CEOs Biting Their Nails
Who better to update us on business and the economy than America’s top CEOs? The Business Roundtable just delivered some big-picture insights for the market to browse, measuring the confidence of 127 CEOs this quarter. Newsflash, they’re as tense as trade.
Confidence decreased this quarter by 5.7 points to a score of 89.5. For some context, the historical average since 2004 has been around 82 points. A score of 50 is worrisome as it preceded the Financial Crisis in 2008, but anything nearing 100 is top-drawer. Cut a long story short, the economy may look rosy in a freeze frame, but the future is bringing with it more fear than greed.
Specifically, CEOs plans to hire dipped, as did their expected sales and investments. President and CEO of the Business Roundtable, Joshua Bolten, made the point that, in fact, “business leaders are ready and eager to hire in the United States. Yet, the uncertainty of trade policy is making it more difficult.” CEO Tom Linebarger of Cummins, believes the year’s economic good days could be lengthened “if some of those tariff burdens were removed.”
As things stand, investors shouldn’t assume their companies won’t hire anybody, won’t sell anything, or won’t invest anything! However, if the market loses momentum soon, confidence in stocks could converge with the confidence of these business leaders. Playing on that outcome, some investors will rotate into defensive stocks and sectors that sell products consumers can’t go without. These stocks pull through in economic downturns, but it does mean a shift away from aggressive businesses that are growing fast. The ground constantly moves beneath us, so keep plan B within reach!
