Is the global outlook darkening (er)? If you look at stock prices this week, the answer is probably “no.” In the United States, Inflation rate Just hit an eye-popping 7%, and the Fed Prepare to tighten policy.

But U.S. stocks are still as buoyant as most other world indexes — not to mention tensions in Ukraine and Taiwan and Oil prices soar.

However, if you look at the mood of the so-called Davos elite — business leaders who usually attend the annual meeting of the World Economic Forum in that lofty Swiss ski resort — you might be even more shocked.

Every winter, the World Economic Forum polls its members on perceived risk, and it has Just released the latest survey, before next week’s virtual meeting. This shows that only 16% of Davosians feel “positive” or “optimistic” about the global outlook; the rest are “worried” or “worried”.

Given Covid trends, you might think that’s not surprising. But more notably, only one in 10 Davosans predicts an acceleration in the global recovery, while a similar proportion fears catastrophe – four in five expect a “sustained volatile” scenario or “sustained volatility” The broken track”. That’s shockingly pessimistic, even considering that the survey is often skewed toward pessimistic warnings because of its focus on risk.

The details that terrified the Davos elite were astounding. Ten years ago, Their concerns are often related to economic, technological or political issues, such as “fiscal imbalances”, “soaring oil prices”, “financial collapse”, “cyber security threats” or “conflict between nations” (a polite term for war).

To some extent, these are still worrisome. “Geoeconomic confrontation” (i.e. trade wars and other conflicts) is considered to be the tenth biggest risk globally right now. “Debt crisis” came in ninth place. A more detailed supplementary survey of world leaders showed that 14% of Davosans fear an “asset bubble burst” in the next two years (albeit at number 10 on the 10-item list).

But fewer people worry about bubbles than “cybersecurity failures” or environmental or social issues. Overall, five of the top ten global risks are related to green issues such as “failure of climate action”, “extreme weather” and “biodiversity loss”. The rest are social in nature, including “erosion of social cohesion”, “crisis of livelihoods” and “contagion”.

Also, the questions on the social watchlist are questions that have never appeared in this ranking. For example, about 26% of respondents now worry about “deteriorating mental health” – a higher percentage than expressing concerns about debt and financial or cyber risks. In other words, if the WEF survey is correct, the inhabitants of Davos today are inundated with human-to-human and human-nature issues, most of whom have never been analyzed training.

So what should investors conclude? One (cynic) interpretation of the results is that these simply reflect a generalized howl of fear, rather than a hard assessment of risk. Corporate boards, like the proverbial generals, tend to fight the last war, or worry about problems in the news.

The focus of this WEF survey on environmental and social issues – this is echoed in opinion polls such as Annually by AXA Life Insurance – thus possibly distorted by the recent Glasgow climate change talks and the Covid-19 pandemic. However, this is not necessarily a good guide for future risk rankings.

Conversely, if you look back over the past two decades, the Davos consensus sometimes says the world was wrong: 2007 Risk SurveyFor example, focus on oil prices and China’s slowdown, not a financial meltdown; it’s 2020 Peers Worry About Climate change, but little mention of pandemic risk. There’s a reason some hedge fund traders joke that the smart way to trade the market is to sniff the atmosphere in Davos and do the opposite.

Another problem that may also skew the polls: disorientation. Today’s business leaders spend their careers assessing tangible economic risks, such as rising interest rates or oil prices. In a pinch, they also consider political issues. However, many new social and environmental issues are unknown. This may explain why the survey shows such a high level of general fear; and why it seems so inconsistent with the experience of many corporate leaders today. Next week’s corporate report In the U.S., it is expected to show that nine out of 11 industries have jumped in earnings.

However, there is another explanation for what is happening: The Davos elite are right to be concerned, and the stock market is wrong. A decade of ultra-easy money has led to dangerous levels of complacency about risk, be it economic, environmental or cyber risk.

That’s not the conclusion most investors want to hear.It also doesn’t mean the market is about to crash – at least not in Goldman Sachs Financial Conditions Index at record easing levels. But I think that part is correct. Flawed or not, investors would be foolish to ignore the tone of this report. Davosians may also be wrong to place “asset bust” low on their list of worries.

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