occurs every 12 years, has historically seen a surge in so-called baby dragons. One reason is that some Chinese traditionally believe that children born in a year of the dragon are more lucky and more likely to succeed.

But experts warn there is a problem: Women of childbearing age in China, who have fewer children than their parents, if any at all, are less likely to believe in old superstitions. “In the past, births were more numerous in auspicious years of the zodiac,” Wang Feng, an expert on Chinese demography at the University of California, Irvine, told the Financial Times. “But given the pessimistic economic outlook and the pessimism of young people, I doubt we will see a notable rebound this year.”

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