Join global experts at WEF 2026 in Davos for ‘Are Markets Mispricing the Future?’ — discussing market signals, risk assessment and how valuations reflect long-term innovation and economic trends.
Despite geopolitical “rupture” and policy chaos, markets remain near highs, prompting debate over whether they are mispricing the future. Gita Gopinath argued headline growth masks structural damage: AI investment, wealth effects, and fiscal spending are “offsetting the drag” from tariffs, but a breakdown in transatlantic trust means “nobody is going back to the previous rules based order,” leaving economies “poorer” over time.
Panelists saw two forces sustaining valuations: real earnings momentum and expectations that AI will lift productivity. Mark Benedetti contended that if AI adds several points to productivity, “these are cheap stocks,” and urged investing in enabling infrastructure—energy, transmission, storage, water—alongside defense-driven tech spending. Others warned productivity gains don’t automatically validate valuations. Gopinath stressed competitive dynamics and unclear monetization: “I don’t necessarily see productivity goes up. That means these valuations are justified.”
Robin Vince reframed AI into “three constituencies”: token “manufacturers” (commodity-like, failure survivable), the innovation ecosystem, and end users driving measurable productivity.
On safety and diversification, Sergio Ermotti said there is “no choice to the dollar,” yet complacency is dangerous as deficits, shorter debt maturities, and politicized policy could erode “truly safe assets,” amplifying any correction. Climate risks are increasingly priced through failing insurance markets.
What a boring 24 hours in Davos, Switzerland. Hey, that was quite a day one. I've got a sneaky feeling the next 24 hours is going to be a little crazier. We'll tease out some of those themes in this panel, so don't worry about that. I want to start the panel with the crazy of not just the last 24 hours, but really the last sort of 12 months. And I think the the disconnect we all feel, I'm sure you feel and the panelists feel as well, the perceived disconnect between the chaos and the fact the equity market is still within 2% of all time highs stateside. The elevated headline risk and the fact that credit spreads have rarely been tighter, and the fact that we're all sitting here trying to work out, are we mispricing the crazy? Or is my friend Rick Rieder over at Blackrock has said just pricing a system built to withstand it, a system able to withstand it because of the massive amount of spending we've seen from a handful of some of the biggest companies we've ever seen on the planet. So I will say this up front on behalf of us all, that none of us have any idea of where mispricing the future to the downside or to the upside. But based on the comments of this forum in the last 24 hours, it certainly feels like the world has changed, and it's our job to try and figure out, as we enter this process, to begin to understand to what degree. And I hope the next 43 minutes or so will contribute to that effort. Now, typically, we sit on a panel like this and we introduce the guest. But I don't think these guys need any introduction. So I'm going to kick it off with Gita Gopinath. Gita, you've written about this and I want to tease out that subject with you, that it's easy to walk away from the last 12 months and conclude that nothing has changed. But you believe everything has changed. Just walk us through it.
Yes, John. I mean, everything has changed for the global economy. And this question answering this question is getting harder by the minute, because what the future is going to be is tremendously uncertain. And I think we're going to have an important speech later today that will tell us something more about what the future would look like. But indeed, everything has changed. Even if you look at the headline numbers and you see global growth is supposed to be 3.3% this year, which is exactly the same as last year, and in fact higher than what was projected before any of this policy chaos started. But we shouldn't take that as a sign that there is tremendous resilience in the world. And none of this, none of the tariffs or none of the policy chaos matters. I think what has offset a lot of that drag has come from AI, from both the investment going into AI, but also the stock market effect on wealth and therefore on consumption. And also because there has been more fiscal spending in many parts of the world, including in China, including in Germany, especially, more so this year and to some extent in the US again this year. So those factors are offsetting the drag that exists from tariffs. And we should also keep in mind is that there is a bit of a disconnect between headline numbers and what the statutory tariffs are and the actual tariff rate, which is much lower. And that's one of the reasons why the effect has been weaker. But the reason I say everything has changed is more in terms of the breakdown in trust in the world between the US and Europe. Nobody is going back to the previous rules based order. I think everything has has transformed none of it. I mean, some of it did require change, but the changes we're seeing are so dramatic that I think the negative effect is going to accumulate over time. So we're not going to see it today or tomorrow. But over the years, we're going to all find ourselves poorer.
