Uncertainty seems to be the reigning theme on Wall Street these days. Just look at recent earnings reports, and it's clear that executives are contending with a world that's not easy to figure out.
Three senior financiers shared their thoughts on these broad risks during a conference in New York on Wednesday, opining on the crisis in Europe, the evolution of China's economy and the sluggish situation at home. Talk during the afternoon panel tended to veer into the technical and philosophical, as perhaps was fitting for the Buttonwood Gathering in New York, hosted by The Economist magazine.
But when it came to the economy at home, each panelist had strong views.
“I'm sorry, but we're in the first or second inning of a long process over many years, probably a decade,†said David McCormick, co-president and member of the management committee of the giant hedge fund Bridgewater Associates.
The outlook for economic growth is “fragile,†he said, w ith risks “largely to the downside.â€
The rate of growth over the next few years will be “painful,†said another panelist, Roger Altman, founder and chairman of Evercore Partners. “We'll have, in most respects, subpar growth,†he said.
After that difficult period, though, the housing market and the broader economy are likely to improve, Mr. Altman predicted. One source of optimism can be found in Silicon Valley and other hubs of tech innovation, said the third panelist, Stephen Pagliuca, managing director of Bain Capital.
Political factors also present risks for doing business. For Mr. Pagliuca, who has watched his firm's name be dragged through the mud during this year's presidential race, those concerns are especially familiar.
“As we know painfully at Bain Capital, you have to separate the political hyperbole as to what you are versus what you really are,†he said at the conference.
Talk turned to the so-called fiscal cliff, th e spending cuts and tax increases that are set to go into effect at the end of the year if lawmakers cannot agree to a budget.
Mr. McCormick of Bridgewater argued that venturing over the cliff would not be as damaging as some have speculated. Mr. Altman and Mr. Pagliuca predicted that lawmakers would reach an agreement to avoid that situation.
The question of political leadership was a theme of the day and a focus of an earlier speech by Mohamed El-Erian, the chief executive of Pimco. Mr. El-Erian argued on Wednesday that politicians weren't doing enough to help the global economy.
With the presidential election coming up, politics isn't far from the minds of Wall Street executives. Last week, David A. Viniar, Goldman Sachs's chief financial officer, said that political speeches can cause market swings.
The panelists were asked about central bankers, which have pumped huge amounts of stimulus into economies around the world, making them popular with traders and others in global finance.
“History will look back on them as having responded in a way that was both necessary and heroic,†Mr. McCormick said. The years since the financial crisis “would have been radically different and much, much worse had they not done what they've done.â€
