Less than a year ago, the financial Republican elite was making its way through the brass doors of New York City’s Trump Tower to kiss the ring of President-elect Donald Trump. Many of them had not supported their fellow billionaire — some had even financed the #neverTrump movement — and disdained what they deemed his retro views on such matters as immigration and trade.
But these men (and they were almost exclusively men) were hoping that a Republican agenda would give them a big tax cut, if nothing else. Now, after almost a year of congressional inaction and new fears that even the tax cut is slipping away, many are privately shunning the president. Like powerful Republicans in Washington, behind closed doors they are expressing disgust, disappointment, trepidation — and deploying no small amount of black humor.
The new dark mood was on display at the Robin Hood Investment Conference last week at 50 Varick Street, an event space in downtown Manhattan. The Robin Hood conference is an annual event where about 1,000 investors pay as much as $7,500 each for two days of talks by a dozen of the best brains in finance, with speakers offering specific stock tips and general prognostications. Proceeds for the event go to the Robin Hood charitable group.
At this year’s event, despite a roaring stock market, the mood was glum. Barry Sternlicht, a billionaire real-estate investor, hotel mogul, and self-described Trump friend and golf partner, seemed to have soured on the president. “I expected him to go to the middle, because I thought he wanted to be great,” he said of Trump, according to an audio of his off-the-record talk obtained by New York. “I played [golf] with Donald Trump and his golf game is like his presidency,” he said, eliciting guffaws. “He’s amusing as my friend, but he’s not very amusing as president of the United States. And I’m a Republican.”
Other conference participants sounded the alarm more loudly. Frequent GOP donor Seth Klarman, CEO of $30 billion Baupost Group hedge fund, had already warned his investors about Trump’s protectionist policies and the deficits his tax plan would produce. But at Robin Hood, Klarman — who is widely revered in investing circles — offered a much harsher assessment of Trump to his peers.
“The president is a threat to democracy. He has attacked journalists and he’s threatening to take away NBC’s license,” Klarman said, according to an audio recording of his remarks. “He’s attacking judges. He’s violating all sorts of democratic norms, from the emoluments clause to questioning the election and threatening to lock up his opponent. People don’t focus on this but Nazi Germany had a constitution before Hitler came to power and at the end of the war they had the exact same constitution. It lasted all the way through, but democracy didn’t.”
Klarman continued: “The country is getting divided, whether it’s immigrants, whether it’s transgender people, whether it’s blacks, whether it’s Mexicans. It’s awful.”
Seven months ago, Sternlicht was on CNBC talking about how Trump’s moves were inspiring the business community — but that wasn’t his message last week. Sternlicht wryly noted that he was waiting for Trump’s promises to materialize, noting that “deregulation has not really taken place yet” and “we haven’t seen much in the way of infrastructure spending.” Sternlicht, whose Miami-based Starwood Capital Group is opening a new chain of high-end hotels (including One New York and One Brooklyn) with the message to visitors to “live green,” also said Trump’s “stance on the environment is just inconceivable to me.”
As a real-estate investor, Sternlicht thinks about future demographic trends, and that’s another area where Trump worries him. The president’s immigration views will hurt growth, he said, noting that the one million refugees Angela Merkel let into Germany are revitalizing the economy there. “It’s amazing; there’s no angst,” he said. “They’re working. They own soccer teams. They are in stores. That’s why Angela Merkel let them in. She needed the labor.”
Hedge-fund manager David Tepper, the CEO of Appaloosa Management, seemed skeptical on the question of whether Trump and the GOP would be able to cut taxes. Tepper — who supported Jeb Bush in 2016 and has called Trump “selfish” — earlier this year was optimistic about deregulation and tax cuts with the GOP in control of the White House and Congress. But at the end of his Robin Hood talk, which focused mainly on a stock pitch, Tepper asked the crowd, “Is the tax bill going to get passed? Do you know?”
The only response from the roomful of hedge-funders was nervous laughter.