Mark Carney of Canada said just yesterday, this forum that this wasn't a transition, it was a rupture. Emmanuel Macron, the French president, is accusing the the Americans of trying to make the Europeans poorer. And then I look at the S&P 500 and, Robin, I just think there's nothing to worry about. S&P is good all time highs. Yes, a little bit of a sell off yesterday. We've had record highs across Europe too. Is there anything to worry about.
Well Jonathan if you just step back for a second I think what Gita said is, is also important, which is we've had a lot of fuel for the economy, and so we've had a lot of fuel for the stock market as well. The spending on AI, the spending on defense, the various different stimulus, government spending. So there is there is a lot of of sort of coming off the back still of a long time of pretty easy money in a lot of countries around the world. So that's all fuel for economies. That's a good thing because we are seeing higher GDP. The US has outperformed most folks's expectations over the course of the past couple of years. Just think about where we were a year ago. Two years ago, people were predicting a downturn hasn't happened. And in fact now looking forward to 2026, I think there's a certain optimism associated with how the US might perform. So that's number one. There is a there is a reality to to what's been fueling the economy. And therefore there's some industrial logic behind the pricing of the S&P. And remember also you've got a forward question about what will be the impact of AI on corporate productivity. How will that feed through. What does that mean to PE multiples in the future? When you think about potentially corporate earnings in a world of AI. So that's I would say, part of the story, the other part of the story, which maybe isn't quite as optimistic, is the market is bad at pricing tail risks, especially ones that are quite far out of the money. And we've got a lot of those at the moment. So I could probably list off, as we all could, 20 different things, which probably each have a 5% probability of happening individually, and therefore they don't get priced in very well as individual things. But take 20 things at 5%. Chances are better that one of them is actually going to happen. Markets just don't handle that very well traditionally. So I think this is the world that we're living in. We've got a lot of quite good fundamentals. We understand there are a lot of issues hovering around in the background, and the market struggles to be able to to get that same balance that I think we feel we're on the one hand. On the other hand.
We've got some headline risks later on this afternoon of this forum, I believe 230 local time. Is that right? I think it might be delayed. We'll see. The president addresses this forum. There's been plenty of questions, Sergio, about diversifying from US assets. I think Dan Iverson over at Pimco talked about a multi-year period of diversification. We saw the Danish pension fund, albeit small, moving back from treasuries yesterday. We all read that announcement. Is that happening? Do you see that with your clients backing away from from US assets at all?
Yeah. Look, I think that maybe just to add on to what has been well explained, my in the previous, interventions here, I just want to say that maybe, you know, we are not very good at, you know, history tells us that we are always, you know, able to rationalize excesses in the market. Right. And, and this is one point that I would say is a takeaway that, over time, we are going to see if, you know, I fully agree that we will see the benefits of, AI and, and the investment in infrastructure to play out positively over the long term for the economy. But, but we are not very good at predicting and, you know, the next risk. And we are very good at rationalizing excesses historically. Now, to your question. Look, I mean, the big difference here is that diversifying away the meaning of that, is it true that you see pockets of investors? Underweighting. Underweighting their asset allocation to the dollar to, maybe some US assets, but it's almost impossible for the system or for very big chunk of capital to take the risk to bet against the US and against the dollar. I think that, first of all, honestly, there is no choice to the dollar at this point in time in terms of, you know, source of investments. And number two, you know, things have to play out over the cycle. So while I do believe that what we see right now is somehow a discontinuity to what we saw in the last 20 years, in terms of the world order, you know, it's it's it's it's not going to be as extreme and as bad no matter what. Today we're going to hear. So because who knows what's going to happen the day after.
Can I follow up with you on that? On what we've seen in the last 24 hours. It's curious to me that all the headlines are about America. After a six basis point move at the long end of the curve, yet we had an almost 20 to 30 basis point move in Japan. And I didn't wake up this morning talking about a multi-year period of dumping Asian assets. So can you help me understand what's happening in the bond market?
