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What the heck is WEF and why are all the market hotshots invited? Here’s why this year’s World Economic Forum might only be a gathering with a lot of skiing and Swiss cheese

What the heck is WEF and why are all the market hotshots invited?

The World Economic Forum (WEF) is an annual meeting of movers and shakers from different industries held in Davos, Switzerland early in the year. Attendees usually include political leaders, prominent businessmen and investors, journalists, Nobel Prize awardees, and celebrities like Angelina Jolie, Bono, and Big Pippin. Okay, maybe not Big Pippin.

Professor Klaus Schwab, founder and Executive Chairman of WEF, hopes that bringing together these industry hotshots to secluded Swiss mountains would inspire fresh opinions on more serious problems like global economic growth and income inequality. Unfortunately, others only see the event as a big party with lots of skiing and Swiss cheese.

How will it affect forex trades?

If last year’s WEF is anything to go by, we probably won’t see a big market reaction during the days of the actual meetings. If you recall, the Davos forum in 2011 didn’t cause any unusual price activity. But strangely enough, we saw quite a bit of action in EUR/USD two days following the forum! Just how much action, you ask? 300 pips’ worth, baby!

EUR/USD during 2011 WEF

It’s very easy to dismiss all of this as a mere coincidence, but if you were watching the markets closely then, you’ll recall that in the weekend of the WEF of 2011, policymakers and bankers made optimistic remarks based on the Davos forum. They all pretty much agreed that the euro zone had “turned a corner” and that the euro’s survival was no longer in doubt.

Hah! What baloney, right? But although we now know that they were very wrong to think that the euro zone had avoided a major crisis, their optimism did help uplift the euro a year ago. That we can’t deny!

What issues are expected to come up this year?

This year’s official theme is “The Great Transformation: Shaping New Models.” For many analysts, this just means that China, India, and other emerging economies will hog the spotlight for most of the conference. And with Germany’s Angela Merkel and ECB President Mario Draghi among the keynote speakers, I’m pretty sure the euro zone debt crisis will get some attention too!

Other attendees have also been giving their two cents on what they think should be discussed. Some of them think income inequality should be on top of the list, while others believe reshaping capitalism as we know it is also a good idea.

To be honest, this year, I’m not really expecting the world’s leaders to come up with big resolutions to address the various threats to growth that threaten the global economy. Let’s face it – economic decisions are getting harder and harder to make these days. I suppose the most we can hope for is a common resolve that might hint at where our leaders are planning to go in the next few months.