Posted 11/4/2009 3:30 PM by bpcoffey from Brendan Coffey in
GFLC
It's rare that conferences generate much of a narrative. After
all, they're primarily about sharing information and extending
professional contacts and knowledge. But the Global Financial
Leadership Conference held this week in Naples, Fla. has plenty of
storylines to mine, much like Wall Street itself. Boiled down to
one line, the story is that there were some mistakes, we're
correcting them now so don't let it take your eye off the
opportunity to make more money.
The conference opened with the financial services industry
continuing to receive less than welcome news. Former Federal
Reserve Open Market Committee member
Michael Moskow
, told attendees the recession is over but high unemployment, weak
housing prices, and weighty debt levels will keep
consumers squeezed - which in turn will have to pressure at
least some sectors of equities.
Obama advisor and
former Federal Reserve Chairman Paul Volcker
delivered blunt assessments of how greater regulation and a push to
re-link Wall Street activities with economic activities and not
just speculation will mean an end to record profits for bankers and
a long recovery toward economic health.
University of
Notre Dame Chief Investment Officer Scott Malpass
discussed endowment strategies, including how universities like his
will be looking for greater discounts on hedge fund and private
equity fees, a statement some hedge fund managers agreed with
wholeheartedly.
But rather than piling on the negatives, the tone throughout the
three days was more accepting of the reality that there will be
greater regulation while looking ahead to see where the next buck
or two will be found. There was plenty of bullish sentiment to go
around. No doubt that's helped along by the fantastic year in
stocks since the March 9 bottoming out of the market.
Nobel Prize winner
Robert Merton
gave hope to financial products developers by explaining why people
overly attribute risk to new things while attributing too little
risk to what is familiar, therefore innovation isn't to be
avoided.
Bankers from Brazil, India and China, including
Qi Bin
of the China Securities Regulation Commission discussed the very
bright outlook for investment in their countries, promising fertile
ground for Wall Street. Tempering the appeal for foreign investors
only a smidgen was reports from each that their respective
countries want to be careful to reign in excesses that could cause
Western-style financial trouble. Speaking of Brazil's new tax on
incoming investment money,
Paulo de Sousa Oliveira Jr
of the BM&F Bovespa exchange framed it as a measure to avoid
frothing up the economy to much, lest it find itself creating it
own bubble. "We're developing another proper way. We're not
precursors to being 'developed' countries."
Qi Bin noted that China takes pains to study the American
economic history and try and draw the best lessons while
avoiding the hazards. for instance, he says the country is entering
a phase of heavy industry consolidation, much like the US had in
the 1970s, but looks to sidestep the obvious problems that
created.
In India,
Sunny Arora
, managing director of Jaypee International emphasized that India
will continue to be conservative even as it slowly opens up
more of its domestic markets to foreign investors. "There is
no point to financial innovation without the proper laws in
place."
As I've discussed in other posts this week, there is also a
strong sentiment that perhaps financial innovators have gotten too
much blame in the financial mess and it's time to move beyond the
blame game. The sight of Leo Melamed exclaiming "don't blame the
pencil for what someone writes with it" to a roomful of attendees
sums up that sentiment best. But so does the approach of Notre
Dame's Malpass. He's examined his portfolio strategy and is
demanding better fees and much more transparency and liquidity from
sub-managers, but isn't shifting much away from private equity and
hedge funds as part of the university's strategy. Rather, he's
looking at them as a key way to get in on what he hopes will be the
'home run' sector of the 2010s, Green, real estate or perhaps gold.
The market is always forward-looking