Yeah. Well, the issue is that I think that you now see clearly that the current situation in terms of deficit and is not, is not, is not priced correctly in the market, is trying to price that risk. But it doesn't mean yet that people are diversifying away. So when you look at diversification, you're you're now talking about the US. And before we spoke about or we heard about the US, Europe relationships, look at the US China relationship that has translated into a definitely a lower asset allocation of, big investors to China. At the end of 2024. They had a, an Underweighting of 2.5% last year, despite the big rally in Chinese stocks and markets. We ended the year still at around 1.3%. Underweighting. Right. So it means that people are not moving away completely from assets, right? So it's all relative. And, you know, I would say that diversification is of course, now even more important. But we have to be realistic in closing, that, for the foreseeable future, there are no real, alternatives to the dollar and the US market and the US economy is still a very innovative economy like the Chinese one. And, you know, both of them are unavoidable places to invest in the future.
Is your region offer an alternative?
Thank you, Sergio, for teeing it up for me so perfectly. I mean, the topic of this conversation, it's other markets, mispricing the future. I think, the immediate reaction is to look at look at it from the vantage point of the US market. But as you suggested, the world is so underweight China for many years. In fact, two years ago, you know, when I attend Davos. Right. I'm still trying to argue with a lot of people whether China is investable or not. And it's very difficult when someone is set, you know, in his mind that, you know, a certain place is uninvestable they always focus on looking for reasons not to invest. But I feel that we've come a long way. The conversation since last year has slowly pivoted to, maybe we should pay attention again to see what Asia and China have to offer. And so now I feel that my my conversation is more, more, more rich, more fulsome in the sense that, you know, we talk about not just the, the, the negative aspects of things, but the pros and cons, and the bright spots. And I do believe, looking at the performance of, well, I run the Hong Kong Stock Exchange. So the Hong Kong market, clearly there is a very strong return of interest. If I look at the IPOs, right, a year ago, if I tell anyone that Hong Kong is going to be the, you know, the number one exchange for IPOs in the global league table, I bet not a lot of people will agree with me, or will believe me. But as it turned out, we delivered 120 IPOs, raising $37.5 billion. But interestingly, if I look at the, you know, who exactly are buying these IPOs, the diversification is in fact, happening. So for a lot of the very interesting deals, especially in areas such as technology, you know, be it AI, semiconductor, new energy, the level of interest from international investors is very strong. And therefore, you know, if you ask me from my vantage point, is there a mispricing, I think, yes. But it's the, the, the opposite of what we are sort of concerned about. The with the US market, I think people are still not really seeing the potential upside.
All roads seemingly lead to tech though, Mark. It feels like it's all one trade AI. And when we opened up this conversation and talked about what insulates us from the craziness at the moment, it seems to be the money that's been printed at some of the biggest companies on the planet. Is it more than just one trade in your world?
Yeah. So I think if you look at what all of this investment means, you have to look at what's the next step and what's the productivity gain. So that's a key point, because if we think about where the S&P 500 is trading, think about where Nvidia is trading, okay. Or the other tech tech stars, if we're adding 1 or 2% of productivity gains to GDP over the next 5 or 10 years, or we adding on the high estimates, you can see people estimating 5 to 7% if it's anywhere near 3456 7% of productivity gain. No. These are this is cheap. These are cheap stocks okay. And so what. So where's it going? I think if we look at the market we look at the tech spend that's happening. It's a matter of conviction. So I firstly I believe that the AI tailwind is not something that's going to stop tomorrow okay. This is a long term tailwind that's going to happen. You know we're not capable of choosing who the next Nvidia is. But what we can do is invest in the infrastructure around it. One thing I'm certain of is energy creation energy transmission, storage water, water transmission. All of this stuff becomes more and more valuable, more and more important. And that's a multi-year tailwind. And you mentioned some of the politicians who are who are speaking about, what's going on in their economies, you know, defense spend in Europe, defense spend in Canada. The budgets are are doubling over the next 5 or 10 years. But that's not all going to planes and tanks and aircraft carriers. That's also going to AI spend. That's also going to quantum computing spend. So I think this is not a 2 or 3 year phenomenon that we're going to see. Now, if it turns out to be only 1% of productivity gains, yes, maybe it's overpriced, but there's this binary feeling in the market where either we're in a bubble or everything is green lights. There could be something in the middle, you know, maybe the productivity gains take longer to come online. So then maybe, yeah, maybe the valuations for certain sectors or certain companies are too high. But this is a five or 10 or 15 year phenomenon.
