The World Economic Forum’s annual meeting of 2012 was blighted by the second-worst snow in at least 66 years.
A year later and 2,500 investors, economists, company executives and policy makers are journeying to the Swiss mountain resort of Davos in milder conditions. The temperature is about 3 degrees Celsius today, compared to minus five degrees on the meeting’s 2012 opening day.
The investment and economic climates are also warming up. A poll of international investors conducted by Bloomberg last week found the most bullishness on stocks in at least 3 ½ years. Some 53 percent also bet equities offer the highest return in the next year, compared to 46 percent in January 2012.
Behind the thaw: growing confidence in the U.S. economy and ebbing concern that the euro-area is on the verge of breaking up.
The latter marks a turnaround too from last year’s gathering at which Nouriel Roubini of Roubini Global Economics LLC predicted Greece would be gone from the euro with a year. He wasn’t alone in thinking the worst: Fellow delegate Joseph Stiglitz of Columbia University warned he hadn’t “heard any convincing arguments that Europe will solve its problems.”
The changing tone this year is largely linked to German Chancellor Angela Merkel and European Central Bank President Mario Draghi for holding the currency bloc together. Both were praised in the poll and will speak in Davos this year, likely tying optimism the financial crisis is over with caution that recession means the economic crisis is far from beaten.
The Davos audience is also unlikely to be too upbeat. Klaus Schwab, founder of the World Economic Forum, spots political “black swan” events” in the form of the dispute between Japan and China in the East China Sea, the Syrian civil war and nuclear inspections in Iran.
Black-swan events, named after the belief that all swans were white until the discovery of black ones in Australia in 1697, describe extreme outcomes such as the 2008 financial crisis that were previously considered very unlikely to happen.
“The world is still full of risks and we do not have only to address the economic risks, I think it is very important that we become more resilient in terms of the political risk,” Schwab told Bloomberg Television.