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Milken Institute Global Conference Highlights Through the Eyes of Todd Harrison

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Lessons learned from America's left coast.

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Minyan Musings, April 26th, 2010

I've been known to share some Random Thoughts. As I furiously absorbed the spirited discussions, I did my best to note of some standout comments, as well as my internal observations. Below, please find them, in no particular order:
  • During the opening panel, From Recession to Recovery, the audience was polled and 66% of all attendees opined that the $12 trillion of American net worth (lost since the beginning of the crisis) won't return until 2013 or later.

  • Mohamed El-Erian seems particularly Minyanesque, not because we share similar points of view on the state of the world and the attendant, necessary, and eventual culpability, but the manner in which he expresses his opinions. He sees "cyclical tailwinds into structural headwinds," and believes the next three years will be a very interesting period. Emerging markets now have credit risk as opposed to the traditional interest rate risk. We must collectively adapt to that secular shift.

  • Throughout societal spectrum, stateside and abroad, upwards taxation and austerity measures are ultimately inevitable. This theme was touched on in a recent Minyanville column, Ten Reasons Why This is Not in a Bull Market.

  • "People hold on to the old paradigm until the new paradigm is self-evident." That quote resonated, particularly as it pertains to the denial, migration, panic continuum we often reference in the 'Ville.

  • Banks are sitting on $1.5 trillion in excess capital, yet lending down 7.5% in 2009. And we wonder why there is such a chasm between the have's and have not's?

  • Mark Lasry, Chairman and CEO of Avenue Capital Group, was very bullish -- and very right -- at last year's conference and remains constructive for the next year or two. That time horizon was interesting to me, as it happens to jibe with the corporate credit cycle).

  • Ken Griffin, Founder and CEO of Citadel, agrees -- something must be very wrong for the economy not to continue to perform.

  • Steve Forbes, Chairman and CEO, Forbes Media, believes Israel won't let Iran get nuclear capability. That potentially may be the "big event." (This is consistent with the conversation Steve and I had last year.)

  • Employment was the single biggest theme of the conference, in regards to the structural and political ramifications. The panel predicted unemployment, one year out, will range from 8% to 9%. El Erian offered that the real measure -- underemployment -- will dip from current levels of 17% to around 14%.

  • On the "Global Risk" panel, Shaukat Aziz, the former Prime Minister of Pakistan, noted that terrorism evolves from hopelessness and exploitation. The lack of income, a desire for a voice and the freedom to choose are drivers of that daunting dynamic. He spoke to the need for global leadership.
No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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