Can I take the other side of that? Because the way I hear a traditionally justified is that we benchmark it to the extreme. It's not the.com bubble. So therefore it's okay and there's nothing to worry about here. So I would actually say that people look at history as a way to justify current pricing. It may never be the technology bubble. We may never see that again. And when I hear you talk about technology, you talk about the potential for the tech. But isn't that different to the way we price it in the market? The number one question I'm getting from people at the moment, and unfortunately they don't say it on Bloomberg TV, they say it offline is what happens if OpenAI goes bust in 2026. What happens to the ecosystem? What happens to the way we price the whole market? That's a very different question to the potential of the technology five, ten years out, is it not?
Yeah. I also think you're right. I think drawing a parallel to what was happening in the.com days are totally different. You know, these these are assets that are that are making money that are growing their earnings 30, 40, 50% year over year. You know, if you take, anthropic was talking about their revenue going from 1 billion on run rate last year to 10 billion this year. These are massive gains. Right. So I think there's an actual impact that we can measure. None of it can be completely parallel to the past because the future is always going to be different. That's for certain. But I also at one point I would I would echo with you is that if you listen to the economists or the big investment banks who are making their predictions for what the S&P 500 was going to be or what the next rate cut cycle was going to be in the next 12 months, you know, 3 or 4 years ago. Yes. We expect four rate cuts over the next 12 months. None happened. We expect four rate cuts over the next 12 months. None happened. So yes, we're in a brand new world. Everything is changing daily. I do think volatility shocks like what we could hear today from President Trump, could have a significant impact on the on the markets. And that could that could alter the course of where we're going. But I do think that still you have to try to look long term, which is very difficult in the news flow that happens on the okay.
So just quickly you wanted to jump in.
Yes. No, I want us to make this distinction between the potential of the technology and where valuations are both those listed on the stock market and those not listed on the stock market, we could very well have productivity growth of 1.5% a year, which is at the upper end of the estimates. And still we could absolutely argue that the market is overvalued, because what we need to do is it's not just about productivity growth. We'd have to find figure out, is there a way for all of these companies with very high valuations, who are doing trillions of dollars in investment and making, at this point, tens of billions of dollars in revenue, that they would all be able to generate the profits that justify the scale of investment that's being made and the valuations that they have. That's what concerns me. I think productivity will go up. I don't have a doubt the productivity will go up. I just don't see how all of the current incumbents will be profitable, have the kind of profitability and have the revenue model that can justify their valuations. And the reason for that is that it is a competitive space at this time. I mean, I work with the different Llms and I keep switching between one and the other. One day is GPT 5.2. Then it's cloud code. And that's just within the US. You have deep seek in China. So I think things are changing in warp speed. It's unclear what the revenue model is going to be for, for companies. And so that's the I think that is the question mark. So I actually see a disconnect. I don't necessarily see productivity goes up. That means these valuations are justified. I think you could have both be you could have question marks over that. And so yes, what is true this time around is that the companies, at least those listed on the stock market, unlike the.com time, are profitable companies. The revenue streams are not necessarily big ones. The big revenue streams are not coming from their AI investments, but they're coming from other sources. But then you have the other companies that are not listed, like OpenAI, which have very high levels of valuation, and that could be the indirect risk that we that we don't see.
Bonnie.
Yeah, I totally agree with that. You know, I've heard someone describe it with AI, there are three formulas, right? There's the capacity FOMO, the the application FOMO, and the investment FOMO. Right. So the valuations we're seeing, right, is probably a product of this investment, FOMO on the expectation or anticipation that one day. Right. All everybody in the world, all companies are going to find ways to apply it. Right. You know, and therefore everyone is also chasing the application FOMO. But the productivity gain, you know, which we talk about, has to be backed up by people willing to pay for that productivity gain. Right. And I think, Mark, you put it as a time frame issue. Right? I think the mismatch of timing, right, between how much people are willing to invest to chase the investment FOMO and when customers are eventually going to pay for that productivity gain and, you know, translate into the productivity of these companies, I think that that is really what what we need to focus on.
Robin.
