Day One of G.A.M.E. III Forum in New York
April 4, 2013 - The first day of the Quinnipiac University third annual Global Asset Management Education (G.A.M.E.) III Forum brought together hundreds of business professionals, academics and students at the Hilton Hotel Midtown in New York City. The investment conference's first day included panels addressing "Global Economy," "Alternative Assets vs. Equities," "Global Markets" "Corporate Governance" and the "Federal Reserve Perspective."
'Global Economy' panelists advise cautious optimism
The U.S. and global economies are slowly recovering from the economic crisis of 2008, and consumer confidence is growing. Uncertainty about government policies and stubborn unemployment levels remain as obstacles. That was the consensus of a high-level panel of experts speaking at the panel discussion "Global Economy."
"Business profits are pretty good, but hirings are not there yet," said Frank Hatheway, chief economist at NASDAQ OMX Group, Inc. "We don't yet have the level of employment normally seen at this stage of the business cycle." Hatheway called for stimulating the sector with government job retraining programs "so we can start creating 400,000 jobs a month, not 150,000."
Hatheway was one of four keynotes on the morning "Global Economy" panel, and his bullish outlook was shared. According to another speaker, Bob Doll, chief equity strategist and senior portfolio manager at Nuveen Asset Management, "The world economy is slowly, irrevocably improving." Looking at the U.S. economy, Doll said that "the business sector is in pretty good shape, and corporations are now willing to spend a little more on hiring workers, investing and paying dividends. We're seeing sustainable momentum."
That momentum hasn't yet taken hold in Europe. Doll said the European economy is likely to remain in recession for the year. In contrast, he said that economic growth in China "has achieved a soft landing."
Building on that, Larry Adam, managing director and chief investment strategist at Deutsche Bank Private Wealth, said a large percentage of global economic growth is now coming from the developing world. Adam said that although GDP growth in the U.S. is "volatile" and somewhat uneven, the Federal Reserve under Chairman Ben Bernanke "will get a very good grade" for its handling of the economic crisis (particularly in the early years post-2008.) He cited as positive signs increasing levels of consumer confidence, low energy costs and no uptick in inflation or commodity prices.
With due diligence, investors should consider putting some of their assets into the developing world, said John Silva, managing director and chief economist at Wells Fargo Securities, LLC. "The fundamentals really matter," he said. "You have to look at the framework of countries' fiscal and monetary policies."
Silva cited Brazil and Turkey as examples of nations often overlooked by investors that have notably business-friendly climates. He said that corporate operations are increasingly global, citing the availability of Coke Zero in Bhutan and a T.G.I. Friday's restaurant in Dubai.
"Global Markets" panelists see opportunities, but advise investors to look before they leap
China's emerging middle class-which could be four times bigger than that of the U.S. in a generation-presents an opportunity for investors, though not necessarily in Chinese companies. Iconic U.S. brands such as Starbucks and Tiffany & Company could see huge growth in the Chinese market, said Jeffrey Kleintop, the chief market strategist at LPL Financial.
China presents both risks and opportunities, as do many of the foreign investments explored by the "Global Markets" panel on April 4.
Abby Joseph Cohen, senior investment strategist and president of Goldman Sachs Global Markets Institute, noted that the failure rate of new stock issues in China is four times higher than in the United States, a fact she attributed to much stronger risk and compliance policies and accounting principle adherence in the U.S.
Higher confidence levels have also led, Cohen said, to greater direct foreign investment in the U.S. economy, compared to other nations with less compliance and transparency. "There had been a high level of direct investment in China, but the bloom is off that particular rose," she said.
Bob McCooey, Jr., senior vice president of new listings and capital markets at NASDAQ OMX Group, Inc., agreed that money flows into the American economy "because the liquidity in the U.S. is better. Investors want to invest here because they know what our standards are-and that's the only way to attract capital."
Several panelists expressed concern about ongoing financial crises in Europe.
Guy Adami, managing director at Drakon Capital and a regular contributor to "Fast Money" on CNBC, pointed to worrying trends in the Cyprus situation, not for the size of the potential bank failure but for Cyprus' willingness to put depositors' money at risk. "Saying 'We're willing to tax people who have money in our banks,' that's somewhat dangerous," he said. "The precedent could be big."
Similarly disturbing, some panelists said, is an Indian Supreme Court ruling denying an Indian patent for a cancer drug developed by the Swiss pharmaceutical company Novartis. Cohen said that such developments are "a long-term problem for global economic growth," pitting countries with a tradition of investing in research and development against those that lack respect for intellectual property.
Nonetheless, all the panelists see great opportunity in foreign investment, with Kleintop citing Indonesia and Malaysia as having particularly strong potential. South Korea was also cited, but McCooey said that the Middle East presents "too much volatility."
About G.A.M.E. III Forum
The forum, founded by David Sauer, a finance professor in the School of Business at Quinnipiac, attracted 1,000 student participants from 44 states and 33 countries, representing 118 universities to hear 120 speakers over two and a half days. Quinnipiac students helped organize the event, and take part in extensive Q&A sessions with the speakers.