SALT: From Washington to Wall Street

From Washington to Wall Street. This mornings panelists at SALT conference 2015 consisted of moderator Robert Wolf, William Daley, Gregory Fleming, David McCormick, and Randal Quarles. The group discussed the intersection of politics, the economy, and the markets. The first question to the panelists was simply, "what do you think of the intersection of politics and the economy?" The answers were varied, but set the stage for the remainder of the panel. Every panelist, in their own way, agreed that the intersection is very sharp and polarized and evident. Gregory Fleming of Morgan Stanley said, "The intersection if real and more strained than any other point in my lifetime." David McCormack of Bridgewater referred to it as an inflection point. "After 70 years of peace and prosperity following WWII, the United States is at an inflection point." Randal Quarles said, "For the first time in history, protecting intellectual capital is a major concern." Geopolitical tension causing the economy to be strained and govnerments to tread lightly can be summed up by William Daley of Argentiere Capital. "China, Saudi Arabia, and Iran have the potential to have the largest impact on the markets. Small proxy fights from small Middle Eastern countries won't have much of an impact on the United States." The moderator turned to David McCormick and asked what keeps him up at night? "I think the things you predict to be the biggest risks are the things that aren't a problem. It's the things you don't see that catch you by surprise. We focus on building a foundation of resilience under any scenario through a system approach to building a portfolio. We need to prepare for anything." The conversation shifted towards the US political system. David McCormick said, "The problem is it comes down to style and substance. Too much the style piece of over emphasized. We need to be able to disagree agreeably in order to make progress." Daley said, "the problem is that the rhetoric equates to the facts," making reference to President Obama on private sector relations. Randal Quarles thinks that there are enough politicians in Washington who want to get something done on a specific topic, like trade or tax reform, that the something should be accomplished. Wolf asked, "what do you think about the importance of the public sector having private sector experience and vice versa?" Randal answered quickly, "Across government, you need to have people with real world experience to be able to create real world solutions." Daley mentioned the common saying that the government needs a CEO to go in and clean up shop. "As a private sector person, you can go into a business and make changes as CEO. A CEO in government is laughable because the private and public sectors are not the same thing." "Greg, if you were advising a presidential candidate, what would you say about millennials?" "It's a very different generation. The day to day, physical interaction is much less than previous generations. They're not a generation that will sit down with a financial advisor. Another thing is that they care tremendously about a broader cross section of issues like the environment, sustainability, and economic reform. Millennials will keep an eye on these issues and so we need to be thoughtful with how we deal with reforms like taxes and immigration." To wrap up the panel, all were asked their views on who will be the next president and what the final matchup will be. All panelists agree that Hillary will be the next democratic nominee while only two picked her to win the election. On the republican side, one panelist picked Walker and the other three picked Bush as the nominee.