‘Government Sachs’ Thrives at Milken as Billionaires Talk Trump

  • Thank me for rise in bank stocks: Treasury Secretary Mnuchin
  • Mike Milken looks to Schwarzman for guidance on tax policy

Mnuchin Says Ultra-Long Bonds Could Make Sense

“Ah, Government Sachs!”

That’s the quip David Solomon encountered at the Milken Institute Global Conference this week, when another attendee realized he was speaking with the co-president of Goldman Sachs Group Inc.

This year’s event, for which 4,500 of the world’s most influential people gathered in Beverly Hills, California, to swap notes on global economics and policy, made Wall Street’s political connections abundantly clear.

“You should all thank me for your bank stocks doing better,” former Goldman Sachs partner turned U.S. Treasury Secretary Steven Mnuchin told the packed Beverly Hilton ballroom Monday. “It’s a friendly room here.”

Investors, government officials and entertainment moguls convened at the storied hotel this week for the event, now in its 20th year. While ringmaster Mike Milken packs the schedule with panel sessions, many attendees also flock to meetings in private suites upstairs and evening cocktail parties at mansions in the hills of Los Angeles.

At an invitation-only event held by Bombardier Inc., guests mingled around a mock-up of a Challenger 350 business jet. A cheetah named Bahati made a celebrity appearance for 80 guests at a party hosted by EJF Philanthropies in a private home nearby.

“This is like a mini World Economic Forum -- like a mini Davos,” former Vice President Joe Biden said Wednesday, hours before President George W. Bush addressed a lunch crowd.

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Griffin Denied

Mnuchin and Commerce Secretary Wilbur Ross, both of whom attended the conference in years past with little fanfare, drew packed ballrooms as they relayed their adventures in Donald Trump’s White House. Billionaire hedge-fund manager Ken Griffin, who arrived at Mnuchin’s session about 15 minutes late, was denied entry because the room was at capacity. “Did he say anything yet?” Griffin asked the security guard at the door.

Griffin was admitted soon after, a Citadel spokesman said.

At times the billionaire echo chamber sounded a bit off-key. Ross, discussing U.S. missile strikes on Syria, compared the event to entertainment for President Trump during dinner with Chinese President Xi Jinping.

“Just as dessert was being served, the president explained to Mr. Xi he had something he wanted to tell, which was the launching of 59 missiles into Syria,” said Ross, a billionaire who made his fortune investing in distressed companies. “It was in lieu of after-dinner entertainment. The thing was, it didn’t cost the president anything to have the entertainment.”

When not watching Ross or Mnuchin, attendees joined sessions and milled about with other administration representatives, including Transportation Secretary Elaine Chao and Education Secretary Betsy DeVos. Pimco CEO Emmanuel Roman relayed the time Mnuchin’s father Robert Mnuchin, then a Goldman Sachs partner, couldn’t pronounce Roman’s name and thus coined his nickname to today, Manny.

Schwarzman’s Role

One of the wealthiest attendees, Blackstone Group LP’s Steve Schwarzman, didn’t escape a friendly ribbing from the conference’s leader, Milken. Schwarzman heads a forum of business leaders that advises Trump on job creation and economic growth.

Schwarzman speaks during the Milken Institute Global Conference on May 2.

Photographer: Patrick T. Fallon/Bloomberg

“I’m happy that you can allocate some of your time to investing,” Milken quipped. When the panel discussion turned to whether the administration will move to lessen the tax deductibility of interest expense, Milken peered down the line of speakers at Schwarzman to say, “Well, Steve’s going to let us know by the end of the panel.”

Despite the many Trump ties, not all attendees gave the president top grades. Richard Haass, the president of the Council on Foreign Relations, took aim at Trump’s approach internationally.

“There isn’t a doctrine; there’s a tendency,” said Haass. “It’s a corrosive approach to friends and allies. We’ve made unpredictability part and parcel of American foreign policy.”

Animal Spirits

Others tempered market expectations in the U.S., saying Trump’s domestic agenda will continue facing hurdles. Goldman Sachs’s Solomon said investors’ animal spirits have been damped slightly by evidence that health-care, tax and regulatory reforms will be more difficult to pass than expected.

“This quarter it feels like that conviction is a little bit more muted,” Solomon said. “The market’s pricing in some excitement about where we’re going from a policy perspective. It’s a complicated process.”

Chris Ailman, the chief investment officer for the California State Teachers’ Retirement System, paused when asked what progress has been made by the administration in its first 100 days toward making infrastructure investing more palatable.

“Not much, sadly,” Ailman, whose pension system managed $202.8 billion as of March 31, said in a Bloomberg Television interview. “I’ve never seen a market where there’s so much need, in terms of U.S. infrastructure needing repair, and so much money willing to go to work, and no transactions.”

Despite the skepticism, Americans should hope Trump is a successful president regardless of their political views. That was the message at Monday’s lunch session with JPMorgan Chase & Co.’s billionaire CEO Jamie Dimon.

“I was not a Trump supporter,” Dimon said. “But you better be rooting for the pilot of the airplane.”

— With assistance by Simone Foxman, and Hema Parmar

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