‘This time feels different’

The masters of the financial universe gathered this week at Hong Kong’s Four Seasons Hotel for the Hong Kong Monetary Authority’s annual investment conference.

It was a good opportunity to take Wall Street’s temperature on the AI trade — on the eve of Democrats wiping the floor with the GOP at the US midterm elections and jolting markets.

Alphaville was looking for any hint of a crack in the wall of confidence projected by Wall Street, still high on SpaceX’s record IPO, close to record-high asset prices and the promise of many more years of multitrillion-dollar capital expenditure on artificial intelligence infrastructure.

The tl;dr is that while some senior executives acknowledged short-term issues with supply of AI compute or tech company valuations, the bullish sentiment in Hong Kong’s Four Seasons Hotel was almost omnipresent and overpowering.

Here was ultra-energetic Bruce Flatt, chief executive of Brookfield, with a balanced take on who to bet on as a beneficiary of AI:

Technology companies, leave aside their multiples, they’re going to win. They’re incredibly powerful, they have all the tools, they’re going to win at this and anybody that’s in their way is going to get crushed. There may be a few other winners but they’re going to win.If you’re small and you’re taking risks that are not prudent you will get washed out . . . and therefore the strong are going to win.”

Technology companies, leave aside their multiples, they’re going to win. They’re incredibly powerful, they have all the tools, they’re going to win at this and anybody that’s in their way is going to get crushed. There may be a few other winners but they’re going to win.

If you’re small and you’re taking risks that are not prudent you will get washed out . . . and therefore the strong are going to win.”

David Solomon of Goldman Sachs and Jon Gray of Blackstone were bullish on the technology underpinning artificial intelligence and the infrastructure investment boom, but sounded slight notes of caution on “speedbumps” and things that can go awry. As Solomon put it:

We have an extraordinary technology that is accelerating very very quickly . . . It’s an exciting time, we worry about speedbumps, things that can go wrong . . . but when I look out 5-10 years I’m really excited about this tech supercycle, the deployment of tech into enterprises, the ability for it to drive productivity . . . I think there’ll be bumps in the road, we have to figure out how to manage it and govern it.

We have an extraordinary technology that is accelerating very very quickly . . . It’s an exciting time, we worry about speedbumps, things that can go wrong . . . but when I look out 5-10 years I’m really excited about this tech supercycle, the deployment of tech into enterprises, the ability for it to drive productivity . . . I think there’ll be bumps in the road, we have to figure out how to manage it and govern it.

Jim Coulter of TPG tried to rise above the pro-AI sentiment in the ballroom - calling the bull or bear binary “a trick question”, and argued that “the three most important words are ‘I don’t know’”. Yet Coulter bowed to the moment in acknowledging the frenzy:

We are in the midst of a gold rush right now in San Francisco. Houses are selling at double ask in three hours in Anthropic stock only . . . this is kind of crazy.

We are in the midst of a gold rush right now in San Francisco. Houses are selling at double ask in three hours in Anthropic stock only . . . this is kind of crazy.

Perhaps sensing the uniformity of opinion in the room, UBS’s Iqbal Khan — moderating a panel on AI compute with Coulter and Flatt — tried to push Bridgewater co-CIO Bob Prince to make an anti-AI statement, asking why “Bridgewater doesn’t believe in AI?”

“We’re super bullish on AI…” Prince retorted, before explaining that the market’s unwieldy expectations for AI spending and productivity boosts had simply openened up opportunities for smart money to arbitrage.

But the bull crown of the HKMA summit went to John Graham, chief executive of Canada’s CPP:

You hear a lot ‘this time is different’. Looking back to my career ‘this time is different’ might be 0-10, but this time feels different. This time feels different.

You hear a lot ‘this time is different’. Looking back to my career ‘this time is different’ might be 0-10, but this time feels different. This time feels different.

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