What's Keeping CEOs Up At Night: Conference Board Survey

nice light reading right before bedtime. Well he had to read us. Adaman Zildroom's Director of Economics and Global Research Chair at the Conference Board, Adoman tell us about the nightmares that we're in this survey. Good morning, thanks for having me on the program. Uh, yes, I'm not sure it's quite you know, nighttime reading, because you know, we

were asking about what keeps ceo is up at night. UM. And you know globally, you know what's the top of the list is really the COVID nineteen pandem make and the vaccines availability and distribution. Um. And that's much more important than other business concerns and business challenges. UM. They're also really looking at recession risk among the top three as a worry about the coming year. So that suggests that CEOs don't think that the economy is out of

the woods yet. All right, Ottoman, how about the new administration, the Biden administration that obviously manifests the whole change in away A lot of these corporations will be operating over the next four years. How did they frame that out? So? Um, you know, we feel that the survey after the elections in November just to make sure that we could kind of get the policy of what business leaders are thinking

about it. Especially in the US, CEOs are worried about the outlook for taxes and regulation uh, and much less about global trade diversions or disruptions, and and also less about geopolitics. UM. So I think they'll be looking at the business environment and how it might be affected by changes in corporate taxes in the outlook for regulations. But I think generally, UM, clarity uh and UH, consistency and more certainty about the environment is going to be welcome.

And Adaman, just give us an idea of who these nine CEOs are. Obviously you don't have to mention companies, but are we talking about the the d s and P five hundred. Is there a good selection from across the market cap ranges? Yeah, it is a global survey, uh, and there is a mix of a large cap and uh smaller companies. Uh. There really is kind of a wide range. But you know, a lot of the Fortune

five hundred are going to be represented. And just to follow on that, then, you know, did the smaller companies worry about other things than the bigger companies? Would they have been more worried, for example, about demand coming back? Uh? There is a lot of concern about changing consumer behaviors as well as about global demand. Uh consumer demand, UM, especially for China and Japan, which I think are more

dependent on global demand. Uh, the recession worries. Uh, We're a higher rank, so I think there is still concern about that. There's uh more UM time will be devoted to understanding how consumer demand and consumer behaviors are going to be changing as a result of what we're going through with the pandemic. So Automan, how about returning to work? That's on the minds I would certainly of employees. How about the what are the the c e O s in the C suite? How do you think about getting

people back to work in a post COVID world. Yeah, especially for the US CEO SUH, there is a desire to bring workers back, um, and they really want to get back to business. But I think there is a recognition that it is going to be a different world coming back. UM. When when we ask about, you know, are you going to increase your remote workforce or decrease your remote remote workforce? The responses are really neutral. So there's kind of an equilibrium in uh, the the proportion

of the workforce that's working remotely. But there is a desire to get back to work and come back to the office. UM. But it'll be it'll be a different environment because at the same time, they're really thinking about reducing uh the office footprint. Right. So for commercial real estate, I think we'll also see some differences in terms of the size of those offices and maybe the location of those offices. You headlines coming out from air Boss that

I think is worth mentioning in this context. Air Boss saying that production rates will remain lower for longer and that commercial aircraft that market will recover by five I mean seriously automatally looking at another three to five years before the commercial aircraft market resumes well, especially since uh, these CEOs are saying that they're looking at reducing business travel. That seems consistent, uh, and recovery would take quite a long time, I think to really come back to the

previous levels that we've seen. The general consensus seems to be there will be there, there will be less business travel. Um. And it's hard to see you know how um, you know tourism or personal travel is leisure travel is going to pick up in the near term. Well, you know poll just to point out that the United EEO had just said that the turn point is coming on travel demand. Yeah, it's interesting. I think, as Ottoman says, I can see

leisure coming back before business. Um, I don't. As soon as I get my shop the next day, I'm on a plane, I'll tell you that, Automan, Azel Drum, thank you so much for joining us director of Economic Research and Global Research Chair at the conference board giving us the highlights from their survey of global CEOs. And it'll be interesting to see, Vannie, when you get fully evoculated, will you hop on a plane? Well, you know no, because I'll clearly recovering for you, because you'll be on

