World unrest can't shake optimism

A range of high-profile investors have shared their thoughts about the global economy … and they are generally positive in their outlook.

Every summer for the past several decades I have organized a series of lunches for serious investors who spend their weekends on Eastern Long Island where the temperatures are cooler, the scenery is exceptional and ordinarily intense people are more relaxed.  This year about 90 attended the four lunches on successive August Fridays.  Many of the participants are well known and a number are billionaires.  There are hedge fund managers, corporate leaders, activists, buyout specialists, real estate titans, private equity folk and venture capitalists, providing some diversity in terms of their daily activity.  I am adding newcomers to lower the average age.  The group was correctly positive during the past two summer sessions, so I was curious to see if their mood had changed with so much unrest around the world. 

The answer is that the investors almost universally believed that all of the threatening geopolitical problems would somehow work themselves out favorably without significantly disturbing the United States economy or its financial markets.  There were a few with negative views; one raised the possibility that a nuclear detonation from a satellite over North America could release an electromagnetic pulse which would knock out the electricity grid across the United States, causing famine and chaos.  A minority were cautious because of the escalation of geopolitical conflict.  But the majority held a positive view that was untempered by the fact that the Ukrainian unrest has already had an impact on the economies of Europe, with Italy in recession and Germany, the economic driver of the continent, turning down.  If Europe slips back into a recession, the US economy is surely going to feel it in some way.

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