Dear Reader: Eternal Vigilance

At the start of 2018, strong economic growth and financial market outperformance seem to be hallmark of the year. One wonders, however, if there is a disconnect between the real economy and financial markets, and whether gains are a sign of bubbles.

Could the low interest-rate climate be the main reason for this performance? Or is it more attributable to the recent US tax reform? What’s the role of quantitative easing? And most of all: How long can this last?

Needless to say, there are no absolute answers. One wonders if uncertainty about economic issues and trade treaties such as Nafta and a tendency to protectionism shown by the Trump administration could bring back some sort of a trade war. At the World Economic Forum at Davos, IMF managing director Christine Lagarde said growth should be strengthening both this year and next, but spoke also of “significant uncertainty,” noting, “the long period of low interest rates has led to a buildup of potentially serious financial sector vulnerabilities.”

Big Tech companies, whose size and power were extensively discussed at Davos, are the focus of our cover story this month. Their dominance is a very serious issue worldwide, not only for regulators, but for companies, consumers and citizens. The CEO of advertising giant WPP, Martin Sorrell, reminded the Davos audience that Google, Amazon, Facebook and Apple from the US, plus Alibaba and Tencent in China, have a market capitalization of US$4 trillion—more than all European listed companies combined—and that Google and Facebook control 75% of the global online advertising market.

The issue is not merely commercial, but political and social. Facebook product manager Samidh Chakrabarti, reacting to accusations of Russian influence on US elections, recently wrote: “It’s abhorrent to us that a nation-state used our platform to wage a cyberwar intended to divide society.” He acknowledged that the social media companies whose products are used by two billion people worldwide could not offer any assurance that they are, on balance, good for society: “I wish I could guarantee that the positives are destined to outweigh the negatives, but I can’t.” Needless to say, it is for all of us to keep an eye on Big Tech and its role in our lives.

–Andrea Fiano