I would actually split it into three different constituencies, because I think when we talk about have this conversation about valuation, the way we should think about it is a little different. So we've got the folks who are producing what is increasingly day by day, more of a commodity, which are the tokens. So the token manufacturers, that's where the real concern on valuation is really ended up being, and they are creating what is now a bit of a commodity. And so we'll see. Is there space for three of them? Five of them. Seven of them will debate. They're spending a lot of money. They'll build infrastructure. The infrastructure is going to be used. The tokens will be created. It's manufacturing capacity. And if one of them were to fail, at the end of the day, we'd probably see some of the others taking over that manufacturing capacity. Personally, I don't worry about that too much. The second constituency is the ecosystem that's built around that manufacturing. These are the folks who are truly innovating with agents and with capabilities that are essentially using that manufacturing capability of the general intelligence from the Llms. And that's a whole new ecosystem that's going to allow us to do new and fantastical things. And that's not going to go away. It's going to be highly relevant and highly useful to us as we build, as we see and use all of these different capabilities. And then the third group are the users, and that could be us as individuals. It could be us as corporations. And this is where also the parallel with the.com boom breaks a little bit. We didn't see the type of productivity gain that we're talking about here on stage for the users over a fairly short period of time back then that we could see. Now we didn't sit here saying, wow, Amazon, my ability to shop online, the rise of of AWS. We didn't see those things as transforming one, two, three, four, 5% of productivity gains year after year. Compounding back then. Now that is how we're talking about it. So I think by looking at the three constituencies, you can say, is the market assessing where the value is ultimately going to be correctly, and how do we look into the future. There's so much obsession about that first bucket, that manufacturing of the tokens, but it's easy to miss the the real adoption and integration, which is much more in the second two categories.
So where do you stand on that?
Well, look, I don't think I can really add much more than what has been already well explained by my colleagues here. But, one thing I would say that you mentioned before, AI bust. I mean, AI is here to stay and it's not going to bust. Maybe some people may disappear. I mean, like, in the old days, you know, Netscape as a browser doesn't exist any longer, but, you know, and but my point is that, of course, what we are we touched on that, on that. But when we talk about valuation, timing is very important. And this is the ABC of, of, of of investing. Right. So I mean, the issue is that it's undebatable that even if it takes longer we're going to create economic value. So but what matters for investors is number one, not pretending to bet on any of these players being the ultimate winner. Because at the end of the day, it's going to always be a race. And and the second one is that, is is is is is the is how long it's going to take to create this output economic output in every major transformation we saw in history, we saw the same elements of people in technology, for sure. Overestimation of how, how impactful, how impactful it will be in terms of financial returns and underestimation of the scope of the changes and going back to the infrastructure part of the equation. You know, other people made that analogy with the railway system in in the early days of the transformation of, of transportation. Right. So it's exactly the same issue.
Is it fair to say that railroads don't depreciate in quite the same way GPUs do?
Well, maybe. Maybe not, but it's an example of how a transformative process that created economic output created some collateral damages. And we need to accept that some investors will suffer, particularly the ones who are trying to do stock picking in investing in the sector.
Mark.
Yeah, I think one point I wholeheartedly agree with you, Sergio, on is the importance of diversification. I think you mentioned that earlier, but there's diversification in a few different ways. I think diversification of asset allocation and geographic investment is important. We're seeing, you know, I take your point before, never bet against the US. The US is is going to continue to grow, and it's going to be the big market to invest in for now and for the future. But we're finding is a lot of our investors for that incremental dollar that they have to invest. They find themselves underweight Europe. And so they're saying, okay, maybe it's now is a good time to rebalance because I'm very exposed to the US. I'm exposed to a lot of these tech names. So now's a good time to invest in Europe. And maybe I want to do it through the private markets. So we see a lot within our buyout business or within our infrastructure business. But the other way of thinking about diversification is within the asset strategy you've selected. And that's important too. And I think trying to find return streams that are kind of decorrelated and that really limits your risk. You know, in our infrastructure business, yes, we invest in data centers, but we also are the largest investor in Heathrow Airport. You know, what drives the return for Heathrow Airport is very different from the data center that we're invested in. I think that's very important.
How expensive are those uncorrelated assets right now compared to the big theme of the moment?
