This week, in my capacity as a part of the strategy team for Principal Global Investors, I have the opportunity of attending the Milken Institute Global Conference in Los Angeles. The conference is a program that includes 140 sessions involving a total of 620 speakers and panelists. This year’s record attendance of over 3,000 brings together participants from 40 countries. By any measure, it’s an incredible range of experiences and disciplines. For the next couple days, I’ll be sharing a few insights from some of the presenters and panels, starting with this post about some of Monday’s sessions.
First, a general observation. Experiencing this conference brings home the fact that, at its core, investing is about people and ideas. In a forum like Milken, you really see the power of bringing senior business leaders and investment professionals together with clients and guests for three days packed with thought-provoking discussions. Jim McCaughan, the CEO of Principal Global Investors, commented that one of the things he thinks that sets Milken apart is that not all of the panelists agree on key points; the result, according to Jim, is lively discussion and constructive debate. It’s the kind of experience that generates dialogue outside the sessions – about investment objectives, ideas and solutions.
During this first day, I saw a lot of the sessions revolving around two recurring questions. First, how should we think about risk in this environment? And second, when and where should we look for real growth, rather than growth simply fueled by central banks expanding their balance sheets? Here are very brief summaries just some of the sessions I attended; you can go to the conference web site for videos of all these sessions and more – the Milken Institute does a fabulous job of making the conference accessible to non-attendees, so I encourage you to check it out.
Monday morning opened with “Global Markets in Uncertain Times,” moderated by Alexander Friedman of UBS. This was a wide-ranging discussion of how tension between the “visible hand of governments” and “invisible hand of markets” is playing out in the U.S., the Eurozone, and in emerging markets, and how that tension’s creating uncertainty for investors. Friedman drew the analogy to a battle between King Kong and Godzilla, you know there’ll be collateral damage regardless of who wins; you just aren’t sure what form it’ll take. I found the perspectives on Eurozone issues and potential outcomes particularly interesting.
Next up for me was “Global Risk,” a panel discussion that included Larry Zimpleman, the CEO of the Principal Financial Group, and Wesley Clark, retired general and former Supreme Allied Commander for NATO. This very timely discussion touched on growing cyber risks, geopolitical risks including tension in Korea and civil war in Syria, and economic risks. I found the discussion of cyber risks particularly interesting. Larry spoke to the importance of effective cyber security by corporations and governments. He also spoke to the need for a strategic approach to defending against state and non-state actors, who are increasingly impacting companies and markets – and who may potentially find access points to do real damage to the U.S. economy.
Later I attended “Central Banks: Is Quantitative Easing Becoming Quantitative Exhaustion?” Jim McCaughan and the other panelists were asked to evaluate the success of quantitative easing, where it’s worked, and where it hasn’t. The consensus among the group was that quantitative easing was both necessary and effective for the first 18-24 months, but has since been counterproductive. At the end of the session, panelists were asked to share insights for investors. Jim urged fixed income investors to remember that at some point, interest rates will rise; the prudent investor should focus on credit and structure and be wary of duration.
That’s it for now. More tomorrow on Tuesday’s sessions!
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