Greetings from Las Vegas, where I’m attending the annual hedge-fund conference run by investing firm Skybridge Capital, known as the SALT Conference. Yahoo Finance reporter Julia La Roche and I will be providing regular updates on who’s saying what, and other details of the conference.
UPDATE, 1 pm, May 18, 2017
Julie LaRoche interviewed Anthony Scaramucci, founder of SkyBridge Capital and a close adviser to Donald Trump during last year’s presidential campaign. Trump offered Scaramucci a job in early January, then rescinded the offer a couple weeks later, for unexplained reasons. See what Scaramucci has to say about that.
UPDATE, 7:45 pm ET May 17, 2017
Various speakers presented investing ideas for the next 12 months. Some were esoteric, such as “legacy” mortgage-backed securities that were issued before the financial crisis, and preferred shares of small banks bailed out by the Treasury in 2008 and 2009, which have since been auctioned to private buyers. Here are a few simpler investing ideas:
Technology: Morris Mark of Mark Asset Management said one strong investment he sees for the next 12 months is Nvidia, the gaming-chip maker. He must be a Yahoo Finance reader, since we declared Nvidia our 2016 Company of the Year.
Europe: Here’s Reade Griffith of Polygon: “It’s nice to hear people talking about Europe in a positive way. We’re really seeing growth in a broad way you haven’t seen in 5 or 10 years. The political risk in Europe is coming down. Europe is in the 3rd inning of a recovery. The US, depending on Trump, is somewhere between the 7th and 9th inning.”
Energy-related products: Here’s Doug Rachlin of the Rachlin Group – Neuberger Berman: “For the first time in years, petrochemical plants are coming back. Seven new plants are coming along the southeast coast. We’re very excited about these petrochemical plants coming online. It’s pretty obvious coal is declining and no matter what Trump says, coal is not coming back. Their share of power generation is going to continue to decline. Nuclear is also going to decline. Solar and wind will continue to gain share, but the energy source that stands to gain the most is natural gas. With oil trading between $45 and $50, the leading MLPs are highly profitable today and will continue to make a lot of money.”
And here’s one risk Rachlin pointed out: “If this administration doesn’t turn out too well, the risk in 2020 is we have Elizabeth Warren, and that’s not going to turn out too well for a lot of people.”
UPDATE, 5:15 pm ET, May 17, 2017
Jeff Gundlach of DoubleLine Capital–the “bond king”–gave a luncheon presentation. It was essentially the same as the talk he gave at the recent Ira Sohn conference in New York, which Yahoo Finance’s Julia LaRoche covered.
UPDATE, 2:50 pm, ET, May 17, 2017:
Yahoo Finance editor-in-chief Andy Serwer interviewed Alphabet’s (GOOG) executive chairman Eric Schmidt on machine learning and artificial intelligence. Schmidt is optimistic about the future of work and life in the United States, and doesn’t think robots will take everybody’s job. But he does acknowledge new technology is making life tough for some people.
A few of his remarks on self-driving cars: “It’s crazy that a human should drive your car. A computer should drive your car because it can do it better. “
Schmidt raised an interesting conundrum: If you’re riding in a self-driving car, and it rolls through a stop light for some reason, and a cop pulls it over, who should get the ticket? “Not me,” Schmidt said. “I didn’t do it.”
“I think you’re going to lose that argument,” Serwer answered.
More from Schmidt: “After 20 or 30 years of doom and gloom about automation, our economy has the lowest unemployment rate in a generation. In almost every measure, we are doing better.” (Life expectancy, for example.) “This is good stuff. And yet we’re more unhappy than ever. I blame it on too much information. We spend too much time looking at the negatives.”
“I don’t worry about the jobs question in aggregate. I do worry about increasing inequality. Globalization can clearly be understood in terms of delivering a large percentage of gains to knowledge workers. The age we’re entering now is the age of intelligence. Computers will essentially add to our intelligence.”
“Moore’s law is slowing. We’re running out of horsepower just because of the limits of physics.”
“The best performance will come when humans are working with AI.”
Serwer asked Schmidt about Uber, which is currently embroiled in a legal battle with Alphabet over the alleged theft of self-driving-car technology. “Are you and Uber getting along these days?” Serwer asked. “Uh, we love Uber, as a shareholder,” Schmidt answered. “How’s that?” (Alphabet was an early investor in Uber.)
UPDATE, 2 pm ET, May 17, 2017:
A recurring theme at the SALT conference: It’s suddenly a good time to invest in Europe. Here’s Bruce Richards of Marathon Asset Management: “Europe has been the most uncertain region. That’s all put to rest right now. All of a sudden we have stability in France, in Germany, in the Netherlands—and more political uncertainty in the United States. Europe is the place to invest, because it’s been very much underinvested.”
Marc Lasry of Avenue Capital seems to agree: “Europe has calmed down a little bit and the volatility is all in the United States.”
More from Bruce Richards: He said retailers J. Crew and Sears are “very strong candidates for filing for bankruptcy.”… On investing in energy, he points out that fracking only occurs in the United States right now, but could soon help bring oil and gas out of the ground in places like Argentina and China. “Cheap energy around the world will probably stay that way for a long time. We think it will bring new markets.”
ORIGINAL POST, 1:25 pm ET, May 17:
Anthony Scaramucci, the founder of Skybridge Capital, opened the conference by explaining, sort of, why he’s not currently working in the Trump administration. Scaramucci was a Trump fundraiser during the presidential campaign, and it seemed so likely that he’d follow Trump to Washington that he sold Skybridge to a Chinese firm. Then the job evaporated. “I was offered a job in Washington on January 12,” Scaramucci told a ballroom crowd. “The job didn’t materialize.”
It may yet, however. “I am ready to serve,” he said. “I remain loyal to the president.” Scuttlebutt at the conference is that Scaramucci doesn’t get along with White House chief of staff Reince Priebus, which explains why he’s still in New York. But there are also rumors that he’ll be heading to Washington soon. Stay tuned.
Former Fed chair Ben Bernanke spoke after Scaramucci. Here are a few highlights:
On the Trump rally in markets: “The reflation trade was probably overdone. Even though there’s unified government, politically it’s less unified than it kinda looks.”
On the Trump controversies: “I didn’t anticipate the day-to-day issues. He’s a very unusual person.”
On political risk: “It always puzzles me a little bit that markets are very blase about political risk until the last moment.”
On Trump’s economic agenda: “I’m not counting on major changes in the tax code or infrastructure.”
On the US economy: “It’s the little engine that could.” Bernanke pointed out that if the current expansion lasts another two years or so, it will be the longest expansion in US history. “I think it’s better than 50-50 we’ll make it.”
On inflation: “Inflation has been below target for a while. It’s been unexpectedly difficult to get inflation up.”
On splitting up big banks, as Sen. Elizabeth Warren wants to do: It would probably make the economy “worse off, on the margin.”
On the next Federal Reserve chair: “It’s in [Trump’s] interest to consider renominating Janet Yellen.”