You know, if I, I was talking about this with an international investor earlier today and, you know, for a very good performing data center today. Yeah, they're expensive. Right. And and the multiples that are getting thrown around can be very high. Now, if we're talking about a trailing 12 month number or a forward looking number, you know, somebody said a good data center with lots of different assets that is, that is, well contracted. Should be 25 times. Well, okay, 25 times forward or 25 times trailing. But on the other side of that spectrum, I was talking to a big investor in the data center space today. You know, one of their largest assets is fully contracted for 15 years with two counterparties, Google and the US government. You know, that's pretty good paper. That's a pretty good long term bet on who your payers are. So yeah, they're expensive. But the upside potential is there.
You've brought up another dimension of investing in this world in this market regime. And that's partnering with the US government, the state capitalism that we traditionally used to focus on with China is now coming out of the American economy. Does that change the market backdrop?
Absolutely.
I think each one of these events changes the the backdrop there is the some bit of confidence that comes from all the regulation that happened to the banking system after the great financial crisis. You have all the stress tests. And I think part of the reason why every single event of this kind is not spilling over into markets is because there's a lot of faith in or belief now, and, you know, justifiably, that there's a much more sounder banking system than existed at the time of the great financial crisis. The risk, of course, is that there are many other markets that were previously considered safe that are no longer safe, and that includes US treasuries. If you look at the long end of the yield curve for the US, you know, interest rates are above 4%. But you would ask yourself, well, that still seems cheap compared to the level of debt that's out there in the market. In terms of the projected path of fiscal deficits for the US and the path of debt for the country. Well, even the administration recognizes that, which is why they're all shortening their maturity and selling at the short end of the yield curve to prevent the long end from going up. So we're setting ourselves up with an, you know, a bigger conflict with monetary policy, which is in the off chance that inflation was a surprise on the upside, and the Fed Reserve were to have to raise interest rates. It would be even more costlier on fiscal policy than it would have been a few years ago, because it's not just the US government, by the way, pretty much every government is moving to the short end of the yield curve. So we risk being in this world where we really don't have any truly safe assets. And one of the points I want to make when we talk about equities and compare it to the.com period, the scale of exposure is just much bigger. The and it's not just US households and US equities, but international investors and US equities never been bigger just in terms of any, you know, scaled multiple of GDP or any measure. The exposure is big. So any correction and it doesn't even have to be a very big correction. It doesn't have to be the size of the correction of.com. It could be half of that correction. I think the consequences of that for the world economy are larger this time around than back then.
Don't they have corrective options? I mean, one thing I would say just to reflect on the European debt crisis, I remember people would always say Italy is poor and coming from an Italian heritage, I would take offense and I would say, no, no, no, no. The Italian government is poor, Italians are rich. And I think the same point needs to be made about America. The government might be poor. Americans are rich. Don't they have options to do something about it?
That's usually not how things work when you're in when you're in a crisis, the way policies get coordinated is, you know, the government steps in does stimulus, the Federal Reserve cuts interest rates. If we are going to be in an environment where there are questions around central bank independence, then the fed would typically in an environment like this, do quantitative easing. And then the question is, are there going to be even more pressure on them to do by large amounts of assets, of classes of assets that they shouldn't be buying? There's the risk of that. And on the fiscal front, again, death is very high. So they are quite constrained on how much they can bail out economies. We've seen the last five years. I mean, I think the last five years has has been, you know, shock after shock in terms of the pandemic, war in Ukraine, Federal Reserve raising interest rates sharply. But there hasn't been a financial crisis. And I think the sense has always been that there will be the government, either the Treasury or the Federal Reserve and governments around the world to save the day. It's getting to be a harder and harder proposition, over time.
And yes, Sergio, we sit here given all those risks granted, and treasuries have a four handle and inflation based, market based inflation expectations are still pretty anchored. Is that the right way to look at things or is that complacent?
