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New York CNN —
Friday marks the end of the annual World Economic Forum in Davos, Switzerland, an elite gathering of some of the world’s wealthiest people and leaders.
The glittering retreat to the Swiss Alps is looking increasingly dated as Europe’s biggest war since 1945 deepens divisions in the world economy. But that doesn’t mean it isn’t important.
The meetings between CEOs, politicians and international personalities in Davos can help set the tone for the coming year. Here are some of the top talking points this week.
It’s a mess: The big stories coming out of Davos this year are full of phrases like “fragmentation of the world economy”, “economic uncertainty” and “the year of inflation”.
While many business leaders and economists are now adopting a more optimistic tone, world leaders are still concerned about the economic outlook. That’s not surprising as they grapple with worrying uncertainties – Russia’s war in Ukraine is still raging, inflation and interest rates remain high, looming energy and food crises, supply chain kinks and the debt ceiling in the United States, not to mention the danger a global recession.
The meeting began with a new report from the WEF calling this decade the “tumultuous 20’s” and the “age of the polycrisis”. Business leaders, politicians and academics, the report says, are bracing for a murky world beset by overlapping crises as rising volatility and fatigued resilience increase the likelihood of painful simultaneous shocks.
Gita Gopinath, number two at the International Monetary Fund, said in an interview with the Wall Street Journal that the IMF is concerned that globalization is on the retreat. “We are very concerned about geoeconomic fragmentation,” she said. The issue was raised frequently in meetings with member countries at the conference, she added.
CEOs and political officials are also concerned that the United States will hit its borrowing limit on Thursday, forcing the Treasury Department to take “extraordinary measures” to keep the government open.
If no deal is reached, markets could collapse (like they did last time in 2011) and the US credit rating could be downgraded again. The situation is a “chaos” said Peter Orszag, CEO of Financial Advisory at Lazard.
JP Morgan CEO Jamie Dimon told CNBC from Davos on Thursday that the United States’ reputation for creditworthiness is “sacrosanct.” Even to question it, he said, is the wrong thing to do. “It’s just part of the financial structure of the world. You shouldn’t play with that at all.”
But it can’t be the Poorly: The economic forecasts of many heads of state and government actually struck a halfway positive note, although they factored in strong headwinds.
So far, energy supplies in Europe have been stable, and the USA and China maintain diplomatic relations – Finance Minister Janet Yellen and Chinese Deputy Prime Minister Liu He met in Zurich on Wednesday.
China’s lifting of tough coronavirus restrictions late last year is also expected to spark a spending spree that could offset economic weakness in the United States and Europe.
Climate change was a hot topic: The rich and powerful love to flock to Davos in their CO2-emitting private jets to discuss climate change. But this year, world leaders have received a serious warning.
The UN Secretary-General accused fossil fuel producers and their financiers of “rushing to expand production, knowing full well that their business model is incompatible with human survival.”
António Guterres said in Davos on Wednesday that the commitment to limit global warming to 1.5 degrees above pre-industrial levels “is going up in smoke”.
“We are flirting with the climate catastrophe. Every week brings a new climate horror story,” he said.
Swedish activist Greta Thunberg also made her way to Switzerland and presented fossil fuel CEOs with a “cease and desist” – signed by more than 800,000 people.
The AI revolution is here: Some CEOs in Davos admitted to using revolutionary new AI bot ChatGPT to do their jobs for them, my colleague Julia Horowitz reports.
Jeff Maggioncalda, the CEO of online learning provider Coursera, said he uses the tool to send emails.
“I use it as a writing assistant and as a thinking partner,” Maggioncalda told CNN from Davos.
Christian Lanng, CEO of digital supply chain platform Tradeshift, said he uses ChatGPT to email and claims no one noticed the difference. He even had it do some bookkeeping work, a service that Tradeshift currently employs an expensive professional services firm to provide.
“I see these technologies as co-pilots that help people do more with less,” Microsoft CEO Satya Nadella told an audience in Davos this week.
There’s a saying on Wall Street that bad news for the economy is actually good news for the stock market and vice versa, reports my colleague Paul R. La Monica.
That’s because investors often bet that bleak headlines will eventually prompt the Federal Reserve and other central banks to cut interest rates and provide other stimulus that can help boost corporate earnings… and stock prices.
But the debt ceiling debate in Washington is changing all that.
Wednesday’s big market sell-off and Thursday’s continued slide may mark a turning point in market sentiment. Still, after a promising start to the year, stocks appear to have taken a turn for the worse. Bad news can actually be bad news.
“We’ve nested in anticipation of a soft landing for the US economy,” said Kit Juckes, chief global FX strategist at Societe Generale, in a report Thursday. “Take the covers off and it feels cool.”
Netflix announced Thursday that its founder Reed Hastings is stepping down as co-CEO of the company and will serve as executive chairman. Hastings will be replaced by co-CEOs Ted Sarandos and Greg Peters, reports my colleague Clare Duffy.
Led by Hastings, Netflix disrupted legacy film distribution companies like Blockbuster and helped shake up Hollywood by igniting an arms race by investing in original content.
Over the past year, however, Netflix has seen its stock and reputation take a hit after losing subscribers due to increased competition from rival streaming services. In response, Netflix introduced a lower-priced, ad-supported tier for the first time in its history.
These changes can pay off. In its earnings report on Thursday, the streamer said it added more than 7.6 million subscribers in the last three months of last year, well above the forecast 4.5 million additions, for a total of more than 230 million paid subscribers worldwide.
“Reed Hastings’ resignation from his current position raises many questions about Netflix’s future strategy,” Jamie Lumbley, an analyst at investment firm Third Bridge, said in a statement. “While subscriber growth numbers are encouraging, revenue growth has been sluggish amid a potential recession that is on everyone’s lips.”