that plane pole. But KLM cutting as many as a thousand jobs just now because the travel recovery there is fading. So exactly, President Joe Widen's first day executive order confirmed what we had been anticipating that TC Energy is Keystone XL pipeline is delayed again and could be scrapped. That might mean wasting an investment of one point four billion

dollars on the part of that company. Let's bring in now, Oh are Liam Denning, Energy Mining and Commodities columnist for a Bloomberg opinion, Liam, you know, the corporation obviously might lose a lot of money on this particular anticipated investment. But is it a good thing that the Xcel pipeline doesn't go ahead? Uh? I think the Keysone Xcel pipeline is just one of those things that was conceived in

a very different environment. So it was first proposed back in July of two thousand and eight, which you may remember, comincided with the all time high in all prices. You know, back then, we were obsessed with peak oil supply. We were worried that oil was running out, um, and we just live in a very different world now, you know, oil supply is abundant, particularly right now in the context of the COVID pandemic. Um. We we've seen a you know, a huge resurgence in oil production in the US in

the intervening thirteen years. Um. And the other thing that's changed is just the the political environment, both around climate policy but also um, you know, in the wake of the financial crisis is too dasignating in the wake of the pandemic, the role of the role of government in kind of setting outcomes. Liam. Just it's been thirteen years.

Refresh our memory here. The Keystone XL pipeline, it was taking oil from where to where, So it was an expansion of an existing pipeline network essentially to take oil from Alberta, mainly from the oil sands up there in Canada, down to refineries and export terminals on the Gulf Coast and also into the Midwest. So it was effectively a

Canadian oil export project. Yeah. And I mean this isn't the only one called on called at risk, right, there are other pipelines in the sides of the White House, not all of the most recent ones, but some, Yes, there are there are others, certainly, um, in the in the White Houses sites Clearly, Keystone was especially vulnerable because um it needed that permit, because it's a cross border pipeline, and also because of the way it had essentially become

something in the prerogative of the president themselves. So um, you know, we saw Obama block it, we saw Trump revive it, and now we've seen Biden block it again, all at the stroke of a pen. So what does this say about President Biden's energy policy? Liam, What do we really know? What is what's the What are the folks in the US energy business? What are they thinking about President biden administration. Well, we already know that Biden has made climate change a central element of his platform.

UM in some respects he was. He was sort of pushed towards that during the primaries by the progressive wing of the party. What was interesting for me about what happened with Keystone is that um TC Energy, the company that wanted to build it, had been carefully kind of layering on insurance UM by coming to agreements with unions and with First Nations groups, um IT even it even throughout the possibility of powering the thing with renewable energy.

UM Biden kind of swept that aside. You know, you you might have expected him to at least go through the motions of a of a review process or something to justify getting rid of the of the of the pipeline. But he went for it on day one, literally on

day one. And what that suggests to me is that his administration will probably are on the side of moving quickly, probably using more executive orders because you know, the Democrats obviously have a very thin majority in Congress um so you know, it would appear to portender an aggressive stance on climate. Yeah. Absolutely. I mean we also, as I say, have other pipelines that are potentially in the sites are

the president. What does it mean for oil supply though, because the type of oil that was going to be passed through the pipeline is is different that the Canadian oil is thicker and heavier oil. What would it have been used for. Well, typically those kinds of barrels UM use to supply what are called distillates UM so, so diesel being the most obvious one. You know, the kind of oil we get from uh Texan shale for example,

tends to be more geared towards producing gasoline. What's interesting about the cancelation of Keystone Excel at this time is that in effect, it's not really going to matter that much for Canadian supply because of what we've seen with the industry in general having to scale back it's expansion plans because of poor financial performance over the past decade, of the need to conserve cash and pay it out

as dividends. Canadian or production growth probably wasn't going to be that much anyway over the next over the medium term, and so in some respects Keysonne Excel at this point just wasn't really a pipeline that was needed. Men, what do we know about the present Biden stands towards um the shale patch in and the and the fracking industry, because that's where you know, there's a substantial number of US jobs. Sure so, um, you know in theory he

wants to put severe curbs on on fracking. The key issue probably in the near term is whether there will be some sort of UH ban on new fracking on federal lands. UM. That would be a particular issue for states like New Mexico, which, as you may know, is also where his his nominee for Interior is coming from.

