1. What happened to crude oil’s volatility?
Shale oil and gas has dampened price volatility, Bob Dudley, CEO of British Petroleum, told Bloomberg TV at the event.
“I’ve been in the industry for 40 years and we’ve always seen huge volatility, particularly with tension in the Middle East,” he said.
However, when the Saudi oil fields were bombed, crude went up $5 and then settled back down. “That’s when I realized the unbelievable impact of the United States on energy markets,” he told Bloomberg TV.
2. When will the stock market top blow?
Paul Tudor Jones, trader and hedge fund manager, told CNBC that the current state of markets and monetary policy “defies imagination.”
“We’re in such extraordinary times. We’ve never seen a fiscal monetary mix like this. So it argues for some massive blow-off at the top,” Jones said, telling CNBC that the top could be a long way off. For example, the Nasdaq gained 130% between early 1999 and the market top in 2000.
“At the top rates will be theoretically substantially higher,” he continued. “The animal spirits will go, the stock market will go, until at some point the Fed gets in the game [and reverses] this insane monetary policy they’re running.”
3. Is cash really trash?
Ray Dalio, founder of the largest hedge fund in the world, Bridgewater Associates, told CNBC’s “Squawk Box” from Davos that “cash is trash. Get out of cash,” adding that “everybody is missing out so everybody wants to get in.”
He also advocated for gold in a portfolio, but saw little purpose for Bitcoin. “There’s two purposes of money, a medium of exchange and a store hold of wealth, and Bbitcoin is not effective in either of those cases now,” he told CNBC.
Dalio did see problems going forward, telling CNBC, “If you get a downturn — and there’s a good probability in the next [presidential] term you’ll get a downturn — and you don’t have effective monetary policy and you have people at each other’s throats, I’m worried about that,” he said.
4. Asset bubbles are a reality.
With high asset valuations, especially in the tech sector, many foresee a correction coming, especially Jes Staley, CEO of Barclays. He told Bloomberg TV that problems typically start in the credit market, where people get overextended and “there’s a shock to interest rates that could be quite a correction.” He added: “When you have zero to negative interest rates almost by definition you’re going to have asset bubbles.”
5. Iraq to U.S.: Please Go
In a speech to Davos attendees, President Barham Salih of Iraq said the request for U.S. troops to leave his country wasn’t “a sign of ingratitude or hostility,” Bloomberg reported, but rather what many Iraqis see as a violation of their country's sovereignty.
He noted that for the Middle East to become stable, no country should dictate to Iraq who they have relations with: “Our policies and our diplomatic and economic ties must be driven by our own national interests and not by those of others.”
6. Fear of Rates Going Negative
What happens if interest rates go negative? The answer is there will be long-term adverse consequences, Anshu Jain, president of Cantor Fitzgerald, told Bloomberg.
“If you wind up investing at negative yield in effect locking in a loss, that will have repercussions,” he told the wire service. “Of greater concern for me is repercussions for insurers and pension funds, and these will be felt for years to come.”