Milken Institute Global Conference Highlights Through the Eyes of Todd Harrison
Lessons learned from America's left coast.
- Other items discussed included the potential for "cumulative and inter-related" cross-border friction, a decline in the standard of living for future generation on a global basis, and the world pushing risk further out on the time continuum (another mainstay theme in the 'Ville).
- The optimism stemmed from our ability, one and all, to learn from our past which -- as Minyans know -- is the only difference between a lesson and a mistake.
- Greece is a symptom, not a cause. Look for Portugal, Spain, and potentially the UK to follow suit. The US, it was noted, is not far from Greece in terms of our debt ratio (although we have a currency lever that others don't). This, too, should be old hat for Minyans.
- This panel featured a spirited discussion between Ted Turner and T. Boone Pickens on America's Energy Future.
- "Immigration has leapfrogged energy reform due to Harry Reid's electoral needs in Nevada". T Boone Pickens.
- The next panel I attended was What's next for Wall Street? (Please note the question at the 69-minute mark).
- Regulatory reform will lead to the removal of outliers; less risk, but more confined reward.
- Look for "regulatory arbitrage," stateside and abroad, as players identify loopholes in the system; this introduces "tail risk" for future generations.
- Greed wasn't just the prevalent in the end-users of the risk equation; it was supplied and fostered by financial institutions.
- Global hedge funds are beginning to get back to their high-water marks.
- Is an unforeseen risk the correlation of hedge fund strategies, an event perhaps triggered by regulatory reform? Other risks include counter-party (derivative) risk, pricing power risk (deflation) and populism (social) risk.
- Positives include mergers & acquisitions coming back, corporate America is de-leveraged (for the time being), headcounts are already reduced and productivity on the rise.
- An excellent lunch panel on the first day: Global Overview.
- The assets under management by the attendees at the conference equal roughly 18% of global GDP. Think about that for a moment.
- Per capita income disparities. Mexico $10k/per, China $1-2k/per, India $1K/per.
- We're seeing the highest foreclosure rates since the Great Depression and unemployment at the highest level since 1983.
- Vicente Fox, former President of Mexico, offered that drugs and crime is a global problem and human capital is a global solution.
- We risk a leadership void for the next generation, particularly given the complexities of global governance (G20).
- 10 necessary solutions for next 50 years: democracy, disease, education, energy, the environment, food, population, poverty, terrorism/war and water. Most of these, it was noted, can be solved by energy solutions and education.
Minyan Musings, April 27, 2010
With a full day under my belt, I was jazzed to dig in for a second stretch of intellectual agility and seasoned acumen. As a firm believer that true education resides in the residual grist of variant views, I found myself racing to panels and fostering relationships in the hallways. Minyans should know we were well-represented; many took the time to proudly proclaim they were part of the Minyanville community. It was humbling and heartfelt in one fell swoop.
As I continue to channel these vibes -- I feel like a cross between a UHF antennae and Andy Dufresne after he crawled out of that river -- please remember that I've done my best to honor the accuracy of the speakers. For the full-on Milken experience, and the quote-unquote, I highly recommend chewing through the hours of video content on their online platform.
To that end, I would be remiss if I didn't offer serious snaps to the staffers at the conference. As someone who has thrown his fair share of shindigs, I know how much work these types of events entail. The fact that it sailed as smoothly as it did speaks to the elbow grease behind the scenes. It was very impressive, soup to nuts, and that effort needs to be recognized.
On the content front:
- The Breakfast Panel theme was the US Overview: Main Street Waits for its Rally.
- Ron Bloom, Sr. Advisor of the US Treasury, offered that the odds of another Great Depression are not zero but "way, way reduced."
- Michael McCallister, CEO of Humana, Inc. (HUM) shared that healthcare is a driver of inflation and, more importantly, obesity trends are alarming and will be a major issue for healthcare costs going forward.
- John Engler, CEO, National Assoc. of Manufacturers, offered that productivity is soaring, efficiency is on this rise. This speaks to one of our 2009 Themes, The Employment Conundrum, when we offered:
While it's no stretch to assume a further uptick in unemployment -- remember, it was 25% during The Great Depression -- the ironic twist is that those with jobs will also feel the pinch. Expect relative pay cuts, rather than salary bumps, to be a central theme this year despite folks working twice as hard to absorb the productivity chasm.
- David Simon, CEO of Simon Property Group (SPG) was surprised the recovery is as robust as it is and wonders how long it will last. We need to see job growth to sustain the consumer, it will take "quite some time" and commercial real estate is still not out of the woods. Higher rates will negatively impact that sector. If and when we see another leg lower, the losses will impact the economy. It's too early to declare victory for the consumer or commercial real estate and we need to be careful setting consumer agendas. We need to tax internet purchases the way mom & pop shops are taxed.
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 firstname.lastname@example.org.
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