Well, there is a level of complacency in the marketplace, but this is nothing new. In the last few years we had a, you know, an enormous amount of economic, macroeconomic and geopolitical events that in, in, in, in the past would have triggered on their own huge corrections. And, you know, not only temporary corrections like the one we saw recently, but, more fundamental correction, but, I guess, you know, the system is now used to an environment in which either governments or central banks will be the ultimate, saver. So, this is this is what, you know, what is consensus in the marketplace. And and it's a very dangerous, assumption to make. I don't have any clear, way to how to address that. And going back into the boring diversification headline, because unfortunately, there are no safe assets, as you mentioned. You know, there are no places where you can say, well, this is a place to go now. Of course, you know, I do see, pockets of undervaluation in certain markets relatively undervaluation. Right. So for example, you know, I mentioned before the Chinese market in terms of technology and innovation. I mean, if you look at multiples, between the Chinese market and what China is doing every day in terms of innovation output and the US multiples, then you have to say this is not not only it's not reflecting the economic reality of two countries basically having almost 50% of the GDP of the world, right, 40 plus 45, but also the innovation power, which is quite exponential. So there are mitigating factors, but everything is somehow then influenced by geopolitical issues. Why it is why it is that the Chinese stocks are under, under weight is because of geopolitical issues. And this is something that is going to take time to, to, to, to, to be addressed. And I don't think, even in the next 24 hours, we will get a solutions of that.
Bonnie.
Yes. Now, I do want to go back to one point that Jesus raised. And again, I agree with you that, you know, if things were to go wrong this time around, the impact will be much bigger. Because if you think back to the.com days, the the way that investors invest are very different with technology. And I'm surprised right where you're just ten minutes away from finishing this session, we haven't talked about tokenization and all that. Right? You know, in every conversation since I arrived in Davos that is just going to make the impact so much more difficult to contain. Right. Because you can in a way say, well, we're making markets more accessible to everyone and being more inclusive. But at the same time, you're syndicating out the risk to a much broader population of people, you know, all around the world. Right. So, I hope, you know, we will be able to get to a safe landing. But at the same time, you know, this the craziness that you alluded to, John, I think this time around with, you know, it will be multiplied. You know, given the change of the way that investors are investing.
We have got about ten minutes left. So think of some questions you might want to ask because I'll open it up to you in just a moment. Sergio.
Maybe have a more of a question, around tokenization and so on and so forth, which is, in my point of view, is still out there. I fully believe that blockchain and tokenization is the future. Having said that, I still don't understand because I'm not a scientist and I'm not such an expert. How quantum computing will eventually put a severe, threat to that system. Or again, maybe not a fundamental structural one, but rather delay how long it's going to delay the timing for implementation of this technology. Because security I mean, when you tokenize, then you better know that it's safe because, and this is, this is the issue that I still don't reconcile. And this is something that, in my point of view, is not fully priced.
Just to conclude this panel before I open it up to the floor, can I make it very simple and forgive me for being a journalist by only asking one question to just condense this whole panel down into but the S&P 500 higher or lower by year end? Based on everything you've said, all these risks is the S&P 500 higher or lower by year end?
I for me. Well go on.
I don't mind I don't mind going first. You have to prepare. I think this is the theme of the panel. You have to prepare for all of the eventualities. And you really have to be able to withstand the answer being lower. But I actually given everything going on in the world, I'd go with higher data.
I think I like the preparation part of it. That's that is important, you know. Yes, I, I would go with with higher but probably not as high as what's currently being expected.
Mark.
Yeah. Look at earnings. Earnings are good I would say higher. But I think the line chart is going to look more like an EKG than a straight line up.
Bonnie I don't know if this gets you in trouble or not. If you have to answer this so you can take a pass if you need to.
I will take a pass. But, you know, I'll focus more on my market. Sure. Please do. All I can say is that, you know, it used to be the case that, you know, the Hang Seng will go hand in hand with the US indices. But, you know, we're seeing now less of a correlation. You know, we're hoping for the best, Sergio.
Well, I mean, it's much easier question than the one I got last night on, on. Is it going to be higher than last year? So that one most likely we're going to be a little bit higher. But I think it's going to be more importantly a still a very volatile year.
So ignore the.
Spikes of volatility and.
Ignore the speech later. We can all go home, Right.
Well we'll see. But you know, I told you before that, you know, historically speaking we are not very good at making predictions in Davos. So.
Trey. Trey. Trey. Trey. Questions please. Please stand the the individual at the front here please.
