Billionaires Weigh the Meaning of a Recession

One thing was clear after a week reporting on media moguls, billionaire investors and cutting edge entrepreneurs at Allen & Co.’s conference in Sun Valley: What concerned the crowd most was how long the hard times ahead will last.

Ken Langone, the investing giant and co-founder of Home Depot, told me he thinks we’re already in a recession. Another prominent venture capitalist said the downturn will be much worse than most are anticipating, while a hedge fund titan privately said his biggest fear is that it could linger for as long as five more years. The investor’s point was that such a long period of ultra-low interest rates are bound to have ripple effects now that the tide is turning.

Billionaire Wes Edens told me we’re also in the early innings of an energy crisis. “Unfortunately we’re going to be in this for a long time,” he said in a Bloomberg Television interview, adding that it’s going to also have ripple effects on food prices. Inflation, especially in light of the higher gas prices, “hits the pockets of the people who can least afford it.”

"You still have you know relatively low interest rates, but now going higher, and it's not really clear where employment and the whole recession is going," said Edens, the co-owner of the Milwaukee Bucks and founder of New Fortress Energy. "So it's it's kind of a mess right in terms of where it's going. And you know anytime you puncture a bubble as big as what we have right now you expect instability." 

Anthony Noto, the former Goldman banker and Twitter finance chief who now runs SoFi, said dealmakers may hold off transactions for six to 12 months while they wait for the market to stabilize. “Cash is king right now,” he told me in an interview on Bloomberg Television.

It wasn’t all sad songs. Anticipation built around Elon Musk’s arrival on Thursday evening, just as everyone from Cory Booker, to Bob Iger, to Tim Cook and Dara Khosrowshahi headed to dinner, dressed to the nines. Twitter’s chief executive officer, chief financial officer and board chair were all at the Sun Valley resort -- with CEO Parag Agrawal near the main building around the same time that Musk arrived. It could not be learned whether the two executives met. Allen & Co. is also an adviser to Twitter.

Some guests are said to be staying at the so-called “billionaires’ summer camp” longer than planned in order to see Musk speak on Saturday. Though some, such as Warner Bros. CEO David Zaslav, were gone by the time he arrived.

Zaslav said the turmoil in his business was a chance for fresh opportunities. “I think the world has changed, and it’s not about how much it’s about how good,” he told a group of reporters earlier in the week.

'Thank Goodness'

Others were just glad to have avoided some of the market excesses that multiplied in the past few years.

“Values were way too high,” Bain’s Steve Pagliuca told Bloomberg’s Ed Ludlow in a television interview, speaking of technology in particular. “We stayed away from a lot of the companies, thank goodness, that were losing hundreds of millions of dollars a year and you had to believe in a 20-year trajectory to make profits. Finally the market and the environment caught up.”

Next week, the biggest banks start reporting earnings. We’ll be covering the results, economic outlooks and any challenges ahead starting at 5:00 a.m. New York time for Bloomberg Television. I’ll also be filling in as co-anchor on Thursday and Friday from 2:00 p.m. to 5:00 p.m. Please join us! And send all tips and opinions to sbasak7@bloomberg.net.