So that's going to be an interesting one to watch. Um. Beyond that, you know, one of the things that caught my eye, uh in the executive orders was this move to to reinstate a social cost of greenhouse gases in terms of federal review of projects. And in some ways that is going to be like a carbon tax, but it's kind of a stealth carbon tax um that's introduced when new projects are being considered, and so that could have a big impact on how new projects, Um, you

know move from the drawing boarder into actual investment phase. Liam, we're out of time that I do want to just mention it with you. That also, Saudia Rancole is causing some controversy today because according to a a view of public filings by Bloomberg Green, it's been under reporting emissions of course because it wants investors to keep investing, but it's been doing this by quite the large fraction. Yeah,

that was a great story by my colleagues. Um. You know, the one point I would just make is that this kind of fits a patter, and we saw it most recently with Excell Mobile, which really had to be kind of pushed into even just disclosing its full carbon emissions footprint. And I think what this speaks to is. Look, the oil industry for decades has been trying to obfuscate this issue,

push onto the back burner. And you know we've seen over time the industry has forced to disclose more and and a Ramco's behavior I think just fits with that, right, Liam Denning, thank you so much for joining us. We appreciate your thoughts always on the global energy spaces, energy mining and commodities calmness for Bloomberg Compinion. You can reach and read his work and all the other work for Work Opinion at Bloomberg dot com, Slash Opinion or O P I N go on the terminal. Five market drivers

in a Biden Administration. That is the title of a recent calm by Barry rid Hoolts. Barry joins us today. Barry Ridholts, Bloomberg Opinion columnists and host of Masters in Business on Bloomberg Radio, also the founder, chairman and chief investment officer of Holt's Wealth Management. Barry the reasons to be bullish on stocks they continue to amount, how are you viewing things in a Biden administration? So it's the

battle between bulls and bears. Is really the battle between which matters more expensive stocks or even bigger stimulus, and so far it looks like stimulus is winning. Yeah, but Barry, we keep hearing about the stimulus, but even Nancy Pelosi said today that it won't you know, she put it in positive terms. And so the Democrats would be ready in February, I mean, the worst of Why aren't they ready now? Um, you got me. I. I looks like the new administration hits the ground running yesterday with a

lot of their checking off a lot of boxes. They're freezing a lot of things that the predecessors had done, and they're overturning a bunch of the the more egregious um policy issues. I think they need people to wrap their head around a one point nine billion dollar, trillion dollar Cars Act three before they introduce the infrastructure bill. I don't know if people remember, but this week is infrastructure week, as we've heard every year for the past

four years. And uh, the Green New Deal is another part of that. And and nobody is really talking about Medicare expansion. Uh, the the you know, new Obamacare expansion. When we added thirty thirty five million people to the roles of in sured, suddenly you had a huge new swath of consumers going out and buying consuming uh, medical services and pharmaceutical services and hospitals. It was a huge, no pun intended shot in the arm for the sector.

I don't know what numbers they're talking about. I've I've read twenty to twenty five million additional people added to the to the insured roles. So you take those factors and you add them together, that's somewhere between five and ten trillion dollars over the next ten years. That's a lot of stimulus. So talk to us about stimulus and and how important is that. I mean, there's some that are suggesting, boy, there's already a lot of liquidit in

the market. There's a lot of money, maybe even from the most recent nine billion round that hasn't been spent. What do you say to those that say, hey, let's tap the brakes on this a little bit, you know, you have to put it into content next of the what we learned from and there were a lot of good and bad lessons from the entire year, at least