Yeah. Thank you Isabelle Hartung a different advisory boards and tech. My question would be I mean you very much focus on productivity and how much it will be. And you know, whether this is reflected in the pricing. From my point of view, the more disruptive potential comes from like new business models doing things differently. And in the end, then winning a competitive edge, which also means where there will be a total reshuffling of the of the landscape in the different industries to new ecosystems. And I'm just wondering, I mean, do you have a read of, you know, how this will translate into, any kind of pricing or market expectations? Because, I mean, this is still a big black box.
Yeah. Look, I it's sort of a couple of themes that we've already talked about. One is it's very hard to pick winners and losers, and so it's hard to look over the horizon and be able to do exactly what you said in the last part of your question. But to the first part, I think lack of adoption and integration deeply of AI into an individual's life or a government or a corporation over the next ten years is an existential threat. So doing AI fairly well is table stakes to being able to exist, because the cost difference and the efficiency and the capacity creation is so transformational that if you talk about compounding the sorts of numbers that we've talked about, five, 6%, whatever the number is, maybe it's two, who knows? But it doesn't matter. Compounded over a ten year period of time, it's massive. There are things in our company at BNI that we do today, which cost 1% of what it is that they might have cost us to do a year or two years ago. You can't compete with a company that can produce things at 1% of the cost.
Yeah. And I would add that I fully echo that. And the reason why it's pricing, is, is, is going to go in favor of mainly in favor of clients. And so the winners will use it to gain market share. I mean, of course it's going to be accretive to shareholders. And this is the reason why it's essential, because it's not about you making less profit than your competitors is you being put under pressure by the pricing advantage of your competitor driving you out of the market. So I think it's very, very important. Of course, what we haven't touched on is the social transition. What does it mean this transformation for jobs and society. And and this is a broader issue than four minutes. But I can tell you that this is probably the biggest challenge we have in making the adoption, because big organizations are based on maybe, maybe you have some visions at the top, maybe not. And you have some levels of embracement of changes at the first level in the organization. But large organizations, have some degree of permafrost. And, and in this changing environment is very, very, is the biggest challenge we have is really to find in three years time that you are still competitive both in pricing and capabilities.
We've got any more any more questions? Why does everyone go shy at the World Economic Forum? Come on. What have we got? There we go. An individual at the front.
Hello. Thank you for this really interesting panel. I was wondering, do you think climate change and the risk linked to that of well priced in today's market, or do you think that's going to change quite dramatically in the few years coming?
Anyone on the panel? Geeta.
So this is obviously tricky and it does depend upon the particular market because some markets have become uninvestable. You basically cannot get housing insurance, flood insurance in some parts that is being priced in. If you're a small island nation, your ability to insure yourself from catastrophes has gone has become incredibly expensive. So we are seeing some insurance markets basically shut down that they don't exist. And that is a challenge with housing, which we know that's a big problem pretty much in all parts of the world. And, and governments are trying to figure out how is it that they're going to fix this market, what is it that they can do to be able to provide insurance? And basically people have to relocate and they can't really live there anymore. Of course, there are other kinds of risks, which is about whether the assets that you have are going to become obsolete. You know, the fossil fuels is, is this how much is this going to be valued over time? That seems to be changing with the geopolitics, depending on how much support there is for it and how much there isn't. But yes, I do think climate related events already, the implications that we see right now in terms of the kinds of financial instruments available for it, that's another big transformative area.
And I guess maybe, I mean, the two real issues that we need to face is that all this, you know, developments are going to need a lot of energy. And how are they in conflict with the target of net zero? No matter if you look at the next ten, 20 or 30 years. So how do we get the two things converging? It's very, very important. And, in that sense, I think that it's very important to really invest in new technologies for for energy. And, you know, it's fair to say that today we are paying the price for demonizing new nuclear, in, in the last 40, 50 years. And it's very important that, you know, it's unlikely to change in the short term, but it's very, very important that we also embrace new ways of of production of energy, because it's not climate change. And, and energy are the same kind of, topic.
That wraps up our panel. We're on Swiss Times. We've got about 60s left, so I'll round it up for us all. Can we have a round of applause for a wonderful panel today? Thank you. Mark, Peter, Robin, Bonnie and Sergio. Thank you very much. Thank you. Thank you buddy.