The 2017 Cayman Alternative Investment Summit (CAIS) kicked off on February 16, 2017 at the Kimpton Seafire Resort + Spa in the Cayman Islands. The conference attracted more than 500 leading thinkers and decision makers from across the alternative investment industry, including managers, investors, economists, academics, regulators and service providers.
Here are some of the highlights from Day 1. (For highlights from Day 2, see: CAIS Day 2: Digital Investing & Evaluating Emerging Markets.)
Investing in a Post-Brexit World
Karsten Schroeder, CEO of Amplitude Capital, said he thought the Eurozone was flawed from the outset, and that there are lots of investment opportunities in the dissolution of the European Union. Meanwhile, Alexander Ineichen, Founder of Ineichen Research, said the U.K. will have more options after Brexit and that business will recover.
Mark Yusko’s 10 Surprises for 2017
Next up on the stage was Mark Yusko, CEO & CIO of Morgan Creek Capital Management, to talk about the future of the alternative investment industry and, in what is now an annual tradition, share his 10 surprises for 2017. His predictions ranged from monetary and fiscal policy to the prospects for oil prices and European bank stocks. These three stood out:
Dealing With the Delusion of Liquidity
The following panel, moderated by Professor Amin Rajan, CEO of CREATE-Research, sought to better understand the true impact of accommodative monetary policies and answer questions such as will there be enough liquidity when the 35-year-old bull market in bonds comes to an end? and what role, if any, will central banks play if there are extreme liquidity events?
Bruce Zimmerman, Trustee of CommonFund and the former CIO of UTIMCO, took the first stab, pointing out that “there is $70 trillion sitting in cash or cash-like securities.” So even if there is a severe market crisis, there’s likely still enough liquidity in the market that central banks shouldn’t have to get involved. Alternative investment firms will be in an especially advantageous position to buy when people are nervous and everyone wants to sell.
Have Central Banks Lost the Plot?
One of the biggest topics of conversation at CAIS 2017 was central bank policy, with wide disagreement on what central banks should be doing and to what extent.
Nouriel Roubini, CEO of Roubini Macro Associates, made an eloquent point when he said, “most people disagree on what the goals of central banks should be, but most people agree one should be price stability.” Michael Green, a Portfolio Manager for Thiel Macro, said he was against the idea of targeting a level of inflation, arguing that the current approach to inflation is destroying the idea of a market economy.
John Mauldin, President of Mauldin Economies, chimed in about how he thought “we’re in the middle of two of the biggest bubbles in the history of the world” and it’s difficult to choose “which bullet I want to be shot with.”
Alternative Credit Takes a Step Forward
The final panel of the day was on credit—“the next frontier in optimizing your portfolio.”
Denise Crowley, Head of Securitized Product at ZAIS Group, started off the conversation by pointing out how there are big moves across the credit markets right now, creating more winners and losers by the day.
Mark Okada, Co-Founder & CIO of Highland Capital Management, added that he was comfortably bullish on credit for the first time in a long time, and that he foresees another strong year in 2017.
Andrew Ross, Associate Director at PAAMCO, offered his own viewpoint that there are good credit opportunities out there if the investments are structured properly. (For related reading, see: How Hedge Funds Can Do More for Charitable Causes.)