speaking economically. The good news is that we passed the two point one trillion dollar First Cares Act and the after tax net cumultive income to us consumers was a trillion dollars. That was about a eight percent bump year over year. That that was huge in the midst of a giant recession. And the way that manifest was not just income but UH savings rates went up, credit card delinquencies fell, and retail sales not only did they recover, they passed the pre pandemic levels. So that's our frame

of reference. What we noticed at the end of last year was how that had faded, and so we we extrapolate from that into what this New Cares Act two is going to do, and that assumes that we were kind of partially reopened. What we're what people seem to be forgetting, is we have this massive new surge that has in the virus that has not peaked. We are probably looking at not just a national mask mandate, but a whole bunch of local, state, and maybe even federal

lockdowns as this gets worse and worse. I mean, four thousand deaths a day are just it's just unthinkable. And so I think the New Cares Act is going to be part of here's how we're gonna bang this out. We're gonna just shut down for three weeks and here's enough money to carry everybody through, and that's how we'll get on the other side of this, and once that's done, the broader economy can begin to recover, once we're past the pandemic lockdown and we start to see more and

more vaccines. I don't know, Barrier, remember Biden saying that he would not, you know, do a whole federal shutdown, and anyway, at this point, you know, on the whole world shutdown, it seems that you know, that's not even fool proof either. But we'll see, maybe maybe there'll be a three week shutdown. Barry, What what would you be looking to buy right now? With markets at these levels

and yet still optimism seemingly out there. So you know, it depends on how concerned you are about valuation and how aggressive or conservative you are. If you're aggressive, go buy everything, but most people aren't. Most people are more moderate. And if you're a little concerned that stocks have gotten a little pricy, well, the the obvious rotation is you move some of your capital that's in large cap growth

and tech and you buy what's inexpensive. And what we see is inexpensive today is is really stands out like a sore thumb. The small caps have been are much cheaper than the big caps. Value is at historic levels of cheapness next to growth they should be after performing terribly for the past decade. Emerging markets are much cheaper than the US, And if we do get the sort of stimulus that this administration is talking about, we're going to see the deficits go up, We're gonna see inflation

peak up, and we're gonna see the yield curve. We've talked about this before. UM. Once the yield curve steepens, that means that the money center banks should do better going forward, as well as anything related to to real estate. So there are a lot of options depending on how conservative you want to be. But selling a little bit of what's done great and buying a little bit of what's done poorly, that's sort of rebalancing tends to work

over the long haul. Hey, Barry, twenty seconds, just give us your thoughts on just valuation for the market here. You know the to me, the question is in our stocks pricy because the second half of all bull markets are always pricey. The question is how much of future profit increases is priced into the market already. That's the bottom line, if this room to grow profits, then there's still room for stocks to go higher. I'm not sure if it's fully priced in yet. M hmm. Interesting, very Rittles,

thank you very two words or possibly three. Who's your master's in business this weekend? Uh? This weekend is Andrew Beer of Dynamic Beta Investments. They run an ets that three words on replication their their track workord you got it in Thanks Barry Verry Rittle's, founder of Rittle's Wealth Management, also Bloomberg opinion contributor and contributor to our show weekly. So it is the first full day for President Biden in the Oval office, for him in his administration. A

busy start to his administration for sure. Let's get the latest from Josh wind Grove, white House correspondent for Bloomberg News Journeys, on the phone from Washington, d C. Josh, I want to start with just the general tone in the White House as it relates to the administration and

the press corps. I saw something on my Twitter feed today which was really interesting, kind of comparing the highlights from the first press briefing under President Trump versus the first press briefing under President Biden, and boy, it was the differences were just stark. What's the feeling within the

press corps and the White House right now? Well, I mean, so they're returning to daily press briefings or at least weekday press briefings, That of course has not been the case or was not the case for the last two years under the Trump administration. Trump's Press secretary, Kaylee mcinny obviously was pretty gleeful in sparring went the press and you know, trying to rechange, reframe the narrative. She her very first press briefings that she would never lie. Of

course she light all the time. But you know, Biden's team has now come in. Jock is saying, look, you know, we're gonna we're committed to sharing information, but you know, well we'll see, we'll see where it though. She uh, she's obviously deeply experienced and this she uh, you know, very smooth in her first appearance. I'm sure, but you know, it's all the job up there is to give the view of the president. She said as much yesterday. So everything's with a grain as salt. Yeah, Josh, it was

a very interesting news conference. Give us your thoughts on whether you think there might be some kind of a policy to not mention the predecessor form President Donald Trump. Everything that related to him was either punted to Congress in terms of any impeachment process, or just not really answered at all. For example, the question of the current

