00:00Just so our viewers know, 50 is the dividing line. If you're below 50, that's negative. If
00:04you're above 50, that's positive. Where did we stand in the most recent survey?
00:08Well, the good news is, Romain, that the confidence index went up, the CEO confidence
00:14index, from 47 to 52. So that's good between the second quarter and the third quarter here.
00:20The bad news is we're still hovering around that 50 mark, which as you pointed out is about
00:24halfway. It's a very neutral territory. Well, what actually led to that big plunge that we saw
00:31earlier this year in CEO confidence? Was that tied to some of the issues that we've been seeing in
00:36the Middle East? It's exactly tied to the war in Iran. The second quarter reading was taken right
00:44after that. And oil prices had gone up to about $120 a barrel. People were saying it was going to
00:50$150. So it was in that context. Now we're down closer to $80. And you see some sort of
00:56normalization. But it's still not over, Romain, as we all know. And so therefore, pretty much
01:02neutral territory for CEOs. It's one thing to say, OK, CEOs have confidence or lack thereof. I think
01:08the most important thing that particularly for investors and for that matter, their workers want
01:12to know is, A, are they confident enough right now to hire? Yeah, we sit in a low hire, low
01:19fire
01:20situation. And we saw that in this survey as well. People are not planning to add huge amounts of
01:27people, but they're also not taking people out. So that's still part of that neutral territory.
01:32This CEO confidence, as we know, is really important for investment, not only for jobs,
01:37but also for capital investment. And it's the same thing there. About the similar number,
01:42plan to raise capital investment and cut capital investment. So it's really halfway neutral in both
01:49of those investment categories. I'm sorry. So on capital investment, no real movement there
01:53overall? A little movement from last quarter, but overall, it's still sitting in neutral. And we need
02:00that to go up, as we all know. Yeah, absolutely. And what about wages, Steve? What did you find out?
02:06So CEOs are telling us that they're planning to raise wages next year between 3% and 4%,
02:12which is not surprising. They tend to hover around the inflation mark. And that's where
02:18inflation is sitting at this point. So when we start to talk about overall kind of where we're
02:24going, and I know these numbers are going to fluctuate on a month-to-month basis, but it seems
02:30like there's a little bit more clarity now overall about what's going on. I know we don't know what the
02:34outcome is going to be on the Middle East. But when you think about the uncertainty that was
02:38here in March and April, not really knowing just how deep this was going to go, do you get a
02:42sense
02:42that there is at least a little bit more, if not clarity, people feel like they have a little bit
02:49more of a handle as to what the future, at least the short and intermediate term, will hold?
02:53Yeah, you see this every time there's some sort of shock. We saw it last year. Well, first of all,
02:58with Ukraine, you saw the same thing. You saw it with the tariffs, and then people sort of adjusted
03:02to it. And now you see it with the Iran situation. I think the key denominator here is the opening
03:07of
03:08the Strait of Hormuz. If we could get oil and goods flowing through the strait again, I think you would
03:13see trade normalization. You would see inflation normalization. And then I think you would see
03:18confidence lift. Well, I mean, we were talking with a lot of CEOs today, really over the last
03:23couple of weeks, given the earnings season, and most of them are relatively upbeat. But we've heard
03:28a big drumbeat from a lot of them, that there is still concerns about economic conditions, primarily
03:33whether not only consumers keep spending, but obviously for the B2B type of companies, whether
03:38we'll continue to see the type of spending by corporations themselves. Is there a sense that,
03:44at least economically, if things are relatively stable, there is no need for change? But if for
03:49some reason we did see a big pullback in spending either by consumers or businesses, then what does
03:55that do to some of these companies? Yeah, I think that's right. You're either B2B or B2C. And in both
04:01cases, you need the spending by your customers. I think the key thing here is inflation. And that's
04:08being driven mostly by oil at this point, as we all know. And it's not just the gas that you
04:12put in
04:13the back end of the car. That hits the consumers largely. But it's the knock-on effects on all the
04:18products. There's about 6,000 consumer products in our, just in this country alone, that are affected
04:23by oil, whether it's packaging or ingredients, fertilizer from a food standpoint, and so forth.
04:29So inflation is rampant, mostly caused by the oil, mostly caused by this trade of Hormuz.
04:35And my final question, too, and I mean, where's the reason why I'm kind of picking your brain on this?
04:38I mean, obviously, you're leading the conference board, but you've run actual companies as well,
04:43including Office Depot and AutoZone, I believe. I mean, so you've been there. I mean, you know
04:48exactly what it's like to sort of be on that hot seat and have to make these hard decisions,
04:52not necessarily knowing. Who are the CEOs relying on for this information right now? Are they just
04:58kind of relying on their own internal finance folks and other folks? Or are they looking to the
05:04external data and the consultants? I mean, where are they getting their information from?
05:07Well, it starts with their top line, and everybody's struggling with growth if they're
05:11not in the AI space, right? So that's number one. Growth is tough to get at the same time
05:17inflation and cost of goods is raging. At the same time, you've got very high borrowing costs relative
05:22to the last decade or so. So these are all factors that they're looking at. And, you know,
05:27you're trying to hurdle a high cost of capital at the moment for any kind of investment. So I think
05:33that they're looking for growth. And that's the fundamental thing that we need to get going
05:38here again.
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