FBI director Christopher Ay. Yeah, they really do want to try to think, take the temperature down and just saying the word Trump has a habit of not doing that. So I think we'll see them pull back. We've seen this even on the issue of impeachment. Remember, this is a big question. A lot of stuff Trump or excuse me, do you know lots of Biden wants to do, relies on Congress, and Congress in particular. Of course, the Senate

is going to be logjam potentially dealing with impeachment. He just this morning they were asked, does Biden think that Trump committed impeachable offenses? They won't even go there. They're like, we're leaving this to the Senate. The Senate can deal with this. So I think they really are trying to, you know, stay away from it, take down the temperature. But we'll see. Biden, of course, yesterday has a big speech appealing to inaugurate, appealing on inauguration to say hey,

we need unity, Americans need to come together. There's already those signs that. Of course in Congress it's not going to be all that unified, even on something like the pandemic. So you know, I think Rubber is about to hit road and testing Hiden series that there's some sort of bipartisan Washington idea that he can return to. All right, Josh, give us what do you think the to do list is for President Biden here in these first days? Well there, it sounds like they're going to try to bunch things

into certain themes on certain days. Today absolutely is all about the coronavirus. We're gonna have a press briefing at four. Bidens getting his own briefing at to Dr Fauci is going to join the press briefing. Remember him, you know, every day we used to hear from him, like in March and April, but in fact, between April and today only once had Dr Fauci been to the White House podium. Trump did not at least invite him up there for months and months and months. So they we're going to

hear it all about all about that. I'm sure we'll have more information on things like immigration, uh maybe climate coming forward in the coming days. But you know, they used to say that they have this sort of multi pronged approach, you know, concurrent crises, climate change, racial and equality of the pandemic economy. Now they're sort of still saying that a bit it but changing their two and

they're like, look, this is all about the pandemic. And we reported yesterday that they were they've been growing increasingly alarmed. They think they've been handed you know, shambles of an organization by the Trump administration in terms of the vaccine rollout. The virus is just getting worse. There's a new strain that is particularly alarming. Uh so really alarmed. Bells coming in and now Biden, they think badly that the pandemic will get worse before it gets better, and that we're

in for a quote dark winter, Josh. They's executive orders? Are they now policy? I mean, is it enough for the president to say that we're back in the w h O and that we're back in the powers climate a cord or it just does something need to be enforced. No, he has the power to do that. As a bit of a mechanic side of it, you know, Paris, for instance, to take about a month to take effect. Um. But you know, the things that are within his power he can do by executive order flick of a pen, and

that's what we're seeing him doing. But a lot of the stuff that he wants to do, namely anything that requires money, he needs Congress for And that's why we're going to see this big push to get the new coronavirus you know bill. And the question is can they do something in a bipartisan way? You know, it looks like there may be already losing appetite to do that. There's two roads in front of Democrats, and they get a bipartisan bill with Republican votes, or you know, can

they just ram it through on their own. Uh. They're at least making noises that they would like to do something by partisan But of course the benefit of winning those two Georgia Senate races is that if they have to use a hammer and get things through, they can. So we'll see how that goes. But for now, Biden is trying to do everything he can do unilaterally, but

he doesn't have a leeway. I'm sure US presidents would love to have the power that prime ministers of other countries have in terms of UNI A, Josh, thank you so much. Looking forward to more coverage from you from Washington, d C. That's Josh win World or White House Correspondent. Thanks for listening to Boomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter at

Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio